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

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

All the existing facilities are primarily located in established industrial areas. The expansion at the existing facilities will take place within industrial area close to the Original Equipment Manufacturer (OEM) and for which either long term lease for land will be signed with the relevant industrial authority or lease rental agreement will be signed with the lessor for land and already constructed industrial building and facilities. The new facility at Perundurai will be located on a leased plot in an industrial estate developed by the local State Government agency. PS5 (Land Acquisition and Involuntary Settlement) will therefore not apply. All the existing and proposed facilities are/will be located in well-developed urban/industrial areas and hence issues related to Biodiversity Conservation and Natural Resources Management (PS6), Indigenous Peoples (PS7) or Cultural Heritage (PS8) are not expected.

 This is category B project according to IFC’s Policy on Environmental and Social Sustainability because the project will result in limited potential adverse E&S risks and/or impacts that are few in number, generally sitespecific, largely reversible and readily addressed thorough mitigation measures.

Key E&S risks and issues related to this project include: adequate E&S assessment of the impacts of the project; the company’s capacity and systems to manage social and EHS aspects of its operations in compliance with legal requirements as well as IFC Performance Standards (PSs) and WBG EHS guidelines; assurance of fair, safe and healthy working conditions as per the local regulatory requirements and relevant IFC PSs; management of air emissions, effluent and waste in compliance with WBG EHS guidelines and emergency preparedness and response. 

 Environmental & Social Assessment:

Expansion of Craftsman’s facilities would primarily involve installation of new machines and construction of some new sheds within the existing facilities. The company will apply for approval for establishment of the project from the State Pollution Control Board (SPCB) and will not require a separate environmental clearance and associated Environmental Impact Assessment (EIA) as per the applicable local legislations. However, the company’s corporate IMS includes documented procedures on legal and other requirements identification and evaluation of compliance, environmental aspect and impact identification, emergency preparedness and response, emergency response plan (including conduct of mock drills for various emergencies), grievance handling, internal and external communication, EOHS key performance indicators (KPIs) monitoring plan and procedures and risk assessment. Number of formats have been developed for each of the procedures, which are implemented at the respective facilities.

Policy and Management Systems:

Craftsman has a corporate EOHS policy in place which is adopted, widely disseminated and followed across all its operating facilities. The EOHS policy reiterates Craftsman’s commitment to provide its employees with a safe work environment, complying with applicable legal and statutory requirements, prevent pollution and continual improvement of EOHS performance. Craftsman has all its operational facilities (except the Bangalore facility) certified for ISO9001 (quality management systems), TS 16949 (international quality management standard for the automotive industry) and IS 14001(environmental management system). The company is in the process of obtaining certification for occupational health and safety management system (OHSAS 18001).

Organization:

The company has a well-articulated detailed organization chart with clearly defined roles and responsibilities. At the corporate level there is a designated assistant manager (safety) who reports to quality manager, who in turn reports to the Chief Operating Officer (COO). Each of the facilities have a designated safety officer responsible for EHS aspects and who work closely with the corporate team. In addition, an EMS coordinator has been assigned at each facility, to work with the corporate team for the development and implementation of management systems (i.e., ISO9001, TS16949 and ISO 14001).

Emergency Preparedness and Response:

Based on the identified hazards and risks, an on-site emergency response plan (ERP) has been prepared for each of the operating facilities and the structure is defined in the corporate IMS manual as part of emergency preparedness and response procedure. Accordingly, potentially hazardous areas have been identified and evacuation routes and assembly points have been designated and marked. Regular emergency response drills, including evacuation drills and fire drills, were noted to be conducted for different emergencies as required under the Factories Act. In accordance with the local regulatory requirements, the facilities are required to obtain a No-Objection Certificate (NOC) for fire and which would include provision of fire safety systems such as portable fire extinguishers, fire hydrant systems with dedicated fire water storage, smoke detectors and fire alarms. The company is in the process of obtaining and renewing fire NOC for all its facilities and accordingly, the company will ensure that fire NOC is obtained for all operating facilities as mandated by legal requirements. For the expansion/new facilities the company will ensure that fire NOC is obtained prior to start of operations. The company will ensure training of adequate personnel in fire safety and emergency response at all the operating facilities.

Monitoring & Reporting:

Craftsman has a formal EHS monitoring program in place for its operations which is governed largely by the permit requirements and is covers KPIs related to ambient air quality, stack emissions, ambient noise levels, workplace noise levels and treated wastewater quality. In addition, water and energy consumption are regularly monitored for internal benchmarking and reporting. Also, each facility reports on standard safety related KPIs such as lost time accidents, recordable injury, first aid cases, etc. and safety inspections are done monthly. Safety committee meetings are conducted regularly at each facility to review EHS performance and safety audits are carried out on a regular basis by the internal team. The same monitoring protocol will be replicated for the new facilities once they become operational. Craftsman reports to IFC annually on environmental and safety performance of the operations via the Annual Monitoring Report covering all its operational facilities. replicated for the new facilities once they become operational. Craftsman reports to IFC annually on environmental and safety performance of the operations via the Annual Monitoring Report covering all its operational facilities.

Craftsman has over 3490 employees across all its facilities including staff, workmen and apprentice. Company also has around 1610 contract workers across all its facilities for carrying out non-core activities such as loading, unloading, housekeeping and canteen service.

Human Resources Policies and Procedures, Working Conditions and Terms of Employment:

Craftsman has a formal and well documented HR policy and procedures manual, which articulates code of conduct, working conditions including working hours, salaries and allowances, statutory benefits such as provident fund (PF) and gratuity, leave and travel rules, internal communication systems, non-discrimination, performance appraisal, employee recognition, safety, collective bargaining, maternity benefit, retrenchment and prevention of sexual harassment. Each employee has an intranet account which provides access to all the HR related information. In addition, the company has developed procedures on non-engagement of child labour and forced labour, human rights principles (including non-discrimination), whistle blower mechanism, anti-bribery and grievance redressal. The HR function is structured at two levels: i) corporate HR responsible for defining overall HR policies and procedures; ii) facility level HR which is the front-end HR arm responsible for HR and administrative related processes at the unit locations.

 Freedom of Association:

There is no existing workers’ union at any of the facilities; although the company through its human rights policy (included as part of HR policy manual) states that employees are free to choose to join a trade union in accordance with local law and the rules of the various trade union organizations.

Workers Engaged by Third Parties:

Craftsman hires the contract workers through manpower supply firms. Some contract workers are also engaged as part of the specific job-related outsourcing contracts such as maintenance. The contract workers have access to same facilities as direct workmen such as access to water supply, canteen, transportation, medical facilities etc. The company ensures that the contract workmen get the PF and Employees' State Insurance (ESIC) related benefits. The terms and conditions of the contract workmen are guided by the company agreement with the manpower supply agency or the specific work orders issued to the contractors for say maintenance activity or civil work. The contract agreement includes requirements for compliance with applicable labour laws for the respective facilities. The child remedial policy (including policy on non-engagement of forced labor) is applicable also to the contractors and mentions the requirement of hiring of workers above 18 years of age only.

The facility HR department monitors contractor compliance with various statutory requirements on providing wages, working hours and benefits to their workers. The payment to contract workers is made through bank accounts or in case of cash, in presence of HR representative from Craftsman.

As included in ESAP item#1, going forward the company will ensure that EPC contract issued for the expansion/new facilities would require the contractor to adhere to statutory labour acts and regulations (including amongst others requirement of minimum wages, non-deployment of child and forced labour and workmen compensation), health and safety provisions and accommodation guidelines for the construction workforce.

Grievance Mechanism:

HR policy manual includes procedure for internal communication and a separate documented grievance handling procedure has also been developed covering both employees and contract workers and allowing for anonymous reporting of the grievance. The documented procedure covers the way grievances can be submitted to HR (including anonymously), how they will be logged, processed and resolved, and outlining steps available to appeal any decision. The company has provided suggestion boxes where any employee can submit their suggestions/feedback/grievances which will be then discussed by a committee comprising of HR representatives. Grievance procedure includes the procedure for receipt and recording of grievance and a three-tier mechanism for review and investigation.

Training:

All new employees undergo mandatory induction training which amongst others, covers aspects related to safety and quality. In addition, Craftsman has a training calendar based on the training needs of different employees consisting of internal, external and on-the-job trainings and covering aspects such as ISO 14001 basic awareness, EOHS policy, Failure Mode Effects Analysis, occupational health and safety, industrial safety, PPE usage, emergency response etc.

All contract workers are provided EHS induction before start of the work, and tool box talks are undertaken on a regular basis. For routine activities, the contract workers are trained and follow relevant Standard Operating Procedure (SOPs).

Occupational Health and Safety:

Each of the facility conducts risk assessment for their operations in line with the procedures included in the IMS manual. Safety induction is provided to employees, workmen and contract workers and regular safety trainings are provided to employees as well as contract workers. Personal protection equipment (PPE) such as gloves, safety shoes, masks and glasses is provided to all the workers on the shop floor, which is commensurate with the nature of operations and potential safety hazards, however enforcement of PPE usage needs to be strengthened at all the facilities.

All shop floors are organized following Kaizen 5S principles and all the KPIs, work instructions and SOPs are displayed on the shop floor. However, the company needs to improve the housekeeping in ETP area at all its facilities. The company follows a work permit system and which is also adopted by contractors. Lock Out and Tag Out process is implemented at the facilities and SOP for the same has been developed.

There is a safety committee in place at the corporate level and at the facility level, which reviews safety performance on a regular basis. Safety performance is also reported to the management on a monthly basis including on accidents/incidents, near-misses, first-aid cases, EHS training, fire incidents.

Adequate first-aid is available at all facilities and Unit 3 in Coimbatore (the biggest among all the Craftsman facilities) has its own ambulance for any medical emergencies. There is an incident reporting mechanism in place which records all reportable injuries, first aid cases, near misses and lost time accidents along with cause of accident, immediate action taken and corrective action required. All incidents are reported and thoroughly investigated through root cause investigation techniques.

Safety audit is done once in two years by an external agency covering all facilities. In addition, another external audit is carried out once a quarter by third party consultant which covers statutory, regulatory and financial audit of each facility of Craftsman.

As a result of the company’s concerted efforts, the company has not had any major accident involving any employee or any third-party worker since last 10 years; those that have occurred relate to minor incidents involving first aid and limited lost time.

Retrenchment:

The company does not envisage any retrenchment and offers the employees the option of transfer to other facilities of the company. The company has included retrenchment policy as part of the HR policy manual.

Resource Efficiency:

The company has included in its EOHS objectives, the target for reduction in water consumption and energy consumption. The company consolidates the water consumption and energy consumption data for all its facilities. The company also has sewage treatment plant (STP) and effluent treatment plant (ETP) at its facilities for recycle of wastewater which is then re-used. The company has taken an initiative for energy conservation which include: replacement of lamps with energy efficient LED lighting, installing lighting energy savers, use of efficient compressor system, installation of separate transformers for the lighting system, transparent roof sheets for natural lighting for all shop floors, demand controller provided with simple programmable logic controller to maintain maximum demand limit, induction lamps in automotive shop, on load tape changers to power transformers and provision of moulded case circuit breaker in place of switch fuse in panels etc. The company has initiated undertaking internal energy audit of its facilities and reports annual resource and energy consumption data including electricity, water and diesel for all its operating units as part of the Annual Monitoring Report submitted to IFC.

Air Emissions and Ambient Air Quality:

Craftsman’s operations involve primarily machining and electricity procured from the grid is the major source of energy. Main source of air emissions for Craftsman’s facilities are the diesel generators, which are only used as backup power supply and thus the emissions are not significant. All diesel generators are provided with acoustic enclosure and stacks.

At the Coimbatore facility, there is also an aluminum foundry, sand foundry, high pressure die casting unit and powder coating operations. The sand foundry unit has been operational since July 2015, includes a thermal reclamation plant with 3 tonnes/hr capacity and uses phenol based resin. To control the fugitive emissions from the process and maintain indoor air quality, the powder coating operation has a cartridge system to collect dust, while the chimneys/stacks for phosphating operation (for surface treatment) and the aluminum foundry have scrubbers installed to treat the emissions and fumes containing volatile organic compounds (VOC) and other hazardous air pollutants. The wastewater from the scrubber system is treated in the ETP.

Ambient air quality and stack emissions are monitored on a quarterly basis or as specified in the permit conditions for the respective facility. Stack emission and ambient air quality monitoring results provided by the company were seen to be compliant with the limits specified for the facilities by the State Pollution Control Boards and with the National Ambient Air Quality Standards (NAAQS). Going forward, as included in ESAP item#2, workplace air quality monitoring will include monitoring of VOCs in areas such as highpressure die-casting unit, sand foundry, powder paint and paint booth units where workers are getting exposed to VOCs. Further in sand foundry unit, indoor air quality monitoring shall include PM10 and PM2.5 levels.

Water Consumption and Wastewater Discharges:

Water is primarily used for cooling and domestic purposes and is sourced from borewell or municipal or industrial authorities. Very small quantity of process wastewater is generated (coolant/oil and water mixture), which is treated in ETP where tertiary level of treatment is provided. The treated wastewater (after reverse osmosis (RO) treatment) is recycled back for coolant preparation and RO reject is used for gardening. The high pressure die casting unit at Coimbatore has a phosphating unit and treated wastewater is allowed to evaporate in a forced evaporation pond. Domestic wastewater is either treated in STP or disposed to septic tanks and soak pits as per the permit conditions. Quality of treated effluent is tested on quarterly basis and was noted to be in compliance with the national standards as well as the WBG EHS General Guidelines. Storm water from clean surfaces is collected and discharged through separate drainage systems.

Noise:

The source of noise includes various machines and equipment. Ambient noise monitoring is done on quarterly basis by third party while workplace monitoring is done in-house monthly. Noise levels were observed to be aligned within the permissible limits. PPE usage needs to be improved and enforced strictly especially in high noise areas.

Solid and Hazardous Waste:

Solid waste is segregated and collected in designated bins and sent for disposal to municipal operated facility. The hazardous wastes generated (such as used oil, ETP sludge and discarded containers) are stored in designated hazardous waste storage area and sent for disposal to authorized contractors as stipulated by local regulations. Transfer records and chain of custody records are maintained. Process solid waste comprises mainly metal scrap, which is sold to scrap dealers. Housekeeping in hazardous waste storage area needs to be improved.

GHG emissions:

Primary energy requirement is that of electricity which is supplied from the national grid. Diesel fueled generators are installed on site as backup generators, and are in use in case of power failure. Therefore, GHG emissions are dominated by electricity consumption with a very small contribution from diesel consumption and the  greenhouse gas (“GHG”) emissions are expected to be approximately 70,500 tonnes of CO2 equivalents annually.

All of the operating facilities of Craftsman are in notified industrial areas surrounded by other similar industries. The industrial areas have adequate access roads and are typically located close to the highways/wide roads. As mentioned above under PS1, site emergency plan is developed for each facility and mock drills are conducted on a regular basis sometimes in collaboration with the local fire brigade as well. Transport of most of the raw materials and final products is by truck however the volume of this traffic is quite limited. Moreover, as most the Company’s facilities are located in industrial areas linked to well established road networks, the Company’s transport does not impact nearby communities.

Unarmed security personnel are employed through security contractors. The company briefs security personnel about policies on child labor and provides training on basic safety, first-aid, fire safety and emergency response. 

 Craftsman has been actively involved in Corporate Social Responsibility (CSR) activities for the society at large. These activities include financial assistance for to NGO engaged in water bodies conservation, schools, preventive health care, donations to the youth welfare associations and sports events, organizing tree plantation activities etc. Given that most of the facilities are in the industrial area and with no communities residing nearby, the company engages with the local administration and the nearby villages from where the workmen usually belong. The stakeholder engagement is mostly restricted to CSR related interventions and the company mostly engages through support in cash and kind contributions.

The grievance handling procedure also covers communities to address any concerns related to its operations. The company will strengthen its information disclosure and grievance handling mechanism and display details for reporting grievance at the main gate of each facility. 

 Craftsman will locally disclose this ESRS and the ESAP at the following address:

Craftsman Automation Private Limited

Senthel Towers, 4th Floor 1078, Avanashi Road Coimbatore – 641 018.

Tel: +91-422-3021000, 2209100

Fax: +91-422-3021056

Email: mohan@craftsmanautomation.com, thiyagaraj@craftsmanautomation.com