32657 - BML-Brummer

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Summary of Investment Information

Project Number

32657

Company Name

BUTTERFLY MARKETING LTD

Date SPI Disclosed

Oct 31, 2012

Country

Bangladesh

Region

South Asia

Projected Board Date

Dec 3, 2012

Environmental Category

B - Limited

Status

Active

Last Updated Date

Nov 30, 2016

Department

Gbl Ind, Manufact, Agribus & Services

Industry

Manufacturing

Previous Events

Approved : Dec 11, 2012
Signed : Dec 18, 2012
Invested : Feb 12, 2013

Sector

Household Appliances (Including Refrigerators, Laundry Machine, Dishwashers, etc.)

Project Description

The Project involves financing the ongoing capital expenditure of Butterfly Marketing Limited (“BML” or “the Company”) to facilitate its backward integration into the assembly/manufacturing of some of its key imported white goods. The Company is in the process of setting up two manufacturing plants, Butterfly Industries Limited (“BIL”) and Butterfly Manufacturing Company Limited (“BMCL”) in an effort to manufacture its products locally, thereby giving it better competitiveness.

The Project Company is BML, which is setting up the two manufacturing plants. It is one of the leading consumer electronics/white goods retailers in Bangladesh.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	20.0
Equity	6.38

Development Impact

The Project is expected to: (i) Job creation: BML''s various projects are expected to create 90 jobs during the construction stage of the plants and 367 permanent jobs in the factories post-construction. The company will be creating 200 new dealerships across the country in the next three years to expand its distribution network, which will create additional indirect jobs; (ii) Technology transfer: BML will be leveraging the technical expertise of LG and Hisense to set up its manufacturing plants, adopting manufacturing best practices, which is expected to improve the overall quality of BML and, in due course, of other companies in the industry; (iii) Diversify Bangladesh''s export basket: BML plans to export Hisense (and possibly other branded) products once operations have stabilized. This would help Bangladesh diversify its export basket and improve the country''s over dependence on the textile sector; (iv) Increase domestic consumption: By selling branded household appliances at lower prices, BML will make these aspirational goods affordable to a much larger section of the country''s population, promoting domestic consumption; and (v) Reduce trade deficit: BML''s backward integration will help reduce Bangladesh''s total import bill and will lead to foreign currency savings, which will help shore up the country''s foreign exchange reserves.

(i) Industry: IFC''s industry expertise in retail and manufacturing have yielded a set of recommendations, which have already been incorporated into the Company''s future plans. Very much welcomed and valued by the Company, IFC will seek to add value through its expertise going forward as a long-term partner; (ii) Demonstration effect: IFC''s equity investment will positively influence the perception of Bangladesh''s undeveloped manufacturing sector, potentially encouraging more investments that could improve the overall scale and competitiveness of the sector; (iii) Corporate governance expertise: Through the proposed investment, IFC/FPE will be able to appoint two to three independent directors to the board of the Company between themselves, which will help promote adoption of corporate governance best practices and increased financial transparency and accountability. IFC is also exploring an engagement of the Corporate Governance Advisory team with the Company; and (iv) Long-term financing: Through the provision of A and B loans, IFC will provide long-term financing to facilitate the growth of the Company, that is not currently available in the local market.

E&S Category Rationale / Risks and Mitigation

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 that can be avoided or mitigated by adhering to generally recognized performance standards and guidelines.

Key environmental and social (E&S) risks and issues related to this project include: adequate assessment of the E&S impacts of the Project; implementation of social, environment, health & safety (EHS) management systems; engagement with local communities in accordance with local requirements and IFC Performance Standards and World Bank Group (WBG)/EHS Guidelines; assurance of fair, safe and healthy working conditions; resource efficiency; management of emissions, wastes and discharges; and life and fire safety management of all the public access buildings (retail stores & dealer outlets). Further details on the potential environmental and social impacts of the project, corresponding mitigation measures and guidance on how and where information about the project are provided in the Environmental & Social Review Summary.

Contacts

For Inquiries About the Project, Contact

Mr. Mahbubul Haque Sufyani
Designation: Executive Director
Address: 71 Motijheel C/A, Dhaka-1000
Tel: 7169150-3
Fax: 9561317-8
Email: mailto:m.sufyani@butterfly-lg.com

For Inquiries and Comments About IFC, Contact

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2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

Local Access of Project Documentation

The Company will disclose this ESRS and the ESAP at its website: http://www.butterfly-lg.net as well as locally at the following address:

Butterfly Marketing Limited
71 Motijheel C/A
Dhaka-1000
Bangladesh.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. Its purpose is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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