IFC requires that this document is made available through the World Bank InfoShop and to the locally affected community no less than 30 days prior to project consideration by the IFC Board of Directors. The Summary of Project Information (SPI) also provides details of where the ERS has been made available to the locally affected community. The SPI must be sent to World Bank InfoShop no less than 30 days prior to project consideration by the IFC Board of Directors.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of site visits to the Ahmedabad, Kandla region (i.e. Kandla, Nani Chirai and Varsana I and II) and Vizag factories and appraising technical, environmental and social information submitted by the project sponsor. The following potential environment, health and safety and social impacts of the projects were analyzed. land acquisition and permitting requirements; environmental management systems; occupational health and safety management including emergency response; hazardous materials management; solid waste management; emissions to air and water; employee relations and employment conditions.

The sponsor has presented plans to address these impacts to ensure that the proposed project will upon implementation of the specific agreed measures, comply with the environmental and social requirements - the host country laws and regulations and the World Bank/IFC environment and social policies and the environmental, health and safety guidelines. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the paragraphs that follow. Land Acquisition and Permitting Requirements. PSL has historically acquired land on both leasehold and freehold basis. The company’s recent land acquisition has been on a willing buyer – willing seller basis from private landowners: and site outlines show that the company was in some cases unable to acquire all the land it might have desired. Land acquired in Gujarat for the Ahmedabad and Varsana sites was barren, undeveloped and unoccupied before acquisition by PSL. PSL’s expansion will require further land acquisition, which may be on a freehold or leasehold basis. While sites have not yet been identified, PSL will develop and implement land acquisition policies to ensure that any future land acquisition will be fully compliant with local requirements and relevant World Bank Group Policies, and will not require involuntary resettlement or economic displacement of the users or occupiers of that land. Sites have been and will be developed in full compliance with local planning requirements and all necessary consents, permits and authorizations under the Water Act, Air Act and Environmental Protection Act have been and will be obtained. The Company will at all times remain compliant with the provisions of the said consents, permits and authorizations. Environmental Management Systems. PSL Ltd published an environmental policy in August 2005. Each manufacturing complex has localized environmental management responsibility, and consequently differing degrees of environmental management sophistication. The Varsana complex (Nani Cherai, Varsana I and Varsana II factories) has developed an environmental management system (“EMS”) and in November 2005 received certification of the EMS’ compliance to ISO 14001, valid for three years. The Company will progressively roll out the ISO 14001 EMS developed at Varsana to all of its other manufacturing facilities, ultimately to develop a company wide Corporate EMS based on ISO 14001 standards, and will obtain ISO 14001 or equivalent certification of EMSs at all manufacturing sites in India by December 2008. Occupational Health and Safety (“OHS”). The manufacturing operations required for pipe making and coating present numerous potential OHS hazards. Some of these, such as the risks of crushing presented by moving pipes, fumes emitted from epoxy and plastic coating, use of hazardous materials and radiation from X-ray inspection are industry-specific. Others are general in nature and range from trip hazards caused by floor-mounted conduits to risks imposed by unguarded machinery and welding and metal cutting equipment, lack of universal eye protection, working at height, for example. Despite the appearance of a hazardous workplace, PSL does not have a bad accident record, as a result of its training programs and low staff turnover. PSL has commissioned a consultant to undertake an OHS audit at the Varsana complex, and follow-up with similar audits at the other manufacturing sites. OHS Action Plans will be developed as a result of these audits and OHS management systems, capable of certification to OHSAS 18001 or equivalent and incorporating these Action Plans, will be developed at each site. OHS system certification at each manufacturing site will be obtained by December 2008. OHS audits will include consideration of noise control. The Company will identify sources generating high levels of noise and undertake appropriate measures including provision of acoustic treatment/enclosures to comply with local and IFC requirements. The company will, in accordance with regulatory requirement, provide appropriate acoustic treatment to the generator rooms to ensure a 25 dB(A) insertion loss in noise levels in the DG set room and at 0.5 m outside the room. Emergency Response. The sites visited all presented emergency response plans. These plans differed in structure, degree and the type of emergency anticipated, and while some of these variations were justified by differences between the sites, others were not. PSL will appoint a manager with company-wide responsibility for environmental and occupational health and safety (“EHS”) management, including management of emergency response. Individual sites’ EHS policies and procedures will be reviewed, and company-wide best practice identified and replicated throughout, after taking account of differing local circumstances, and the results of the OHS audits. Hazardous Materials Management. Hazardous materials used in PSL’s processes are chemicals used in pipe coating, fuel for diesel generators and the LPG-fired pipe preheater used in coating, and used lubricants. Underground fuel oil and over-ground LPG storage tanks have been licensed by appropriate authorities, and PSL reported that underground oil-storage tanks were installed within concrete pits to provide secondary containment in the event of leakage. However there was evidence of a small degree of oil spillage at fueling points, and it was not clear that water from remote fire hydrants would reach the LPG tanks under all wind conditions, although these tanks are separately equipped with local water sprinklers. Dedicated stores will be constructed for hazardous chemicals, in compliance with material safety data sheets and recommendations of the OHS audits. Fire fighting capability for the LPG store will be reviewed and enhanced if necessary. Additional fire-fighting capacity will be installed in the plastic granules stores at the coating plants. Impermeable fuelling points with secondary containment will be constructed to prevent ground contamination in the event of fuel spillage. Similarly, an impermeable surface will be provided at the base of the tar-coating fumes-control cyclones, to prevent the risk of ground contamination at these points. Underground tanks inventories will be monitored to detect possible leakage. Hazardous wastes such as used oils are disposed of to waste handling contractors. The Company will identify the various categories of hazardous wastes generated on its premises (in accordance with the Hazardous Waste Management and Handling Rules as amended up to 2003) and seek authorization from the relevant pollution control boards for generation, handling and storage of such hazardous wastes. The Company will store such hazardous wastes only in designated areas with appropriate containment; maintain records of generation and disposal in the six copy manifest system; and dispose of hazardous wastes only through authorized contractors in a manner approved by the regulatory authorities. Solid Waste Management. Solid wastes arising from manufacturing operations are steel swarf, sacks used for the delivery of chips of coating polymer (PE and PP), PE and PP trimmings and paper. All are collected and recycled. Welding flux is collected and used as an aggregate in within-site roadway construction. At Varsana, non recyclable wastes, such as kitchen wastes, are separately collected and composted or transported by waste contractors as appropriate. Other sites will appropriately categorize, segregate and store solid wastes. PSL will in future require evidence of appropriate disposal of such wastes. Emissions to air. Emissions to air are exhaust emissions from diesel generator sets, particulate matter arising from shot-blasting operations, smoke/fume arising from three-layer epoxy and plastic pipe coating, and solvents arising from coal-tar coating operations. Emissions to air from diesel generator sets will be monitored and if necessary plans will be developed and implemented to improve emission to IFC and local requirements. Particulate emissions from shot-blasting operations will be measured, and if necessary filters will be installed to restrict dust emissions to less than 50 mg/Nm3. Systems will be developed to capture and filter fume arising from the three-layer external coating operations, such that fugitive fume emissions to the workplace and environmental are substantially eliminated and post-treatment particulate content of exhaust is less than 50 mg/Nm3. Emissions to air from tar-coating fume control cyclones will be measured and action taken as necessary to limit emissions to IFC and local requirements. Fugitive emissions of dust arising from the mixing plant at the concrete coating lines shall be captured and returned to process. Emissions to water. PSL’s process are essentially dry, though small quantities of water are used in pipe testing, for quenching and in washdown. At Vizag the Company water will design and install a plant to treat its process effluent to local and IFC requirements, or confirm that it has no process water emissions, even though it has permission to discharge trade effluent. No other plant has process water emissions. The only water emissions are from septic tanks used to treat sanitary waste water and kitchen waste which are discharged to leach fields. The company will monitor water use, implement measures to reduce, reuse and recycle water and install rainwater harvesting facilities as required to meet local requirements. Drinking water will be sampled, and if necessary treated to meet local and IFC drinking water standards. Employee relations and employment conditions. PSL prides itself on good industrial relations, a loyal workforce and low staff turnover. Basic salary is paid for 8hour/day 6 days/week, though overtime is often worked and is paid at a double time. Production is continuous and workers are required to work a shift system which includes periodic Sunday working. Annual and medical leave and accident insurance are available to all employees. Trades unions are permitted. The minimum basic wage level for a full time (unskilled) newly-recruited employee is around double the legal minimum wage, though this can be increased through overtime working and as experience and skill levels increase. PSL’s business is project-based and mobile. If business requires a pipe mill to be moved, the skilled staff, PSL employees, will move with the mill, while unskilled staff will be recruited on a contract basis for the duration of the project. The minimum age of PSL employees is 18 years. PSL will check ages of its contractors’ employees.

The following supporting documents provide further details of environmental and/or social issues. Environmental Action Plan dated November 28, 2005.

Accordingly, IFC concludes that the proposed project will meet the applicable World Bank/IFC environment and social policies and the environmental, health and safety guidelines upon successful implementation of the agreed mitigation measures.

IFC will evaluate the project's compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing the annual monitoring reports (AMRs) prepared for the project covering: (i) the status of implementation of any measures contained in the Environmental Action Plan and (ii) ongoing performance of project-specific environmental, health and safety and social activities as reflected in the results of periodic and quantitative sampling and measuring programs. Periodic site supervision visits will also be conducted. Additionally the Company shall undertake regular monitoring and reporting of ambient conditions, emissions to air and water and waste arisings and disposal as required by local regulatory agencies.