45445 - Khaadi Corporation SMC Pvt Ltd

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Summary of Investment Information

Project Number

45445

Company Name

KHAADI SMC PVT. LTD.

Date SPI Disclosed

Sep 13, 2021

Country

Pakistan

Region

Middle East

Projected Board Date

Dec 31, 2021

Environmental Category

B - Limited

Status

Active

Last Updated Date

Oct 7, 2022

Department

Regional Industry MAS MCT

Industry

Tourism, Retail and Property

Previous Events

Approved : May 13, 2022
Signed : May 27, 2022
Invested : Oct 5, 2022

Sector

Retail (Including Supermarkets, Grocery Stores, etc.)

Project Description

Khaadi Corporation (SMC-Private) Limited (“Khaadi” or the “Company”) is a leading retailer of Pakistan with largest market share in formal apparel retail market. Khaadi started operations in 1998 with one store and has expanded its retail network to 62 stores in over 25 cities in Pakistan and 14 international stores in Qatar (1), UAE (6), Bahrain (1) and United Kingdom (6), to mainly cater to the South Asian communities in these countries. ?

The Company is undertaking an expansion plan to (i) help grow its operations as it recovers from disruptions related to COVID-19 through expansion of footprint/retail space by adding stores in strategic locations in tier II and III cities across Pakistan, optimization of existing retail space, (ii) acceleration of global online sales, and (iii) expansion of the international store network (the “Project”) and has invited IFC to consider supporting its investment program.

Associated Advisory Engagement

IFC AS services are expected to include: i) Corporate Governance Advisory to help improve corporate governance structure through board representation and formulation of a proper board procedures and board committees, and (ii) E&S Advisory to help ensure adoption and implementation of adequate E&S standards (namely with respect to labor aspects, supplier management and sourcing risks) and explore resource efficiencies measures.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	25.0

Development Impact

Implementation of the Project is expected to generate robust local demand for the labor-intensive textile industry, create ~850 direct and indirect jobs with up to 20% for women and enhance tax collection by encouraging formalization of retail and upstream activities. The Project has the potential to provide more job opportunities for female workers, both for those who work directly with the company and for the female workers in the supply chain such as local artisans, designers, and tailors. IFC anticipates that the Project will promote market integration by: i) improving standards across the value chain; ii) increasing access to market for local suppliers; iii) promoting development of retail infrastructure by creating demand for lease space and; iv) increasing formal retail penetration in Tier II/III cities. The expansion of Khaadi stores into Tier II and III cities of Pakistan will increase access to goods at attractive price-points and quality products otherwise not available outside large cities in the country.

IFC will be providing the Company with long-term patient capital not readily available locally for asset-light companies that will help strengthen the financial soundness, creditworthiness, and governance of the Company. IFC's equity financing will also provide confidence in Khaadi's minority shareholder rights as it progresses towards public listing. In addition, IFC will also assist the Company in establishing adequate Corporate Governance standards and E&S policies to ensure full compliance of the Project with IFC performance standards.

E&S Category Rationale / Risks and Mitigation

This is a category B project according to IFC’s Policy on Environmental and Social Sustainability 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 and adequately managed through the implementation of expansion work specific Environmental and Social Management Plan.

Key E&S risks and issues related to this project include: (a) the company’s capacity and systems to manage its social, environmental, health and safety (EHS) aspects of its operations (stores, primary suppliers) in compliance with legal requirements as well as IFC’s Performance Standards and World Bank Group (WBG) EHS guidelines; (b) life and fire safety (LFS) management for all stores as per WBG EHS Guidelines; (c) assurance of fair, safe and healthy working conditions for its workforce (both company employees and third party workers) including management of occupational health and safety, and COVID-19 response measures; (d) resource efficiency; management of wastes; and (e) E&S risks in the supply chain.

Contacts

For Inquiries About the Project, Contact

Khaadi Corporation (SMC-Private) Limited
Ayaz Abdulla
Chief Strategy Officer
+92-21-111-542-234
ayaz.abdulla@khaadi.com
22nd Floor, Sky Tower B, East Wing, Dolmen City, HC#3 Marine Drive, Clifton, Karachi - 74000, Pakistan
corporate.khaadi.com

For Inquiries and Comments About IFC, Contact

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Telephone: 202-473-3800
Fax: 202-974-4384

Local Access of Project Documentation

Khaadi will make relevant documentation available in English on its website and its office in Karachi, Pakistan.

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.

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