WII is fully-owned by WEG S.A. (WEG). WEG was founded in 1961 in Jaraguá do Sul, state of Santa Catarina, Brazil, where it is still headquartered. WEG engineers and manufactures capital goods, in particular it specializes in electric motors, generators, transformers and electronic and electromechanical components for industrial and other automation systems. While WEG has exported throughout the world since its earliest days, the company is in a phase of investing in production capacity outside Brazil, of which WII is an important step. In 2009, WEG reported BRL 4.2 billion in net sales (approximately US$ 2.1 billion). WEG S.A. is listed on the Sao Paulo stock exchange, whereby approximately 65% of the company’s shares are with the founders and their families (Voigt, Silva, and Werninghaus) and the balance of shares is more widely held.

The total project cost is estimated at approximately US$ 95 million, of which half is attributable to production machinery, approximately one-quarter for civil works and leasehold. The balance of one-quarter is working capital, information technology, and pre-operational expenses. IFC has been asked to provide a loan of approximately US$ 25 million. While WII will have some working capital facilities from local institutions, most of the balance of the project cost is funded by WEG S.A.

25.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	25.0
Equity

* These investment figures are indicative

The site lies within the boundaries of the SIPCOT Industrial Complex, Phase II at Hosur, where the WII is building a 33,000 m2 facility. The plant is located approximately 40 kms south of Bangaluru (Bangalore) on National Highway 7 linking Bangalore and Chennai. In addition to the site, WII has a project office in Hosur and WEG’s sales company in India maintains an office in Bangalore.

Improved Product Availability and Quality. The Indian market is undersupplied with locally-manufactured, high voltage motors and generators that are state-of-the-art technologically. The importance of manufacturing this equipment locally derives not only from transportation cost savings but also because this equipment is built-to-order to very detailed specifications, bringing to the client benefits from the ease and accuracy of information exchange with a local manufacturing facility and improved delivery times. Infrastructure Development. Infrastructure, including power generation is a bottleneck to economic development in India. WEG will increase its capacity to sell turbines for small-scale, run-of-the-river generation projects that tend to serve areas that are off-grid. Further, another important segment which requires high voltage motors are the producers of basic infrastructure building blocks: cement and steel plants. WEG also is building on its track record in India of supplying motors for the pumping stations that make up important, government-sponsored irrigation projects. Employment. The Project will generate at least 250 direct jobs and is estimated to generate a multiple of this in the supply chain of WII and contractors for corporate and industrial services including maintenance, security, transportation providers, etc.

Long-term Capital. As a start-up company in India, WII does not yet have the standing in the local market to borrow long-term. Further, the Company is contemplating a rupee-denominated loan. IFC is in a position to structure a long-term loan to the project company and, if desired, extend the facility as a rupee-denominated one. Partnership. WEG is operating in a business where its most significant peers are headquartered in developed countries, but have evolved into global players. IFC is supporting the Project at a critical stage of the globalization of WEG. The plant in Hosur will be the first greenfield plant for WEG outside the Americas, but over the years to come is not likely to be the last investment by WEG in production capacity in a developing country abroad. IFC has the global reach and long track record in emerging markets that positions it well to assist WEG as it continues its globalization. Review of Environmental, Health and Safety Standards. Due diligence by IFC consists of a review of the environmental, health and occupational safety standards being developed for the new factory. The involvement of IFC will support the Company's goal to implement world-class systems and standards.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of projects because a limited number of environmental and social impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards and guidelines.

Key risks and issues related to this project include: adequate social and environmental assessment of the impacts of the Project during both construction and operations; the Company’s capacity to manage its social, environmental, health and safety performance, and engage with local communities in accordance with local requirements and IFC Performance Standards and applicable EHS Guidelines; assurance of fair, safe and healthy working conditions during construction and operations; utilization of equipment and operational practices that maximizes conservation of energy, water and process materials including recycling and reuse initiatives; management of air emissions, wastewater treatment and discharge, and solid and other waste disposal; handling and management of hazardous materials and hazardous wastes; management of the impacts of the influx of construction labor, the impacts of operations on local ambient air quality, and impacts on transport infrastructure during construction and operations; and, with regard to site selection, management of land acquisition, physical/economic displacement and compensation as required.