Summary of Proposed Investment
Project Number
10894
Company Name
Tecnofil S.A.
Date SPI Disclosed
May 17, 2001
Country
Peru
Industry
Manufacturing
Projected Board Date
Jun 22, 2001
Status
Completed
Sector
Other Miscellaneous Fabricated Metal Products (Including Non-Wood Housing Products, Tanks, Cutlery, Kitchen Utensils and Handtools, etc.)
Department
Regional Industry MAS LAC & EUR
Environmental Category
B - Limited
Previous Events
Approved : Jun 29, 2001
Signed : Dec 13, 2001
Invested : Dec 17, 2001
Project Description
With total estimated assets of US$24 million and net sales of approximately US$30 million for FY2000, Tecnofil is one of Peru’s most important producers of copper and copper alloy semi-finished and finished products (electrical bars, connection flats, wire, hardware "nuts and bolts" type of products, solder, copper sulfate for the mining and fertilizer industries). The company started operations in 1975 and in the past four years has modernized its operations and significantly increased its exports. The company would like to obtain IFC financing to fund: (i) an expansion in its production capacity; (ii) the continuation of the implementation of modern technology to their production processes; and (iii) the refinancing of short term debt.
The project will increase their production capacity by approximately 50% from around 15,000 to around 23,000 tpa. This will be very beneficial for operating costs, as the project will enjoy economies of scale, and production campaigns will be longer and more cost-effective. More importantly, Tecnofil will switch completely to a modern ''continuous casting'' technology thereby increasing the company''s efficiency.
Tecnofil needs the new technology to continue their modernization and maintain their growth pace, be able to compete internationally and comply with more demanding quality requirements from more sophisticated clients.
IFC will play an important role in this project by:
-Providing access to long term funds: The current political crisis has affected the Peruvian economy and to a large extent its financial sector. Given the characteristics of the project and the fact that high capital investments are inherent to the industry, the project requires long term funding currently unavailable in the local market.
-Increasing the company’s financial viability: As a result of the project, the company will be able to access new markets, compete internationally with multinational enterprises and increase profitability.
With the support from its sponsors and proactive management skills, the company has been able to turnaround its operation and financial viability including the establishment of long term contracts that assure higher sales. However, the inability to obtain adequate financing has prevented them from undertaking the proposed expansion and has increased the threat of losing the position they have built up in their markets, something that can be resolved with an investment by the IFC.
Development Impact:
-IFC''s investment will create a "demonstration effect" to highlight attractive investment opportunities that will foster growth in Peru.
-Tecnofil’s exports will provide the country valuable access to foreign exchange. At project completion the company would be exporting approximately US$50 million annually.
-Tecnofil is one of the few companies that adds value to the copper mined in Peru through further processing. This type of value-added work allows Peru to generate higher income from its natural resources.
The project will increase their production capacity by approximately 50% from around 15,000 to around 23,000 tpa. This will be very beneficial for operating costs, as the project will enjoy economies of scale, and production campaigns will be longer and more cost-effective. More importantly, Tecnofil will switch completely to a modern ''continuous casting'' technology thereby increasing the company''s efficiency.
Tecnofil needs the new technology to continue their modernization and maintain their growth pace, be able to compete internationally and comply with more demanding quality requirements from more sophisticated clients.
IFC will play an important role in this project by:
-Providing access to long term funds: The current political crisis has affected the Peruvian economy and to a large extent its financial sector. Given the characteristics of the project and the fact that high capital investments are inherent to the industry, the project requires long term funding currently unavailable in the local market.
-Increasing the company’s financial viability: As a result of the project, the company will be able to access new markets, compete internationally with multinational enterprises and increase profitability.
With the support from its sponsors and proactive management skills, the company has been able to turnaround its operation and financial viability including the establishment of long term contracts that assure higher sales. However, the inability to obtain adequate financing has prevented them from undertaking the proposed expansion and has increased the threat of losing the position they have built up in their markets, something that can be resolved with an investment by the IFC.
Development Impact:
-IFC''s investment will create a "demonstration effect" to highlight attractive investment opportunities that will foster growth in Peru.
-Tecnofil’s exports will provide the country valuable access to foreign exchange. At project completion the company would be exporting approximately US$50 million annually.
-Tecnofil is one of the few companies that adds value to the copper mined in Peru through further processing. This type of value-added work allows Peru to generate higher income from its natural resources.
Sponsor / Cost / Location
Development Impact
Related ESRS/ERS
Contacts
For Inquiries About the Project, Contact
Mr. Martin Majluf, General Manager
Isidro Bonifaz 471 Independencia
Lima, Peru
Isidro Bonifaz 471 Independencia
Lima, Peru