31030 - PMC Serbia

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Summary of Proposed Investment

Project Number

31030

Company Name

PMC AUTOMOTIVE DOO KRAGUJEVAC

Date SPI Disclosed

Feb 8, 2012

Country

Serbia

Industry

Manufacturing

Projected Board Date

Mar 9, 2012

Status

Completed

Sector

Motor Vehicle Parts

Department

Regional Industry MAS LAC & EUR

Environmental Category

B - Limited

Previous Events

Approved : Mar 22, 2012
Signed : Mar 30, 2012
Invested : May 11, 2012

Project Description

CLN Group, and Proma Group, two Italian automotive suppliers (the “Sponsors”) have decided to jointly invest in Serbia in a Greenfield metal stamping factory (the “Project”). The Project will be located in Grosnica, a supplier park dedicated to FIAT’s new plant in Kragujevac.

FIAT current production capacity in Kraguievac is 20,000 car/year and is expecting to grow to 140,000 car/year by 2013 and potentially 300,000 car/year by 2015. The Project will produce for FIAT, seat structure, safety component and system, suspension and car jacks, with manufacturing processes including press, assembly and painting. The plant is expected to create 367 skilled jobs.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	26.88
Equity

Development Impact

Sustainable employment creation - The Project is expected to create at least 367 skilled jobs in Sumadija District, a frontier region of Serbia.
Support FDI in Serbia - Channeling foreign direct investment is a priority for Serbia. The project will contribute to balancing Serbia''s large current account deficit.
Support export oriented industry - the project will sell its product to FIAT assembly plant in Kragujevac, which will export 90% of the production.
Technology transfer - MA and Proma are FIAT trusted suppliers and have state-of-the-art technologies and efficient processes. Local staff will be trained to new, highly competitive standards.

(i) Crisis response and Counter-cyclical role - Current market conditions in Europe magnifies IFC''s countercyclical role as most of the European banks, especially the Italian banks that are active in Eastern Europe, have been limiting their exposure to emerging markets due to funding and capital constraints. By providing long-term financing, that matches the cash flow of the project, IFC will be sending a signal to the market that it is willing to finance sound projects and companies;
(ii) Global presence and partnership - MA needs to invest alongside with OEMs in new capacity in emerging countries. In addition to Serbia, MA has already inquired about possible cooperation with IFC in South Africa and Russia and value our ability to support them across the globe;
(iii) Risk mitigation - MA and Proma are still at early stages of their expansion to the emerging markets and the Project is their first investment in Serbia. Partnering with IFC especially in frontier regions provides comfort to MA and Proma in terms of country knowledge and contacts in the public and private sectors.

The proposed project is being developed in accordance with national regulatory requirements and international standards by a Sponsor committed to good environmental and social management. The project has primarily local and international raw material supply, will follow international labor standards, and will have minimal of emissions and discharges from controlled sources. As documented further in the Environmental and Social Review Summary there is no involuntary resettlement. With no indication of impacts related to Performance Standards 4, 5, 6, 7 and 8 and only readily mitigated environmental issues under Performance Standards 1 through 3 this is a Category B project.

Contacts

For Inquiries About the Project, Contact

Mr Fabio Montuori
Gruppo Proma
San Nicola la Strada (CE)
V.le Carlo III, Trav. Galvani
81020 San Nicola la Strada, Italy
Tel.: +39 0823227205
Fax: +39 0823454164
e-mail: fabiomontuori@gruppoproma.it

For Inquiries and Comments About IFC, Contact

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IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

Local Access of Project Documentation

PMC Automotive D.o.o.
Miloja Pavlovica 9, II Sprat, Local 1
34000 Kragujevac.

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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