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 Systems PS2: Labor and Working Conditions PS3: Pollution Prevention and Abatement PS4: Community Health, Safety and Security All the expansions are within existing properties. No land will be acquired. No natural protected area or protected species are identified at, or near, the project sites. Indigenous Peoples were not identified in the project area. Cultural Heritage was not identified in the project area.

All the manufacturing facilities are located in industrial areas and there are no communities near the facilities. Moreover, all the expansions are located within the existing properties, and all the wastewater generated from these expansions will be treated and recycled. Air emission rates for both traditional pollutants and carbon dioxide will be reduced due to new technologies adopted in this project. Water and energy specific consumption rates for unit products will also be reduced due to process optimization. Mitigation measures for the potential environmental and social impacts have been identified and are incorporated into an attached Environmental and Social Action Plan (ESAP). The potential adverse E&S impacts of this project are therefore few in number and limited to project sites, and may be readily mitigated. This is therefore an E&S Category B project.

The key environmental and social issues for this project include the following: - Wastewater treatment and recycling - Occupational health and safety - Air emissions and abatement - Energy efficiency - Solid and hazardous waste management - Operational hazards, fire prevention, and emergency response - Road transportation and community safety - Community engagement and development LOIL has presented plans to address these issues and to ensure that the proposed project will, upon implementation of the specific agreed measures with IFC, comply with the environmental and social requirements of the host country’s laws and regulations, IFC’s Performance Standards on Social and Environmental Sustainability, and the World Bank Group’s (WBG) Environmental, Health and Safety (EHS) Guidelines. The information about how these potential impacts will be addressed by LOIL is summarized in the paragraphs that follow. Further information is provided in the attached ESAP, which is agreed upon by IFC and LOIL, and will address compliance gaps with IFC’s requirements. 1. Social and Environmental Assessment and Management Systems Land and Natural Environment: The main manufacturing facilities (Units 1 and 2) are located inside the chemical industrial park of Maharashtra Industrial Development Corporation (MIDC) in Mahad, Maharashtra State, India. MIDC was set up in late 1960 by the state government, who has owned the land of the industrial park since then. The facilities are surrounded by other chemical plants and barren hills. Unit 1 is surrounded by barren hills and industries such as Khatau Mills, Pidilite Industries, Ashok Organic and barren hills where as Unit 2 is surrounded by industries and MIDC vacant plots – Lona Industries, Deepal Synthetics, Pearl Polymers and vacant industrial plot. There is no farm land nearby. The environmental impact assessments for the existing operations confirm that there is no natural reserve area or protected species at or near the project sites. Satara facility is located in sugar cane farming area and adjacent a large sugarcane mill. There is no residential community nearby. Corporate Environmental and Social Management and Organization: LOIL has an established E&S management system. The special assistant to the chief operation officer coordinates the corporate EHS management and community engagement. The corporate EHS manager is located at Unit 2 and there is a fulltime EHS officer at each manufacturing facility with support of part-time EHS committee members. LOIL Unit 1 has environmental and occupational health and safety management systems certified compliant with ISO 14000 and OHSAS 18000 respectively. LOIL will prepare and obtain certification of equivalent management systems once the expansion is put into operation. Based on the annual risk identification report from the EHS manager, the corporate management sets up next year’s EHS performance targets, implementation plans, and associated budgets. The EHS manager and operation managers at the different facilities are responsible for the implementation of EHS improvements, while the corporate EHS assistant oversees the whole implementation process with support of long-term external consulting teams. LOIL hires external consulting firms to audit its EHS performance every other year, which is also used as a basis for setting annual EHS performance targets. Environmental and Social Impact Assessment (ESIA): LOIL hires external experts to conduct E&S assessments for various existing projects according to India’s regulatory requirements. For the proposed expansion project, LOIL will revise the current version of the draft ESIA and include information on cumulative impact, energy efficiency evaluation, quantitative risk analysis, and social impact. LOIL is committed to follow the requirements of both local regulatory agencies and IFC’s Performance Standards for the future chemical and non-chemical projects. Training, Monitoring, and Reporting: LOIL has an established program that provides necessary E&S performance-related trainings for all of its employees, including through new employee inductions and annual refreshers. The company conducts routine EHS monitoring of its operations and keeps its E&S performance records through its internal reporting structure. Moreover, LOIL reports the EHS performances to local regulatory agencies and discloses the main EHS performance data at bulletin boards outside all main gates of its facilities. 2. Labor and Working Conditions Corporate Human Resources Policy and Management: LOIL has a corporate human resources (HR) policy that specifies the terms of employment and working conditions. These include procedures related to recruitment, probation, training, performance review, promotion, insurance, salary and compensation, resignation, lay-off and firing, vacation, other leave, and retirement. The company has HR policy training that is part of the new employee induction, and all employees have access to this policy. The HR department also works as a grievance mechanism for employees; there is an HR liaison officer at each manufacturing facility available to help the employees and handle their grievances. Furthermore, LOIL has an open door policy that requires each manager to be open to answer questions from employees and provide guidance to them. Workers’ Organization: There is no labor union at LOIL. The company’s management has no objection to a labor union if employees would like to form one. LOIL management also accepts collective bargaining from groups of employees. There has been no labor unrest in LOIL’s operation history. Non-Discrimination and Equal Opportunity: The HR policy specifies non-discrimination and equal opportunity. No procedures and/or practices have been identified as discriminatory. All the hiring and promotion are merit-based. However, among approximately 500 employees/contractors on LOIL payroll, there are only five female employees. LOIL management has recognized this and decided to promote the hiring of female employees in the future. Retrenchment: Retrenchment is not expected for this project. The company will hire approximately 50 new employees for the expansion. An undetermined number of workers will be hired for construction through contractors. Protecting the Work Force: LOIL complies with national law and does not hire workers below the age of 18. HR checks birth and school certificates during hiring process. No forced labor practices are used by LOIL. Since LOIL suppliers are mostly large chemical companies who do not rely on low labor costs for competitiveness, child or forced labor are not expected to be encountered among LOIL’s suppliers. Occupational Health and Safety (OHS): Operation safety is highly emphasized in the company. There are effective OHS procedures and adequate personal protection equipment for each position, which are strictly enforced. LOIL has routine OHS training, including annual refreshers for its employees, and safety awareness is among the top concerns for both management and operators. There have been no fatal or serious accidents in the company’s operation history. LOIL also monitors recordable accidents and near-misses. As required by the ESAP, LOIL will enforce follow-up actions and take other appropriate methods to reduce the incidence of recordable accidents and meet good international industry practice (GIIP). The monitored parameters for drinking water and workplace air quality/noise level meet the requirements of both local regulatory and GIIP. In accordance with the ESAP, LOIL will also monitor workplace dust levels. 3. Pollution Prevention and Abatement Raw Materials and Resource Consumption: The major raw materials used at LOIL are acetic acid, methanol, ethanol, monomethyl amine and molasses. At the current production levels, LOIL consumes approximately 55000 KWh electricity/day electricity; 32,000 tonnes of coal/y; 1,020 tonnes liquid fuel 545,000 m3 water; and 15,000 tonnes of bagasse (energy resource for ethanol distillation at Satara facility) per year. The electricity and water are supplied by MIDC and coal is imported from Indonesia. Bagasse is supplied by a neighboring sugar plant. After the expansion, all the power will be supplied by onsite coal fired cogeneration. LOIL will consume 65,000 tonnes coal; 2,800 tonnes liquid fuel; 960,000 m3 water; and 15,000 tonnes of bagasse per year. LOIL has energy and water efficiency programs, and annual targets to improve resource efficiency, mainly for water and energy. Corporate EHS Performance Management and Compliances: LOIL has the necessary EHS performance procedures for its different processes and operation positions. The EHS manager and EHS officers at each facility manage the daily EHS performance and identify outstanding EHS issues that need improvements. The first item in LOIL’s monthly operation meetings is on EHS issues. During this meeting the corrective actions for outstanding EHS issues, including an implementation timetable and responsible parties, are decided. The progress on the implementation of corrective actions will be reviewed during monthly operation meetings. Moreover, there are also facility-level monthly EHS meetings and EHS briefings are required between shifts. Process wastewater generated at Mahad is treated at an onsite wastewater treatment plant. The effluent quality meets the WBG EHS Guidelines limits. LOIL currently generates approximately 325 t/d wastewater and it is discharged to MIDC’s central effluent treatment plant (CETP) after treatment for further disposal. The sanitary wastewater is primarily treated at onsite septic tanks and discharged to CETP for further treatment. The expansion projects will generate an additional 238 t/d wastewater. However, all the additional wastewater will go through tertiary treatment (activated carbon adsorption) and recycled back to processes. Wastewater from the facility in Satara is all recycled back to the production lines of the neighboring sugar plant and spent wash is used for bio-composting and composte used by farmers. The current air emissions and predicted emissions for the expansion meet both local regulatory requirements and the World Bank Group EHS Guidelines limits. Solid and Hazardous Wastes: The industrial wastes include distillation bottoms, coal ash, used activated carbon, used catalysts, among others. The distillation bottoms at Mahad facilities are sold as by-products or disposed of at furnaces; coal ash is sold to nearby brick plant; used activated carbon is disposed of at boilers; and the used catalysts are sent back to manufacturers for regeneration or disposal. Hazardous Materials and Operation Hazard: LOIL’s raw materials, intermediate products, and products comprise significant amount of hazardous materials. The manufacturing, storage, handling, and transportation of these materials may pose serious dangers to the employees and nearby communities. LOIL has detailed procedures to handle these hazardous materials. All the hazardous liquids are stored at above ground tanks, and the tank integrity is routinely checked. Process safety management is lead by the operational manager at each facility. There are hazard operability studies for all the company’s processes; these studies are updated following each process modification. Fire Prevention and Emergency Response (ER): Fire hazard is the main operational risk at LOIL. Wherever possible, nitrogen blankets apply to all flammable material storage. There is adequate firefighting equipment onsite with proper maintenance. As required in the ESAP, LOIL will install an automatic fire detection system and an automatic sprinkler system at tank farms. Monthly firefighting and ER drills are conducted at each facility. The MIDC fire brigade is only 500 meters from main manufacturing facility at Unit 2 and 1,500 meters from Unit 1. In accordance with the ESAP, LOIL will conduct annual joint firefighting and ER drills with neighboring companies and the MIDC fire brigade. Greenhouse Gases (GHG) and Energy Efficiency: After the expansion, Laxmi will generate approximately 122,250 tonnes of CO2-equivalent annually, mainly from co-generation based on coal and supplementary fuels (furnace oil and bagasse). LOIL contracted external experts to conduct detailed energy audits. Based on these audits and operational experiences, LOIL has adjusted the operational controls and optimized process flows. As a result of these manufacturing process modifications, the overall energy consumption rates for products at Unit 1 dropped from 86 kWh/t product in 2007 to 33 kWh/t in 2010. The energy consumption rate for products at Unit 2 dropped from 2,400 kWh/t to 2,100 kWh/t within one year of commissioning in 2010. LOIL also contracts external experts to optimize the design efficiency of the proposed co-generation. Based on the design parameter analysis, the net CO2 emission intensity for the co-generation at LOIL will be 806 kg CO2/MWh, which is lower than recognized industrial norms. 4. Community Health, Safety and Security Community Health, Safety and Security: The normal operations at LOIL facilities have limited impacts to the communities nearby. All LOIL’s raw materials and products are transported by road tankers and underground pipelines. The road conditions are not ideal for heavy truck transportation and there are communities along the main transportation routes. All the hazards arising from minor accidents in the history since inception have been effectively mitigated. Emergency Preparedness and Response: LOIL has ER plans available, and conducts routine drills for fire fighting and potential chemical explosion/releases. Communities are informed of the drills. As indicated in the ESAP, LOIL will only contract transportation companies that have defensive driving programs, acceptable safe driving records, and sufficient emergency response methods. LOIL will require the transportation company to report on its accident rates quarterly. Security Personnel: LOIL hires an external agency for plant site security that conducts routine ID check at the gates and security monitoring.

LOIL engages with nearby communities on an ad-hoc basis. The facility administration managers meet with community leaders several times a year to hear the concerns and requirements from nearby communities. The facility managers’ contact information is disclosed at the facility gate and the local residents can report grievances directly to facility manager. LOIL engages the local communities mainly through promotion of hiring local employees and business opportunities for local contractors. LOIL also provides assistance for vocational training of local low-income families, sponsors local cultural events, and donates funds to local schools. In accordance with the ESAP, LOIL will develop a community development plan to engage the local communities in a systemic way and with clear goals. As the plants are located in MIDC, it is not mandatory to conduct public hearing, however as suggested by IFC, LOIL will also conduct a formal public consultation before the trial production of Unit 2 expansion projects.

LOIL will disclose this document in the local prevailing language at LOIL bulletin boards outside of Unit 1 and Unit 2, located at Unit 1 – A 22/2/3, MIDC, Mahad and Unit 2 – B 2/2 B-3/1/1, B-3/1/2, MIDC, Mahad, Maharashtra, India. Please contact the following for inquiries or concerns about the environmental and social impacts of this project. Unit 1- Address A 22/2/3, MIDC, Mahad Maharshtra, INDIA Phone: +91-2145 - 232548 Fax: +91- 2145 - 232203 Unit 2 – Address B 2/2 B-3/1/1, B-3/1/2, MIDC, Mahad, Maharashtra, INDIA. Phone: +91 -2145- 233161 Fax: +91 – 2145 - 233418