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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 | 23858 |
| Project name | Arcelik Regional Expansion |
| Country | Turkey |
| Sector | Industrial & Consumer Products |
| Department | Global Manufacturing & Services |
| Company name | Arçelik, A.S. |
| Environmental category | B |
| Date SPI disclosed | January 3, 2005 |
| Projected board date | February 3, 2005 |
| Status | Completed |
| Previous Events | Invested: April 19, 2005
Signed: April 8, 2005
Approved: February 10, 2005 |
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| Description of company and purpose of project |
Established in 1955, Arcelik A.S (Arcelik or the company) is the market leader in Turkey’s household appliances sector, with revenues of approximately $2.4 billion in 2003. International revenues accounted for approximately 50% of this amount. Its asset size was $1.8 billion at the end of 2003.
The company pursues a two-fold strategy targeted at the following components:
- maintaining its dominant position in the domestic market and
- strengthening its position internationally through brand development, export sales, as well as through acquisitions and greenfield expansions abroad.
Arcelik has state-of-the-art production facilities, practices advanced production management techniques, maintains cutting-edge research and development (R&D) capabilities and has experience in implementing new technologies and launching innovative products. In 2002, Arcelik started to develop operational and commercial bases outside Turkey with the acquisition of Romania’s only producer of refrigerators and the purchase of five West European brands. The project supports this strategy through helping the company implement a number of corporate-wide initiatives, including those related to the modernization and capacity increases of existing plants, R&D, information technology, production and the establishment of a green-field washing machine plant in Russia. |
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| Project sponsor and major shareholders of project company |
| The project will be implemented by Arcelik. Arcelik is 57.3% owned by Koc Group, a leading Turkish industrial conglomerate with investments in consumer durables, automotive, financial services, energy and trade and services. The Burla Group holds 22.3% of Arcelik, while the remaining 20.4% is publicly traded on the Istanbul Stock Exchange. |
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| Total project cost and proposed IFC investment |
| Arcelik would use the IFC financing to fund part of its corporate investment program estimated at €285 million ($379 million). The IFC financing is a loan package consisting of an €80 million ($106.4 million) for IFC’s own account and a loan of up to €80 million ($106.4 million) on the account of participants. |
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| Location of project and description of site |
Arcelik is headquartered in Cayirova, Turkey, approximately 50 kilometers from Istanbul, with 8 other production facilities located in the Istanbul area, Eskisehir, Ankara, Tekirdag (Cerkezkoy), and Bolu in Turkey and Gaesti in Romania. Manufacturing facilities consist of washing machine, refrigerator, cooking appliance, vacuum cleaner, dishwasher, electrical motors, and compressor plants ranging in areas from 18,000 to 57,000 m2/plant.
The greenfield washing machine plant contemplated by Arcelik’s corporate investment program will be built on a site located in an industrial zone in the vicinity of a large city in the European part of Russia. Currently, the company is in the process of making its choice among several potential sites. |
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| Project Development Impact and IFC's Role |
The proposed IFC investment would support the ongoing investment program of one Europe’s lowest cost producers of household appliances. The benefits to Turkey stem from having a competitive leader in the appliance industry active throughout the EU area and beyond, which would continue to generate significant export revenues. In addition, the proposed IFC investment would support of Turkey’s integration into the EU economy.
Additional benefits are expected to Russia as a result of the implementation of the company’s project to build a greenfield washing machine plant in Russia. Russia is expected to benefit from technology and production management expertise transfer, as well as from upstream linkages with Russian suppliers and the company’s contribution to the development of advanced supply chain management techniques. The IFC role in the project includes:
- provision and mobilization of long-term funding for a Turkey-based company;
- support to an emerging market country company with advanced production management, environmental and social practices;
- facilitation of a project that contemplates cross-border investments between emerging market economies;
- facilitation of cross-border transfer of industry best practices. |
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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, health and safety, and social/community impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The environmental review consisted of appraising technical, environmental, health and safety, and social/community information submitted by Arcelik. The following EHS and social/community impacts were analyzed:
- Arcelik’s commitment to quality and performance including ISO certifications, implementation of the TPM and Six Sigma programs;
- Compliance of the manufacturing plants in Turkey, Romania and Russia with IFC, Turkish, Romanian and Russian environmental, health and safety requirements; and
- Social and community issues.
Based on the appraisal of this project and the information currently available, the proposed expansion projects and the new plant in Russia will meet the applicable local (i.e. Turkish or Russian) EHS requirements as well as IFC environment and social policies and the environmental, health and safety guidelines. IFC will evaluate the project’s compliance with the applicable Turkish/Russian and IFC environmental, health and safety, and social/community requirements by reviewing an Environmental Impact Assessment for the Russian project and annual monitoring reports prepared for the project covering ongoing performance of EHS and social/community activities. Periodic site supervision visits will also be conducted including a visit to the Russian project site once it is selected.
To view the environmental documents for this project, click here |
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| Location of environmental documents in locally affected community |
Environmental documentation will be made available at the following locations:
Municipal Office Bulletin Boards located in Tuzla and Eskisehir, the company’s website and local newspapers. |
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| To contact the project company, please write to: |
Mr. Tamer Soyupak, Finance Director
Arcelik, Tuzla 34950 Istanbul Turkey
Phone: 90 216 423 3035 |
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