31481 - MATCO Rice

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Summary of Proposed Investment

Project Number

31481

Company Name

MATCO FOODS LIMITED

Date SPI Disclosed

Nov 11, 2011

Country

Pakistan

Industry

Agribusiness and Forestry

Projected Board Date

Dec 12, 2011

Status

Active

Sector

Grain Processing (Milling, Starch, Flour, Malt)

Department

Regional Industry MAS MCT

Environmental Category

B - Limited

Previous Events

Approved : Feb 2, 2012
Signed : Feb 15, 2012
Invested : Jun 8, 2012

Project Description

Matco Rice Processing (PVT) Ltd. (the “Company”) is a private-family owned limited company engaged in rice processing and export business. The Company has three rice processing plants, two in Karachi (Matco 1 & Matco 2) and one in Sadhoke. Rice is procured from Punjab and Sindh provinces and stored in warehouses in Karachi and Lahore. The production activity in Karachi comprises mainly of re-processing include polishing, length grading, color sorting, and packing lines of 5 and 25 tons per hour (tph) capacity respectively whereas Sadhoke has paddy drying, storage and milling processing line of 10 tph capacity.

The project is to construct a modern rice paddy drying, husking and parboiling plant at Sadhoke, Punjab and storage capacity in Sadhoke (the “Project”).

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	5.06

Development Impact

The expected development impact includes the following:
(i) Employment: The Project will generate 300 new rural jobs and about 200 seasonal employees in Punjab in 2 years;
(ii) Farmers reach: The Project will create additional backward linkages which are expected to generate benefits to approximately 1,500 farmers in the region;
(iii) Improved agri-infrastructure: The Project will increase automatic drying capacity by 45,000 MT and automated silo capacity by 30,000 MT thus improving food storage in the Punjab region and reducing losses and bottlenecks; and
(iv) Better quality product: The company will expand the production of its high quality branded rice products in Pakistan.

IFC investment is expected to help the Company prepare for an initial public offering in the next 2 to 3 years. It will also enhance its ability to borrow from local banks. Without the IFC investment, the Company will likely move slower on the Project and would finance the Project by either excessive leverage or internal cash generation. The expected additionality is as follows:
(i) Corporate Governance: IFC''s value-added in helping assess its current levels of corporate governance, identify areas of improvement will enhance the success of the Project and the long term future for the Company as it prepares for an IPO;
(ii) Stamp of Approval: The proposed IFC investment is expected to make the Company more appealing to investors for the planned IPO in the next few years and is one of the key reasons for the Company''s interest in IFC;
(iii) Sustainable Business: IFC will be able to advise the Company on appropriate standards of environmental, safety and social practice; and
(iv) Farmer Linkages: Raw material supply is key to the success of the Project. MATCO and IFC will explore providing advisory services to basmati farmers to strengthen the Company SME linkages in Punjab.

The potential adverse effects of the project are limited, site specific and reversible and can be readily mitigated. It is therefore concluded that this is an Environmental Category B project according to IFC’s Environmental and Social Review Procedures.
The key environmental and social issues associated with the project include: company’s capacity to manage and implement its health, safety, and environmental (HSE) policies and procedures in accordance with IFC Performance Standards and Environment, Health and Safety (EHS) Guidelines, utilization of equipment and operational practices that maximizes conservation of energy, water and process materials including recycling and reuse initiatives; monitoring and management of air emissions, wastewater treatment and discharge, solid waste disposal; and management of any child labor in the supply chain as well as other issues (e.g., pesticide/fertilizer provision to suppliers) associated with the supply chain.

Contacts

For Inquiries About the Project, Contact

Mr. Faizan Ali Ghori
Director
Head Office: L-24/1, Block-21, Federal ''B'' Industrial Area, Karachi-7 5950, Pakistan.
Tel: +92-21-36312896, 36323137, 36312896
Fax : +92-21-36320509 35206835

Email: contact@matcorice.com

Web page: www.matcorice.com www.falakrice.com

For Inquiries and Comments About IFC, Contact

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

Local Access of Project Documentation

Business Recorder newspaper (www.brecorder.com).

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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