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PT Karunia Alam Segar
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.
KARUNIA ALAM SEGAR, PT
Date SPI disclosed
May 2, 2006
Projected board date
June 5, 2006
Invested: August 14, 2006
Signed: June 22, 2006
Approved: June 8, 2006
View Environmental & Social Review Summary (ESRS),
PT Karunia Alam Segar (PT KAS) is one of the operating companies in the Wings Group. The company is an existing IFC client. PT KAS produces instant noodles in Surabaya and seeks follow-on capital to expand its instant noodle lines. The project will set up 9 instant noodle lines in PT KAS.
Project sponsor and major shareholders of project company
The Wings Group will sponsor the project through P.T. Mitrajaya Ekaprana (Mitrajaya) and the shareholders of Mitrajaya. The Wings Group is a private Indonesian conglomerate with core business in soap and detergents. Mitrajaya is a 99% shareholder of PT KAS.
Total project cost and amount and nature of IFC's investment
The total project cost is estimated at $40 million. The proposed IFC investment includes a $20 milllion A Loan to PT KAS for IFC’s own account.
IFC investment as approved by Board
20 million (USD)
IFC Investment (million USD)
* These investment figures are indicative
Location of project and description of site
PT KAS, Gresik, Surabaya, East Java Province. The plant occupies a portion of a larger industrial site of 75 ha located in north Gresik in a developing industrial area. The area was formerly occupied by brackish water fish ponds which are now being filled as the city expands. The land was purchased from the previous owners on a willing seller-willing buyer basis, and no residents or land users were displaced. This plant started operation in early 2003.
Anticipated development impact of the project
The project will support the continued growth of a leading Indonesian food group to seize opportunities offered by a rapidly growing demand for processed foods. Secondary benefits from the project will likely include:
- employment generation; and
- increase in domestic competition.
The Indonesian economy will also benefit from the project through incremental taxes (income tax, import duties on equipment, import duties on imported raw materials).
IFC's expected development contribution
IFC has been active in Indonesia assisting reputable clients in key sectors such as agribusiness, extractive industries, infrastructure and financial sector. IFC will play a vital role in supporting an existing client for a Project that caters to the lower segments of the population. Long-term funds are still not easily available in Indonesia and given the nature of the project and the long lead times to profitability, IFC would play a key role in fulfilling this need. IFC has assisted this family owned concern in the environmental and social issues and IFC will continue to add value in this area.
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 review of this project consisted of appraising both plants and reviewing technical and environmental/social information submitted by the project sponsor. The following potential environment, health and safety and social impacts of the projects were analyzed: existing and planned management systems for quality, environment and health and safety; occupational health and safety; food safety; air emissions from steam and heat generation; sustainability and quality of potable water supply used in food manufacturing; liquid waste management; biological control of pest species; and solid waste management.
For inquiries about the project, contact:
Hanny Sutanto, Director
Jl. Setia Budi Selatan Kav. 10
Environmental documents will be made available at the local public post office
For inquiries and comments about IFC, contact:
General IFC Inquiries
IFC Corporate Relations
2121 Pennslyvania Avenue, NW
Washington D.C. 20433
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