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Annual Report 1964-1965

International Finance Corporation A

A MEMBER OF THE WORLED BANK GROUP

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IFC ANNUAL REPORT 1964-1965

contents

LETTER OF TRANSMITTAL ..................................... 3

PRINCIPAL ACTIVITIES ...................................... 5

FINANCIAL RECORD ........................................ 10

THE YEAR' S COMMITMENTS .................................. 13

FINANCIAL STATEMENTS

A Balance Sheet.: ..................................... 22

B Comparative Statement of Income and Expenses ..... ..... 23

B Comparative Statement of Changes in Reserveagainst Losses ..................................... 23

C Statement of Operational Investments andStandby and Underwriting Commitments ..... ......... 24

D Notes to Financial Statements ......................... 34

OPINION OF INDEPENDENT AUDITOR ........................... 35

OTHER APPENDICES

E Subscriptions to Capital Stock and VotingPower ....................................... 36

F Governors and Alternates ............................. 37

G Directors and Alternates and their VotingPower ....................................... 38

H Officers ....................................... 39

1

International Finance Corporation

1818 H Street, N. IV

Washington, D.C. 20433, U.S.A.

September 27, 1965

My dear Mr. Chairman:

The Ninth Annual Report of the International

Finance Corporation for the period July 1, 1964 to

June 30, 1965, is submitted to the Board of Gover-

nors by the Board of Directors herewith in accord-

ance with Section 8 of the By-Laws of the

Corporation.

Sincerely yours,

GEORGE D. WOODS

President

Chairman, Board of Governors

International Finance Corporation

3

Lj ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~j

An IFC investment of $1,600,000 in Compania de Cemento Pacasmayo,S.A.of Peru is helping the company to double its cement production capacity. Here an overhead

crane loads storage bins at the company's plant in northern Peru.

400 |

PRINCIPAL ACTIVITIES

T HE INTERNATIONAL FINANCE CORPORATION expe- support from the Boards of Governors of the World

Trienced further growth and expansion in its Bank and IFC at their Annual Meetings in 1964.

operations during the fiscal year 1964/65. Com- The effect of the proposal would be to make pos-

mitments made by IFC in this period amounted to sible an increase of approximately $400 million

$26 million, more than in any previous year; they in the funds available to the Corporation for re-

raised the cumulative total of commitments to lending to private enterprises without government

$137 million. In all, IFC took part in financing guarantee.projects being carried out at a cost of some $150 Within the World Bank group of institutions-

million by 15 enterprises in 11 countries of Latin the Bank, the International Development Associa-

America, Europe, Africa and Asia. The Corporation tion (IDA) and the Corporation itself-IFC acquired

extended the geographic range of its operations by added responsibilities during the year: IFC now

making initial investments in Ethiopia, the Ivory acts for the whole group in the technical and

Coast and Uganda, bringing to a total of 32 the financial appraisal, preparation and supervision of

countries in which it has now invested. industrial and mining projects. The Corporation's

Participations by other investors in IFC'S under- activities in this respect are comparable with its

writing commitments and investments, sales from activities on behalf of the group since 1962 in the

portfolio and principal repayments came to $16.1 field of development finance companies, where its

million, raising the total of funds IFC has been able operations may lead to an IFC investment, a World

to revolve to date to more than one-third of its Bank loan, an IDA credit or a combination of these.

entire commitments. At June 30, 1965, a total of$174 million had been available to the Corporationsince it began operations in 1956; of this amount, New Commitments$48 million was uncommitted (see page 11).

Toward the year end, member governments of Commitments made by IFC during the year were

the World Bank and IFC were completing the steps undertaken chiefly in support of enterprises in a

necessary to make effective a proposal for increas- number of basic industries, including cement,

ing IFC'S financial resources by permitting the steel, textiles, pulp and paper and food products

Corporation to borrow from the Bank. The pro- (see table, page 6). IFC invested in cement com-

posal, which requires amendment of the Articles panies in Chile, Greece and Pakistan. It made both

of Agreement of both institutions, received general an underwriting commitment and a share invest-

5

IFC'S INVESTMENT COMMITMENTS 1964/65

Loan Equity Total

INDUSTRIES

ARGENTINA

La Papelera Argentina, S.A.. ........................ $ 2,500,000 $ - $ 2,500,000

CHILE

Cementos Bio-Bio, S.A.(Supplemental Investment) ....................... - 100,000 100,000

Fideos y Alimentos Carozzi, S.A.(Supplemental Investment) ...... ................. - 153,846 153,846

COLOMBIA

Industrias Alimenticias Noel, S.A .................... 1,000,000 17,254 1,017,254

ETHIOPIA

Cotton Company of Ethiopia, S.C .................... 1,500,000 1,003,778 2,503,778

FINLAND

Huhtamaki-yhtyma Oy ............................. 700,000 99,357 799,357

GREECE

Titan Cement Company, S.A ........................ 1,000,000 501,672 1,501,672

MEXICO

Compania Fundidora de Fierro y Acero de Monterrey, S.A. - 6,446,250 6,446,250

PAKISTAN

Crescent Jute Products Limited ...................... 1,950,000 - 1,950,000Ismail Cement Industries Limited .................... 1,260,000 416,504 1,676,504Packages Limited .................................. 2,310,000 840,001 3,150,001

SPAIN

Fabrica Espanola Magnetos, S.A ...................... - 225,444 225,444

UGANDA

Mulco Textiles Limited ........... .............. 2,799,409 713,629 3,513,038

DEVELOPMENT FINANCE COMPANIES

IVORY COAST

Banque Ivoirienne de Developpement Industriel, S.A... . - 204,081 204,081

SPAIN

Banco del Desarrollo Economico Espanol, S.A .......... - 291,911 291,911

TOTAL .. $15,019,409 $11,013,727 $26,033,136

6

ment in a steel company in Mexico. The Corpora-tion continued to assist the development of thetextile industry in Africa, investing in cotton tex-tile production in Ethiopia and Uganda; it alsohelped to finance a new jute products mill inPakistan. In the pulp and paper field, IFC invested MATRIALS

in a producer of kraft and other industrial gradepapers in Argentina and in a manufacturer of INCECOPMANI

paperboard containers in Pakistan. Two commit- TEXTILES

ments were made in the food products industry, inChile and Colombia. IFC also helped to finance theexpansion of a pharmaceuticals producer in Fin- 35.0

land and a Spanish company making electrical PULP AND PAPER IRON AND STEEL 12.0

equipment for the motor vehicle industry. TheCorporation increased its investments in develop-ment finance companies by subscribing to part ofthe initial share capital of a new institution in theIvory Coast and by participating, together withother existing shareholders, in a doubling of thecapital of a development finance company in Spain. FOOD

The commitments of $137 million made to date PEANDG

by IFc have involved 103 transactions. Approxi- OTHERS PURPOSES OF IFC INVESTMENTSmately $35 million has gone to steel companies (in millions of U.S. dollars)

and to metal manufacturing enterprises makinga variety of producer and consumer goods. A fur-ther $19 million of commitments have been madein pulp and paper producers. Manufacturers ofconstruction materials, chiefly cement, haveattracted nearly $17 million of iFc's commitments,while textile companies have accounted for a fur-ther $14 million. Other industries in which IFC

has made substantial commitments include chem- IFC INVESTMENTS, STANDBY AND

icals, food processing and electrical goods. UNDERWRITING COMMITMENTS BY AREAIFc has made commitments of more than $17 (in millions of U.S. dollars)

million in private development finance companies,and is now a shareholder in 14 of these companiesin 12 countries. Through these commitments, IFC

has helped to strengthen intermediary institutionsdesigned to finance smaller and medium-sized in-dustrial enterprises, to channel both domestic and V\

foreign private capital into industrial investmentand to develop local capital markets through equityinvestments and underwriting commitments.

The number of countries receiving iFC invest-ments has increased steadily in recent years. At

the year end, the Western Hemisphere (Latin

America and Jamaica) continued to account forthe bulk of the Corporation's investments; its 58RAI

commitments in 12 countries amount to over$76 million, or about 56 per cent of total commit-

ments. In Asia and the Middle East, IFC'S commit-menits now amount to $30 million in six countries,

or 22 per cent of total commitments, having

7

doubled in proportion in the last three years; while SALES OF IFC INVESTMENTS

in Africa, IFC'S commitments have grown to nearly Fiscal year ending June 30

$19 million in eight countries, compared with a in millions of U.S. dollars 14

single commitment of $2.8 million as recently asthree years ago. 12

There was continued growth and change in thesize and composition of IFC'S portfolio during theyear. New commitments included approximately$15 million in loans and $11 million in equity. At 8June 30, loan and equity investments held in port-folio totaled $62.7 million, of which approximately 6

$21 million, or 34 per cent, was in the form ofequity, compared to 30 per cent a year earlier. 4

Holdings now include investments in 62 enter-prises in 30 countries. The growth of IFC'S portfolio 2

has meant that supervision of existing investmentshas become as important a part of nI;'c's day-to-day 1 l l l l l loperations as the processing of proposals for new 1959 1960 t961 1962 1963 t964 1965

investments. This in turn has been reflected in the PARTICIPATIONS W PORTFOLIO SALES

continuity of the relationship between IFC and UNDERWRITINGS TAKEN UP

many of the companies it has helped to finance.

One of the features of the 1964/65 fiscal yearwas the number of second and even third commit- GROSS IFC COMMITMENTS

ments made by IFC in enterprises in which it has Fiscal year ending June 30

outstanding investments. Eight of the commit- in millions of U.S. dollars

ments made were in this form; they were instru-mental in providing $9.9 million in financing for 24

seven enterprises in five countries. Among thesewas the first line of credit ever extended by the 22

Corporation, to Industrias Alimenticias Noel, S.A.of Colombia, to which IFC had previously made a 20

loan iu 1959.In Chile, IFC agreed to renegotiate its invest- *

ments in Cementos Bio-Bio, S.A. and Fideos yAlimentos Carozzi, S.A., so as to help strengthen l 16

the working capital position of the two companies.In each case, IFC surrendered some (If its rights to 14

contingent interest, together with its stock option,and accepted payment in the form of the delivery 12

of shares of the company. The new terms serve tobring the IFC investments more into line with thekind of financing the Corporation is now providing.

IFC also acted during the year to mobilize private 8domestic capital and to broaden the distribution ofindustrial ownership, often in company with local 6financial institutions. Six IFC commitments werejoint ventures with development finance com- 4

panies. Three were in Pakistan, where iFc supple-mented funds provided by local private investors2and by the Pakistan Industrial Credit and Invest-ment Corporation Limited, in which SFc is a share- o holder. In Mexico, IFC and Credito Bursatil, S.A. 1957 1958 1959 1960 1961 1962 1963 1964 1965

renewed their partnership of 1962 by forming a MM LOAN _ EQUITY

8

second underwriting syndicate, to handle a $12.5 developing countries. The year's operations againmillion share issue made by Compania Fundidora illustrated this fact of life for the Corporation. Netde Fierro y Acero de Monterrey, S.A. in 1964. profits on sales of loans and equity investmentsMost of the issue, the largest ever made by a during the year, transferred directly to the reserveprivately owned company in Mexico, was taken up against losses, amounted to $302,141, bringing thein the Mexican market. The number of share- cumulative total of net profits on such sales toholders of the company has increased more than $1,601,386. IFc's largest single profit resulted fromfourfold since 1962. the sale of part of its holding of shares of a Spanish

IFC continued its efforts to stimulate the inter- company, Fabrica Espanola Magnetos, S.A., thenational flow of private capital to the developing first equity investment ever made by IFC. The salecountries, especially by enlisting the participation involved 13,500 shares purchased in 1962. Inof other financial institutions in its investments Mexico, profits were recorded on the sale of 25,512and by selling more seasoned investments from shares of FUNDIDORA acquired in 1964 and onportfolio. To date, all or part of 46 of IFC'S commit- the sale of part of IFC'S interest in Tubos de Aceroments in 22 countries (notably Brazil, Colombia, de Mexico, S.A., acquired in 1963. During theMexico and Peru and, on a somewhat smaller scale, year, IFc also sold 752,909 shares of its holdings inIndia and Pakistan) have been sold. Since the Corporacion Financiera Nacional of Medellin,Corporation made its first sale of an investment Colombia, as well as its rights to subscribe to sharesin 1959, it has sold or agreed to sell $29.5 million of Industrias Reunidas, S.A. of Peru.of its loan and equity investments. The leading IFC wrote off to the reserve against losses itspurchasers have been U.S. institutions and their investment in Durisol del Peru, S.A., to which theaffiliates, which have taken up approximately $11.8 Corporation made a loan of $300,000 in 1959 tomillion. A further $3.7 million has been bought assist in the construction of a plant near Lima,by institutions domiciled in Switzerland, while Peru, for producing a special lightweight buildingUnited Kingdom banks and other institutions have material. The company encountered productionmade purchases totaling over $1.6 million. Sales and sales problems which led to the closing of itsof approximately $6.8 million have been made to plant in May 1962. After reviewing various alter-investors in a number of other countries, including natives, IFc and other principal shareholders andBelgium, France, Germany, Kuwait, the Nether- creditors of the company decided to auction off thelands and Sweden. In addition, by far the greater company's assets. As an unsecured creditor ofpart of IFC's underwriting and standby commit- Durisol, IFC will not recover any part of its out-ments have been acquired by others: in all, $13.4 standing investment in the company.million of the $16.5 million of commitments of A continuing default on interest and principalthis kind made by the Corporation. repayment was experienced by IFC on an invest-

The amount of investments sold and under- ment of $170,000 in Berry, Selvey y Cia., S.A., ofwriting commitments acquired by others in the Colombia. Toward the fiscal year end, lFc reachedlast two fiscal years exceeds the total registered an agreement with the company under which Berry,during the previous seven years of IFC's existence. Selvey will continue to operate at a reduced levelDuring the 1964/65 fiscal year alone, other invest- while a phased liquidation of its assets takes place.ors took or agreed to take over a record $13.1 This procedure should make it possible for themillion of the Corporation's investments and creditors to recover more of their investment thanunderwriting commitments. These sales involved if a forced liquidation were necessary. What19 of IFC's commitments in 11 countries. By re- amount will be recovered by IFC is not yet known,volving its resources in this way, lFc has been free but the Corporation has already written off to theto make new commitments it could not otherwise reserve against losses an amount of $20,825 ofhave undertaken. accrued deferred interest which will not be col-

lected.In addition to its write-offs on Durisol and Berry,

Profit and Loss on Investments Selvey, there were several miscellaneous items,principally exchange losses, which were charged

In its investment operations, IFC is exposed to the directly to the reserve against losses. On a netfull range of risks as well as to the opportunities basis, the loss on all of these write-offs amountedfor profit that confront all private investors in the to $415,235.

9

FIINANCIAL RECORD

IFC'S gross commitments of $26.0 million during others, the amount of funds available to thethe year, including an underwriting commitment Corporation increased by approximately $19 mil-of $6.1 million, raised the cumulative total of the lion to a cumulative total of $174.0 million at theCorporation's gross commitments to $137.0 million year end. At June 30, 1965, uncommitted fundsat June 30, 1965, after allowing for exchange adjust- stood at $48.2 million, compared with $51.9 millionments on commitments made in previous years. a year previously.Net of cancellations and terminations amountingto $11.2 million, of which $2.9 million occurredduring the past fiscal year, IFC'S commitmentsamounted to $125.8 million at June 30, 1965.

Disbursements during 1964/65 were $16.2 mil- SOURCE OF FUNDS AVAILABLE

lion, bringing the cumulative total to $92.7 million. as of June 30 in millions of U.S. dollars.

IFC's net income from operations for the year,credited to the reserve against losses, rose slightly l l

to $3,007,412. The level of the Corporation's in--;Wt~'come from operations is being affected by theincreasing trend to equity investments, particu-larly in new or expanding companies which are 133

often unable to pay dividends in the early years.On the basis of dividends received by IFc duringthe year, the return on the average amount dis-bursed and outstanding in equities for the periodwas about three per cent; the comparable rate of $1D7return on the loan part of the portfolio was over seven per cent. ~~ ~

After including net income from operations andnet profits from the sale of investments, while 23ITdeducting the net loss on miscellaneous items, the ;rj>cumulative total of the reserve against losses stood at $23,140,812 at the year end, compared with$20,246,494 the previous year.

Loan and equity investments which IFC sold oragreed to sell during the year amounted to $7.1million. Acquisition by others of securities coveredby standby and underwriting commitments cameto $6.0 million during the year. Repayments to theCorporation during the year were $3.0 million.

Due in large part to sales of investments and the CAPITAL F1 PROFITS

acquisition of underwriting commitments by NE SALES REPAYMENTS

10

The change in IFC'S financial position can be Bank Limited and the Industrial Development Bank

traced in the following table: of Turkey. Mr. Virgil C. Sullivan was appointed

Special Adviser to IFC, effective June 1, 1965.

FUNDS AVAILABLE Mr. Sullivan is also acting as the Corporation's

(Million ,$) representative on the boards of the Pakistan Indus-

Fiscal Year trial Credit and Investment Corporation Limited,1964/65 Cumulative the Industrial Finance Corporation of Thailand and

Capital .............. - 99.0 the Malaysian Industrial Development FinanceNet income ........... 3.0 22.0 Limited. Mr. Ladislaus von Hoffmann was appointedNet profits on sales of Director of Investments Africa Asia and Middle

investments ........ .3 1.6 D oNet other losses ..... (.4) (.5) East, in succession to Mr. Abdel G. El Emary, who

Repayments of became the Director of the Africa Department ofinvestments ........ 3.0 9.0 the World Bank. Mr. Michael L. Lejeune was ap-

Sales of investments ... 7.1 29.5Acquisition by others pointed Director of Administration. Effective July

of securities covered 1, 1965, Mr. Naokado Nishihara became IFC'S Spe-by standby and cial Representative in the Far East. Mr. Augustounderwritingcommitments ....... 6.0 13.4 Guillermo Arango, a consultant to the Corporation,

Total of funds was appointed its representative on the board ofavailable ......... 19.0 174.0 C.A. Venezolana de Desarrollo (Sociedad Finan-

Gross commitmentsmade ............ 26.0 137.4 ciera) of Venezuela.Less cancellations IFC'S international advisory panel of investment

and terminations. . 2.9 11.2 bankers met for the fourth time on October 6,Less exchange 1964 The panel members are Dr Hermann J.

adjustments ...... .4 .4Net commitments Abs, Chairman, Deutsche Bank, A.G., Frankfurt;

made .............. 22.7 125.8 Viscount Harcourt, Managing Director, Morgan

Uncommitted funds... . (3.7) 48.2 Grenfell & Co. Ltd., London; Dr. Raffaele Mattioli,

Chairman, Banca Commerciale Italiana, Milan; Mr.Andre Meyer, Senior Partner, Lazard Freres &

ADMINISTRATION AND MEMBERSHIP Company, NewYork; and Baron Guy de Rothschild,Partner, de Rothschild Freres, Paris.

Mr. J. G. Beevor resigned his office as Vice Presi- IFC'S MEMBERSHIP WAS UNCHANGED during the

dent of IFC on January 1, 1965, in order to return to year, remaining at 78 countries. The Corporation's

private business in London. He is continuing to rep- paid in capital of $98,964,000 was also unchanged.

resent the Corporation on the boards of the Banque Shortly after the end of the fiscal year, Malawi

Nationale pour le Developpement Economique of became a member of the Corporation, with a sub-

Morocco, the Nigerian Industrial Development scription of $83,000.

11

A printer checks the operation of a press at the

Packages Limited plant at Lahore, Pakistan. IFC has invested $3,150,000

in the company to assist in financing an expansion program.

12

THE YEAR'S COMMITMENTS

ARGENTINA panics, with the aim of rationalizing and strength-

$2,500,000-La Papelera Argentina, S.A. ening their operations. The merger is to be effectedthrough an exchange of shares, with Celulosa

A loan of $2,500,000 to La Papelera Argentina, Argentina as the surviving company.S.A., the leading producer of cardboard, kraft andother industrial grade papers in Argentina, wasannounced by IFC in September 1964. The IFC in-vestment, in the form of unsecured notes, was CHILE

accompanied by the right to subscribe to 2.8 mil- $100.000-Cementos Bio-Bio. S.A. (BlO-BIO)-

lion Class B common shares of the company. This Supplementalfinancing helped to make it possible for the com-pany to complete, in early 1965, the final stages of An equity interest in Cementos Bio-Bio, S.A.

a $27 million expansion and modernization pro- (BIO-BIO) was acquired in January 1965, when addi-

gram begun in 1959 and suspended in 1962/63 tional interest accruing to IFC under its original

during the severe recession experienced by the investment agreement with the company was used

Argentine economy. to purchase 310,000 fully-paid common shares of

The program involved the modernization and BIO-BIO. The company is a Chilean-controlled ce-

improvement of existing facilities at the company's ment producer whose plant, located at Concepcion

main plant, located in Bernal, a suburb of Buenos in southern Chile, came into production in 1961.

Aires, together with an increase in production IFC made a loan of $1,000,000 to the company in

capacity for paper and paperboard from 55,000 1959, followed by a supplemental loan of $200,000

metric tons to 75,000 metric tons a year. The pro- in 1960 to help meet additional costs incurred as

gram is expected to help both to upgrade the qual- a result of a number of technical problems. The

ity of the kraft paper produced and to lower new iFC investment is expected to assist BIO-BIO

production costs, thereby widening the markets by improving its working capital position at a time

available for the products and making them more when it is faced with heavy debt repayments. An

competitive with those of other producers. interest in BIo-BIo is held by Koppers Company

The biggest single shareholder in La Papelera of the United States and by International Basic

Argentina is Cia. General Fabril Financiera S.A., Economy Corporation.a holding company with interests in a group ofArgentine industrial enterprises, including Celulosa $153,846-Fideos y Alimentos Carozzi, S.A.

Argentina S.A., the major domestic producer of (CAROZZI)-Supplementalpulp and printing and writing papers. Shareholdersof La Papelera Argentina and Celulosa Argentina Contingent interest accruing to IFC under an in-

have recently approved a merger of the two com- vestment agreement made in 1959 was used in

13

August 1964 to acquire 3.6 million common shares ETHIOPIAof CAROZZI, the largest manufacturer of pasta $2,503,778-Cotton Company of Ethiopia, S.C.products in Chile. In 1959, IFC made a loan of $1.5million to the company to help finance the con- In October 1964, lFc announced an investment ofstruction of a new wheat-flour mill and pasta plant approximately $2,500,000 in the Cotton Companyat Nos, near Santiago, and the modernization of of Ethiopia, S.C., to help finance an expansion andits existing factory at Quilpue. The loan carried modernization program. To keep pace with growingwith it the right to contingent interest, as well as demand in Ethiopia for higher quality textiles andan option on 3.6 million shares. As a result of to meet competition both from other domesticdelays in construction, together with rising costs textile producers and from imports, the companystemming from inflation in the Chilean economy, has undertaken to modernize its present millthe company was obliged to allocate a substantial located at Dire Dawa, to expand its finishingpart of its earnings to financing the final stage of facilities and to construct a new plant equippedits expansion program. As a consequence, it expe- with 12,000 spindles and 400 looms adjacent to itsrienced a heavy drain on its working capital. By existing plant. The total cost of the project, includ-accepting payment of accrued contingent interest ing provision for permanent working capital, isin the form of shares of the company, IFc assisted estimated at Eth$13,524,000 (equivalent to approx-in conserving CAROZZI'S cash resources, thereby imately $5,410,000).enabling it to finance the completion of its program. IFC is making a loan of $1,500,000 and an invest-The IFC share option was canceled. ment in shares of the company amounting to

Eth$2,500,000 (equivalent to $1,003,778). Twowell-known Japanese companies, Fuji SpinningCompany Limited and Marubeni-lida Company

COLOMBIA Limited, which acquired a major interest in thecompany in 1963, have invested the equivalent of

$1,017,254-Industrias Alimenticias Noel. S.A. $1,650,000; while the Export-Import Bank of(NOEL) Japan is making a loan to cover part of the cost of

purchasing machinery and equipment. The finan-An additional IFC commitment in NOEL, in the form cial plan arrived at to cover the expansion programof a $1,000,000 line of credit, was announced in is as follows:April 1965. Formerly named Fabrica de Galletas (Eth$ '000)y Confites Noel, S.A., the company is a well-known Share CapitalColombian manufacturer of a wide range of food Fuji Spinning Marubeni-Ilda .... 4,125products, including biscuits, crackers, confec- IFC .................. 2,500 6,625tionery and meat products. NOEL originally obtained Loan Capitala loan of $1,000,000 from IFC in 1959 to assist it in IFC .................. 3,750relocating its production facilities in a modern Export-Import Bank of Japan ... . 3,149 6,899plant in Medellin and in expanding its output. TOTAL . 13,524Since then, demand for the company's productshas grown, and it has undertaken to raise its capacity The two Japanese companies have been provid-again by installing new machinery for making bis- ing management as well as technical staff for thecuits, crackers and candies, along with modern Dire Dawa mill since the beginning of 1964. Theypackaging machines. Total cost of the program is have also undertaken, as part of their agreementestimated at about $1,000,000. with the company, to provide training for Ethiopian

The IFC line of credit will be open to the com- staff, both in Ethiopia and in Japan. Finished tex-pany for two years; it was negotiated in order to tiles are at present the largest single import itemenable NOEL to place firm orders for the equipment entering Ethiopia, and the expansion of a majorrequired for the program and to provide assurance domestic textile producer is expected to make pos-of the availability of foreign exchange. IFC received sible savings in foreign exchange. The companyshares of NOEL in payment of the commitment fee will market its entire output in Ethiopia.on the line of credit. Bamerical International Financial Corporation,

Northwest International Bank, of New York, is a subsidiary of Bank of America, and Irving Trustparticipating in the new IFC commitment. Company are participating in the IFC investment.

14

FINLAND Titan Cement Company, S.A. (TITAN), one of the

$799,357-Huhtamaki-yhtyma Oy (HUHTAMAKI) leading cement producers in Greece. The IFC com-mitment, consisting of a loan of $1,000,000 and a

In March 1965, aFc announced that together with subscription to shares of the company amounting

the Industrialization Fund of Finland (Teollista- to Dr 15 million (equivalent to $501,672), was

misrahasto Oy), it is helping to finance a $1,875,000 made in conjunction with a loan in convertible

program being undertaken by 1HUHTAMAKI. The currencies by the European Investment Bank and

company, one of the leading producers of processed a loan and share investment by the National Invest-

foods and pharmaceuticals in Finland, is expanding ment Bank for Industrial Development, S.A.

and modernizing its Leiras Pharmaceutical Divi- (NIBID) of Greece. This was the first occasion on

sion. IFC'S commitment was represented by a loan which IFc has taken part in a joint fiilanicinig ven-

of $700,000 and an investment in shares of the ture with the European Investment Bank or with

company in the amount of Fmk 320,000 (equiv- NIBID.

alent to $99,357). The remainder of the financing TITAN was established by the Canellopoulos

is being provided by the company from its own family, a leading private industrial group in Greece.

resources. The financial plan for the expansion The company, which operates two cement plants,

program is as follows: at Eleusis, near Athens, and at Salonica, has un-

(Fmk '000) dertaken several programs of expansion in order to

Share Capital keep pace with the growth in demand in Greece.IFC ................ .. 320 TITAN iS currently carrying out a $7.5 million pro-

Industrialization Fund of gram at its Eleusis plant, with the objective ofFinland ... ..... ... 100 420 improving the operating efficiency of its existing

Loan Capital facilities and installing additional capacity of ap-IFC ....... 2,240 proximately 500,000 metric tons of cement a year.Industrialization Fund of The production capacity of TITAN'S two plants will

Finland ........ 900 3,140 be 1,750,000 metric tons of cement per year after

Cash Generation .2,440 the expansion at Eleusis is completed. Of the totalTOTAL .6,000 amount required to complete the program, $3 mil-

lion had previously been provided for. The remain-

An international group of financial institutions ing $4.5 million is being financed by IFC, NIBID, the

participated in the IFC investment: Brinckmann, European Investment Bank and shareholders of

Wirtz & Co. of Hamburg; Northwest International the company, as follows:Bank, an affiliate of Northwest Bank Corporation ofMinneapolis; Irving International Financing Cor- (Million Dr)

poration, an affiliate of the Irving Trust Company Share Capitalof New York; Kuwait Investment Company of NIBID ........... 23.5Kuwait, and Handelsfinanz A.G. of Zurich. Among IFC ........... .. 15.0them, these institutions took up $496,000 of IFC'S Shareholders .... ..... 6.5 45.0

loan and Fmk 91,780 (equivalent to $28,514) of Loan Capitalits share subscription. European Investment Bank ...... 45.0

The investment in HUHTAMAKI was IFc's first joint IFC ... . ..... . 15.0 90.0

venture with the Industrialization Fund of Finland NIBD .. . ... 5 900

since that institution was reorganized in 1963 with

the assistance of the World Bank and IFc. IFc hasan investment of approximately $160,000 in the A group of financial institutions participating in

Fund. the IFc investment took up $700,000 of the IFC

loan and Dr 7.5 *nillion (equivalent to $250,836)of the IFC share subscription. The institutions

GREECE concerned were: First Chicago International Fi-

$1,501,672-Titan Cement Company, S.A. (TITAN) nance Corporation, an affiliate of the First NationalBank of Chicago; The Company for Investing

IFC is helping to finance part of a major moderniza- Abroad, an affiliate of Fidelity-Philadelphia Trust

tion and expansion program being carried out by Company; Manufacturers-Detroit International

15

Corporation, an affiliate of Manufacturers National MEXICOBank of Detroit; Banque Lambert of Brussels, and $6.446.250-Compania Fundidora de Fierro yA cero

Kuwait Investment Company of Kuwait. de Monterrey. S.A. (FUNDIDORA)

In August 1964, IFC and Credito Bursatil, S.A., asubsidiary of Banco Nacional de Mexico, S.A.,

IVORY COAST acted as joint managers of a syndicate including

$204,081-Banque Ivoirienne de Deve.loppement ten United States, Mexican and Swiss financialIndustrieLJ S.A. (BIDI) institutions, which underwrote an offering of shares

by the Compania Fundidora de Fierro y Acero deIFC'S first investment in the Ivory Coast was made Monterrey, S.A. (FUNDIDORA). The largest pri-in the form of a subscription to the share capital vately owned steel producer in Mexico, FUNDIDORA

of a new development finance company, the Banque has undertaken a program to raise its productionIvoirienne de Developpement Industriel, S.A. capacity from 500,000 tons to 750,000 tons a year.(BIDI), which came into existence in February The share issue took the form of an offering of1965. The amount of IFC'S subscription was CFA rights to shareholders to subscribe 1,250,000francs 50 million (equivalent to $204,081). The shares at a total price of Mex$ 156 millionmain objectives of HIDI are to stimulate privately (equivalent to approximately $12,500,000), theowned industrial enterprise in the country and to largest capital increase ever made by a privatelypromote the participation of domestic and foreign owned company in Mexico. It supplemented a loanprivate investors in industrial development. The of $28 million from the Export-Import Bank ofnew institution was sponsored, at the request of Washington, funds generated from the company'sthe Ivory Coast Government, by Chase Interna- operations and other financing.tional Investment Corporation, an affiliate of the Kuhn,Loeb&Co.,Inc.ofNewYork,HandelsfinanzChase Manhattan Bank of New York, and Lazard A.G. of Zurich and Morgan Guaranty InternationalFreres & Co., New York. BIDI'S share capital Finance Corporation, an affiliate of Morgan Guar-amounts to CFA francs 700 million (approximately anty Trust Company of New York, took substantial$2,900,000), including subscriptions made by the participations in the IFC commitment. Seven Mex-Government of the Ivory Coast and Ivorian in- ican financial institutions took part in Creditovestors, as well as two agencies of the French Bursatil's commitment. They were:Government and a group of U.S. and European Banco Nacional de Mexico, S.A.financial institutions: Banco de Comercio, S.A.

(Million Banco Comercial Mexicano, S.A.Class A Shares CFA Francs) Banco de Londres y Mexico, S.A.

African and French Banco Aboumrad, S.A.Government Agencies ....... 152.5 Banco de Industria y Comercio, S.A.

Ivory Coast Government ....... 147.5 Casasus Trigueros y Cia., S.A.IFC ....................... 50.0 350.0

Class B Shares This was the second occasion on which IFc andPrivate Foreign Investors ...... 250.0 Credito Bursatil have formed a syndicate to under-Private Ivorian Investors ...... 100.0 350.0 write an offering of shares by FUNDIDORA: the pre-

TOTAL .700.0 vious occasion being in 1962, when a similarunderwriting raised somewhat more than $4 mil-lion for the company. The latest offering was quickly

In addition, the Ivory Coast Government has subscribed almost in full, and the underwritersprovided BIDI with a long-term, interest-free loan, were required to take up only 8,540 shares whichsubordinated to share capital, of CFA francs 1,250 were subsequently sold on the open market. Inmillion (equivalent to approximately $5 million), addition to its underwriting commitment, IFC exer-while the U.S. Agency for International Develop- cised its rights as a shareholder by acquiring 34,615ment (AID) has extended the new institution a shares of FUNDIDORA at a cost of $346,250. Subse-credit of $5 million which BIDI will re-lend to quently, IFC sold 25,512 shares from its holdingIvorian enterprises. Total resources of BIDI, in local in this investment to investors in Mexico.and foreign currencies, amount to approximately The new expansion program is part of a long-$12,900,000. range plan to raise FUNDIDORA'S production capac-

16

ity to 1,000,000 tons annually. The company of the new mill, the second to be established in

makes steel products for use in industry, construc- West Pakistan, has been determined largely by the

tion, mining, railroads and agriculture. Its inte- proximity of major users of jute products, includ-

grated division, Aceros Planos, produces steel plate, ing companies in the sugar, cement, fertilizer, cot-

hot-rolled strip and cold-rolled coils and sheets. ton textile and grain packing industries. West

Steel production in Mexico has been rising rapidly Pakistan accounts for between 85 per cent to

in recent years, and the country is now almost self- 90 per cent of consumption of jute products in

sufficient in steel. The market for steel over the Pakistan. Taking into consideration the industrial

next five years is expected to grow rapidly in view expansion projected within the next few years,

of the expansion anticipated in the Mexican econ- forecasts indicate that consumption of jute prod-

omy, and specifically because of the increasing ucts in the Province can be expected to double

proportion of locally produced components used between 1965 and 1970, from 81,000 tons to

in making capital goods, machinery and consumer 162,000 tons annually.

durables in Mexico. In addition to the IFC and PIcic investments, the

company obtained financing from both of its spon-

sors, as well as from an issue of shares offered to

private investors in Pakistan and underwritten by

the Amin-Basbir group. The financial plan for the

PAKISTAN Crescent Jute project is as follows:

$1,950.000-Crescent Jute Products Limited (Rs '000)

Share CapitalA loan of $1,950,000 to Crescent Jute Products Pakistan Public .............. 11,250

Limited, with an option to convert part of the in- Amin-Bashir Group .9,000

vestment into shares of the company, was an- WPIDC ...................... 2,250 22,500

nounced by IFC in February 1965. Crescent Jute Loan Capital

is a new public company, formed to establish a PICIC .14,280

jute mill in West Pakistan, at an estimated cost, IFC .9,282 23,562

including provision for permanent working capital, Unsecured Temporary Loan

of Rs 48 million (equivalent to approximately Amin-Bashir Group ............. . 2,000

$10,100,000). The joint sponsors of the new com- TOTAL .48,062

pany are the Amin-Bashir group, which has inter-

ests in a number of industries in Pakistan, and the $-1,676.504-Ismail Cement Industries Limited

West Pakistan Industrial Development Corpora- (ISMAIL)

tion (WPIDC), an agency of the Pakistan Govern-

ment. The sponsors originally approached the In order to assist Ismail Cement Industries Limited

Pakistan Industrial Credit and Investment Corpo- in an expansion of its production facilities, IFC

ration Limited (PicIc), in which IFC is a shareholder, joined in May 1965 with the Pakistan Industrial

to finance the entire foreign exchange cost of the Credit and Investment Corporation Limited (picIC)

project, estimated at approximately $4,950,000. In in making an additional investment in the com-

line with its general policy, PIcIC preferred to limit pany, supplementing the $7 million financing which

its commitment to $3,000,000 and requested IFC IFc and Picic originally provided in 1961. The

to provide the remainder of the foreign exchange company, a major cement producer in West Pak-

requirements. National and Grindlays Bank Lim- istan, was established to help meet the growth in

ited of London participated in the IFC commitment. demand for cement in the Province, particularly

The new mill, which will have a capacity of about in connection with the construction of irrigation

27,000 tons of jute fabrics a year, is to be built at and power works in the Indus Basin. Construction

Jaranwala, near the industrial center of Lyallpur. on the Ismail Cement plant began in 1962, with

It will have approximately 8,000 spindles and 500 production commencing in mid-1964.

looms, and will produce both sacking and hessian The company's expansion program involves in-

for use by local industry and agriculture. Raw jute stallation of a third cement kiln and auxiliary

will be purchased in East Pakistan, the world's equipment at its Ismailwal (formerly Gharibwal)

leading producer and traditionally the home of jute plant, at an estimated cost of approximately

products manufacturing in Pakistan. The location $4,830,000, with the objective of raising produc-

17

tion capacity from 416,000 tons to 624,000 tons from 12,000 tons to 18,000 tons a year. The pro-annually. To meet this cost and the company's gram will make it possible for Packages to produceother needs, a financial plan was evolved totaling its own supply of a variety of boards and to manu-Rs 27,600,000 (equivalent to approximately facture a wider range of paperboard products,$5,800,000), part of which is to be provided out of including certain specialty grades for which therecash generation from operations. Under the plan, is growing demand. The entire output of the newIFC agreed to make an investment of approximately board mill is to be used in the company's convert-$1,677,000, consisting of a subscription to shares ing operations.of the company in an amount equivalent to Packages, which commenced operations in 1957,$417,000 as well as loans, denominated in U.S. supplies a variety of containers to the cigarette,dollars and pounds sterling, of $1.134,000 and soap, pharmaceutical and other consumer goods£45,000. National and Grindlays Batik Limited of industries. It was originally sponsored by theLondon is participating in the IFC cornmitment. At Wazir Ali group of Pakistan and by AB Akerlundthe same time, existing shareholders of ISMAIL (in- & Rausing and its associates of Sweden, a leadingcluding PICIC) subscribed to a new issue of shares. producer of paperboard containers. Packages was

The financial plan is as follows: converted into a public company in connectionwith the new financing, and shares in the expanded

Share Capital enterprise were offered to investors in Pakistan.Shareholders .'7,633 The financial plan for the project is as follows:IFC ....................... t 1,983PICIC ....................... 1,933 11,549 (Rs '000)

Loan Capital Share CapitalIFC ..................... (5,000 Pakistan public ............... 10,000PICIC .................... t,900 10,900 Sponsors .................... 8,500

Cash Generation .5,151 IFC .4,000 22,500TOTAL ............ ...... 27,600 Loan Capital

PICIC .12,000IFC .11,000

This IFC investment raises IFC'S commitment Debenture issue .2,000 25,000in the company to the equivalent of $5,676,504, Cash Generation .12,880representing IFC'S largest single cornmitment in TOTAL .60,380Asia.

$3. 150.001-Packages Limited The Stockholms Enskilda Bank, Stockholm, andThe Chartered Bank, London, are participating in

A joint investment in Packages Limited, a leading the IFC commitment.producer of paperboard containers and packages inPakistan, was announced by IFC and the PakistanIndustrial Credit and Investment Corporation(PICIC) in June 1965. The IFC commitmnent amounts SPAINto the equivalent of $3,150,001, consisting of a $291,911 -Banco del Desarrollo Economicoloan of $2,310,000 and a subscription to shares of Espanol, S.A. (BANDESCO)the company costing Rs 4,000,000, (equivalent to$840,001). The company is undertaking a major Together with a group of leading European andexpansion of its facilities at Lahore, West Pakistan, U.S. banking institutions, IFC iS one of the originalat a cost of about Rs 60,380,000 (equivalent to shareholders of BANDESCO, a privately owned de-$12,680,000). There are two major elements in the velopment finance company established in 1963program: construction of an integrated 15,000-ton under the sponsorship of the Banco Espanol deper year pulp and paperboard mill, using locally Credito, the largest commercial bank in Spain.available fibrous raw materials, and expansion of Rapid growth in the operations of the new institu-the capacity of the company's existing facilities for tion made it evident by the middle of 1964 that anconverting paperboard into packages and containers increase in BANDESCO'S share capital was desirable

18

in order to raise its borrowing capacity. Shortly UGANDA

afterwards, a new issue of shares totaling Ptas 210 $3.513,038-Mulco Textiles Limited (MULCO)

million (equivalent to approximately $3,500,000)was made to existing shareholders, and in August In May 1965, IFc announced a commitment of

1964, IFc exercised its rights by subscribing to $3,513,038 in loan and share capital, including a

shares in the amount of Ptas 17.5 million (equiva- standby commitment of $70,000, in Mulco Textiles

lent to $291,911), thereby doubling its original Limited (MULCO), a new Ugandan company estab-

commitment. All of BANDESCO'S other shareholders lished to build and operate a major textile mill at

also exercised their rights. They were: Banco Jinja, near Lake Victoria. This was IFC'S first invest-

Espanol de Credito; Banco Guipuzcoano; Banca ment in Uganda. The project is sponsored by the

Commiierciale Italiana; Barclays Bank Limited; Madhvani Group, one of the leading industrial

Deutsche Bank A.G.; Morgan Guaranty Interna- groups in East Africa. Total cost of the new mill,

tional Finance Corporation, an affiliate of Morgan including provision for working capital, is expected

Guaranty Trust Company; and de Rothschild Freres. to be about £2,760,000 (equivalent to $7,728,000).

Between late October 1963, when BANDESCO A participation in the IFC investment was acquired

began to consider applications for financing indus- by The Standard Bank Finance and Development

trial projects, and April 30, 1965, it had approved in- Corporation Limited, an affiliate of The Standard

vestments totaling about Ptas 2,370 million (equiv- Bank Limited of London, which had expressed an

alent to $39.5 million) in over 100 enterprises early interest in the project. Other participants

located in 25 provinces of Spain. To date, BANDESCO were Barclays Overseas Development Corporation

has made three issues of its own bonds, totaling Limited, a subsidiary of Barclays D.C.O. of London,

Ptas 1,500 million (equivalent to $25 million). and the Kuwait Investment Company of Kuwait.

In all, these three institutions took up £461,500

$225,444-Fabrica Espanola Magnetos. S.A. (equivalent to $1,292,200) of the IFC investment.(FEMSA) The financial plan for the project is as follows:

IFC made an additional investment in FEMSA in (£ stg. '000)

September 1964, when it exercised its rights as a Share Capital

shareholder to subscribe to part of a new issue of Madhvani Group ............. 826

shares totaling Ptas 115 million made by the com- IFC ................... 230

pany. Of this amount, IFC took up Ptas 13.5 million Private Ugandan investors ..... 44 1,100

(equivalent to $225,444). The leading manufac- Loan Capital

turer of electrical equipment for the Spanish motor IFC .................... 1,000

vehicle industry, FEMSA has been expanding rapidly Sliort-terin borrowing ......... 660 1,660

in recent years in order to keep pace with the TOTAL .2,760

growth of the industry and of the market for re-

placement parts. The new share issue was part of Uganda is already a substantial producer and

the financing required to complete further invest- exporter of cotton, and MULCO will use locally

ments in the company's factories in Madrid and grown cotton in its operations. The new mill is

Treto and its offices in Valladolid and Vitoria. To being equipped with 24,220 spindles and 450 looms,

complete the financing, the company arranged a together with bleaching and dyeing facilities. Its

line of credit with Bankers International Financing principal products will be gray cloth and piece dyed

Co. Inc., an affiliate of Bankers Trust Company of fabrics. MULCO's entire output will be marketed in

New York, which participated in the original IFC the East African Common Market area, consisting

investment in FEMSA in 1962. of Kenya, Uganda and Tanzania.

19

A Nigerian operator works yarn in the Arewa Textiles Limited

plant at Kaduna. The plant, which IFC helped to finance in conjunction with

20 investors in Japan and Nigeria, began operations late in 1964.

appendices

FINANCIAL STATEMENTS

Balance Sheet ..................................... A

Comparative Statement of Income and Expenses .......... B

Comparative Statement of Changes in ReserveAgainst Losses .................................... B

Statement of Operational Investments and Standbyand Underwriting Commitments ...................... C

Notes to Financial Statements ......................... D

OPINION OF INDEPENDENT AUDITOR

OTHER APPENDICES

Subscriptions to Capital Stock and Voting Power .......... E

Governors and Alternates ............................. F

Directors and Alternates and their Voting Power .......... G

Officers ...................... ............... H

21

APPENDIX A

Balance Sheet

JUNE 30, 1965

Expressed in United States Currency-See Notes to Financial Statements, Appendix D

ASSETS

DUE FROM BANKS ............................................. $ 512,114

INVESTMENTS

United States Government obligations (At cost or amortized cost)Face amount $54,300,000 ................................ $53,484,928

Time deposits maturing within six months-United States dollars.. 9,500,000Accrued interest .......................................... 971,328 63,956,256

EFFECTIVE LOANS AND EQUITY INVESTMENTS HELD BY CORPORATION

(At cost) (See Appendix C)-Note B(Including undisbursed balance of $5,864,001)

Loans ................................................... $41,635,635Equity ................................................... 21,069,684 62,705,319

ACCRUED INCOME ON LOANS, EQUITY INVESTMENTS AND UNDERWRITING

COMMITMENTS-Note B .919,003

RECEIVABLE FROM PURCHASERS ON ACCOUNT OF EFFECTIVE LOANS AND

EQUITY INVESTMENTS AGREED TO BE SOLD

(Including undisbursed balance of $1,987,248) 2,031,166

OTHER ASSETS. 46,760

TOTAL ASSETS .$130,170,618

LIABILITIES, RESERVE AND CAPITAL

LIABILITIES

Accounts payable and other liabilities .. $ 131,557Undisbursed balance of effective loans and equity investment

agreements (See Appendix C)Held by Corporation ...................... ............ $ 5,864,001Agreed to be sold ..................................... 1,987,248 7,851,249

RESERVE AGAINST LOSSES (See Appendix B)-Note C 23,140,812CAPITAL

Capital stockAuthorized 110,000 shares of $1,000 par value each

Subscribed 98,964 shares .. 98,964,000Payment on account of pending subscription 83,000

OUTSTANDING UNDERWRITING COMMITMENT-Note D ....... $179,856

TOTAL LIABILITIES, RESERVE AND CAPITAL $130,170,618

22

APPENDIX B

Comparative Statement of Income and Expenses

FOR THE FISCAL YEARS ENDED JUNE 30, 1964 AND JUNE 30, 1965

Expressed in United States Cnrrency-See Notes to Financial Statements, Appendix D

July I-Jone 30

1963-1964 1964-1965

INCOME

Income from United States Government obligations andtime deposits ........................................... $2,550,144 $2,489,886

Income from loans, equity investments and standby andunderwriting commitments .................. ............ 2,812,711 3,241,837

Other income ............................................. 8,410 1,196

Gross Income ......... ........................... $5,371,265 $5,732,919

EXPENSES

Administrative expenses:Personal services ........................................ $1,317,253 $1,419,011Contributions to staff benefits ............................. 193,185 209,758Fees and compensation ............. ..................... 89,265 130,025Representation .......................................... 24,545 32,080Travel ................................................. 392,738 543,109Supplies and material ......... ........................... 17,749 18,639Office occupancy ........................................ 171,901 167,435Communication services .................................. 81,251 86,238Furniture and equipment ................................. 100,006 43,579Books and library services ....... ......................... 21,713 22,675Printing ............................ .................. 34,777 41,122Insurance .............................................. 13,063 11,035Other expenses ......................................... 735 801

Gross Expenses ........... ...... $2,458,181 $2,725,507

NET INCOME-Allocated to Reserve Against Losses-Note C ........ $2,913,084 $3,007,412

Comparative Statement of Changes in Reserve Against Losses

FOR THE FISCAL YEARS ENDED JUNE 30, 1964 AND JUNE 30, 1965

Expressed in United States Currency-See Notes to Financial Statements, Appendix D

July I-June 30

1963-1964 1964-1965

BALANCE BEGINNING OF PERIOD . $17,002,706 $20,246,494ADDITIONS AND DEDUCTIONS

Net income-Note C ............. .......................... 2,913,084 3,007,412

Net gains on sales and other dispositions of loans andequity investments ...................................... 356,927 302,141

Net other losses .. ...................................... (26,223) (415,235)

BALANCE END OF PERIOD ...................................... $20,246,494 $23,140,812

23

APPENDIX C

Statement of Operational Investments and

JUNE 30,

Expressed in United States Currency-

Operationainvestments Acquisition

Original principal amount standby and bLeritesof- underwiting OntsOsading ccretd by

COUNTRY Standby and commitments standby and standby and Canceltations,and Obligor Operational undwriting not yet underwritin undewriting terminations

tacesirnents commit,ents effective, comuitments= commitmnts and writIofs

ARGENTINAAcindar Industria Argentina

de Aceros, S.A ................ $ 3,660,000 $ - $ - $ _ $ _Papelera Rio Parana, S.A .......... 3,000,000 - - - - 3,000,000Fabrica Argentina de

Engranajes, S.A.I.C ............ 1,500,000 - -

Pasa, PetroquimicaArgentina, S.A.I.C ............. 3,050,000 - - - - 2,745,000

La Papelera Argentina, S.A ........ 2,500,000 - -- _ _

TOTAL .................. 13,710,000 - _ _ - 5,745,000

AUSTRALIADuncan's Holdings, Ltd ........... 660,000 - -Rubbertex (Australia)

Proprietary, Ltd ... .......... 315,000 - - -

TOTAL ................. 975,000 - -- - -

BRAZILSiemens do Brasil Cia.

de Electricidade ... ............ 2,000,000 - - - - 1,000,000Olinkraft, S.A. Celulose e Papel ... 1,200,000 - - - - 243,000D.L.R. Plasticos do Brasil, S.A ..... 450,000 - -

Willys-Overland do Brasil, S.A.,Industria e Comercio ........... 2,450,000 -

Companhia Mineira deCirnento Portland, S.A .......... 1,200,000 - - - -

Charmpion Celulose, S.A ........... 4,000,000 - - - -

TOTAL .................. 11,300,000 - - - - 1,243,000

CHILEEmnresa Minera de Mantos

Blancos, S.A.6 ................. 3,100,000 - - - - -Fideos y Alimentos Carozzi, S.A.6. . 1,653,846 - - - - -

Cementos Bio-Bio, S.A.6 .......... 1,300,000 - - - - -Compania Manufacturera de Papeles

y Cartones, S.A ............... 3,000,000 - - - - -

TOTAL ....... ......... 9,053,846 - - - -

COLOMBIALaminas del Caribe, S.A .......... 500,000 - - - - -Industrias Alimenticias Noel, S.A.6. . 2,017,254 - - - - -Envases Colombianos, S.A ......... 700,000 - - - - 400,000Berry, Selvey y Cia., S.A .......... 170,000 - - -Electromanufacturas, S.A ......... 500,000 - - - - 289,625Corporacion Financiera Colombiana 6 2,023,730 - - - - 514Corporacion Financiera Nacional6 . 2,042,000 - - - - 34Compania Colombiana de Tejidos, S.A. 2,000,000 - - - -Corporacion Financiera de Caldas. . 701,403 - - - -Forjas de Colombia, S.A .......... 749,628 353,781 - 179,856 173,925 -

TOTAL ...... ... 11,404,015 353,781 - 179,856 173,925 690,173

24

tandby and Underwriting Commitments

965

ee Notes to Financial Statements, Appendix D

Undisbarsedbalane ofeective Held by Corporation

Principal Loans and Loans toansrepayments equity sold converted Principal and equity Total loans

to or agreed into amount investment and equ,iyCorporation to be sold

4equity disbursed agreements

5Loans Equity (at coot)

$ - $ - $ - $ 3,660,000 $ $ 3,660,000 $ - $ 3,660,000

_ - - 1,500,000 - 1,500,000 - 1,500,000

- 305,000 - 305,000 - - -_ - - 2,500,000 2,500,000 - 2,500,000

- 305,000 - 7,965,000 - 7,660,000 - 7,660,000

400,000 - - 660,000 - 260,000 - 260,000

42,750 272,250 - 315,000 - - - -

442,750 272,250 - 975,000 - 260,000 - 260,000

140,000 860,000 - 1,000,000 - - - -- 957,000 - 957,000 - - - _

125,000 - - 450,000 - 325,000 - 325,000

1,750,000 - - 2,450,000 - 700,000 - 700,000

- 1,200,000 - 1,200,000 - - - -- 3,175,000 - 4,000,000 - 825,000 - 825,000

2,015,000 6,192,000 - 10,057,000 - 1,850,000 - 1,850,000

467,742 995,161 - 3,100,000 - 1,637,097 - 1,637,097399,960 - - 1,653,846 - 1,100,040 153,846 1,253,886

- - - 1,300,000 - 1,200,000 100,000 1,300,000

- 225,000 - 3,000,000 - 2,775,000 - 2,775,000

867,702 1,220,161 - 9,053,846 - 6,712,137 253,846 6,965,983

290,000 - - 500,000 - 210,000 - 210,000580,000 370,416 - 1,317,254 700,000 1,052,000 14,838 1,066,838203,571 96,429 - 300,000 - - - -

- - - 170,000 - 170,000 Note 7 170,000- 210,375 - 210,375 - - - -- - 1,999,486 2,023,216 - - 2,023,216 2,023,216- 843,807 1,999,966 2,041,966 - - 1,198,159 1,198,159

31,000 1,725,000 - 2,000,000 - 244,000 - 244,000- - - 701,403 - - 701,403 701,403- - - 749,628 - - 749,628 749,628

1,104,571 3,246,027 3,999,452 10,013,842 700,000 1,676,000 4,687,244 6,363,244

(continued)

25

APPENDIX C

Statement of Operational Investments and

JUNE 30,

Expressed in United States Carrency-

Operation-linvestments Acquisition

and by others ofOriginal pincipal amount standby and securities

underecriting Outstanding co-ered byCOUNTRY Standby -od commit-ents standby and stundby and Cancellations,

and Obliger Operational unde-rriting not yet underusiting undercriting terminationsinvestments mitmns comitms c s and arite.offs

5

COSTA RICAProductos de Concreto, S.A ....... $ 269,529 $ - $ _ $ _ $

EL SALVADORIndustrias Textiles, S.A ........... 140,000

ETHIOPIACotton Company of Ethiopia, S.C.. . 2,503,778

FINLANDOy Kutomotuote Ab,Tricol Oy,Toli Oy 156,000Rauma-Repola y ............... 1,875,000Teollistamisrahasto Oy ........... 158,644 158,644 - - 158,009Huhtamaki-yhtyma Oy ........... 799,357 - -

TOTAL .... 2,989,001 158,644 - - 158,009

GREECEAevol Industrial Company

of Organic Fertilizers, S.A ........ 600,000 - -- _ _Titan Cment Company, S.A .. . 1,501,672 -

TOTAL .................. 2,101,672 - - - - -

GUATEMALAIndustria Harinera

Guatemalteca, S.A ............. 200,000 -

HONDURASEmpresa de Curtidos

Centro Americana. S.A ......... 350,000

INDIARepublic Forge Company, Ltd ...... 1,500,000 - - - - 1,500,000Kirloskar Oil Engines, Ltd ......... 850,000 - - - - 850,000Assam Sillimanite, Ltd ............ 1,365,000 - - - - 478,724K.S.B. Pumps, Ltd.. -............ 210,000 - - - - -Precision Bearings India, Ltd ...... 898,947 - - - - -Fort Gloster Industries, Ltd ........ 1,210,894 - - - - -Mahindra Ugine Steel Company, Ltd. 3,450,001 - 3,450,001 - - -Lakshmi Machine Works, Ltd.... .. 1,380,000 - 1,380,000 - - -

TOTAL .. . 10,864,842 - 4,830,001 - - 2,828,724

IRANSherkate Sahami Kahkashan ...... 300,000 - - - - -

ITALYMagrini Meridionale, S.p.A ........ 960,000 -

26

Standby and Underwriting Commitments (continued)

1965

See Notes to Financial Statements, Appendix D

Undisb.rsedbalance ofeffective lleld by Corporation

Principal Loans and Loans loansrepayments equity sold converted Principal and equity Total loam

to or agreed into amount investment and equityCorporation to be sold, equity disbursed agreeents

5Loans Equity (at cost)

$ 32,000 $ 89,848 $ - $ 269,529 $ - $ 97,333 $ 50,348 $ 147,681

140,000 - - 140,000 - - -

- 430,000 - 1,253,778 1,250,000 1,070,000 1,003,778 2,073,778

48,000 108,000 - 156,000 - - -

585,000 1,290,000 - 1,875,000 - - -- - - 159,279 - - 159,279 159,279- 524,514 - 799,357 - 204,000 70,843 274,843

633,000 1,922,514 - 2,989,636 - 204,000 230,122 434,122

90,000 - - 500,000 100,000 510,000 Note 7 510,000- 950,836 - 501,672 1,000,000 300,000 250,836 550,836

90,000 950,836 - 1,001,672 1,100,000 810,000 250,836 1,060,836

66,000 134,000 - 200,000 - - -

- 100,750 - 350,000 - 210,000 39,250 249,250

- -- 886,276 - 886,276 - 886,276- - 210,000 - 210,000 - 210,000

- 260,000 - 898,947 - 260,000 378,947 638,947- 151,362 - 605,593 605,301 710,500 349,032 1,059,532- Note 8 - - - - -

- Note 9 - - - - -

- 411,362 - 2,600,816 605,301 2,066,776 727,979 2,794,755

150,000 - - 300,000 - 150,000 - 150,000

- - - 960,000 - 960,000 - 960,000

(continued)

27

APPENDIX C

Statement of Operational Investments and

JUNE 30,

Expressed in United States Currency-

Operationalivwestments Acqioition

and by other8 ofOnginalprncipal amowut 5tandby and er

underlwrtg Outstanding cvrdbCOUANTRY Standby cominets andby and stdad Cancellations,

and Obligor Operatial udrwriting noyet nderwrig unerwiting termiwtionsvtwat comlatmnb ecommimen ommitns

2commitments and writetoffs

IVORY COASTBanque Ivoirienne de

Developpement Industriel, S.A... $ 204,081 $ - $ - S - $ - $

JAMAICAJamaica Pre-Mix, Ltd ............. 224,000

MALAYSIAMalaysian Industrial Development

Finance, Ltd .................. 817,917 490,000 - - 490,000

MEXICOIndustrias Perfect Circle, S.A.6 .... 800,000 - -- - 200,000Bristol de Mexico, S.A ........... 520,000 -Acero Solar, S.A ................. 280,000 - - -Compania Fundidora de Fierro y

Acero de Monterrey, S.A.6 ...... 1,473,552 9,044,856 - - 7,882,350 168,926Tubos de Acero de Mexico, S.A..... 250,000 750,000 - - 600,000 -Quimica del Rey, S.A ............ 750,000 - -Industria del Hierro, S.A ......... 1,601,281 - - -

TOTAL .................. 5 ,674,833 9,794,856 - - 8,482,350 368,926

MOROCCOBanque Nationale pour le

Developpement Economique ..... 1,495,774 - - -

NIGERIANigerian Industrial Development

Bank, Ltd.d ....................- 1,400,000 - - 484Arewa Textiles, Ltd ............... 769,801 - -

TOTAL ... ........... 769,801 1,400,000 - - 484

PAKISTANSteel Corporation of Pakistan, Ltd.. . 630,000 - -Adamjee Industries, Ltd. 750,000 - - - - 295IsmaiI Cement Industries, Ltd.6 .... 5,676,504 - 1,676,504The Pakistan Industrial Credit

and Investment Corporation, Ltd. 449,400 - - - - -

Crescent Jute Products, Ltd ........ 1,950,000 - 1,950,000 - -Packages, Ltd ................... 3,150,001 - 3,150,001 - -

TOTAL .................. 12,605,905 - 6,776,505 - - 295

28

Standby and Underwriting Commitments (continued)

1965

See Notes to Financial Statements, Appendix D

Undisbursedbta awe ofeffective Held by Corpsoration

Principal Loans and Loans loansrepayments equity sold converted Principal and equity Total loans

to or agreed into amount investment and equityCorporation to be sold4 equity disbursed agreements

5Loans Equity (at cost)

$ - $ - $- $ 204,081 $- $ - $ 204,081 $ 204,081

- - - 224,000 - 224,000 - 224,000

= - - 491,250 326,667 - 817,917 817,917

600,000 - - 600,000 - - - -400,000 - - 520,000 - 120,000 - 120,000

- 280,000 - 280,000 - - -

- 1,578,304 - 2,467,132 - - 888,828 888,828- 309,000 121,000 400,000 - 91,000 - 91,000- 676,002 - 750,000 - 73,998 - 73,998- 160,128 - 1,601,281 - - 1,441,153 1,441,153

1,000,000 3,003,434 121,000 6,618,413 - 284,998 2,329,981 2,614,979

- - - 1,495,774 - - 1,495,774 1,495,774

- - - 1,399,516 - - 1,399,516 1,399,516- 316,680 - 699,801 70,000 125,597 327,524 453,121

- 316,680 - 2,099,317 70,000 125,597 1,727,040 1,852,637

189,000 - - 630,000 - 441,000 - 441,000674,705 - - 749,705 - 75,000 - 75,000

- 272,00010 - 3,656,167 343,833 3,728,000 - 3,728,000

- - - 449,400 - - 449,400 449,400- Note 11- -- Note 12 - - _ -

863,705 272,000 - 5,485,272 343,833 4,244,000 449,400 4,693,400

(continued)

29

APPENDIX C

Statement of Operational Investments and

JUNE 30,

Expressed in United States Currency-

Operationalinvest-unto Acqmisition

and by others ofOriginalprincipal amount standby and Soroities

COUNTR -. d Sta.dby u=er ting Outsadaig coered byCOUNTRY -tandf and co,iteonto tandby od standby od C.n-elaot-n,

and Obligor Operational underwriting not yet underwriting undensriting terminationssiaestments co-mitrents efective' commitments, commitments and write.offs3

PERUIndustrias Reunidas, S.A .......... $ 250,000 S - $ - S - $ - $Luren, S.A. and Ladrillos

Calcareos, S.A ................. 280,000 - - -Durisol del Peru, S.A ............ 300,000 - - - - 300,0003Fertilizantes Sinteticos, S.A.

6...... 4,083,290 - - -

Cemento Andino, S.A ............ 2,400,000 - -Compania de Cemento

Pacasmayo, S.A ................ 1,600,000 - - -

TOTAL .................. 8,913,290 - - - - 300,000

PHILIPPINESPrivate Development Corporation

of the Philippines ............. - 4,359,063 - - 4,153,846 -

SPAINFabrica Espanola Magnetos, S.A.6 ... 3,227,259 - - -Banco del Desarrollo Economico

Espanol, S.A.6

................ 584.631 - -

TOTAL ....... ........... 3,811,890 - -

SUDANKhartoum Spinning and

WeavingZCompany, Ltd ...... ... 688,893 - - - - -

TANZANIAKilombero Sugar Company, Ltd.6. ... 4,731,085 - - - - -

THAILANDThe Concrete Products and

Aggregate Company, Ltd . .... 300,000 - - - - -

Industrial Finance Corporationof Thailand ......... .......... 193,108 - - - - -

TOTAL .................. 493,108 - - - - -

TUNISIANPK-Engrais, S.A.T .............. 3,500,000 - - - - -

TURKEYTurkiye Sinai Kalkinma Bankasi, A.S. 916,667 - - - - -

UGANDAMulco Textiles, Ltd .............. 3,513,038 - -

30

Standby and Underwriting Commitments (continued)

1965

3ee Notes to Financial Statements, Appendix D

Undisbursedbalance ofeffective Held by Corporation

Principal Loans and Loans loansrepayments equity -old convcrted Principal and equity Total Ioans

to or agreed into amount investment and equityCorporation to be sold' equity disbursed agreements

tLoans Equity (at cst)

$ 250,000 $ - $ 250,000 $ - $ - $ -

65,000 - - 280,000 - 215,000 - 215,000- - - 300,000 - - _ -

145,000 2,264,000 - 4,083,290 - 1,674,290 - 1,674,290- - - 2,400,000 - 2,400,000 - 2,400,000

- 1,308,600 - 1,150,000 450,000 291,400 - 291,400

460,000 3,572,600 - 8,463,290 450,000 4,580,690 - 4,580,690

- 205,217 - - 205,217 205,217

1,565,499 - 3,137,259 90,000 1,210,500 451,260 1,661,760

- - 365,881 218,750 - 584,631 584,631

1,565,499 - 3,503,140 308,750 1,210,500 1,035,891 2,246,391

201,146 - 688,893 - 215,110 272,637 487,747

-- 700,000 4,215,885 515,200 4,031,085 700,000 4,731,085

300,000 - 300,000 - - - -

- - 193,108 - - 193,108 193,108

300,000 - 493,108 - - 193,108 193,108

1,025,573 - 3,488,502 11,498 1,314,000 1,160,427 2,474,427

-- - 916,667 - - 916,667 916,667

1,292,200 - 1,343,038 2,170,000 1,679,409 541,429 2,220,838

(continued)

31

APPENDIX C

Statement of Operational Investments anc

JUNE 30

Expressed in United States Currency-

Oper-tianaIinvestments Acquisition

and by others ofOriginal principal amount standby and secrities

underwriting Outstanding covered byCOUNTRY Standby and commitments standby and standby and Cancellations,

and Obligor Operational underuniting nt yet underuriting underwriting terminationsinvestments commitments effective' commitments commitments and write-os

VENEZUELASiderurgica Venezolana

"Sivensa", S.A.6 .............. 3,140,529 $ - $ - $- $ -Diablitos Venezolanos, C.A ........ 500,000 - - - - 324,000C.A. Venezolana de Desarrollo

(Sociedad Financiera) .......... 1,336,183 - - -

TOTAL ......... 4......... 4,976,712 - - - - 324,000

GRAND TOTAL ... . ....... $120,458,677 $16,556,344 $11,606,506 $ 179,856 $13,458,614 $11,500,1183

$137,015,021

Note 1-In these cases, certain legal formalities must be completed and other conditions fulfilled before funds may be with-drawn on account of the investments or before disbursements are required for commitments underwritten.

Note 2-See Note D-Appendix D.Note 3-$300,000 written off.Note 4-Amounts sold representt respective book values and any profits or losses on these sales have been entered directly

to the Reserve Against Losses. To date, such profits have totaled $1,759,633 and losses $158,247 resulting in netprofits of 61,601,386. This column does not include 6908,465 of investments not yet effective which the Corporationhas agreed to sell as shown in Notes 8 to 12.

Note 5-This includes $1,987,248 of effective investments which the Corporation has agreed to sell.

Summary of Standby and Underwriting CommitmentsExpressed in United States Currertcy

Amount acquired by theCOUNTRY Original standby Corporation and its subunderw,ritern

and Obtigor and erwriting Participation by Acquisitoncommitments bubunerwriters by others Subunderwriters Corporation

COLOMBIAForjas de Colombia, S.A .............. $ 353,781 $ - $ 173,925 $ - $ -

FINLANDTeollistamisrahasto Oy ............... 158,644 - 158,009 - 635

MALAYSIAMalaysian Industrial Development

Finance, Ltd.. 490,000 - 490,000 -MEXICO

Compania Fundidora de Fiermo yAcero de Monterrey, S.A. (1962). 2,944,856 1,040,513 1,782,206 410,797 751,853

Compania Fundidora de Fierro yAcero de Monterrey, S.A. (1964) ..... 6,100,0001 5,298,545 6,010,144 9,620 1,310

Tubos de Acero de Mexico, S.A ........ 7 50,000 - 600,000 - 150,000NIGERIA

Nigerian Industrial DevelopmentBank, Ltd .............. ......... 1,400,000 484 - 1,399,516

PHILIPPINESPrivate Development Corporation

of the Philippines ................. 4,359,063 - 4,153,846 - 205,217TOTAL.. $16,556,344 $6,339,058 $13,368,614 $420,417 $2,508,531

Note I-Includes $78,926 which was canceled as an underwriting commitment when the Corporationdecided to enercise stoak rights on its original holding of shares.

32

tandby and Underwriting Commitments (continued)

965

iee Notes to Financial Statements, Appendix D

Undisbursedbalance ofeffective Held by Corporation

Principal Loans and Loans loasrepayments equity soid con-r-ted Prncipal and equity Total loans

to or agreed into amoaun investment and equaitCorporation to be sotd4 equity disbursed agreements, Loans Equity (at co_s)

$ 1,087,500 $ 1,612,500 $ 300,000 $ 3,140,529 $ - $ - $ 440,529 $ 440,529- 176,000 - 176,000 - - - -

_ - - 1,336,183 - - 1,336,183 1,336,1831,087,500 1,788,500 300,000 4,652,712 - - 1,776,712 1,776,712

$ 8,952,228 $28,612,380 $ 5,120,452 $92,718,678 $ 7,851,249 $41,635,635 $21,069,684 $62,705,319

Note 6-The Corporation has made more than one commitment to this company.Note 7-The Corporation has received shares in this company at no cost.Note 8-The Corporation has agreed to sell $149,625 of this investment.Note 9-The Corporation has agreed to sell $149,040 of this investment.Note 10-The Corporation has agreed to sell $126,000 of this investment.Note 11-The Corporation has agreed to sell $121,800 of this investment.Note 12-The Corporation has agreed to sell $362,000 of this investment.

Summary of Currencies in Which Effective Loans and Equity InvestmentsHeld by Corporation are Denominated

Expressed in United States Currency

Carreocy Loans Equity

CFA francs ....................................... - $ 204,081Chilean escudos..- 153,846Colombian pesos.. - 4,687,244Costa Rican colones .... 50,348East African shillings ..- 1,241,429Ethiopian dollars ,..,, - 1,003,778Finnish markkas ...................... - 230,122Greek drachmas . .......... ,....,...., - 250,836Honduran lempiras. - 39,250Indian rupees .......... ,............... - 727,979Italian lire .. 480,000 -Malayan dollars. - 817,917Mexican pesos ............................. 60,000 2,329,981Moroccan dirhams ..- 1,495,774Nigerian pounds .. ........... 70,000 1,727,040Pakistan rupees .- 449,400Philippine pesos.. - 205,217Pounds sterling. 4,463,601 -Spanish pesetas. - 1,035,891Sudanese pounds.. 2272,637Thai baht..- 193,108Tunisian dinars.- 1,160,427Turkish li. ..- 916.667United States dollars .. 36,562,034 100,000Venezuelan bolivares .... - 1,776,712

TOTAL ............................... $41,635,635 $21,069,684

33

APPENDIX D

Note.s to Financial Statements

JUNE 30, 1965

NOTE A except the following amounts for which the dollar equiv-The undisbursed balances of investment commitments alent is shown:and the amounts outstanding of standby and under- Principal outstanding .... . ..... $ 22,685,785writing commitments made in currencies other than Accrued interest, commitmentUnited States dollars have been translated into United charges and other income 469,992States dollars at the par values as specified in the"Schedule of Par Values", published by the International Total .$23,155,777Monetary Fund, or in the case of Colombian pesos atthe rate of 18.000 to 1 United States dollar. NOTE C

Amounts disbursed and /or repayable in currencies other Pursuant to action of the Directors, the net income ofthan United States dollars have been translated into the Corporation has been allocated to a reserve againstUnited States dollars at the following average rates: losses; and the future net income of the Corporation

will, until further action by the Directors or the BoardCurrency Unit of Governors, be allocated to this reserve.

Currency per U.S. dollar Berry, Selvey y Cia., S.A. has not paid interest due since

CFA francs. ...... 245.000 May 15, 1964 on a principal amount outstanding ofChilean escuos .2.340 $170,000 and has not paid a principal installment ofColombian pesos .9.822 $14,000 due May 15, 1965. With IFC's consent, theCosta Rican colones. ...... 6.620 company is taking steps to sell its assets. The amount ofEast African shillings .7.145 recovery, if anv, in respect of this investment andEthiopian dollars .2.481 the interest accrued thereon, cannot presently be de-Finnish markkas .3.216 terminedGreek drachmas .29.900Honduran lepiras .2.000 NOTE DIndian rupees. 4.755 The Corporation and two Colombian financieras haveItalian lire ... 625.000 ... Malayan dollars ................................. .053 jointly agreed, in consideration of certain commissions,Mexican pesos ... 1..................... 3.490 to underwrite 1,000,000 shares of a new stock issue ofMoroccan dirams .5.014 Forjas de Colombia, S.A. The Corporation has agreed toNigerian pounds u 0.357 subscribe, at the par value of Col$10 per share, to onePakistan rupees .4.762 third of the underwritten shares not subscribed by otherPhilippine pesos .3.898 investors. As of June 30, 1965, 971,223 shares remainPounds sterling .0.357 unsubscribed. The company may request subscriptionSpanish pesetas ......... ...... .. 59.789 by the Corporation until December 31, 1966.Sudanese pounds .0.348Thai baht .20.714 GENERALTunisian dinars .0.425 The operational investments are represented by bothTurkish liras . 9.000 loans and equity. In addition, in certain investments,Venezuelan bolivares . 4.503 the Corporation has the right to acquire shares and /or

participate in the profits of the enterprise.Accrued interest, commitment charges arid other income The Board of Governors has approved the applicationsreceivable in currencies other than United States dol- for membership from the following countries:lars, have been translated into United States dollars atthe approximate market rates. Country Subscription Date to accept

No representation is made that any currency held by Cameroon $111,000 September 30, 1965the Corporation is convertible into any other currency Chad $ 55,000 September 30, 1965at any rate or rates. Malawi $ 83,000 September 15, 1965

Nepal $ 55,000 September 30, 1965Trinidad and Tobago $148,000 September 15, 1965

NOTE B Zambia $295,000 November 17, 1965

The principal disbursed and outstanding on effectiveloans and equity investments and the accruals for inter- Malawi paid $83,000 due on account of its subscriptionest, commitment charges and other income on such prior to June 30, 1965 and on July 19, 1965 completedloans and equity investments and on undlerwriting com- the othier action necessary and became a member onmitments are denominated in United States dollars that date.

34

Opinion of Independent Auditor

1707 L STREET, N.W.

WASHINGTON, D. C. 20036

JULY 29, 1965

To

INTERNATIONAL FINANCE CORPORATION

WASHINGTON, D. C.

In our opinion, the accompanying financial statements present fairly, in terms of United States currency,

the financial position of International Finance Corporation at June 30, 1965, and the results of its opera-

tions for the year then ended, in conformity with generally accepted accounting principles applied on a

basis consistent with that of the preceding year. Our examination of these statements was made in accor-

dance with generally accepted auditing standards, and accordingly included such tests of the accounting

records and such other auditing procedures as we considered necessary.

PRICE WATERHOUSE & CO.

Financial StatementsCovered by the Foregoing Opinion

BALANCE SHEET . ................................................................ APPENDIX A

COMPARATIVE STATEMENT OF INCOME AND EXPENSES .................................. APPENDIX B

COMPARATIVE STATEMENT OF CHANGES IN RESERVE AGAINST LOSSES ..................... APPENDIX B

STATEMENT OF OPERATIONAL INVESTMENTS AND STANDBY

AND UNDERWRITING COMMITMENTS .............................................. APPENDIX C

NOTES TO FINANCIAL STATEMENTS .................................................. APPENDIX D

35

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APPENDIX F

Governors and AlternatesJUNE 30, 1965

Member Governor Alternate

Afghanistan .............. ............ Sayed Kassem Rishtiya. .Zia H. NoorzoyArgentina.. . Flix Gilberto Maria Elizalde ............. Enrique Garcia VazquezAustralia . . ............................. Harold Holt . .................. Sir Roland WilsonAustria. ... Wolfgang Schmitz .. Hugo RottkyBelgium .. . ............. G. Eyskens . . .................. Hubert AnsiauxBolivia . . ............ Alberto Ibafiez Gonzales . .Enrique Vargas GuzmanBrazil . . ................................ Octavio Gouvea de Bulbes . . Denio Chagas NogueiraBurma . . ............................... U Kyaw Nyein . .U Kyaw NyunCanada...... Walter L. Gordon... A. F. W. PlumptreCeylon . . ............. Ukku Banda Wanninayake . . H. Jinadasa SamarakkodyChile... Carlos Massad*.. Jorge Marshall*Colombia... Joaquin Vallejo*.. Jorge Mejia-SalazarCosta Rica . . ............ Alvaro Castro J. . Alvaro Vargas E.Cyprus . . ............................... Renos Solomides ....... . M. E. GuvenDenmark . . ............................. Otto Muller . .................. Karl Otto BredahlDominican Republic ...................... Di6genes H. Fernandez . .Luis SchekerEcuador. . . Wilfrido Freire Duefias. . Gustavo Larrea C6rdova

El Salvador . . ............ Francisco Aquino b . ............. Abelardo TorresEthiopia. .... Yilma Deressa . ....... Bulcha DemeksaFinland. . .. R. v. Fieandt . .................. Esko RekolaFrance . . ............................... Minister of Finance.. Bernard Clappier*Germany. . . Kurt Sebmuicker . ................ Rolf DahlgriulGhana . . ................................ K. Amoako-Atta.. W. M. H. BalmGreece ................................. George Mavros. .John P. ParaskevopoulosGuatemala . . ............ Carlos E. Peralta Mendez . ............. Jorge Lucas Caballeros Mazariegos

Haiti. . . Herve Boyer.. Antonio AndreHonduras. . . Manuel Acosta Bonilla... Ricardo Zuniga AugustinusIceland...................... Petur Benediktsson.India. .. T. T. Krisbnamachari . . S. BhoothalingamIran . . ................................. Jamshid Amuzegar . ............... Jahangir AmuzegarIraq . . ................................. Mohammed J. Oboosy.. Khair El-Din Haseeb

Ireland. ... John Lynch....... T. K. WhitakerIsrael . . ................................ David Horowitz . ................. Jacob ArnonItaly ................. . ...... Guido Carli.. Donato MenichellaIvory Coast . . ............ Raphael Saller . ................. Mohamed DiawaraJamaica. . . D. B. Sangster . .G. Arthur BrownJapan .................................. T akeo Fukuda. Makoto UsamiJordan . . . Hatim S. Zu'bi .Nijmeddin DajaniKenya. .... J. S. Gichuru. John Njoroge Michuki*Korea. . . Seung Hi Hong. Se Ryun KimKuwait . . ............................... Sheikh Jabir Al-Ahmad Al-Jabir . .Abdlatif Y. Al-HamadLebanon. .. Elias Sarkis. Raja HimadehLiberia . . ............................... Charles Dunbar Sherman . .James Milton WeeksLibya . . ................................ Mansur Ben Gaddara. Ali A. AttigaLuxembourg. ... Pierre Werner . ................. Pierre GuillMalagasy Republic . . .......... Ralison Rakotovao.. Louis RakotomalalaMalaysia... Tan Siew Sin . .................. Mohamed Sharif bin Abu Abdul SamadMexico ................. . Antonio Ortiz Mena... Jos4 HernAndez DelgadoMorocco. Mohamed Cherkaoui ........ . Mamoun TahiriNetherlands. . . A. Vondeling... J. H. 0. Count van den BoschNew Zealand. . . H. HR. Lake . ................... D. W. A. BarkerNicaragua. ... Guillermo Sevilla-Sacasa.. Silvio Argiiello CardenalNigeria. . . Chief Festus Sam Okotie-Eboh. . E. 0. OgbuNorway. ... Trygve Lie . ................... Christian BrinchPakistan .. . Mohamed Shoaib.. S. A. F. M. A. SobbanPanama . . .............................. David Samudio A . ................ Carlos VelardeParaguay . . ............................. Cesar Romeo Acosta . ............... Oscar Stark Rivarola

Peru . . ................................. Celso Pastor.. Tulio De AndreaPhilippines. .. Andres V. Castillo . ................ Rafael S. RectoSaudi Arabia . . ........... Ahmed Zaki Saad.Senegal. ... Habib Thiam. . Ibrahima TalSierra Leone ........................... . R. G. 0. King.. Elkanah Laurence Coker*Somalia . . .............................. Awil Hagi Abdullahi . ............... Francesco Palamenghi-CrispiSouth Africa . . ........... T. E. Donges . .................. Gerard RissikSpain . . ................................ Juan Jose Espinosa*

. .. Mariano Navarro Rubio*

Sudan. . ............. Ibrahim El Mufti . ................ Sayed Abdel Rahim MirghaniSweden. ... G. E. String . ........ . N. G. LangeSyrian Arab Republic. . . Abd el-Fattah Beuchi. .Abdul Hadi NehlawiTanzania... ............. Paul Bomani.. .E. I. M. MteiThailand.. . Sunthorn Hongladarom. Chalong PungtrakulTogo . . ................................. Boukari Djobo . .Jean TeviTunisia ................................ . Ahmed Ben Salah . . Ali ZouaouiTurkey . . ............................... Ihsan Gursan.... . Zeyyat Baykara*Uganda...... Laurence Kalule-Settala . ............. A. J. P. M. SsentongoUnited Arab Republic. ... Abdel Moneim El Kaissouni... Hamed Abdel Latif El SayehUnited Kingdom . . .......... The Earl of Cromer.. . Sir Denis RickettUnited States... ......... _ Henry H. Fowler ..... Thomas C. MannVenezuela. . . Rafael Alfounzo Ravard. . Luis Vallenilla Meneses

*Appointment effective after June 30, 1965

37

APPENDIX G

Directors and Alternates and their Voting Power

JUNE 30, 1965

Director Alternate Casting votes of Total Votes

APPOINTED

John C. Bullittl United States 35,418J. M. Stevens N. M. P. Reilly United Kingdom 14,650Rene Larre Jean Malaplate France 6,065K. S. Sundara Rajan S. Guhan India 4,681Otto Donner Helga Steeg Germany 3,905

ELECTED

Mumtaz Mirza Ali Akbar Khosropur Pakistan, United Arab Republic, Iran, Kuwait, 5,022(Pakistan) (Iran) Saudi Arabia, Syrian Arab Republic, Iraq,

Lebanon, JordanAndr6 van Campenhout Othmar Ilaushofer Belgium, Austria, Turkey, Korea, Luxembourg 5,022

(Belgium) (Au stria)John M. Garland A. J. J. van Vuuren2 Australia, South Africa, New Zealand 4,996

(Australia) (South Africa)L. Denis Hudon S. J. Handfield-Jones3 Canada, Ireland, Jamaica 4,830

(Canada) (Canada)Gengo Suzuki Eiji Ozaki4 Japan, Burma, Ceylon, Thailand 4,240

(Japan) (Japan)Joaquin Gutierrez Cano Sergio Siglienti Italy, Spain, Greece 4,129

(Spain) (Italy)Vilhjalmur Thor Odd H 0kedal Sweden, Denmark, Norway, Finland, Iceland 4,097

(Iceland) (Nor-way)Pieter Lieftinck Aleksandar Bogoev Netherlands, Cyprus, Israel 3,929

(Netherlands) (Yugoslavia)Luis Machado Rufino Gil Mexico, Peru, Venezuela, Costa Rica, 3,629

(Cuba) (Costa Rica) Guatemala, Haiti, El Salvador, Honduras,Nicaragua, Panama

John Mammari Garba S. Othello Coleman Nigeria, Kenya, Tanzania, Uganda, Sudan, 3,231(Nigeria) (Liberia) Liberia, Sierra Leone, Ethiopia

Manuel San Miguel Juan flaus-Solis Argentina, Chile, Bolivia, Paraguay 3,144(Argentina) (Bolivia)

Jorge Mejia-Palacio Jos6 Camacho Brazil, Colombia, Philippines, Ecuador, 3,024(Colombia) (Colombia) Dominican Republic

Abderrahman Tazi Chedly Ayari Morocco, Malaysia, Ghana, Tunisia, 2,630(Morocco) (Tunisia) Afghanistan, Libya

Mohamed Nassim Kochman Said Mohamed Ali Senegal, Ivory Coast, Malagasy Republic, 1,822(Mauritania) (Somalia) Somalia, Togo

In addition to the Directors and Alternates shown above, the following also served as Director or Alternate after November 1, 1964:

End of Period End of PeriodDirector oj Service Alternate Director of Service

Sir Eric Roll January 14, 1965 Helmut Abramowski March 31, 1965(United Kingdom) (Germany)

A. F. W. Plumptre April 13, 1965(Canada)

T.o be succeeded by Liringstsn T. Merchant (Ulnited State.,)'2To be suvceeded by A. M. de Vittiers (South Africa) effecve September 1, 1965.'Ta be succeeded by Patrick M. Reid (Canada) effective Jly 1, 1965.4To be succeeded by Chalong Pungtraksl (Thailand) effective July 1, 1965.

38

APPENDIX H

Officers(July 1, 1965)

George D. Woods ................ President

Martin M. Rosen ................ Executive Vice President

Robert W. Cavanaugh* ................ Treasurer

William Diamond ................ Director, Development Finance Companies Department

J. David Dodd ................ Director, Engineering Department

Harold N. Graves, Jr.* ................ Director of Information

Howard C. Johnson* ................ Director, New York Office

Michael L. Lejeune* ................ Director of Administration

M. M. Mendels* ................ Secretary

John D. Miller* ................ Director, European Office

Naokado Nishihara ................ Special Representative in the Far East

Neil J. Paterson ............ Director of Investments, Latin America, Europe and Australasia

R. B. J. Richards ................ General Counsel

Virgil C. Sullivan ................ Special Adviser

Ladislaus von Hoffmann ............. Director of Investments, Africa, Asia and Middle East

Harry J. Williams ................ Accounting Adviser

*Also Officer of the World Bank

39

INTERNATIONAL FINANCE CORPORATION

HEADQUARTERS

1818 H Street, N.W.Washington, D.C. 20433, U.S.A.Telephone: EXecutive 3-6360

NEW YORK OFFICE

20 Exchange PlaceNew York, N.Y. 10005, U.S.A.Telephone: WHitehall 3-5400

EUROPEAN OFFICE

4 Ave. d'IenaParis 16e, FranceTelephone: KLEber 25-10

LONDON OFFICE

New Zealand HouseHaymarketLondon S.W. 1, EnglandTelephone: WHitehall 3886-7

Cable Address: CORINTFIN