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| Summary of Project Information (SPI) |
| This Summary of Project Information 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. |
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| Project number | 24444 |
| Project name | ABC Coffee |
| Country | India |
| Sector | Accommodation & Tourism Services |
| Department | Global Manufacturing & Services |
| Company name | Amalgamated Bean Coffee Trading Company Ltd |
| Environmental category | B |
| Date SPI disclosed | March 31, 2006 |
| Projected board date | May 2, 2006 |
| Status | Active |
| Previous Events | Invested: November 20, 2006
Signed: September 30, 2006
Approved: September 15, 2006 |
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| Description of company and purpose of project |
Amalgamated Bean Coffee Trading Company Ltd. (ABC or the company) is India’s largest integrated coffee company, involved in purchasing, roasting and selling high quality coffee and specialty beverages across multiple food-service channels. The company currently owns and operates around 288 cafes under the “Café Coffee Day” brand. In addition, it has an extensive network of kiosks and outlets selling freshly ground coffee. ABC is a privately held company established and majority owned by Mr. V.G. Siddhartha, an Indian entrepreneur.
The company currently enjoys a clear leadership position in the modern café and coffee vending segments in India. Over the next three years (financial years 2007 to 2009), the company proposes to implement an investment program to finance a further expansion of its cafes and kiosks. The key components of the project are:
- expansion of the Café Coffee Day chain;
- expansion of kiosks and freshly ground coffee outlets;
- other capital expenditure; and
- incremental working capital requirement.
ABC has requested IFC to provide financing for the project. |
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| Project sponsor and major shareholders of project company |
ABC is a privately held company established in 1993 and owned by entities owned or controlled by Mr. V.G. Siddhartha, an Indian entrepreneur with interests in coffee plantations, venture capital investments, retail investment advisory and broking, and real estate development, besides his interest in ABC. Mr. Siddhartha is a well established local entrepreneur, named in 2003 as ‘Entrepreneur of the Year’ by the Economic Times newspaper in India. Mr. Siddhartha began his career in 1983 as a stock broker trading shares in Bombay. In 1984 he established Sivan Securities Ltd as an independent brokerage house, which subsequently expanded into investment banking and advisory services under the Sivan Securities Group umbrella.
Mr. Siddhartha, through his company Sivan Securities, established Amalgamated Bean Coffee Trading Company Ltd (ABC Trading), as a domestic coffee bean trading and exporting company. The first café was opened as a cybercafé on Brigade Road, one of Bangalore’s main shopping areas. Since then, ABC has established itself as the market leader in the chained coffee café sector in India with around 288 Café Coffee Day cafés and over 300 Xpress takeaway coffee kiosks. The company’s brand ‘Café Coffee Day’ has emerged as one of the leading foodservice brands in India. |
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| Total project cost and proposed IFC investment |
| ABC is seeking an investment from IFC of up to $15 million to assist in funding its strategic expansion program over the 2007-2009 period. It is proposed that the IFC investment be provided as a loan of up to $10 million and an equity/quasi-equity investment of up to $5 million. This investment would be IFC’s first investment with ABC and IFC’s first in the foodservice sector in India. |
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| Location of project and description of site |
| ABC is headquartered in Bangalore, India. The Company’s Café Coffee Day cafés are located across India, mainly in large urban population centers such as Bangalore, Delhi, Mumbai, Chennai and Hyderabad. The cafés are typically located in shopping malls, high pedestrian traffic areas, airports and medium density middle-class suburbs. ABC’s expansion is expected to occur within the cities in which the company already has established operations. |
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| Project Development Impact and IFC's Role |
The project is expected to produce a number of important development impacts including:
Employment generation. The modern foodservice sector contributes significant direct and indirect employment in local communities. ABC employees receive higher than average pay and are given extensive training in modern work practices and working in a computerized environment. In addition to the 2,000+ new direct positions that will be created by the expansion of the café chain, there will be substantial indirect employment generated through local sourcing of food and other supplies.
Training of suppliers/farmer linkages. The company sources the bulk of its inputs (coffee as well as snacks and other supplies) from local Indian producers. The sponsor supports local communities through a school in Chikmagalur and a vocational/technical college, whilst the company’s research and development laboratories directly support local coffee growers and planters.
Extension of responsible coffee production practices. The sponsor’s coffee plantations operate under the international “Utz Kapeh” certification standard, which requires that the certificate holder maintains a recognized set of economic, social and environmental criteria for responsible coffee production. These include minimal and appropriate use of pesticides, protection of labor rights and access to education and health care.
Demonstration effect. Operating in the formal sector, ABC pays taxes (local and income) and maintains high standards of service and hygiene. In an economy where the foodservice industry is still highly fragmented and hygiene standards vary widely, ABC is a good role model providing tax revenue and setting a high profile lead in best practice foodservice hygiene standards.
Support the development of an Indian brandname. It is widely recognized that the mark of a successful business is the value of its brand. Currently, there are still only a few emerging market brandnames that can be counted among the top 500 brands in the world. This investment would support the development of a homegrown Indian brand and demonstrate to others the value of developing strong brandnames, backed up by quality and efficiency. |
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| Environmental and social issues - Category B |
This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result, which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The following potential environment, health and safety and social aspects of ABC’s operations were analyzed:
- corporate environmental, social, and health and safety management systems;
- national and local government permitting requirements;
- source of power and energy, including fuel storage if applicable;
- air emissions from existing and new sources in construction and operation;
- ambient air quality and noise impacts on nearby receptors in construction and operation;
- source and volumes of water consumed including efforts to minimize water use;
- recycling and treatment of process effluent and domestic waste water;
- hazardous materials management;
- minimization, recycling and disposal of solid and hazardous wastes;
- fire and life safety and emergency response;
- occupational health and safety in construction and operation;
- plantation workers welfare, health and safety;
- fair trade labeling; pest management in warehouses and plantations;
- public consultation and disclosure;
- corporate social responsibility efforts, including HIV/AIDS awareness; and timely reporting on environmental and social performance to IFC.
The company has presented plans to address these impacts to ensure that the proposed project will upon implementation of the specific agreed measures, comply with the host country laws and regulations and the World Bank/IFC environment and social policies and the environmental, health and safety guidelines. A discussion on the company’s plans to mitigate/minimize identified environmental and social impacts has been provided in the Environmental Review Summary (ERS) and an Environmental and Social Action Plan (ESAP). The company has publicly disclosed the ERS and the ESAP in a manner and at locations specified later in this document.
To view the environmental documents for this project, click here |
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| Location of environmental documents in locally affected community |
Karnataka Bank Limited (Overseas Branch)
Kasturba Road, Bangalore-560001, Karnataka
Kurkenmutty Estate
Thanigebailu Village, Lingadha Halli, Sambige Khan Post, Tharikere Taluk, Chikmagalur District, Karnataka |
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| To contact the project company, please write to: |
Mr S.R. Hussain
Manager, Quality Systems
Amalgamated Bean Coffee Trading Company Limited
321, Raheja Chambers, #12 Museum Road, Bangalore-560001, Karnataka
Telephone: (080) 2558-9581
Fax: (080)-2558-0535
E-mail: hussain@abccoffeeday.com |
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