Mumbai: Tata Sons Ltd, the holding company of the $108 billion Tata group, will receive up to $500 million a year in financing from Canadian government-owned Export Development Canada (EDC).

EDC will underwrite loans under the agreement as opportunities arise for Canadian companies, particularly small- to medium-sized exporters, within Tata group companies’ global supply chains, the Ottawa-based agency and Mumbai-based company said in a joint statement on Wednesday.

Tata companies have invested more than Canadian dollar (CAD) 1.3 billion in Canadian operations over the past five years, CAD 355 million last year alone, with active consideration for new developments going forward.

The Tata group has over 100 independent operating companies.

Among Tata companies present in Canada are Tata Global Beverages Ltd, Tata Steel Ltd, Tata Consultancy Services Ltd, Tata Chemicals Ltd, Tata Communications Ltd, Tata Technologies Ltd and Tata Interactive Ltd, with approximately 3,000 employees.

“Their (Tata companies’) facilities include an IT development centre (Ontario), telecommunications facilities (Quebec and Ontario), iron ore mining (Quebec) and soda ash distribution centres (Quebec and New Brunswick). Tata companies’ worldwide operations already include more than 1,000 Canadian suppliers," the joint statement said.

The financing agreement was signed by Madhu Kannan, member, group executive council at Tata Sons, and Benoit Daignault, president and chief executive officer of EDC.

“The Tata group has had a long-standing and successful presence in Canada. EDC continues to be a very important partner for us and we are delighted to enter into this funding arrangement with them which would facilitate the expansion plans of Tata companies," Kannan said.

“The Tata group is a critical organisation within a key market for Canada and India, and the financing is a reflection of the Tata group’s importance to Canadian exporters," said Daignault.

“Equally important is Canada’s importance to Tata, with EDC’s financing helping it deepen its roots at home and create new opportunities for Canadian companies," he added.

In January, Mint reported that the Tata group had identified 12-16 international markets to invest in over the next eight years, including Canada, Japan, Germany, Myanmar, Vietnam and Nigeria.

Kannan, who joined the Tata group in May 2012, said in January that these markets were chosen after comparing factors such as the condition of the market, the aspiration of Tata companies, the compatibility of their business models vis-à-vis the market, the group’s and Tata companies’ historical presence in the country.

“The country list may change because of evolving geopolitical concerns and group company priorities, but for now they include a balanced combination of developed countries with slightly lower growth rates (Canada, Japan, Germany), countries with significant growth potential (Myanmar, Vietnam, Nigeria) and also countries where there is the potential of significant returns in the future if we invest in relationships today (Russia and Egypt)," Kannan said.

Kannan’s office is working on the globalization agenda for Tata companies.

He had said it is one thing to be an Indian company with a very strong presence in international markets but it is another thing altogether to be like IBM or GE—companies with local leadership in every market they operate in.

In April 2014, Reliance Industries Ltd had secured $500 million in financing from EDC as a response to the increasing business that the Mukesh Ambani-led company had been undertaking with Canadian companies since 2004, when EDC first became one of its financiers.

That financing package helped diversify Reliance Industries’ funding sources and extended the maturity profile of its long-term debt in a cost-effective manner.

EDC is Canada’s trade finance agency, providing financing and insurance solutions locally and around the world to help Canadian companies respond to international business opportunities.

In its April 2014 statement, EDC had said India is a strategic market for Canada, as outlined in its Government’s Global Market Action Plan, and a market of corporate priority for EDC.

“EDC is looking to grow the amount of financing that it offers to Indian companies for their capital expenditure, whether the financing be for general corporate purposes or project finance purposes. Canadian and Indian companies used EDC’s financial services to undertake CAD 1.8 billion of business in 2013 alone," it said.

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