While all Performance Standards are applicable to this investment, IFCs 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. If IFCs investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

PS 1 – Assessment and Management of Environmental and Social Risks and Impacts
PS 2 - Labor and working conditions
PS 3 - Resource Efficiency and Pollution Prevention
PS 4 – Community Health, Safety and Security
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards
The Company’s operational facilities are located in well established industrial areas. The Company is finalizing the location for new facility from the two available options – one free-hold land purchased by the Company on willing-buyer-willing-seller basis (area 25 acres) at Bholadih, Dist. Seraikella, Kharsawan on the outskirts of Jamshedpur which is around 18 Km from the existing facilities the established Adityapur industrial area and the other is being leased from Adityapur Industrial Development Authority (area 25 acres) in an established industrial zone just outside Jamshedpur city. There are no forest lands, ecologically sensitive areas or indigenous people in the vicinity of the Company’s operational facilities or either possible Project site.

Accordingly, the findings of the Project review indicate that there are no impacts related to Land Acquisition and Involuntary Settlement (PS5), Biodiversity Conservation and Natural Resources Management (PS6), Indigenous Peoples (PS7) or Cultural Heritage (PS8).

This is a category B project according to IFC’s Procedure for Environmental and Social (E&S) Review of Projects because a limited number of specific environmental and social impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards and guidelines.

Key E&S risks and issues related to project include: the Company’s capacity to manage its EHS performance, and engage with local communities; assurance of fair, safe and healthy working conditions during construction and operation; utilization of equipment and operational practices that maximizes conservation of energy, water and process materials including recycling and reuse initiatives; management of wastes, emissions and discharges; handling and management of hazardous materials and wastes; and the impacts of operations on nearby communities and local ambient environment.

IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFCs requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives. The Company has presented information about how the E&S issues and impacts are being addressed, to ensure that the Project complies with the environmental and social requirements including: the host country laws and regulations; IFC’s Performance Standards; and the relevant World Bank Group (WBG) Environmental Health and Safety (EHS) guidelines. This information is summarized in the paragraphs that follow.

IFC’s assessment considered the Company’s management of its EHS performance in the establishment and operation of the facilities; compliance with national and local permit requirements.

- Policy

RKFL has articulated Quality, Environmental, Occupational Health and Safety (EHS) and Energy policies covering all its operations.

- Identification of Risks and Impacts:

For the brownfield expansion and technology upgrades in its existing operations, Company will review the environmental aspects and impacts associated with the proposed Project and develop programs to mitigate and manage those as part of RKFL’s environmental management system (EMS) which is described below.

For the proposed greenfield facility, the Company, will conduct a formal Environmental Impact Assessment (EIA) study if required by the environmental permitting process. Even if a formal EIA is not required the Company will procure all the necessary regulatory permits for the expansion project and accordingly shall comply with stipulated measures to mitigate potential E&S impacts during construction and operation of the Project.

In addition, as a part of the EMS which RKFL has started developing for the proposed greenfield facility, it will review the environmental aspects and impacts associated with the construction, commissioning and operation of proposed Project and develop programs to mitigate and manage those.

- Management Systems:

The Company has an EHS management system implemented at the operational facilities in Jamshedpur, which will also be implemented in the proposed greenfield facility.

Company’s operational facilities have implemented certified quality (ISO9001:2008), environmental (ISO14001:2004) and occupational health and safety (OHSAS 18001:2007) management systems. In addition, RKFL has implemented a certified quality management system as per the ISO/TS 16949:2009. This technical specification aims to develop a quality management system tailored for automobile sector, emphasizing defect prevention and the reduction of variation and waste. This is critical for the Company to meet the requirements of its buyers for high-precision forged and machined components.

Under the framework of these management systems, the Company is currently implementing programs for continuous improvements in the areas of resource efficiency (energy and water conservation), safety improvements, elimination of soil /land contamination caused by cutting fluid, oil leakage; etc. – supported by a rigorous monitoring and documentation systems.

- Organization:

RKFL has a formal organizational structure in place to oversee the environment and safety matters at corporate as well as facility levels. At the corporate level, the Vice President and Head (Corporate HR), with a direct reporting line to the Chairman, has the responsibility to oversee EHS management across all facilities. This person also serves as the Management Representative (MR) for development and implementation of various management systems (i.e., ISO9001, ISO14001, OHSAS 18001). In addition, an EHS coordinator (also the deputy MR) and a safety officer are assigned for each facility, for day to day oversight of EHS activities.

- Monitoring & Reporting:

The Company has put in place an elaborate monitoring and reporting program as documented in the management system manual. This program covers monitoring of emissions and waste as per the statutory requirements. In addition, Company regularly monitors water and energy consumption for internal benchmarking and reporting purposes (described below under Resource Efficiency).

As a part of its structured monitoring and reporting program, regular reports are prepared and shared with the senior management. Moreover, the Company’s Chairman reviews the EHS performance every week.

The company will further review WBG EHS Guidelines and accordingly, update its monitoring program to cover relevant parameters for workplace monitoring, such as temperature, noise, particulate matter and volatile organic compounds (VOCs).

- On-site Emergency Response Plan:

Based on the identified hazards and risks, on-site emergency response plans have been developed by the Company for its operational facilities. Accordingly, potentially hazardous areas have been identified and evacuation routes and assembly points have been designated and clearly marked.

RKFL currently has around 915 regular employees, comprising technical staff, associates and management staff. In addition, RKFL employs 550 contract workers mainly for movement and loading / unloading of material and finished products, and other functions such as housekeeping, security etc. In addition, around 280 employees of sub-contractors work on the outsourced job of cleaning the edges of the machined parts.

- Human Resource (HR) Policy, Management

RKFL has articulated HR policies and procedures for its operations which are consistent with national labor laws and IFC’s PS2 provisions. The Company has HR professionals deputed at each of its facilities, who are responsible for implementing HR policies and procedures.

RKFL manages its workforce under the Indian government’s Model Standing Orders. The Model Standing Orders are consistent with PS 2 provisions and are displayed in the local language at Company’s premises. These cover terms of employment; non-discrimination and equal opportunity; leave, exit and termination policies; working hours, provident fund, training, welfare, and grievance mechanism.

This information is provided in the induction manual which all new recruits receive at the time of joining together with the employment contract. In addition, the Company has set up several computer terminals in the canteens and other public places across the facilities, through which the employees can access the HR systems on the Company intranet for accessing all the HR policies and procedures, applying/modifying leave, printing salary slips etc. This system also provides the employees access to several technical journals and websites.

Company’s HR department also has the responsibility of monitoring the contractors and ensuring compliance with the provisions of the Contract Labour Act of India. For this purpose, documented procedures and monitoring checklists and formats have been developed.

- Workers’ Union:

A workers’ union exists at one of the Company’s plants, and collectively negotiates the wages and other benefits with the management. While Company does not restrict the formation of workers’ union, there is no union at its other plants.

- Training and Human Resources Development

RKFL has an extensive human resource development and training program for its employees, managed by the HR department in accordance with a well-defined documented procedure. Several structured training programs are delivered for different levels of employees to enhance their competencies in four areas: basic mandatory skills, job specific skills, system awareness and behavioral competencies. A detailed training calendar is maintained and the training effectiveness is monitored post-training. Safety and resource efficiency /energy conservation are integral topics in the annual training calendar.

- Occupational Health and Safety

RKFL’s Occupational Health and Safety Policy guides the overall safety management at its facilities as well as that of its contractors. Under its safety program, RKFL has the following key focus areas: ensuring safety related statutory compliance; safety awareness through visual messages; safety training; work permit system; identification and action on unsafe acts and working conditions, use and upgradation of proper personal protective equipment (PPE); annual health check-up of employees; accident reporting system and trend analysis including near misses.

In addition, RKFL has developed documented procedures and programs to ensure safety at the proposed Project’s construction site, which include: safety induction training to all workers; trade test as per their job assigned; health check up depending on the job profile (work at height, fabrication work, hot work etc.); pep talk meeting with site engineers; provide and ensure use of PPE (such as safety harness, fall arrester, helmets, shoes, goggles, face shield; hand gloves etc.) as per job requirement; maintaining the health and accident register; and site emergency preparedness plan. The Company has developed various checklists and formats for monitoring the Contractors’ compliance against these requirements, which will be implemented during construction of new facility. Company will include relevant clauses in the contracts to ensure that the contractors implement these various requirements and assign one of its own staff for monitoring the same. There will be no labor camp during the construction of the Project.

Fire detection and suppression equipment is fitted across the facility in accordance with the potential fire risks. Fire exits and the locations of fire extinguishers are marked. Security guards are trained by the Company and security agency (Group 4) in fire fighting and first aid; and mock fire drills are regularly conducted. An occupational health center is available at the operational facility, and an ambulance is available on call.

The housekeeping and safety management was found to be very good in the machining operation. The facility is well lit and ventilated and workers were found to be using assigned PPE. Gas – the main fuel used in the facility – is stored in a well secured area. Various key performance indicators (KPIs) are displayed throughout the shop floor, together with visual safety signage and messages. Emergency procedures and contact numbers are prominently displayed and a safety instruction card is provided to all employees and visitors.

Due to all these efforts, there has been no reportable major accident in any of the Company’s facilities during the last 7-8 years.

At the same time, the safety management and housekeeping in the forging facility operation could be further improved in line with industry best practices. Specifically, the risks related to manual handling of hot forgings can be significantly reduced by using simple material handling equipments and systems (such as trolleys, conveyors etc). For this purpose, Company has already started a job-hazard analysis of the various operations in the forging facility. Based on the outcomes of this study, Company will develop and implement an improvement action plan in a time bound manner.

IFC’s assessment considered the Company’s operations with regard to resources consumption (water, energy), efforts to optimize resource inputs, waste minimization and management practices as well as the storage and handling of hazardous materials and wastes.

- Process Description

The Company’s manufacturing processes include: Closed Die Hot Forging using 8 hammers ranging from 0.5 ton to 6 tons including “Huta Zigmuth” made air pneumatic hammers; Upset Forging to manufacture finished rear axle shafts; Heat Treatment facilities such as Carburizing furnace, Hardening furnace, Tempering furnace, Normalizing Furnace, Iso-Annealing Furnace, Induction Hardening Furnace and Seal Quench Furnace which has helped the company to meet the demand for finished forgings, after heat treatment and grinding.

The Company’s machining unit is equipped with state of art automated CNC machines, Gear Hobbing Machines, Vertical Turning Lathes, Gear Shaping Machines, Vertical and Horizontal Machining Centers, Robo Drills, Gear Shaving Machines, Gear Broaching Machines.

In addition, the Company has recently installed a fully robotic Ring Rolling Press line imported from Germany for supply of rolled machined forgings to auto and bearing Industry. In the ring rolling process, a pre-form is heated to forging temperature and placed over the internal roll of the rolling machine. Pressure is applied to the wall by the main (external) roll as the ring rotates. The cross-sectional area is reduced as the inner and outer diameters are expanded. Equipment is fully automated from billet heating through post-forge handling. Advanced ring rolling equipment rolls contours in both the inner and outer diameter of the ring, allowing for excellent weight reductions, material savings, and reduced machining cost.

As part of the proposed Project, the Company proposes to set up a modern press line to manufacture front axle beam, crank shaft, sub axle and connecting rods. These products will be sold in both forged and machined condition to the buyers. The entire facility is a state of art technology and will be mostly imported from Europe as a package.

The Company’s operations primarily involve “dry” processes and do not result in significant amount of process wastewater. Small quantities of wastewater discharges include water-based cleaning and rinsing streams; cooling water; and water-based metalworking fluid operations. Limited emissions of VOCs may result from the use of lubricating / cooling fluids. The solid waste primarily comprises of metal particles (e.g. iron filings, and chips arising from machining operations); metal-bearing machining fluid sludge etc.

- Pollution Prevention and Resource Conservation:

Primary inputs for the manufacturing process are metal and energy: electricity for various machines in the machining unit and other fuel (oil/gas) for forge furnaces.

Currently, the furnaces in the forging facility are fired with fuel oil, however, Company is in the process of replacing all these oil-fired furnaces to induction furnaces, as a part of the proposed IFC investment. Company will switch over to induction furnaces in the existing facilities by end-2012, which will result in cleaner and energy efficient process.

Company conducts internal energy audits and accordingly, implements measures to reduce its energy consumption. In the past months, Company has implemented measures such as: optimization of cooling tower operation, fanless cooling tower, repairs to prevent air leakage and optimization of compressor operation, changeover to energy efficient lighting etc.

All these measures have resulted in savings of nearly 28,000 kWh of electricity per month. As a result of such efforts, Company has reduced its specific carbon footprint by 20% (from 1.82 in FY2008-09 to 1.46 t CO2e/t of product in FY2011-12).

Similarly, Company is implementing several measures such as plugging the leaks, recycling, and rain water harvesting to reduce its unit water consumption.

- Energy Sources and GHG Emissions:

After the switch over to the gas fired furnaces energy requirement for the Project is that of electricity, which is procured from the national grid. Gas will be used in the furnaces in the Press Forging Facility. Diesel generators are installed on site as backup generators, for use in the rare case of power failure.

The GHG emissions from the Company shall be, therefore, dominated by those due to the electricity consumption. The proposed new facility being developed under the Project will have estimated emissions of 45,000 t CO2e/year once the Project is operational at full capacity.

- Water Supply and Effluent:
Currently, the daily water consumption for the Company’s existing operations is around 5,700 KL per month which is sourced from the bore well. Company has an effluent treatment plant for one of the operational facilities and is in the process of constructing another for its other operational facility. Treated wastewater is used for gardening inside the premises.
Company will require 12500 kVA of power for the proposed expansion plan, which will be procured from the national grid. Water required for the production process and domestic use in the proposed facility shall be secured from a bore-well.

- Solid and Hazardous Waste:

The metal scrap from the process comprises of steel scale from forging operations, flash removed from pieces, and steel waste – such as swarf from machining, iron filings from grinding operations etc. This is sold to recyclers.

RKFL complies with all relevant regulations for the storage, handling and disposal of hazardous materials used in the production process. Small quantities of notified hazardous wastes (waste lube oils, oil-laden cotton waste etc.) are disposed of through licensed waste management contractors, as per the regulatory authorizations.

- Air Emissions

Company monitors its emissions from oil fired furnace stack and diesel generator stack as per the local regulatory requirements. However, these will be significantly reduced once over the conversion to induction furnace is complete.

The new Project will have an induction furnace, and hence there will not be major air emissions from the facility except for those from the backup diesel generators when used in case of power outage.

As the Company’s facilities are located in the well established industrial area, impacts on the nearby communities – including increased vehicular traffic - due to RKFL’s operations are minimal. However, Company has developed an Emergency Response Plan for all its facilities.

The Company contracts with a nationally certified security agency (Group 4) for 24 hour surveillance of the facility. Guards are trained by the security agency as well as the Company on the use of force.

On the basis of the above information, it is concluded that the Project has been designed and will be operated in compliance with IFC’s PS and relevant environmental, health and safety guidelines.

Company’s operational facilities are located in an industrial area; there are no local communities in the immediate vicinity of the facility. However, the new Project may be built in the vicinity of local communities.

Company recognizes that engagement with nearby communities and other stakeholders is the key for building long-term constructive relationships that are essential for the successful management of Project''s environmental and social impacts. For this, Company will develop and implement a stakeholder engagement plan, comprising a grievance mechanism and plan for external communication on Project''s environmental and social impacts for the nearby communities and other stakeholders. Local disclosure of this ESRS will be an important aspect of Company’s community engagement and disclosure program.

RKFL will disclose this ESRS locally at the following address:

Plant III & IV, Plot No. M- 15, 16 & NS – 26,
Phase VII Industrial Area, Adityapur,
Jamshedpur - 832109
Telephone: +91 657 3984 999
E-Mail: mailto:sakti.senapati@ramkrishnaforgings.com

All inquiries and comments may be directed to:
Mr. Sakthi Senapati
Plant III & IV, Plot No. M- 15, 16 & NS – 26,
Phase VII Industrial Area, Adityapur,
Jamshedpur – 832109, INDIA
Telephone: +91 657 3984 999
E-Mail: mailto:sakti.senapati@ramkrishnaforgings.com

Broad Community Support is not applicable for this project