Gunkol/TEBA

completed

Project : Gunkol Gunes Enerjisi ve Klima Sanayi A.S. (“Gunkol”, or the “Company”), the white goods company of the Teba Group, is Turkey’s leading profitable exporter of cooking ranges and ovens with 2000 revenues of US$60 million equivalent. The project is a US$20 million modernization investment to (i) support the Company''s growth to satisfy the increasing international demand for quality low-cost cooking ovens, and (ii) further increase Gunkol’s export competitiveness through technology improvements and manufacturing cost reduction. The project will raise the Company’s cooking range manufacturing capacity from 360,000 units at present to about 700,000 units, mostly for exports primarily through the rationalization of production processes and equipment modernization. The investment will also support new product development with new designs and features in response to export market demands and specifications. The project is expected to be completed by end-2002.Development Impact: The proposed project will have a significant direct and indirect development impact on the local economy, especially since Gunkol sources products from over 300 local suppliers, mostly in the Izmir area. While direct additional employment at Gunkol will be limited to about 40 people, the project will generate significant indirect employment for about 200 people at local suppliers who are expected to provide higher local value-added and technical inputs to Gunkol. The gradual transformation of Gunkol into a leading global supplier through newer production and design technologies will help the Company and the local suppliers to become globally competitive through increased quality and efficiency demands of export markets. Gunkol could also serve as a model for other Turkish manufacturing enterprises aiming to become competitive exporters to help the economy. IFC Role: The project gives IFC an opportunity to support a new client in Turkey, which is a growing medium-size, second-tier, export-oriented, family-owned company not associated with any of the large industrial groups in Turkey. Access to long-term financing in Turkey is limited, especially for second-tier companies such as Gunkol. IFC will provide a stable longer-term funding base to the Company so that it can instead focus strategically on enhancing production efficiency and exports. This will directly support the Turkish economy, especially in the current economic climate.