27317 - HIKAL

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Environmental & Social Review Summary

Project Number

27317

Company Name

HIKAL LIMITED

Date ESRS Disclosed

Jul 3, 2008

Country

India

Region

South Asia

Last Updated Date

Jun 3, 2021

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Sep 10, 2008
Signed : Sep 22, 2008
Invested : Sep 30, 2008

Sector

Pharmaceuticals and Medicine

Industry

Health, Education and Life Sciences

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

Hikal Limited (Hikal or the company) is a medium-sized manufacturer of Active Pharmaceutical Ingredients (APIs) and intermediates for the pharmaceutical industry and fine chemicals for the agrochemical industry.

Since its inception in 1988, Hikal has focused on providing research and manufacturing services to clients and most of their production is exported. The company has manufacturing facilities at Jigani (near Bangalore), Panoli (Gujarat), Mahad and Taloja (both near Mumbai) and R&D facility in Bangalore.

In order to support its growth, the company is embarking on a capital expenditure program. The company has therefore requested IFC to provide a financing package comprising a combination of debt and equity to part finance the capital expenditure program.

Overview of IFC's Scope of Review

This is a category B project according to IFC''s environmental and social review procedure. Potential environmental and social issues associated with this project include: management systems for quality, environmental and social issues, occupational health and safety for the staff and workers of the company as well as those of its contractors; handling of hazardous chemicals, emissions from its operations (air, water and sold wastes), and community health, safety and security.

The review of this project consisted of appraising technical, and review of environmental and social documents provided by the company - including copies of permits, certificates, monitoring records, policies and operating procedures etc., visits to the Hikal facilities at Jigani, near Bangalore and at ,Taloja near Mumbai and discussions with the company’s senior management team regarding their policies and procedures.

E & S Project Categorization and Applicable Standard

While all Performance Standards (PSs) are applicable to this investment, the E&S review of company and project information indicates that the investment will have impacts that must be managed in a manner consistent with the following PSs:

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

Since all the Hikal manufacturing facilities are located in government designated industrial zones, the issues addressed in PS 5, 6, 7 and 8 are not expected to be encountered during the course of the project.

Specific key environmental and social issues are listed below:

- Environmental and social management systems (ESMS) at each facility;
- Occupational health, safety and working conditions for Hikal staff as well as those of its contractors;
- Transportation, storage and handling of hazardous chemicals; and
- Emissions and waste management

Because potential adverse effects arising from these issues are limited and may readily be addressed through improved procedures and mitigation measures, this project has therefore been classified as a Category B project.

Environmental and Social Mitigation Measures

The following paragraphs describe the environmental and social issues identified during the appraisal and provide a discussion on the commitments made by Hikal to ensure compliance with IFC’s PSs. The attached Environmental and Social Action Plan (ESAP) summarizes the specific mitigation measures that will be put in place to address the identified issues.

- PS1: Social and Environmental Assessment and Management Systems:

Hikal management places a high priority on product quality as well as occupational health and safety management. At the corporate level, individual policies are in place for Health and Safety, Energy, Environment and Quality management. The Jigani site is certified for ISO 9001 (Quality), 14001 (Environmental), 18001 (Occupational Health and Safety) certifications and has been approved by the regulatory authorities of several countries to which Hikal exports its products, including the US Food and Drug Administration (FDA). In addition, it is compliant with the International Conference on Manufacturing Q7A quality guidelines, which have now been adapted and adopted into Indian law. The Taloja site also has ISO 9001, 14001 and 18001 certifications, and the laboratory on site has been certified by the Government of India’s National Accreditation Board for Testing and Calibration Laboratories (NABL).

Hikal has a corporate level Occupational Health, Environment and Safety (OHES) manager who is responsible for overseeing the safety and environmental management at all of the company’s facilities. The OHES manager works closely with an established OHES department at each facility. Personnel in these divisions were found to have appropriate educational backgrounds and relevant experience for their positions. Hikal is in the process of expanding its OHES teams, to ensure adequate OHES management control as its operations expand.

Manuals for quality, environmental and OHES management systems for each facility provide a framework and procedures for management and monitoring of relevant issues. All of the facilities visited during the appraisal visit demonstrated sound implementation of these management systems.

The site visits also revealed that the OHES management could be further strengthened by Hikal by explicitly addressing the relevant issues related to transportation and construction contractors. This is critical as the transportation of hazardous chemicals and solvents is outsourced to contractors.

The company will therefore, review and revise the existing management systems documentation for all its sites to explicitly address the contractors, with special reference to transportation and construction contractors, within a timeframe agreed with IFC. Hikal will also ensure that the documentation for environmental and OHES management systems is updated for all facilities to reflect operational changes brought about by expansion of facilities and changes in operations.

As per Government of India legal requirements, Hikal conducted Rapid Environmental Impact Assessments (REIA) for the expansion of its facilities at Jigani, Taloja and Panoli, and has received the required approvals. The REIAs analyze the potential environmental impacts and provide mitigation and management measures. Hikal will continue to ensure that its construction contractors are operating in compliance with the mitigation measures outlined in the REIA and will undertake regular audits to verify this compliance.

- PS2: Labor and Working Conditions:

Hikal manages labor relations in accordance with all relevant Indian regulations. Labor unions exist at all of its manufacturing plants. Worker grievances are addressed through the labor union representatives as well as through direct interaction with the company’s Human Resources (HR) department and senior management. All employees as well as contract labor are covered under the company’s medical insurance program and receive annual medical checks.

Hikal has several measures in place to manage on-site OHES. Production areas are well designed, have adequate ventilation and consist of equipment fitted with adequate safeguards and controls. Employees are provided with all relevant personal protective equipment (e.g, dust masks, eye and ear protection, etc.), and the use of this equipment is well regulated and stringently enforced.

Hikal monitors and records safety performance statistics; the company has recently surpassed 3 million labor hours worked at the Taloja plant without any lost time incidents. The company uses a “Safety Passport” system to reward workers for individual safety performance and completion of safety related trainings. Each facility has a documented and regularly tested emergency response plan (fire drills, mock emergency drills, etc.)

With expansions currently underway at Jigani, Taloja, and Panoli, there are numerous construction activities in various stages of completion at these sites. While construction contractors are temporary, they have a long-term presence at all of Hikal’s facilities. Hikal will therefore continue to ensure that construction contractors on site comply with all mitigation measures outlined in the respective REIAs and with all IFC PSs, especially with regard to the child labor and use of necessary personal protective equipment.

Hikal will undertake a comprehensive review of its existing practices with respect to labor and working conditions as compared to the requirements of IFC’s PS2, and has agreed to incorporate any changes into its HR systems and practices as may be needed to ensure compliance with these requirements.

- PS3: Pollution Prevention and Abatement:

Hikal has an established environmental monitoring program that includes monitoring of effluent and stack emissions. Monitoring reports reviewed during appraisal indicate material compliance with both local requirements and IFC guidelines for the parameters monitored. Hikal has agreed to review and make necessary changes to its monitoring program to ensure compliance with IFC guidelines for all relevant parameters.

Hikal obtains water for each of its facilities from relevant municipal authorities and, depending on its end-use, further treats water prior to use. As a result of the expansion activities currently underway at the Jigani plant, a new effluent treatment plant (ETP) and solvent recovery unit are under construction to meet regulatory requirements which also includes tertiary treatment for recycling the treated effluent. Once the new ETP is commissioned, Hikal will monitor the quality of both the raw effluent going into the ETP, as well as the treated effluent, so that the treatment efficiency of the ETP and compliance with relevant requirements can be assessed. The Taloja facility already has an ETP on the premises; and the pre-treated effluent is discharged to a central effluent treatment plant within the industrial zone.

Uninterrupted grid power is available to all of Hikal’s plants through express feeders. Each plant also has 100% power back-up in the form of diesel generators, in the event of an interruption to the grid supply. The company has indicated that the back-up gensets are only in use for a few hours per month. Dust collection filters and scrubbers have been installed to reduce particulate emissions, and the company conducts regular monitoring of emissions from the generators and boiler stack as part of the company’s EHS monitoring program.

Solid waste and scrap is separated and disposed of in several ways, according to the risk and locally available means of disposal. Recycling and reuse is practiced to the extent possible. Where this is not possible, materials are disposed of to authorized landfills. In the case of hazardous wastes, including spent oil or drums used for transport of chemicals, materials are disposed of by licensed contractors.

Hikal uses a variety of hazardous chemicals at all its manufacturing facilities and recognizes that the handling and use of such chemicals poses a potential environmental and human health risk. Hikal has well-developed and secured handling and storage facilities on site, and the standard operating procedures in place are consistent with good international practices. All the chemical storage facilities have secondary containment as well as spill / leakage detection systems, as well as appropriate safety measures such as sprinkler sprays as necessary (e.g. for chlorine, ammonia etc.). The plants are automated consistent with accepted international practices. Points of human contact with chemicals are thus minimal, contributing to Hikal’s overall high standards of occupational health and safety.

- PS4: Community Health, Safety and Security:

Hikal’s facilities are all located within designated industrial zones and, as a result, community impacts of its operations are minimal. Hikal is nonetheless committed to preventing any harm to communities that could arise from its research, development, production or other operational activities. The company is a member of the voluntary industry “Responsible Care” initiative, originally created by the International Chemical Manufacturing Association. Hikal operates in compliance with Responsible Care principles, which include response to community concerns about operations, development of safe processes, and prompt communication with government and other local stakeholders on issues of health or environmental hazards.

The major potential hazard to the community health and safety arises from the transportation of the chemicals to the manufacturing sites or delivering finished products to an export site. These operations are handled by the contractors. The company has confirmed that the drivers are trained in emergency response procedures in the case of an accident during transportation. Each truck has on-board the material safety data sheets and emergency procedures for the respective chemicals in local languages. The company has also confirmed that there has been no accident so far involving the transport vehicles for its operations. Any case, the company has agreed to develop a documented procedure as a part of its management systems supplemented by necessary training modules for the drivers and fleet contractors and regular training will be conducted for them. Security services at all plants do not carry firearms and their Terms of Reference and performance are consistent with IFC standards.

Stakeholder Engagement

Hikal has undertaken a number of social activities, primarily around the Taloja facility, as part of its corporate social responsibility efforts. These initiatives have included an eye diagnostic and treatment camp for the elderly, AIDS awareness for staff and community through street plays, first aid training for local school children, donations to local schools, and provision of scholarships to a number of university students for studies related to pharmaceutical and agrochemical production fields. In addition, Hikal has made it’s expertise in hazardous chemical handling available to local government entities and highway authorities near Taloja, in case of road accidents that involve chemical spills. The team has been called out on a number of occasions to assist local government in managing chemical spills outside of Hikal’s premises.

This Environmental and Social Review Summary and accompanying Action Plan will be available for public review and comment at the following locations:

Contact Person : Mr. Ashok Moza, Corporate Head - EHS
Address : Great Eastern Chambers, 6th Floor,
Sector 11, C.B.D. Belapur,
Navi Mumbai – 400 614

e-mail : ashok_moza@hikal.com
phone number : + 91 22 27574276
fax number : + 91 22 27574277
Web : http://www.hikal.com

Client Documentation

File Name	Actions
Hikal Final E&S Action Plan.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).

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