Nile Suez

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	27155
Company name	Nile Suez Spinning and Weaving
Country	Egypt
Sector	Textiles, Apparel & Leather
Environmental category	B
Department	Global Manufacturing & Services
Status	Active

Date SPI disclosed	May 8, 2008
Projected board date	June 9, 2008
Previous Events	Invested: June 29, 2009 Signed: June 16, 2008 Approved: June 13, 2008

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

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The proposed transaction supports Mr. Nikhil Poddar (Mr. Poddar or the sponsor) in establishing Nile Suez Spinning and Weaving SAE (Nile Suez or the company). Nile Suez is currently setting up a greenfield integrated weaving, finishing, dyeing, and cut-and-stitch operation for bed sheeting and towels in Sadat Industrial City, Egypt. The company will leverage on the sponsor’s existing trading operation to supply its products to the US and European markets.

Anticipated development impact of the project

- Supporting the modernization of the textile section:

The proposed project will contribute to Egypt’s effort in transitioning from a supplier of raw material to an international textile manufacturing center. The textile sector in Egypt is majority controlled by state owned companies which are poorly managed with outdated technologies. The project will transfer management expertise, technological know-how, and a proven quality control system to Egypt and help support the modernization of the sector.

- Domestic value addition:

Currently, Egypt exports the majority of its production of cotton. The project will add value to this raw material through further processing, thus increasing government tax revenue and contributing to export earnings for Egypt. In addition, the project will enhance the skills of the local workforce through training and management and technology transfer.

- Employment generation:

Egypt’s main economic challenge is to generate enough jobs to absorb its large and growing labor force. By creating around 2400 jobs in Menoufia, Egypt’s most populated governorate where the plant will be located, the project will help address Egypt’s unemployment problems, especially outside of the capital.

- Setting environment and social standards:

The project will help set high standard for environment, social, safety and labor practices in the country’s textile manufacturing industry in which these aspects in the global supply chain are increasingly scrutinized by the customers.

Key development impacts of the project that will be tracked during supervision include the following:
- Benefits to the local economy, to be measured by local purchases of raw materials, energy and other services;

- Benefits to the employees, to be measured by the number of direct jobs created, wages, and training costs;

- Modernization of the textile sector, to be measured by the transfer to new technology and production skills and techniques;

- Setting environment and social standards, to be measured by compliance with the WBG Environment, Social, Health, and Safety standards.

In addition, the following key financial and economic performance indicators will be tracked during supervision:

- Financial performance: The company’s sales, net income, return on invested capital; and
- Economic performance: Operating income, economic return on invested capital, and taxes paid to the government.

IFC's expected development contribution

The sponsor views IFC as a unique partner in investing in emerging market for the following reasons:

First, IFC’s industry expertise and extensive experience and knowledge in emerging markets, a rare combination often not available from other financial institutions, is of important value to the sponsor who is backward integrating into manufacturing in these markets. As the supply chain of the textile industry is increasingly globalized, the sponsor appreciates the global prospective brought about by the IFC sector team.

Second, the sponsor is comforted by IFC’s presence in these markets to mitigate the political risks.

In addition to the funding, IFC also advised on the technical and operational issues regarding project implementation.

Environmental and social issues - Category B

The key environmental and social issues associated with this project are social and environmental assessment, management of social and environmental issues in operation, labor and working conditions, emissions to air and water, and efficient use of energy and water.

These issues are may all be readily mitigated by the application of readily available techniques and technology, are site specific and are reversible. This is therefore an environmental category B project.

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