26947 - Modern Dairies Limited

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Environmental & Social Review Summary

Project Number

26947

Company Name

MODERN DAIRES LIMITED

Date ESRS Disclosed

May 28, 2008

Country

India

Region

South Asia

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 27, 2008
Signed : Jul 1, 2008
Invested : Jul 8, 2008

Sector

Dairy Products

Industry

Agribusiness and Forestry

Department

Regional Industry - MAS Asia & Pac

Project Description

Modern Dairies Limited (Modern Dairies or the company), a dairy company based in the state of Haryana (Northern India), is undertaking a $46.4 million expansion plan to expand its milk sourcing directly from farmers and increase processing capacity for value added dairy products. As part of this expansion, the company has already successfully increased its milk processing capacity at its plant near Karnal, Haryana from 0.5 million to 1.5 million liters of milk per day (lpd). The company now plans to:

- expand its milk supply network from farmers in the vicinity of the processing plant,
- increase its production capacity of nutritional products,
- install a 3.5 MW biomass based power plant for captive electricity supply, and
- finance working capital needs.

The capacity expansion for the nutritional products will be done at the company’s existing facilities in Karnal.

Overview of IFC's Scope of Review

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 appraising technical, environmental and social information submitted by Modern Dairies (or the company), and a visit by IFC appraisal team to the project site in Karnal to meet with company’s management and to have a first-hand look at operational activities. The team also visited a village milk collection center, a bulk cooler and chilling center and some farmers who supply milk to the company.

E & S Project Categorization and Applicable Standard

While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards:

- PS1 - Social and Environmental Assessment and Management System
- PS2 - Labor and Working Conditions
- PS3 - Pollution Prevention and Abatement
- PS4 – Community Health, Safety and Security

There are no issues related to land acquisition and involuntary resettlement, and no impact on indigenous people or cultural property under the project, nor is it expected to have any impacts on natural habitats, forests, or protected or sensitive areas.

The relevant PSs have been provided to the company, as have the relevant IFC Guidelines (i.e. Environmental, Health, and Safety Guidelines for Dairy Processing, April 2007).

The project is categorized as a Category B project 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. Mitigation measures can be readily designed for any adverse impacts – which are not likely to be diverse, are not likely to be irreversible; most likely will be limited to project site; and not likely to impact environmentally sensitive areas.

The key social, environmental, health and safety impacts associated with the project include:

- Environmental, Health and Safety Management Systems;
- Labor working conditions, including occupational health and safety;
- Emergency preparedness and response;
- Chemical storage and handling; and
- Pollution prevention and control (esp. wastewater treatment and reuse/discharge).

Environmental and Social Mitigation Measures

To ensure compliance with applicable laws and other applicable standards, company has policy and procedures in place for environmental, health, safety, and social management that can help in compliance with the applicable host country laws and regulations, IFC Performance Standards, and IFC environmental, health and safety guidelines. This information is summarized as follows:

- Environmental, Health, Safety and Social Management:

The company has adopted management systems for quality, environment and food safety that have been certified by DNV under ISO 14001, ISO 9001 and the Hazard Analysis Critical Control Point (HACCP) based Food Safety System. The company provided copies of both its ISO certificates as well as documentation on its management system during the appraisal visits. While a basic management system structure and processes are in place, the site visit indicated that implementation of the system has not been fully embedded throughout the company’s operations. Moreover, the management system documentation provided by the company did not reflect the various changes, expansions, or other relevant developments that have occurred since the system was originally adopted in 2002.

As a condition of IFC’s investment, the company will enhance its environmental and social management systems (ESMS) to comply fully with IFC’s Performance Standards. The revised ESMS will include specific policies and procedures to manage all relevant functions, including any functions that are outsourced as well as all relevant issues covered in PS2 through PS4 such as resources and waste management, accident prevention, occupational health, safety and welfare of the workforce including contract labor; and community health and safety (especially due to accidental emissions). Modern Dairies has also agreed to develop and implement a corporate training program for all staff to raise awareness on the ESMS and to ensure implementation of the various management systems in place.

- Labor and Working Conditions:

Modern Dairies has confirmed that it complies with all applicable Government of India labor laws and regulations. Company policy requires that no employee below the legal employment age may be hired, and makes explicit reference to principles of fair treatment, non-discrimination and equal opportunity for all workers. Further, as a part of the Environmental and Social Action Plan (ESAP), the company shall include necessary clauses in the contract documents for various contracts such as construction, security, fleet management etc. to ensure that no contractors’ employee is below the legal employment age.

All the company’s employees and contract labor are provided with appropriate personal protective equipment (PPE) and health and safety training for the type of work in which they are engaged. However, on-site observations regarding the routine inspection and maintenance of safety equipment (such as fire hydrants) and use of the PPE underlines a need for additional training and effort from the senior management. The company has reviewed PS2 and confirmed that as a part of the ESAP it will implement all the necessary measures to improve its management of labor and working conditions to meet its requirements.

- Pollution Prevention and Abatement:

Modern Dairies has installed comprehensive wastewater treatment systems at its facility near Karnal to ensure compliance with national regulations. Examination of analyses of treated effluent indicates compliance with both local regulations and IFC limits (with the exception of total coliform bacteria, total nitrogen and total phosphorus, which were not measured). The company has confirmed that it will monitor these parameters in the future and also that the capacity of the existing treatment plant is adequate to handle the increased volumes that will result from the proposed expansion / process upgrade.

CIP (Cleaning-In-Place) of various tanks and vessels (esp. chemical storage area) can be a major source of contamination. The company has provided a list of chemicals used for CIP operations which include: hydrochloric acid, nitric acid, formaline, phosphoric acid etc. For this, the company has agreed to develop and conduct regular training programs for concerned staff on the best practices in chemicals storage, handling and management, and to establish a robust documentation and reporting system to prevent any accidental spillages in the storage area based on the relevant Material Safety Data Sheet (MSDS) for the chemicals in use.

The company has further agreed to ensure that there is no uncontrolled discharge of wastewater outside company premises. Any potential recycling of the treated effluent will be permitted only after a thorough analysis of the treated wastewater by third parties and approval from the concerned regulatory agencies. The company has agreed to submit the supporting documentation for the same through the annual monitoring report.

The company has also provided the records for the monitoring of stack emissions from the 3 rice-husk based boilers and the DG set. Noise level monitoring data for the DG set area was also submitted. All the records show that Modern Dairy is in compliance with the local regulations.

The company has confirmed that it will continue to monitor the wastewater, air emissions, noise and solid and hazardous waste generated from its facilities and report to the local authorities and the IFC as per their respective requirements to ensure compliance.

- Community Health, Safety and Security:

The company has agreed to enhance its waste management practices and the ESMS to consciously improve the health, safety and security of the neighboring community. Specifically the company has agreed to implement a plan to prevent negative impact on the community health and safety as well as the agriculture activities around the facility due to accidental discharge wastewater or emissions to the neighboring community and their farms. This is particularly important since the salting activities during cheese production may result in high salinity levels in wastewater and may also contain acids, alkali, and detergents with a number of active ingredients, and disinfectants, including chlorine compounds, hydrogen peroxide, and quaternary ammonia compounds. Wastewater may also have a significant microbiological load and contain pathogenic viruses and bacteria.

In addition, the company has agreed to undertake a comprehensive review of the potential impacts and safety hazards of its operations on the health, safety and security of the neighboring communities, which would include milk collection operations (including vehicular movements) and the milk processing in the dairy (including potential hazards from utilities such as boilers, chemical storage). Further, the company has also agreed to develop an extensive emergency response plan and disclose it to the community.

Stakeholder Engagement

One major pillar of the company’s operations is collection of milk from the farmers / families at the village level. The company has developed an extensive network of extension services in the surrounding areas. One key feature of this supply chain development effort is the establishment of a network of village level collection centers, bulk coolers and chilling centers. The extension services currently focus on increasing the communities’ awareness/knowledge about the dairy related aspects, but the company has plans to expand this to other areas for the welfare of these communities. As a part of its corporate social responsibility (CSR), the company has promised to plan and implement some awareness programs related to community health (e.g. HIV AIDS), general hygiene etc. leveraging this network of milk collection centers at village levels.

For all such aspects of community engagement, the company has agreed to develop to IFC’s satisfaction any further procedures needed to comply with IFC Performance Standards, including disclosure of relevant facts to community members regarding the company operations, and provision for handling and resolving queries or grievances received from community members.

Questions or comments may be directed to:

Mr. Ashish Sharma, General Manager (Secretarial)
Modern Dairies Limited
S.C.O. 98-99, Sub-City Centre,
Sector 34, Chandigarh 160022 (INDIA)
Telephone: +91-172-2609001
Fax: +91-172-2609000

The project’s environmental and social related to the project are available at the company’s corporate office in Chandigarh.

Modern Dairies Limited
S.C.O. 98-99, Sub-City Centre,
Sector 34, Chandigarh 160022 (INDIA)
Telephone: +91-172-2609001
Fax: +91-172-2609000

These are also available on project site in Karnal at:

Municipal Council
Near Ghantaghar Chowk
Karnal, Haryana State

Client Documentation

File Name	Actions
Modern Dairies E&S Action Plan 28 May 2008.pdf

**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Environmental and Social Review Summary (ESRS) is prepared by IFC to disclose its findings and recommendations related to environmental and social considerations regarding potential investments. Its purpose is to enhance the transparency of IFC's activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this ESRS is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein.
It is distributed in advance of IFC Board of Directors' consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following ESRS is disclosed in accordance with IFC's Access to Information Policy (AIP).

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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Environmental & Social Review Summary

Project Description

Overview of IFC's Scope of Review

E & S Project Categorization and Applicable Standard

Identified Applicable Performance Standards

Environmental and Social Categorization and Rationale

Environmental and Social Mitigation Measures

Environmental and Social Mitigation Measures

Stakeholder Engagement

Stakeholder Engagement

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