A leading Mongolian Dairy processor, Suu was founded in 1958 as a state owned company. The Company was partially privatized in 1992 and fully privatized in 2006. At present, 94% of equity stake is held by three sponsors, and remaining 6% is listed on the Mongolian Stock Exchange. Mr. Ganbaatar Dagvadorj, Chairman of Max group and Suu, started his export and import business in the early 1990s when the country shifted to an open market economy. He later expanded successfully into restaurants, manufacturing, retailing, construction and property management. These activities (except Suu) are now operating under the Max group , one of the large business groups in Mongolia (Annex 5). Mr. Ganbaatar is responsible for overseeing the general direction of all his business interests and remains actively involved in the operations of each entity. Mr. Jamyan Dagvadorj was general manager of Max Impex where he was in charge of sales and distribution. He also managed the construction of various office buildings and apartment complexes. Currently, he is a board member of Suu and holds a position as Director at Max Trade LLC. Mr. Tuvshintugs is currently a member of Suu’s Board of Directors. He joined the Suu in August 2005, and served as the CEO from March 2006 – April 2007. Altogether, three sponsors hold a 94% stake in the Company. Mr.Jamyan and Mr.Tuvshintugs are brother and brother-in-law of Mr. Ganbaatar respectively.

Total Project Cost is estimated at $8.6 million, to be funded by an IFC A Loan of up to $2 million and the balance by other financiers and internally generated funds.

2.50 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	2.0
Equity	0.50

* These investment figures are indicative

The Project will be implemented Suu (Milk) Company building, Uildverchnii gudamj-37,18th khoroo, Songinokhairkhan district, Ulaanbaatar, Mongolia 211213

(i) Expansion of raw milk procurement is expected to provide 2,500 existing and 1,500 new herders and farmers involved in milk supply chain with increased and more sustainable income; (ii) at the same time the project will provide them with more information about quality milk standards through newly established MCPs and MCU as well as new milking parlors that will offer a controlled environment for cow milking; and (iii) Self-sustainability of Mongolia for domestic milk product supply will be improved and import dependency will be reduced. Currently around 25 % of all processed dairy products are imported.

(i) The IFC investment will support the leading agribusiness SME in Mongolia, providing a demonstration effect to other SME and potential investors on improving the efficiency of previously state owned factories. (ii) IFC provides long-term financing, which is not available in the local market, especially during this period of low liquidity in the banking sector and immature level of development in the capital markets. Without IFC the project will need to rely on short-term debt or scaled back dramatically, resulting in availability of poor quality milk for a longer period of time + will not achieve the reach to source milk as planned. (iii) IFC experience dairy farming could provide guidance on establishing a sustainable milk supply chain in the very seasonal Mongolian milk supply market. It will contribute to higher quality milk standards for Mongolian people. Suu is going for an ISO certification. An Advisory Services on the basis of satisfactory cost sharing agreement to be evaluated. (iv) The IFC involvement in the project will strongly enhance the chance of other lenders to co-finance (mobilization).

This is a Category B project according to IFC’s Environmental and Social Review Procedures. A limited number of environmental and social impacts would result from the project, which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. Key environmental, health and safety, human resources and social issues that were reviewed included: Environmental and social management system (ESMS); Water and energy use and efficiency; Air emissions, water and solid waste discharge; Occupational health and safety; Community health and safety; Labor and working conditions; Land acquisition; Cultural heritage; and Community engagement.