The project sponsor is the Aditya Birla Group, one of India’s largest business conglomerates with worldwide sales of more than $8 billion in 2002. The Group is a longstanding client of IFC, in Egypt, India and Thailand and Indonesia. Major group companies include Grasim Industries (fibers, cement, sponge iron, textiles and chemicals); Hindalco (India’s largest aluminum company); Indian Rayon (apparel, yarn, textiles, carbon black) and Indo Gulf Company (fertilizers). The Birla Group has an existing presence in the acrylic fiber business through Thai Acrylic, which started operations in 1989. The Birla Group’s existing operation in Egypt is Alexandria Carbon Black, which started production in 1994 and after successive expansions is now the largest single site carbon black plant in the world. The Aditya Birla Group will own 60% of the equity capital of the new company. Other shareholders are: SIDPEC a subsidiary of Egyptian Chemicals Holding Co. owned by the Ministry of Petroleum of the Government of Egypt; APICORP, an investment company established by the governments of the ten member states of the Organization of Arab Petroleum Exporting Countries (OAPEC) and Saudi Egyptian Industrial Investment Company (SEIIC) an investment company owned the governments of the Kingdom of Saudi Arabia and Arab Republic of Egypt. IFC is also proposing to be a shareholder with a 10% equity stake.

The total project cost is estimated at $68.9 million. The proposed IFC investment consists of a loan for IFC’s account of $8 million together with a $2.4 million equity investment for a 10% ownership stake.

10.40 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	8.0
Equity	2.40

* These investment figures are indicative

The 35 ha project site is located in Ameyra, Alexandria, 25 Km from the main port of Alexandria on the Mediterranean coast. The project site is in an industrial zone adjacent to the existing operations of Alexandria Carbon Black., to Alexandria Tire Company, a major local tire producer and to a number of petrochemical facilities.

Local production of acrylic, by reducing working capital requirements, improving selection, offering competitive prices and improved technical assistance, will reinforce the long term sustainability of downstream textile customers, Egypt’s largest manufacturing sector and the main source of employment. The project will directly provide 240 new jobs, create additional indirect employment and save foreign exchange. The Birla Group has a strong record in Egypt in ACB, with a focus in particular on quality control, ISO and other certifications (including for environmental performance) which have a continuing positive demonstration effect in raising the quality of local manufacturing companies. The Project will reinforce this effort and provide an ongoing model for business success. Historically IFC has played a valuable role with the Birla Group in Egypt to broker the relationships with the Group and its local financial partners. IFC will continue to play this role for the Project, providing comfort to local institutions, expertise in financial structuring and help in extending the tenor of local bank financing. Finally through our involvement in the financing, we will provide ongoing country risk comfort to the Birla Group for the diversification of their investment portfolio in Egypt. IFC has also played a significant role in developing the Project proposal, advising on initial capacity, technology, customer credit appraisal and market entry strategy.

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 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.

- Site suitability for project;
- Land acquisition procedure;
- Performance of the ACB company, which has common owners and is located adjacent to the project;
- Utilization of waste energy;
- Air emissions, liquid discharges and solid waste management; and
- Health and safety standards.
Location of environmental documents in locally affected community
The full Environmental Review Summary was published in Arabic language in El Gomhorya newspaper on May 21, 2004.