The project will be implemented by Arcelik. Arcelik is 57.3% owned by Koc Group, a leading Turkish industrial conglomerate with investments in consumer durables, automotive, financial services, energy and trade and services. The Burla Group holds 22.3% of Arcelik, while the remaining 20.4% is publicly traded on the Istanbul Stock Exchange.

Arcelik would use the IFC financing to fund part of its corporate investment program estimated at €285 million ($379 million). The IFC financing is a loan package consisting of an €80 million ($106.4 million) for IFC’s own account and a loan of up to €80 million ($106.4 million) on the account of participants.

106.14 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	106.14
Equity

* These investment figures are indicative

Arcelik is headquartered in Cayirova, Turkey, approximately 50 kilometers from Istanbul, with 8 other production facilities located in the Istanbul area, Eskisehir, Ankara, Tekirdag (Cerkezkoy), and Bolu in Turkey and Gaesti in Romania. Manufacturing facilities consist of washing machine, refrigerator, cooking appliance, vacuum cleaner, dishwasher, electrical motors, and compressor plants ranging in areas from 18,000 to 57,000 m2/plant. The greenfield washing machine plant contemplated by Arcelik’s corporate investment program will be built on a site located in an industrial zone in the vicinity of a large city in the European part of Russia. Currently, the company is in the process of making its choice among several potential sites.

The proposed IFC investment would support the ongoing investment program of one Europe’s lowest cost producers of household appliances. The benefits to Turkey stem from having a competitive leader in the appliance industry active throughout the EU area and beyond, which would continue to generate significant export revenues. In addition, the proposed IFC investment would support of Turkey’s integration into the EU economy. Additional benefits are expected to Russia as a result of the implementation of the company’s project to build a greenfield washing machine plant in Russia. Russia is expected to benefit from technology and production management expertise transfer, as well as from upstream linkages with Russian suppliers and the company’s contribution to the development of advanced supply chain management techniques. The IFC role in the project includes: - provision and mobilization of long-term funding for a Turkey-based company; - support to an emerging market country company with advanced production management, environmental and social practices; - facilitation of a project that contemplates cross-border investments between emerging market economies; - facilitation of cross-border transfer of industry best practices.

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, health and safety, and social/community impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The environmental review consisted of appraising technical, environmental, health and safety, and social/community information submitted by Arcelik. The following EHS and social/community impacts were analyzed:

- Arcelik’s commitment to quality and performance including ISO certifications, implementation of the TPM and Six Sigma programs;
- Compliance of the manufacturing plants in Turkey, Romania and Russia with IFC, Turkish, Romanian and Russian environmental, health and safety requirements; and
- Social and community issues.

Based on the appraisal of this project and the information currently available, the proposed expansion projects and the new plant in Russia will meet the applicable local (i.e. Turkish or Russian) EHS requirements as well as IFC environment and social policies and the environmental, health and safety guidelines. IFC will evaluate the project’s compliance with the applicable Turkish/Russian and IFC environmental, health and safety, and social/community requirements by reviewing an Environmental Impact Assessment for the Russian project and annual monitoring reports prepared for the project covering ongoing performance of EHS and social/community activities. Periodic site supervision visits will also be conducted including a visit to the Russian project site once it is selected.
Location of environmental documents in locally affected community
Environmental documentation will be made available at the following locations: Municipal Office Bulletin Boards located in Tuzla and Eskisehir, the company’s website and local newspapers.