K.C. Textiles

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	25946
Company name	Kucukcalik Tekstil Sanayii ve Ticaret A.S.
Country	Turkey
Sector	Textiles, Apparel & Leather
Environmental category	B
Department	Global Manufacturing & Services
Status	Completed

Date SPI disclosed	April 27, 2007
Projected board date	May 29, 2007
Previous Events	Invested: August 30, 2007 Signed: June 13, 2007 Approved: June 6, 2007

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

Küçükçalik Textil San. ve Tic. A.Ş. (Kucukcalik or the company), a Turkish manufacturer and exporter of home textiles, plans to implement:

- a green-field investment to build spinning, weaving and embroidering facilities in the 10th of Ramadan Industrial City, Egypt; and
- modernization and capacity expansion of the company’s existing facilities, along with providing working capital to its existing plants in Inegöl-Bursa, Turkey.

Anticipated development impact of the project

The proposed project presents the following positive developmental impacts:

- South-to-South Expansion:

The project will allow Kucukcalik to set up an operation in Egypt, which supports expansion/re-location of manufacturing capacities to a more cost-competitive environment. The investment in Egypt will reduce the overall manufacturing cost of the group and improve its access to its traditional markets.

- Improving Sustainability:

The project is expected to improve the overall competitiveness of the company and hence its financial sustainability.

- Employment:

The project will create about 1,000 new jobs (900 in Egypt and 100 in Turkey), which will benefit the local economies of both countries.

- Transfer of Technology and Know-How:

The project is expected to use the latest state of the art technology and would require significant training of the Egyptian work-force.

IFC's expected development contribution

Long-Term Financing:

IFC financing has a longer-tenor than the one currently available in Turkey.

Global Expertise:

IFC is providing its global knowledge on the sector, technical and financial expertise to help the company improve its operational efficiency.

Environmental and Social Aspects:

IFC’s environmental and social knowledge will help the company consolidate and improve its environmental and social management to the internationally acceptable level.

Corporate Governance:

IFC will contribute with its global knowledge on the best practice of corporate governance, which will allow the company to increase its transparency and to increase operational efficiency for further growth in the future.

Environmental and social issues - Category B

Key environmental and social issues in a project of this nature are the company’s capacity to manage social and environmental issues, including environmental assessment and planning in Egypt, the provision of a fair and safe workplace, control of hazardous materials and emissions to water and air, including of greenhouse gas emissions and waste management.

The potential adverse effects of the project would be limited, site specific, reversible and can be readily mitigated. It is therefore concluded that this is an Environmental Category B project according to IFC’s Environmental and Social Review Procedure.

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