Ramenka is 50% owned by Migros Turk Ticaret Anonim Sirketi (Migros), the largest and the oldest supermarket chain in Turkey with international operations in Azerbaijan, Bulgaria, Kazakhstan and Russia. 48.94% of Migros’ shares are traded at the Istanbul Stock Exchange. The remaining shares are controlled by the Koc Group, one of Turkey’s leading industrial conglomerates. The remaining 50% of the company are owned by Enka Insaat ve Sanayi Anonim Sirketi (Enka) through its European subsidiaries: - Enka Holding Investment S.A. (38.3%); and - EnTrade GmbH (11.7%). Enka is a Turkey-based international conglomerate active in construction, power, management of real estate properties and retail. Enka is active in Algeria, Azerbaijan, Croatia, Germany, Kazakhstan, Lybia, the Netherlands, Russia and Turkey. 13.1% of Enka’s shares are traded at the Istanbul stock exchange. The remaining shares are held privately.

The estimated project cost is $119 million. IFC is considering an A loan of $40 million to the company. The financial plan also includes subordinated loans and cash generation.

40.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	40.0
Equity

* These investment figures are indicative

The project consists of 2 supermarket/malls located in Moscow oblasts and 3 hypermarket/malls in Moscow, St. Petersburg and Togliatti. Udelny Park in St. Petersburg is going to be located on a 2.0 ha land plot. Orehokhovo-Zuyevo in Moscow oblast is located on the eastern side of the city of Moscow with a land plot of 2.0 ha. Reutov in Moscow oblast is also located on the eastern side of the city of Moscow with a land plot of 1.5 ha. Butova is located in the southern part of Moscow with a land plot of 2.9 ha. Togliatti located in Samara oblast, Southern Russia has the biggest land plot in the project with 5.2 ha.

The project will extend a modern retail format that has proven successful in Moscow to the surrounding area and to new cities (St. Petersburg and Togliatti.) The project will allow consumers in these areas to benefit from the superior prices, quality, choice, and shopping environment of these larger markets. In addition, the development impact of the project is expected to include the following benefits: - infrastructure development outside Moscow: the implementation of the project will further increase the supply of high-quality commercial retail space in St. Petersburg and Togliatti; - follow-up projects outside Moscow by other large investors: should Ramenka’s regional expansion prove to be successful, it would spearhead investments by major retail chains beyond the capital city; - increased local purchasing; - increased employment; IFC’s Role: IFC provides the longest term to Ramenka comparing with other financial sources. By providing long-term debt financing for the project, IFC would enable Ramenka to proceed with a strategically important expansion in a timely fashion. In addition, IFC would help the company to: - enhance its financial structure; - broaden Ramenka’s involvement with commercial lenders (through arranging a new syndication); - reduce recourse to the Turkish lenders; - improve further the corporate environmental, health and safety structure of the company.

Main environmental, health and safety issues of the project are: site selection and site environmental conditions; land acquisition, rights and use, air emissions; liquid and solid waste treatment and disposal including sewage collection; use of appropriate refrigerants; power and water supply; fire protection and life safety; emergency response; general worker health and safety; and environmental, health and safety management. As this is the fourth investment with Ramenka, IFC staff has engaged in a constructive dialogue with the company on overall environmental management since 2000. The company has presented plans to address and mitigate impacts, and it is anticipated that the proposed project will comply with applicable Russian Federation laws and regulations and World Bank Group/IFC requirements.

Lease rights are acquired through a willing seller/willing buyer relationship. Space for some existing supermarket stores is leased in shopping centers owned by third parties. At all sites the local utility company will provide potable water. Electricity will be drawn from the grid. At all sites employee- and customer-generated sanitary sewage discharged to the municipal sewage system with permission from the authorities. Most of the waste generated by the stores will be packaging-related material and will be recycled. Operational environmental issues are relatively well managed. Ramstore design and lay out of their retail outlets to conform to Russian fire safety standards, which are compatible with international standards. Each store has either a sprinkler system with full coverage of the sales area or clearly marked fire hydrant including detailed fire and emergency instructions.

A dedicated staff member is in charge of all licenses, safety approvals and permitting documentation. In order to properly manage environmental the sponsor has developed an Environmental Management System (EMS) with full implementation taking place in the second quarter of 2005. During the appraisal IFC provided advice on how to best implement the EMS, which has just received ISO 14001 certification. An independent review of the life and fire safety systems and emergency plans for all the stores will take place as a condition of disbursement. In addition IFC has recommended Ramenka to prepare a comprehensive Security, Life and Fire Safety Manual.

In addition, IFC has recommended to Ramenka to review its corporate environmental, health and safety structure to reflect key issues that need to be addressed as well as the additional demand linked with the company’s growth. Better integration of EHS issues at the corporate management level as well as in store operations is needed. Finally Ramenka has developed positive relationships with local communities and is supporting municipal activities on life safety prevention and public health improvement.
Location of environmental documents in locally affected community
Announcements in the local press (Moscow oblast, Moscow city, St Petersburg and Togliatti) will inform all stakeholders about the disclosure of the ERS at Ramstore shops. The ERS will be posted in Russian and English in all Ramstores sites. Originals of all environmental and safety documents are being kept mostly in stores, and rarely in central office depending on the type of the documents.