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
SAME India facility has been operational at its existing location for the past 10 years, which is in a well developed industrial area close to Ranipet and Vellore towns, approximately 120 km from Chennai in Southern India. Land for these facilities has been leased for 99 years from the State Industries Promotion Corporation of Tamil Nadu (SIPCOT). There are no impacts on biodiversity, cultural heritage and indigenous people. As such, issues related to PS5: Land Acquisition and Involuntary Resettlement, PS6: Biodiversity Conservation and Sustainable Natural Resource Management, PS7: Indigenous Peoples and PS8: Cultural Heritage are absent from this Project.

This is a category B project according to IFC’s Procedure for Environmental and Social 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 environmental and social issues associated with this Project include: SDF''s corporate approaches to management of environmental, health and safety (EHS) and social issues; SAME India’s management of occupational health and safety and environmental aspects during the manufacturing operations; labor and working conditions including workplace air quality and noise; efforts to minimize wastes and emissions and enhance resource efficiency; emissions to air; use, treatment; discharge quality of liquid effluents and management of solid and hazardous waste and impacts of transportation to and from the facility on the nearby communities.

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 Sponsor and the Company have presented plans to address these issues and impacts to ensure that the proposed Project will, upon implementation of the specific agreed measures, comply with the environmental and social requirements including: the host country laws and regulations; IFC’s Performance Standards; and the World Bank Group (WBG) EHS guidelines. The information about how these potential impacts will be addressed is summarized in the paragraphs that follow.

IFC’s assessment considered SDF’s management of its EHS performance in the establishment and operation of its facilities; compliance with national and local permit requirements; and SDF’s engagement with local communities as well as its suppliers, regarding EHS performance.

- Environmental & Social Assessment and Management Systems:

SAME India facility is well established and operational at the existing location for over 10 years now. The proposed Project does not involve any new construction or area development; hence a formal Environmental Impact Assessment is not required. However, as a part of an elaborate permitting process, SAME India is required to assess the E&S aspects of its operations and make necessary modifications from time to time, so as to comply with a range of requirements related to EHS, fire safety, emissions, waste disposal etc.; thereby mitigating key environmental and safety related impacts and risks.

SDF has developed an integrated quality, environmental, occupational health and safety policy at the corporate level, covering all its facilities.

SDF has initiated a group-wide a program for implementing Environmental Management System (EMS) compliant with ISO14001 and Occupational Health and Safety Management System (OSHAS) compliant with OHSAS18001 standards. SDF has recently got its Treviglio facility certified for its EMS and OSHAS, and has set a target for the certification of all its facilities by 2015. While SAME India has already received ISO9001 certification for its quality management system (QMS), as part of this corporate initiative it expects to obtain ISO14001 and OSHAS 18001 certifications in near future.

As an important requirement of EMS implementation, SAME India will review the environmental aspects of its operations and assess the impacts in due course, and devise appropriate environmental management plans and programs to adequately manage these aspects and impacts.

- Organization:

SDF has appointed a dedicated EHS officer at corporate level to oversee and coordinate safety and environmental management across all the facilities in the group. In addition it has a dedicated resource as Management Representative to oversee the implementation of management system across all the facilities.

At facility level, Plant Director and Manufacturing and Operations Head are responsible for the overall operational and EHS matters, with the support from Deputy General Managers for the tractor assembly plant and engine plant, and heads of Utilities and HR departments, who assist in ensuring compliance related to environmental and labor aspects. While there is no dedicated safety officer for SAME India, a safety committee with a broad representation across all departments is active (described below).

- Monitoring & Reporting:

SAME India undertakes monitoring of process effluent, domestic effluent, stack emissions, ambient air quality, ambient and workplace noise levels and submits regular reports in accordance with local regulatory requirements.

In addition, elaborate monitoring system for safety related information (accidents, lost man-days, near misses etc.) is in place and monthly reports are submitted to SDF for group wide benchmarking.

Going forward, Company will regularly report to IFC about its EHS performance, including its compliance with IFC Performance Standards and WBG EHS Guidelines.

- Managing Supply Chain:

SDF has adopted a global sourcing system across the group. Accordingly, supply chain for SAME India is managed by SDF at corporate level. SDF follows an elaborate supplier evaluation process, to assess each vendor for its quality, HR, planning, logistics, legal compliance, audit quality etc.

At the moment, much of SDF’s supply chain is in Europe and EHS aspects are not considered in the supplier evaluation. However, in line with its localization strategy, SDF is now expanding its supply chain beyond Europe to the emerging economies. Recognizing potential EHS risks in the supply chain in these markets and in accordance with the requirements of its newly established EMS, SDF will enhance its vendor evaluation program to include EHS and labor compliance aspects in the evaluation of its supplier base.

SDF currently employs approximately 2,800 staff globally. SAME India employs 288 permanent employees (including trainees) and nearly 160 temporary workers for non-core shop floor activities, logistics, packing and forwarding, gardening etc.

- HR Policy, Management and Training

HR departments for SAME India has various documented HR procedures covering terms of employment and working conditions including procedures for hiring, salary and compensation, probation, training, performance review, promotion, grievance redressal. These are modeled on the corporate HR policies of SDF, which are applied across the Group with necessary localization. The HR procedures are consistent with the national labor laws and IFC PS2 requirements.

Even if no workers’ union is present at SAME India; the Company does not prevent formation of such a union and respects workers’ freedom of association - a fundamental right under the Constitution of India.

SAME India requires all its employees to undergo minimum 2 days training per annum. A detailed training calendar has been developed and several trainings are provided to the employees with the help of internal and external trainers.

- Occupational Health and Safety

The Company combines adherence to the national industrial safety standards as well as SDF’s corporate standards for workplace health and safety. SDF has demonstrated a notable improvement in safety indices over the past decade, through consistent technical and organizational initiatives. SDF’s corporate-wide initiative include: (i) documentation and analysis of ‘near-miss’ accidents, (ii) substantial increase in the activities of the ‘safety teams’, (iii) increased participation of the workers’ safety representatives and (iv) establishment of the new post of ‘safety tutor’ for work areas.

SAME India has its own safety policy and has established a Safety Committee comprising various department heads (HR, production, operations, utilities, maintenance) as well as workers’ representatives. This committee undertakes safety patrol round every Tuesday. Any areas for improvements identified during the safety rounds are addressed in a time-bound manner. Results of the safety patrol round are displayed on the shop floor together with safety related key performance indicators (KPIs).

Safety signage and fire detection and suppression fighting equipment are fitted across the facility in accordance with the potential risks. The Company is continuously making improvements in the workplaces safety, such as ongoing change in the flooring in the engine testing areas, to prevent accidental slippage.

Personal Protective Equipment (PPE) is provided to employees; however, its implementation could be strengthened – especially for temporary contract employees. Special attention shall be provided to the PPE provided for the operators working in the Company’s small paint shops, who will be provided with proper overall safety suites, in accordance with international best practices. SAME India will develop a safety rule book modeled on the similar documents in SDF’s other facilities. The rule book will include hazard risk assessment for different activities in the production process, prepare standard safety practices and minimum PPE required for each activity.

There has been no fatal accident in SAME India facility and there is a clear downward trend in the number and frequency of accidents or incidents leading to lost man-days over the past years.

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

The Company’s operations primarily include assembly of various parts sourced from its global vendor base and some painting in its small painting booth. Most of Company’s operations are primarily dry operations and result in noise and only some solid (packaging, scrap) or hazardous waste (waste oils etc.). Primary source of wastewater is painting operation, which results in volatile organic compounds (VOCs) and wastewater generated due to VOC control and treatment system.

- Pollution Prevention and Resource Conservation:

In its environmental policy, Company has articulated its commitment to minimize impact of its activities on the environment, with an aim to achieve “zero pollution”, in line with the SDF group’s corporate policies.

SDF has set objectives for limiting solvent use in the paints in all the facilities across the group. With the introduction of water-based products and modifications to the coating systems, it has reduced solvent consumption by over 30%. SDF is also implementing measures to comply with the European ‘Reach’ regulations on the import and use of chemical substances and is in the process of introducing a computer-based system for the suppliers. In its Treviglio facility, SDF has implemented a waste heat recovery system to use the heat of exhaust emissions from tractors testing beds for preheating of air used in space heating.

As a part of the Project, SAME India is planning to modernize its paint booth, and thus plans to continue its efforts to reduce solvent use in the operations.

At facility level, Company will undertake an energy and water audit to explore the possibilities to reduce the water and energy consumption and thus enhance its resource efficiency. The audit will specifically focus on energy efficiency opportunities in space heating, lighting, compressed air and manufacturing process.

- Water Supply and Effluent:

SDF sources treated water from the industrial zone authority SIPCOT, and further treats with its own reverse osmosis (RO) based water treatment unit for the paint shop and potable use. The average water consumption in the tractor plant is approx 10 m3/day for the process, cooling and domestic requirements and ** m3/day for engine plant.

The VOC emissions from the paint booths are treated with wet scrubbers and the effluent undergoes special pre-treatment prior to reaching the ETP for further treatment and recycling.

The entire wastewater is recycled for cooling and gardening after treatment in on-site effluent treatment plants (ETP). Company also has a domestic sewage treatment plant and the treated sewage is also recycled. The sludge is sent to authorized collection and disposal contractor as per the environmental permit condition.

- Solid and Hazardous Waste:

SAME India complies with all relevant regulations for the storage, handling and disposal of hazardous materials used in the production process such as paints, solvents, paint sludge and other chemical additives. The notified hazardous wastes are disposed of through licensed waste management contractors, as per the regulatory authorizations. Packaging materials, sheet metal scrap etc. are sold for recycling. Adequate controls during the storage and handling are in place and the quantities of solid waste thus generated and disposed of are regularly monitored and documented.

- Air Quality:

Electricity is the main source of energy for the Company, and is sourced from the grid. In addition diesel generator sets are provided as emergency backup and are extensively used during the summer months. Company also has diesel fired boilers which produce hot water for painting process.

SAME India monitors stack emissions and ambient air quality as per the environmental permit condition and WBG EHS guidelines.

Company will monitor the VOC emissions from the paint drying ovens and shall regularly report to IFC as a part of annual reporting. Moreover, SAME India will regularly monitor the workplace air quality for such parameters as VOC, particulate matter etc. and will report to IFC through annual monitoring reports, regarding their compliance with national regulations as well as applicable IFC EHS guidelines. In case some parameters exceed the stipulated limits, Company will take appropriate actions to ensure the compliance.

There is direct access to the industrial zone from a national highway; however the access road to the plant passes through Ranipet town. As such, some impact of vehicular movement on surrounding communities is expected.

To mitigate these impacts, SAME India will develop and implement procedure to train the drivers of heavy vehicles (including those of contractors) on safety procedures to be followed inside and outside the plant. Further, Company will regularly monitor the effectiveness of this effort through the safety committee patrols, and shall keep record of any accidents.

While the impacts on the nearby communities due to SAME India’s operations are expected to be minimal, it has developed detailed emergency response plan for its operations. Mock drills are regularly conducted.

On the basis of the above information, and by implementing the Environmental and Social Action Plan it is concluded that the Project has been designed and will be operated in compliance with IFC’s Performance Standards; and the WBG/IFC EHS guidelines.

As the company is located in an industrial area, there are no local communities in the immediate vicinity of the facility. 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.

At the moment, as per the regulatory requirement, Company displays its environment related KPIs at the main gate for public information.

As a part of its community engagement activities, SAME India is supporting refurbishment of one wing of a public hospital in the nearby Ranipet town.

The Company will disclose this ESRS and the ESAP at the following addresses:
SAME DEUTZ-FAHR India (P) Ltd.
72, SIPCOT Industrial Complex, Ranipet
Tamil Nadu 632403, India

And on the Company website: http://www.samedeutz-fahr.com

All inquiries and comments may be directed to:
Mr. LV Surendhran C.F.O.
Email: mailto:surendhran.lv@sdfgroup.com
Tel: +91-4172 247156

Broad Community Support is not applicable for this project

	Task Description	Anticipation Completion Date
1.	SAME India will review the environmental aspects of its operations and assess the impacts, and devise appropriate environmental management plans and programs to adequately manage these aspects and impacts.	31 December 2012
2	SDF will enhance its vendor evaluation process to include EHS and labor compliance aspects in the evaluation of its supplier base.	30 September 2012
3	SAME India will develop a safety rule book modeled on the similar documents in SDF’s other facilities. The rule book will include hazard risk assessment for different activities in the production process, prepare standard safety practices and minimum PPE required for each activity.	30 September 2012
4	SAME India will undertake an energy and water audit across its facilities to explore the possibilities to reduce the water and energy consumption and thus enhance its resource efficiency.	30 September 2012
5.	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.	30 September 2012