CS was established in 1998 and listed on the Growth Enterprise Market (GEM) of Hong Kong Stock Exchange in February 2004. Mr. Chi Wenfu: 44, is the founder, Chairman and CEO of CS and controls 48.62% shares in CS through a holding company. The balance of the shares is owned by public (49.66%) and other senior executives and directors (1.72%).

The proposed IFC investment is an A loan of up to US$20 million composed of two tranches: (1) a 7-year RMB tranche in the amount of RMB 120 million (US$ 15 million equivalent) and (2) a 5-year HK$ tranche in the amount of HK$40 million (US$5 million equivalent).

20.19 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	20.19
Equity

* These investment figures are indicative

The location of the Project will in Fujian province.

The proposed Project will support the expansion of a successful company through internal expansion and possible acquisitions. The full impact of the project will depend on the nature, condition and location of the acquired assets. The production of certified organic fertilizers is important for the emergence of agricultural producers who will target the fast developing organic product demand in China and abroad. The production of organic fertilizers is equally important for the safe and efficient disposal of waste from the livestock industry. The project will use animal and plant waste and convert it into high value-added organic fertilizer. The primary beneficiaries of the project are expected to be its financiers, the government (through higher income tax contribution) and the local population through increased employment.

- IFC will help CS mobilize customized long-term debt financing not available to the company as present;
- IFC investment would be a vote of confidence in a company at an early stage of development;
- IFC can help further improve the company’s corporate governance practices;
- Encourage development of a new sector: Organic fertilizer in China is still a sector at its early stage. IFC’s financing of CS will be vote of confidence in the sector and in a company at an early stage of development in this sector.

This is a Category B project according to IFC’s Environmental and Social Review Procedures, 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 following potential environmental, social, and health and safety issues were reviewed during appraisal:

- site selection for organic fertilizer plants;
- management of air and water emissions, including odor control;
- sanitary controls on use of animal waste;
- worker labor aspects, health and safety; and
- development and implementation of environmental and health and safety management systems.

The production of organic fertilizer is a low-tech process which effectively makes waste into a valued and valuable product. The nature of the production process is such that air and wastewater emissions are minimal, and any health and safety issues can be readily handled using basic engineering technology. The company carefully monitors its raw materials to ensure that they contain no pesticide residues, heavy metals or any other anthropogenically-derived contaminants. The resulting product is subject to independent testing by Chinese and international certification bodies specializing in organic foods. The company produces a small line of organic pesticides, and implements appropriate safety measures to protect workers’ health. The processing plants are relatively innocuous and present no threats to community health, safety or security. There are no significant emissions which could affect the surroundings, and no noxious odors are produced. The company has already achieved ISO 9001 certification for its quality management system, and is planning to also obtain ISO 14001 and OHSAS 18001 certifications to ensure an integrated management approach to dealing with these issues. The company is managed in a fashion consistent with IFC’s Performance Standards, and will ensure that these are applied in its future developments.