IFC’s environmental and social due diligence indicates that the projects proposed for development by BEL will have impacts which must be managed in a manner consistent with the following Performance Standards:- PS 1: Social and Environmental Assessment and Management System; - PS 2: Labor and Working Conditions; - PS 3: Pollution Prevention and Abatement; and - PS 4: Community Health, Safety and Security Further, it is possible that one or more of the Company’s pipeline projects will have impacts that must be managed in a manner consistent with the following Performance Standards: - PS 5: Land Acquisition and Involuntary Resettlement; - PS 6: Biodiversity Conservation and Sustainable Natural Resource Management; - PS 7: Indigenous Peoples; and - PS 8: Cultural Heritage IFC will review the environmental and social due diligence undertaken by the Company for each proposed project to ensure that all applicable Performance Standards have been addressed.

This is a category A project according to IFC’s Procedure for Environmental and Social Review of Projects insofar as the Company proposes to invest in medium to large-scale hydropower projects with potential significant adverse social or environmental impacts that may be diverse, irreversible or unprecedented. Key risks and issues related to this investment include the Company’s capacity to: undertake adequate social and environmental assessment commensurate with the impacts of the Company’s projects during both construction and operations phases; manage the social, environmental, health and safety performance of its contractors in accordance with good international practice; consult and engage with project-affected communities in accordance with local requirements and IFC Performance Standards; ensure fair, safe and healthy working conditions during construction and operations for direct employees as well as for the contract workers; ensure proper handling of hazardous materials, and management of air emissions, wastewater, solid and hazardous waste during construction and operations; ensure proper management of the impacts of construction and operations on local ambient air quality, community health, safety and security as well as management of the potential impacts of the influx of construction labor during construction; minimize adverse impacts of construction and operations on the natural flora and fauna, including the maintenance of adequate ecological flows in the rivers utilized for power generation.

Information concerning how these potential impacts are being/will be addressed by BEL and its project companies is summarized in the paragraphs that follow. A detailed Social and Environmental Action Plan reflecting BEL’s commitments is attached to this documentation. PS 1: Social and Environmental Assessment and Management Systems – IFC’s assessment considered the Company’s management of its environmental, health and safety performance in the establishment and operation of its facilities; compliance with national and local permitting requirements; and the Company’s engagement with local communities regarding environmental, health and safety performance. BEL has committed to establish a corporate Social, Environmental, Health and Safety (SEHS) Management System to ensure that its individual projects are constructed and operated in a manner consistent with host country requirements, IFC’s Performance Standards and good international industry practice as detailed in IFC’s Environmental, Health and Safety Guidelines. BEL will appoint a qualified individual who will have overall corporate responsibility for the development and implementation of SEHS policies and procedures that will be applied by BEL to all prospective acquisitions and greenfield projects. These policies and procedures will require an environmental impact assessment or environmental audit consistent with host country requirements of all prospective projects, as appropriate, that results in the development of an Environmental and Social Action Plan setting forth: i) measures to mitigate adverse impacts, ii) monitoring requirements for ensuring the mitigation measures are made effectively and in a timely manner; iii) organizational and financial resources for carrying out the measures; and (iv) an implementation schedule for these activities. If BEL proceeds with the acquisition or greenfield project development, this Action Plan would then form the basis for the project company’s SEHS management system. BEL has committed to engage qualified consultants, similar to those that have supported the SEHS assessment and management planning for its Allain Duhangan Hydropower Project, to build the capacity within the Company for corporate-wide SEHS management. Under the supervision of the BEL SEHS Manager and his/her staff, these consultants will: i) support the screening of potential projects for SEHS risk; ii) review of assessments and plans carried out in accordance with host country permitting requirements for completeness and consistency with IFC’s Performance Standards and EHS Guidelines; iii) identify the need for supplemental studies and engage specialists to undertake those studies; and iv) develop Action Plans to govern the implementation of each project. BEL’s SEHS Manager and his/her staff will be responsible for ensuring that the Action Plan is implemented by each project company throughout the construction and operations of the project. For each project, BEL will require its project companies to develop and implement a Public Disclosure and Consultation Plan (PDCP) to ensure that affected communities are provided with information on the risks, impacts and opportunities presented by each project. The PDCP will be designed to ensure the free, prior and informed consultation of project-affected populations with regard to the risks and benefits of each project, and way in which those risks and benefits will be managed. BEL will replicate the grievance redressal procedures that it has successfully implemented in both its Malana and Allain Duhangan hydropower projects to address any community concerns associated with its projects as they arise. PS 2: Labor and Working Conditions. IFC’s assessment considered BEL’s management of project construction and operations with regard to fair, safe and healthy working conditions in construction and operation of facilities. BEL will adopt the systems by which it manages worker health and safety in its Allain Duhangan Hydro Project (ADHP) commensurate with the scale of its new projects. In addition to the ADHP’s dedicated 58 person SEHS team, the project has employed 20 contract personnel to monitor contractor compliance with the Project’s SEHS guidelines at all construction sites where the employment of casual laborers is intensive. These personnel are dedicated to monitoring the effective implementation of guidelines for the protection of the workforce, including control of tunnel access and the prevention of children from entering active work sites. ADHP has addressed issues of children present at worksites by establishing a crêche for the children of non-resident working families employed as casual laborers. Each of the ADHP’s major civil and electro-mechanical contractors maintains satisfactory standards of worksite health and safety, monitoring worker exposure to hazardous working conditions (e.g., air quality in tunnels), enforcing the use of personal protective equipment and the observance of traffic safety protocols in the operation of heavy equipment. ADHP’s SEHS team deploys safety officers across all major construction sites. In both India and Nepal, labor unions are typically well represented at large construction sites and among the rank and file of industrial unit operations. Three of India’s largest labor unions are active among the entire ADHP work force. Union representatives ensure wages are consistent with statutory requirements and advocate for worker protection and benefits at the work site. Union representatives meet regularly with Project management. Grievances raised are addressed by ADHP management directly with its contractors. The human resources management system of the ADHP project company (Allain Duhangan Hydro Power Limited or “ADHPL”) has been modeled on the HR management framework established by its parent company, the LNJ Bhilwara Group, a large and respected diversified industrial group. That system is governed by a policy that is consistent with IFC’s PS2. The Group’s HR policy and procedures includes components related to: guidelines for recruitment, selection and continuity in service; standardized skill competencies; performance appraisal; career progression; professional development; rewards and recognition; and professional ethics. BEL, as the power sector investment vehicle of the Bhilwara Group, will replicate the Group’s HR policy and procedures in all its operating companies. PS 3: Pollution Prevention and Abatement. IFC’s review considered BEL’s capacity for management the impact of its projects on the surrounding natural environment. Site specific pollution prevention and mitigation measures associated with each project will be identified, in accordance with host country requirements, during the project environmental assessment. The Company will, as part of its SEHS Management System, develop procedures to ensure that the environmental impacts associated with the construction and operation of its projects, are managed in accordance with IFC’s Performance Standard 3 and its EHS Guideline provisions. Since the commencement of ADHP construction, the project’s SEHS team has managed general housekeeping, solid waste and the storage, handling and disposal of hazardous materials at all construction sites to a satisfactory standard. The team oversees the collection, segregation and sale of recyclable solid waste and the Project has installed a high temperature, dual-chamber electric incinerator for the disposal of non-recyclable solid waste. A wastewater treatment plant services the project’s administration building and housing colony and treated wastewater is recycled for use in dust control, irrigation and sanitary waste disposal. The SEHS team maintains a well equipped laboratory for measuring stack emissions from diesel generators and the incinerator as well as water quality sampling to ensure compliance with Government of India Central Pollution Control Board standards. The team also monitors the measures put in place by the project to control overflow and run-off from existing tunnel muck dumping sites onto slopes and into streams, and to store excess muck until it can be used for back-filling at a number of the major civil-works sites. PS 4: Community Health, Safety and Security. IFC’s review considered the Company’s capacity to manage the impacts of the construction and operation of its facilities on the health, safety and security of surrounding communities. ADHPL, the operating company created by BEL for the construction and operation of the Allain Duhangan project, continues to satisfactorily manage the impacts of the construction and operations of facilities, including: movement of vehicles to and from construction sites, operation of construction equipment, containment of dust, noise and other nuisance factors; and control of public access to construction sites. All project structures, including upstream water storage structures, have been designed in accordance with internationally accepted engineering standards for structural integrity that account for the geomorphologic conditions of Himalaya, including avalanches. The project’s Independent Engineer reviewed and certified all structural designs prior to commencement of construction and inspects all project works against design specifications on a quarterly basis. In addition, ADHPL has fulfilled its commitments to ensure the security of the local population faced with the influx of a large construction workforce. Unarmed security guards man check posts at major civil works sites, along access roads and at labor camps throughout the Project area to ensure both the security of the work sites as well as that of the surrounding communities. Blasting schedules are well established and publicized throughout the project area. Project management has established a police post at Prini, the most populous village in the project area. There has been no major compromise of public security in the project area since the commencement of construction and relations remain amicable between the communities and the construction workforce. The project company ensures that all its own and all contractor employees undergo periodic health check up including for HIV/AIDS, and require contractors to implement a periodic health checkup program for contract labor as well. The company has implemented a HIV/AIDS awareness program, for its own employees, labor and contractor’s laborers and has extended the HIV/AIDS awareness program to the communities in the vicinity of its project sites. PS 5: Land Acquisition and Involuntary Resettlement. IFC’s assessment considered the capacity of BEL to manage the potential displacement of occupants and/or users of land acquired for the construction and operation of its projects. BEL will ensure compliance of its project companies with the applicable host country requirements as well as IFC requirements for the management of land acquisition, resettlement and rehabilitation of project-affected people. Neither BEL’s Malana nor ADHP projects entailed physical displacement. Families from whom these projects acquired land were compensated at rates significantly greater than prevailing market rates. To comply with IFC requirements, provisions were made in the ADHP Resettlement Action Plan for special assistance to vulnerable families affected by land take (e.g., the provision of alternative land, assistance with the uprooting and replanting of fruit trees). Throughout the construction period, the community liaison staff of ADHP’s SEHS team addressed complaints of damage to crops, orchards and other property by community members swiftly and fairly. PS6 - Biodiversity Conservation and Sustainable Natural Resources Management: IFC’s assessment considered BEL’s capacity to manage anticipated impacts on the natural environment of the construction and operation of its projects. Biodiversity protection measures specific to each project location will be identified during the project environmental assessment and implemented by the project’s SEHS team. The ADHP SEHS Management Plan required team members to be deployed to the project’s remoter construction sites to discourage poaching and illegal use of firewood by construction laborers. Project management requires all contractors to supply their labor camps with kerosene for cooking and electricity for heating to reduce the demand on local wood and biomass resources. In compliance with Government of India regulations, ADHP management has paid approximately Rs 145 million in fees to the Himachal Pradesh State Forest Department for compensatory reforestation and improvement of the catchment of the Allain and Duhangan streams. To allay the concerns of villagers in the project area, ADHP management has built protective structures for natural springs supplying their villages as well as a supplementary piped water system. Preliminary results of a multi-year riverine ecology study undertaken as part of the project’s ESIA indicated that the minimum (environmental) flow in both the Allain and Duhangan streams to which the project is committed for release downstream of the diversion structure is sufficient to maintain the ecological integrity of the stream. As a condition of IFC’s financing of the project, ADHP management has prepared a construction demobilization and landscape restoration plan as a supplement to the Project’s SEHS Management Plan. This supplemental plan provides the details and timetable for a systematic restoration of the project area landscape following the completion of all civil works and the evacuation of all construction sites, including muck disposal sites, materials lay down areas and labor camps. PS7 – Indigenous Peoples: IFC’s review considered BEL’s capacity to avoid or mitigate adverse impacts resulting from the construction and operation of its projects on Indigenous Peoples. The Himalayan regions in which the Company’s pipeline projects are located is ethnically and culturally diverse. The Company has demonstrated sensitivity in its engagement with the ethnically distinct pahari populations inhabiting the sites of its Malana and ADHP projects. BEL will ensure that SEHS Management System procedures compliant with host country provisions as well as IFC’s PS7 requirements will be developed to meet the specific contexts of its pipeline projects. PS8 - Cultural Heritage: IFC’s review considered BEL’s capacity to avoid or mitigate adverse impacts resulting from the construction and operation of its projects on sites of cultural significance within those projects’ sphere of influence. The management of BEL’s Malana and ADHP projects has demonstrated respect for the religious sentiments of the project-area population through protection and enhancement of sacred sites (e.g., ponds and forest groves) in consultation with community members and through support for local religious institutions, festivals and ceremonies. The Company will develop similar procedures for the protection of local cultural heritage consistent with IFC’s PS8 to meet the specific contexts of its pipeline projects.

BEL, through its investment in both the Malana and ADHP projects, has demonstrated a commitment to supporting local development through employment of local contractors and contribution to public infrastructure and services. For example, ADHP management has disbursed nearly Rs 60 million in small-scale infrastructure works throughout the area including: improvement of irrigation canals; construction of piped water systems and bath houses; paving of village pathways; installation of street lighting; and the construction and improvement of school and health care facilities. In addition, the Project has granted approximately 3,500 separate contracts to Project area contractors amounting to approximately Rs 700 million for transport, heavy equipment, hauling and construction labor providing a considerable boost to local employment in the entire Manali sub-district of Himachal Pradesh. In addition, the project has committed Rs 150 million to the Kullu District government that is intended to supplement the budgets of all local community development line departments (e.g., public works, agriculture, forestry and irrigation).

Bhilwara Energy Limited Bhilwara Towers A-12, Sector -1, Noida – 201 301 (NCR-Delhi) – India Phone: +91-120-4390300 Fax: +91-120-2531648 Documentation related to each project will be made available locally and on the Company’s web site (www.bhilwaraenergy.com) as projects are developed.