PRAN

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	27005
Company name	PRAN-RFL Group
Country	Bangladesh
Sector	Food & Beverages
Environmental category	B
Department	Agribusiness
Status	Pending Approval

Date SPI disclosed	June 26, 2008
Projected board date	July 31, 2008

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

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The project is defined as the corporate-wide expansion to increase production capacity across business lines to be undertaken by the PRAN during FY2009 – 2011.

PRAN is one of the leading branded food and beverage producers in Bangladesh. The company produces a wide range of products, which can be categorized into six broad categories:

- beverages;
- culinary products;
- confectionery;
- dairy;
- snacks; and
- premium rice.

Created in 1993, the company enjoys a very strong brand reputation in the country and it also exports to more than 70 countries. For the financial year ending 30 June, 2007, the company reported combined sales of $66.8 million and a net profit before minority interest of $4.2 million.

At present Pran borrows in the local market from both local and multinational banks. IFC’s funding will support the long term tenor requirement and funding diversification effort of the company.

Anticipated development impact of the project

The proposed corporate investment program will support the continued growth of a leading food company in Bangladesh to expand capacity, improve operating efficiencies and exploit domestic and export market opportunities. The company’s growth has an extended reach on the local economy around production sites, with significant benefits for employment, farming, local SMEs as well as taxpayers.

IFC's expected development contribution

- Support upgradation of quality management system and environment standards for PRAN, creating demonstration effect for other companies.
- Supporting a potential south-south player: One of PRAN’s strategic objectives is to set up operations in North East India.
IFC’s support of PRAN will allow the company to pursue its growth strategy and allow for opportunities for further supporting and financing such south-south ventures.
- Supporting the company in improving its Corporate Governance practice.
- Providing long-term financing.

Environmental and social issues - Category B

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects. The review of this project consisted of appraising technical, environmental and social information submitted by the project sponsor; plant and field visits to review production processes; and meetings with the company’s management team to discuss IFC’s PSs, guidelines and other requirements.

Social and Environmental Assessment and Management Systems: The company is HACCP compliant and has obtained a company wide ISO 9001 (Quality) certification. It has further agreed to develop, within an agreed timeline, an integrated management system covering ISO 9001-2000, ISO 14000, OHSAS 18000 standards and HACCP for food safety.

Labor and Working Conditions: PRAN has an HR policy that is consistent both with relevant local regulations, as well as international good practices on some aspects. The general housekeeping in facilities was found to be of reasonable standards in the plants visited.

Pollution Prevention and Abatement: The existing PRAN facilities receive water from own tube wells and electricity from the national grid. Two facilities are equipped with sewage and/or wastewater treatment plant as required and the ETP in the third facility is currently under construction.

Community Health, Safety and Security: All PRAN facilities are located in rural areas and nature of the operations does not present significant safety and security risks to nearby communities.

Land Acquisition and Involuntary Resettlement: As part of the proposed Project, the Company will not be acquiring new land.

Biodiversity Conservation and Sustainable Natural Resource Management: There are no legally protected areas in the vicinity of any of PRAN operations and PRAN operations do not involve modification or degradation of any biodiversity resource.

The company has agreed to take corrective actions where necessary to ensure adherence to World Bank/IFC policies and procedures for all environmental and social issues and report them in the Annual Environmental & Social Monitoring Report (AMR) where applicable.

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