The EBRD is considering providing a loan of up to €15 million to Serbian bakery company KLAS d.o.o. to support the modernisation of KLAS’s operation through development of modern production facility in the industrial zone close to the capital city of Belgrade. New production facilities will increase capacities, improve efficiency and enlarge the product portfolio. The project will also support further development of the Company’s retail network in the country.
The project will support the overall modernisation of the sector generally dominated by obsolete equipment. It will have strong demonstration effects as one the first modern bakery in the country is going to be constructed. It will have most modern equipment and production will be fully aligned with quality standards such as HACCAP, ISO 9000 and ISO 14000.
Backward linkages will be strengthened with local suppliers through increased quantities of wheat/flour needed for the increased products as well as through quality requirements to be imbedded in the procurement contracts. The new modern bakery will encourage local producers to process according to best business practice and to increase standards in order to satisfy the Company’s quality requirements.
The project is also likely to support forward linkages improvement such as development of less developed regions through regional expansion into central and southern parts of Serbia, which have been ignored by recently developed bakery operators. Also through introduction of higher quality and more varied products and widening of consumers’ choice through a large specialized bakery retail chain.
Klas d.o.o a limited liability company incorporated under the laws of Serbia is the leading and largest bakery group in Serbia which includes production facilities at Klas and at majority owned Beogradska Pekarska Industrija a.d.
Long-term senior secured loan of €15 million to Klas d.o.o.
The project has been classified as B/1 according to the Bank’s 2003 Environmental Policy. The Bank's environmental due diligence, assessed the Company's management of environmental, health and safety issues and ability to comply with national and applicable EU environment, health and safety (EHS) standards. It also included an independent environmental audit of the site selected for the new bakery in Belgrade which identified no major liabilities.
The Company has demonstrated their responsible approach to EHS management. An Environmental and Social Action Plan (ESAP) has been agreed with the Company, to ensure that the Company will meet both national and EU standards for environment, health and safety and includes the implementation of international management systems for environment, health, safety and labour.
The Company is in compliance with Serbian labour laws and are subject to regular inspections from the Labour inspectorate. They have trade union representation and engage with negotiations with the trade union representatives.
The Bank will monitor the Company’s environmental performance for the lifetime of the loan through annual environmental reporting and via periodic site visits. The Company will be required to immediately notify the Bank of any incidents or accidents likely to have an effect on the environment or worker and public safety
EBRD contact: Miljan Zdrale, Operation Leader
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