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
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

Inherently the Project is designed to bring about quantifiable environmental benefits in the form of climate change mitigation and adaptation (water savings) impacts. As such, the Project is expected to result in a net positive impact on the environment.

However, specific environmental and social (“E&S”) risks and issues related to the Project are:
Extension of the environmental and social management systems (“ESMS”) at the facilities where the project activities will occur to include the Project
Occupational health and safety risks during construction
Emissions control and ash management for the new biomass boilers

All the Hikal manufacturing facilities are located in government designated industrial zones. As the Project will be implemented at the existing facilities and does not involve any major construction activities or additional traffic, no adverse impacts are expected on community health, safety and security (PS4). Also, no additional land is required for the Project, therefore issues related to PS 5, 6, 7 and 8 are not expected to be encountered during the course of the Project. The briquettes will be sourced from suppliers who produce briquettes from agricultural wastes e.g., coconut shells, groundnut shells, sawdust and bagasse. Therefore, no biodiversity impacts are expected (PS6).

The potential adverse effects arising from the Project activities are limited and may readily be addressed through Hikal’s existing ESMS and other mitigation measures. The Project is therefore classified as a Category B project.

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 the information about how the E&S issues and impacts are being addressed to ensure that the Project complies with the E&S requirements including: the host country laws and regulations; IFC’s Performance Standards; and the relevant World Bank Group (WBG) EHS Guidelines. This information is summarized in the paragraphs that follow.



- Environmental & Social Assessment:



For the proposed Project no environmental and social impact assessment (ESIA) is required as per the local regulation. Hikal will continue to ensure that all the risks and impacts of the proposed Project are mitigated as part of the existing management systems. Hikal will obtain all the regulatory permits and implement the mitigation measures as per the permit conditions.



- Policy and Management Systems:



All Hikal production facilities have implemented an Environmental Management System certified compliant with ISO 14001 and Occupational Health and Safety (“OHS”) management system as per OHSAS 18001. The Company has been recently awarded the “Best Responsible Care Committed Company” in India for 2011 as sponsored by the Aditya Birla Group in association with the Indian Chemistry Council.



- Organization Capacity:



Hikal has a corporate level EHS manager responsible for overseeing the safety and environmental management across all facilities. The EHS manager works closely with the established EHS department at each facility. Manuals for quality and EHS management systems for each facility provide a framework and procedures for management and monitoring of relevant issues.



All of the facilities visited over the past years demonstrate sound implementation of these management systems.



The Company will make the necessary changes in the management system manuals based on the new activities implemented in the Project.



- Monitoring & Reporting:



Hikal has an established environmental monitoring program that includes monitoring of effluent and stack emissions. The same program will cover the new facilities and Hikal will ensure compliance with regulatory requirements and the WBG EHS Guidelines for all relevant parameters.

PS2: Labor and Working Conditions



- Human Resource Policies and Procedures, Freedom of Association, Grievance Mechanism



As mentioned in the ESRS of IFC’s previous investment, Hikal manages labor relations in accordance with all relevant Indian regulations. Formal and documented HR policies and practices are in place (including freedom of association and grievance mechanism), which comply with the local laws as well as IFC’s PS2 requirements.



- Occupational Health & Safety:



For the Project, minor construction activities will be required. Hikal will therefore ensure that construction contractors on site comply with all the requirements the IFC PSs, especially with regard to child labor and use of necessary personal protective equipment. The OHS risks during construction and operation will be managed as part of Hikal’s existing OHS management system which complies with IFC’s requirements.

The Project is expected to have a net positive impact in terms of resource efficiency and pollution prevention as explained below:



Biomass briquette-based boilers and co-generation plant: Hikal will install briquette based boilers to replace its existing fossil fuel based boilers in its Mahad, Taloja and Jigani facilities. These boilers use briquettes made from bio-waste and would reduce dependence on fossil fuel. This will help Hikal generate the steam required at its manufacturing plants in a cheaper and cleaner way. This will help Hikal reduce its Furnace Oil consumption by around 10,000 kiloliters/year. Hikal will also set up a briquette based co-generation facility with a capacity of around 1 MW in its Jigani facility to generate 35%-40% of its power requirements at the site.



Enzymatic process-based production plant for key products: The existing process of manufacturing one of Hikal’s key products uses chemicals such as chlorine, bromine and a number of organic solvents like toluene, acetone, methanol and isopropyl alcohol. These solvents are difficult to treat and recover. As part of the Project Hikal will set up a new manufacturing plant based on a bio-catalytic process that will completely eliminate the use of these chemicals and also reduce solvent usage by a factor of almost 100. The technology and materials used in the process are completely biodegradable and, therefore, will help in reducing the toxicity of the wastewater.



Green process pilot plant: Hikal has consistently been involved in developing more environmentally friendly production processes for pharmaceutical and agrochemical products in its portfolio. The Company plans to set up a pilot plant to be able to run sample production batches before commercialization and to also help execute orders of a smaller size.



Effluent treatment plant (ETP) and Water Conservation: Hikal will be upgrading effluent treatment facilities at its sites in Panoli, Taloja and Mahad with water conservation and recovery mechanisms. The treated water will be reused within the facility and is thus expected to save around 495 cu.m of water per day across three facilities.



- Greenhouse Gases (GHG) Emission



As mentioned earlier, the Project is expected to result in a reduction in Furnace Oil consumption by around 10,000 kiloliters/year leading to a reduction in total GHG emissions by around 27,000 tons of CO2 equivalent / annum.



- Air Emissions:



The new boilers will be installed with the required emission control equipment to ensure compliance with regulatory requirements and the WBG EHS Guidelines for all relevant parameters.



- Waste Management:



Hikal will ensure that all the ash generated from the new briquette based boilers and co-generation plant is disposed of in compliance with the regulatory permit conditions. The fly ash generated from the boilers will be taken back by the suppliers of the briquettes as per contract and then resold by the briquette suplliers to
the brick making and cement industries which use these as part of their processes.



- Hazardous Materials Management:



For handling of hazardous materials, Hikal has well-developed and secured handling and storage facilities on site, and the standard operating procedures in place are consistent with good international practices.



As discussed above, the new manufacturing plant (based on enzyme catalytic process) will completely eliminate the bromine/chlorine and also reduce solvent usage. This will have a positive impact on OHS as well as hazardous materials management at Hikal.

As the Company is located in the industrial zone, there are no communities in the immediate vicinity of the facility. However, as per local regulatory requirements, the Company displays its environmental monitoring information at outside the facility.

Hikal has undertaken a number of social activities, primarily around the Taloja facility, as part of its corporate social responsibility efforts. In addition, Hikal has made its expertise in hazardous chemical handling available to local government entities and highway authorities near Taloja, in case of road accidents that involve chemical spills. The team has been called out on a number of occasions to assist local government in managing chemical spills outside of Hikal’s premises.

Hikal will disclose this ESRS at its website: http://www.hikal.com, as well as locally at the following addresses:

Hikal Limited
T-21, M.I.D.C.,
Taloja,
Dist. Raigad - 410 208,
Maharashtra
Ph : +91-22-3099 0100

Hikal Limited
629/630, G.I.D.C,
Panoli - 394 116,
Dist. Bharuch, Gujarat
Ph : +91-2646-302 100

Hikal Limited
A-18, M.I.D.C.,
Mahad,
Dist. Raigad - 402 301,
Maharashtra
Ph : +91-2145-232 791 / 573

Hikal Limited
82/A, K.I.A.D.B.,
Jigani, Anekal Taluk,
Bangalore - 562 106,
Karnataka
Ph: +91-80-3986 1100

Hikal Limited, R & D Centre
32/1, Kalena Agrahara,
Bannerghatta,
Bangalore - 560 076,
Karnataka
Ph : +91-80-3023 6100

All inquiries and comments may be directed to:

Name: Sham Wahalekar, Senior Vice President Finance and Company Secretary
Address: Hikal Limited, Great Eastern Chambers, CBD Belapur, Navi Mumbai- 400614
Telephone: +91-22-3097-3100
E-mail: mailto:sham_wahalekar@hikal.com

Broad Community Support is not applicable for this project

Current client performance is aligned with applicable Performance Standards and EHS Guideline requirements. No ESAP is required