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| JK Paper CPLP |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 28233 |
| Company name | JK Paper Ltd. |
| Country | India |
| Sector | Pulp & Paper |
| Environmental category | C |
| Department | Global Manufacturing & Services |
| Status | Pending Disbursement |
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| Date SPI disclosed | May 6, 2009 |
| Projected board date | June 8, 2009 |
| Previous Events | Signed: June 15, 2009 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
JK Paper has proposed a series of investments to increase energy efficiency and reduce water consumption at its two manufacturing facilities located in Orissa and Gujarat, India. Overall, project implementation is expected to reduce energy consumption by 5.1% and water consumption by 17.3%, annually. The recommended project encompasses optimization of electric drives and motors, steam and pumping systems, and cooling and lighting systems. Together, these “Cleaner Production” investments qualify for funding via IFC’s Board-approved Cleaner Production Lending Pilot facility, a $20 million facility that enables IFC to provide Cleaner Production sub-loans to its existing portfolio clients.
JK Paper is India's second largest producer of branded printing and writing paper with a total manufacturing capacity of 240,000 tons per annum and has been an IFC client since 2006. |
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| Project sponsor and major shareholders of project company |
JK Paper is publicly listed on the Bombay and National Stock Exchanges and is promoted by the Singhania family, which together holds a 39.5% stake in the company directly and indirectly through other JK Group companies. The JK Group is a leading Indian private sector group of companies, with interests in paper & boards, automotive tires, cement, sugar, dairy and agri-products.
The other major shareholders (with shareholding of greater than 5%) are JK Paper Employees’ Welfare Trust (13.3%) and IFC (9.8%). |
| Total project cost and amount and nature of IFC's investment |
| The estimated total project cost is $3.5 million. The proposed IFC investment is an A Loan (Cleaner Production Loan) of $3.0 million equivalent for IFC’s own account. The balance $0.5 million will be invested by the company itself, through internal accruals. IFC’s investment in JK Paper will be a sub-loan of the aforementioned dedicated lending facility established as part of the Cleaner Production Lending Pilot initiative. |
| Location of project and description of site |
| The Cleaner Production project will be implemented at JK Paper’s manufacturing facilities – one is located in Fort Songadh, 90 kms from the industrial city of Surat in Gujarat; the other is located in Jaykaypur in the Rayagada district in Orissa. |
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| Anticipated development impact of the project |
Overall, the implementation of the project is expected to result in:
Reduction of greenhouse gas emissions (GHG) by 67,235 tons p.a.
Savings of 3.4 million m3 of water p.a.
Savings of 30 million kilowatt hours of electricity p.a.
This project will also serve to demonstrate that the investments proposed by JK Paper at its Orissa and Gujarat plants are cost-effective, leading to wider adoption of such projects within the industry. |
| IFC's expected development contribution |
| The IFC-supported cleaner production assessment enabled JK Paper to identify projects that would reduce energy and water consumption as well as costs. IFC will assist JK Paper to implement these efficiency enhancements by financing their Cleaner Production investments with an appropriately structured senior loan. IFC will work with the company to quantify expected operational and environmental benefits from its Cleaner Production investments. This investment may also have a demonstration impact as this is one of the first Cleaner Production loans IFC will be extending to a manufacturing sector client in India. |
| Environmental and social issues - Category C |
| This is a supplementary loan to an existing IFC borrower, with the loan proceeds to be used entirely for Cleaner Production projects previously mentioned in this SPI. The environmental performance of the borrower is acceptable and the current ESRR score for that investment is B2-Average. The proposed initiatives to be financed by this CPLP investment will have a net positive effect by reducing the environmental impact of the manufacturing process. This is therefore a Category C project. |
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| For inquiries about the project, contact: |
Mr. V. Kumaraswamy
Chief Financial Officer
Phone : +91 11 23724337
Fax: +91 11 23712680
Nehru House, 4 Bahadur Shah Zafar Marg,
New Delhi 110002 |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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