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: Performance Standard 1: Social and Environmental Assessment and Management System; Performance Standard 2: Labor and Working Conditions; Performance Standard 3: Pollution Prevention and Abatement; and Performance Standard 4: Community Health, Safety and Security. The Project activities will be undertaken within the existing plants and no land acquisition is envisaged for any of the activities in the Project. Further, the plants are located within existing industrial areas, hence, impacts of the type envisaged in PS5 (Involuntary Resettlement), PS6 (Biodiversity Conservation and Sustainable Natural Resource Management), PS7 (Indigenous Peoples) and PS8 (Cultural Heritage) are not expected on account of the Project.

This is 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, and it is possible to readily design and implement engineering and management measures to mitigate adverse impacts on account of the Project and from the facility operations. Key aspects of relevance to the Project include: resource conservation, recycling, recovery of materials and energy and water efficiency; management of emissions to air, soil and water; management of hazardous materials and hazardous wastes; management of occupational health and safety including work place environment quality; ensuring fair labor working conditions including for contractors; and transportation safety including management of impacts on community health, safety and security. The Company will implement a social and environmental management system (SEMS) consistent with IFC Performance Standards and good international industry practice.

The Company has presented plans to ensure that the Project and its operations will upon implementation of the specific agreed measures, address the environmental and social impacts and comply with environmental and social requirements including: all applicable host country laws and regulations; IFC’s Performance Standards; and the World Bank Group (WBG)/IFC environmental, health and safety guidelines. The information about how these potential impacts will be addressed is summarized in the paragraphs that follow. Further information is provided in the attached Environment and Social Action Plan (ESAP). Social and Environmental Management System (SEMS) VOL Sponsors and management both are sensitive to and recognize the importance of social, environmental, occupational health and safety (SEHS) aspects associated with the Company’s operations. VOL has also deployed qualified HSE staff at each site; articulated a HSE Policy; and put in place a basic HSE manual. However, overall management of SEHS aspects was not undertaken under a structured and documented management system conforming to internationally recognized standards. The Company has in the past two years commenced initiatives to adopt a systems approach to managing SEHS aspects. While VOL has in place a ISO 9001:2008 certified quality management system, the Company will, by December 2011, put in place a SEHS management system (SEMS) certified to ISO 14001 and OHSAS 18001 standards, with IFC Performance Standards incorporated. Social and Environmental Assessment VOL has carried out Hazard and Operability (HAZOP) studies for the plant at Mahad and for the proposed new processes at Lote. The Company has also carried out risk analysis for the Lote plant and a MCLS study for the Mahad plant. Further, the Company has carried out third party safety audits (besides customer QEHS audit at Mahad) and is implementing an action plan based on the findings of the third party audit. Further, the Company will for each plant: (a) carry out a detailed quantitative risks assessment (QRA) including domino effect considerations for existing and proposed facilities; (b) undertake HAZOP for existing facilities at Lote plant; and (c) implement risk mitigation measures based on the outcome of the QRA, HAZOP recommendations and MCLS study at its Mahad and Lote plants. To apply for regulatory permits for the Project from MPCB, the Company has carried out a limited environmental examination of the Project. MPCB has required the Company to obtain environmental clearance. However, while implementing the SEMS, the Company will undertake a comprehensive SEHS assessment, identify the significant SEHS risks and impacts associated with its routine operations, and implement management programs to minimize/mitigate the identified impacts. Any future investments and projects by the Company will be similarly assessed. Labor and Working Conditions VOL employs about 145 persons and 225 persons directly at its plants in Mahad and Lote respectively. Further, the Company has also engaged about 150 contract workers at its Lote plant. The Company has in place a HR Policies and Procedures Manual. Labor working conditions are managed under the Model Standing Orders (conditions of work), which is generally consistent with PS2 requirements. The service conditions are communicated to employees through appointment letters. However, to make its HR Policies and Procedures consistent with PS2 provisions, the Company will: (a) translate the model standing orders into the local language and make it available to all employees in either English or the local language as per the preference of the employee; (b) put in place an Employee Grievance Redress procedure consistent with PS2 provision; (c) include provision for maternity leave in accordance with the legal requirements; (d) display the abstracts of applicable labor laws in the local language in accordance with the provisions of these laws; and (e) put in place a procedure for documented audit of key contractor and service providers compliance with all labor law requirements (e.g. construction contractors, transporters, security service, O&M and labor contractors engaged by VOL plants etc). The manufacturing processes at VOL’s facilities involve handling and reacting highly flammable materials such as toluene, propylene, sodium, acrylonitrile, sulphuric acid, and sodium hydroxide under high temperature, high pressure conditions or in exothermic reactions. Consequently, VOL’s operations involve storage and handling of large quantities of hazardous chemicals. While areas for improvement in occupational health and safety management remain, VOL has: deployed safety officers at each plant; a joint safety committee process; provided and adequately ensured usage of personal protective equipment by employees and workers; provided in process safety interlocks as part of the automated process control system; in place a work permit system; installed automatic gas detection and alarm system; fire/accident prevention, detection, alarm and control facilities and equipment; a safety training program in place for employees and contract workers; provided safety signage; prepared an emergency response plan; participated in the common emergency response plans of the industrial authority/area at Mahad and Lote; conducted mock drills; carried out risk analysis and safety audits; and commenced implementing recommended risk mitigation measures. Further, going forward, VOL will manage occupational health and safety through its OHSAS 18001 certified management system. However, in the interim, the company will further upgrade: procedures for storing and handling sodium to ensure access from all sides; the sodium usage cycle from last in first out (LIFO) to first in first out (FIFO) cycle; fire detection and alarm system from push button to electronic system; procedures for safety equipment checking and its documentation; medical examination to a targeted medical surveillance program; work area environment quality monitoring to meet statutory requirements; procedures for enforcing usage of all required personal protective equipment (PPE); detailed assessment of worker exposure levels to hazardous chemicals and conditions (with and without PPE); tag out and lock out procedures; detailing and on ground implementation of emergency response plan; safety signage and exits; ventilation of some areas; painting and corrosion prevention; location, access and directions to showers, eye wash, SCBA, fire extinguishers and exits; railings and toe guards; provision, sealing and maintenance of flame proof fittings, gaskets, flanges, earth pits, earthing and jumpers; pressurizing of UPS battery room, and panel room at Mahad to prevent ingress of toluene; total enclosure of the utilities section at Lote; pressurizing of the substation room at Lote; removal of hydrogen cylinders to flameproof area; humidity control in control rooms; removal of air conditioners from UPS battery room; and construction contractor compliance with VOL’s safety requirements. Pollution Prevention and abatement VOL will, going forward, manage environmental impacts of its operations as per the ISO 14001 certified SEMS. The Company has implemented and is considering (as part of the Project as well) several initiatives to: recover joint products; and recycle and reuse material, joint products and water. This is expected to reduce specific water consumption at the Lote plant. The Company as part of the Project aspires to make Lote plant a zero discharge facility, which it is expected to achieve except during the monsoon months and towards this is installing a 75m3/day effluent treatment plant (ETP), which will enable it to recover some joint products from the process waste streams and also recover, reuse/recycle the entire wastewater. The Company will ensure that the treated effluent to be used on land meets applicable IFC EHS Guideline values. The Company is currently treating the process waste water (25 m3/day) and disposing it to the Lote industrial area common effluent treatment plant (CETP). At its Mahad plant, the Company sells 22 m3/day of the total 51 m3/day process effluent/waste stream to Viral Alkalies (a sister concern owned by the Sponsors) for recovery of potassium carbonate and sodium hydroxide, which are then sold. However, at the Mahad plant, the Company is currently mixing its remaining process effluent and domestic sewage (8 m3/day) for treatment in an ETP before disposal to Mahad industrial area CETP. The Company will, in accordance with the consent conditions, segregate the sewage stream from the process wastewater stream, and treat it to IFC guideline standards before disposal. At Lote, treated (septic tank) sewage (10 m3/day) is discharged into the industrial area municipal sewage system. The biological oxygen demand (BOD) and total suspended solid levels in the treated sewage, though within national standards, exceed IFC guideline values. The Company will put in place sewage treatment plants both at Mahad and Lote to meet IFC guideline norms. The Company will check the ETP facilities to plug any leakages/seepages and at Mahad, provide an impervious lining in the sludge drying beds. Further, the Company will implement a procedure to test liquids from all open storm drains to ensure absence of hydrocarbons/organic chemicals. The Company consumes about 100 m3/day of water at Mahad and about 150 m3/day at its Lote plant. The water consumption post project is expected to increase to 375 m3/day. The water is sourced from industrial area/municipal water grid. Drinking water is sourced from the industrial grid. The Company will implement a drinking water quality testing program to demonstrate potability as per national potable water quality standards. The grid is the primary source of electricity at VOL’s plants both at Mahad and Lote. However, at Mahad the Company also consumes 12 ton per day (tpd) of coal for its 3 million kcal/hr thermic fluid heater & 5.2 tons per day of liquid fuel for other 3 thermic fluid heater of (1.5, 0.85 and 0.6 million kcal/hr) which are operated only when the 3 million kcal/hr heater is under maintenance. A 325 kVA diesel generator (DG) unit has been provided as backup power at Mahad plant. Further, at Lote the Company has a coal fired steam boiler of 9 TPH capacity, which will be expanded to 15 TPH as part of the Project. Lote plant consumes about 28 tpd of coal. In Lote unit, Company has liquid fuel fired spray drying system for Polymer plant & liquid fuel fired hot oil unit of 1 million kcal/hr capacity for IB plant. Company consumes about 1.8 tons per day of liquid fuel at Lote. In addition, Lote plant also has two 325 kVA and one 600 kVA DG sets for backup power. Particulate matter emissions from thermic fluid heaters and boilers both at Mahad and Lote respectively, though within national standards, exceed IFC guideline values. Sulphur di-oxide and oxides of nitrogen emissions are within both national standards and IFC guideline values. The Company will: upgrade the pollution control equipment in the existing boilers to bring particulate matter emissions to within IFC guideline values; and ensure that emissions from the facilities proposed under the Project meet IFC Guideline values. Limited monitoring from Lote Plant process stack indicates that acid mist (as HCl) emissions while within national standards, exceed IFC EHS Guideline values. Monitoring of process stack emissions has not been undertaken at Mahad plant. The Company will undertake benchmark monitoring of process stack emission both at Mahad and Lote plants for parameters required to be monitored as per consent conditions and also as per applicable IFC EHS guidelines. In cases where process stack emission parameters exceed IFC EHS guideline values, the Company will implement mitigation measures to ensure that these emissions remain within national and IFC EHS guideline values. The GhG emission from Lote plant after the Project (at increased capacity) is expected to be about 103,000 tCO2e per annum. The Company has provided acoustic enclosure for DG sets. Moreover, the Company has installed vapor absorption chillers at its plants. Further, VOL will ensure that refrigerant/air conditioning gases comply with the Ozone Depleting Substances Rules set by the GOI under Montreal Protocol requirements. Ambient air quality and ambient noise levels at both Lote and Mahad plants are well within national standards. Material impact on ambient air quality and ambient noise levels is not expected on account of the Project. The Company stores and handles significant quantities of hazardous materials, most of which are stored within secondary containment. However, some over ground tanks do not have dyke walls which VOL will provide. In addition, the Company will further upgrade the PPE made available to workers handling hazardous materials, enforce the use of PPE, provide training to employees handling hazardous materials, and provide washing stations in material handling areas. The Company will ensure that relevant material safety data sheets are posted at appropriate locations and necessary antidotes for accidental exposure are available and readily accessible. Further, the Company will also: provide process area peripheral spill containment; ensure that all floor and equipment washing water is taken to ETP; and provide corrosion resistant lining in acid and alkali storage areas. The Company’s plants generate hazardous waste including used oil, ETP sludge, tank/equipment cleaning sludge, used chemical/oil drums/carbuoys/containers/painting wastes, spent batteries etc. The Company will put in place procedure for ensuring that all hazardous wastes are labeled and stored within secondary containment in designated areas. The Company has procedures in place to dispose of hazardous waste to authorized entities and in an authorized secure land fill. The Company generates about 4 tpd of coal ash at each of its plants, which it disposes off by filling low lying areas within its premises. The Company will: undertake benchmark characterization of the ash including for presence of heavy metals and mercury as also Toxicity Characteristic Leaching Procedure (TCLP) test; based on the findings of the test implement an appropriate interim ash handling and storage plan; and in any case implement an ash utilization plan including a program to dispose it off to brick makers or other users. Community Health, Safety and Security VOL has constructed the infrastructure and is using equipment that meets good industry practices. The Project facility design and equipment will also meet good industry practices. The Company will, as part of the SEMS develop and ensure that its transporters put in place comprehensive transportation safety procedure including provision of training to drivers in defensive driving and handling transport emergencies; and procedures to mitigate risk of uncontrolled release of hazardous materials and wastes. VOL has engaged a security service provider that deploys security personnel who are armed. The Company will however upgrade its security personnel procedure and implement documented procedures for demonstrating that: past records of security personnel employed are screened; security personnel have clear objectives and permissible actions laid out; security personnel are trained in avoidance of human rights violations and handling various situations with clear procedures; security incidents are recorded, investigated and corrective action implemented; bona fide complaints against security personnel are investigated/disciplinary actions implemented; and there is a grievance mechanism for aggrieved members of community or employees in the event of a violation of the code for security personnel. The Company has prepared an emergency response plan (ERP), which it will further upgrade, detail and link with the industrial area emergency management plan. VOL participates in the Mahad and Lote industrial area offsite disaster/emergency plan and coordination process.

VOL’s plants are located within existing industrial areas. While the Company does not have a formal community engagement process in place, it will as part of the SEMS put in place procedures for receiving, responding to and redressing as required, community/stakeholder information requests and/or grievances. The Company however, has a corporate social responsibility program in place with focus on supporting education, health awareness and sports in areas near its plants.

The Company will locally disclose the ESRS, ESAP on its website (www.vinatiorganics.com) and also at Mahad MIDC Office B-12 & B 13/1 MIDC Industrial Area Mahad 402309, Dist. Raigad, Maharashtra and Lote MIDC office Plot No A-20 MIDC Industrial Area,Lote Parashuram 415722, Taluka Khed, District Ratnagiri, Maharashtra. Inquiries and comments about the Project may be directed to: Ms. Vinati Saraf Mutreja Executive Director. Shiv Ashish, 2nd Floor, Near Lathia Rubber Factory, Andheri Kurla Road, Sakinaka, Mumbai 72. Phone: 022 42014444 Fax: 022 42014438 e-mail: vinati@vinatiorganics.com website: www.vinatiorganics.com