This is a Category B project according to IFC’s Policy on Environmental and Social Sustainability 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.

The key E&S risks and issues include: (a) capacity to develop and implement a management system covering environment, health and safety and food safety aspects; (b) assurance of fair, safe and healthy working conditions in compliance with local regulatory requirements and Performance Standard 2; (c) resource efficiency of the operations (water, energy, milk); (d) monitoring and management of air emissions, wastewater treatment and discharge, solid and other waste disposal; (e) life and fire and safety management including emergency preparedness and response for handling ammonia leakage from refrigeration system; and (f) supply chain of milk.

 Environmental and Social Assessment and Management System

Environmental & Social Impact Assessment:

The company has all necessary EHS related regulatory approvals for its operational facilities and complies with all permit conditions. Accordingly, the company has obtained the Consent for Operation (CFO) from the State Pollution Control Board (SPCB) which is the environmental clearance for its processing facilities and specifies the conditions to be met by the company such as emission standards, treated effluent discharge characteristics and the waste (including hazardous waste) handling mechanism. For the chilling centres, the company is required to obtain a No Objection Certificate (NOC) from SPCB prior to commencement of operations. The company has also obtained other required permits for all the processing facilities such as factories license, authorization for handling and disposal of hazardous waste covered under the CFO, NOC from groundwater extraction and NOC from fire department (as needed). Each of the permit specifies the requirement to be met by the company including reporting to the regulatory authorities and submission of yearly returns/compliance statement. The company will ensure that requisite approvals are obtained for the new facility to be developed as well.

EHS Management System and Programs:

Out of 11 processing facilities, 6 are certified to ISO 22000: 2005 (food management system) by SAI Global (third party agency) and two facilities at Nellore and Palamaner are certified to ISO 50001: 2011 (energy management system) by Intertek (third party agency). The company is in the process of obtaining certification for remaining facilities. The company has developed standard operating procedures for food safety and energy management and which is included as part of ISO manual.

Going forward, as included in ESAP item#1, the company will develop and implement a corporate environmental and social management system (ESMS) consistent with IFC’s Performance Standards requirements and WBG EHS guidelines appropriately incorporating the following: (i) Environmental Health Safety and Social (EHSS) policy; (ii)  checklist for assessing EHS/OHS risks and impacts associated with processing facilities, collection centres, chilling centres and suppliers; (iii) checklist for labor accommodation facilities (for contract workers); (iv) check-list for ensuring compliance with EHS requirements and legal requirements on working conditions, working hours and non-deployment of child and forced labor (including for contract workers);  (v) emergency preparedness response and evacuation plan (covering key hazard scenarios such as fire and ammonia leakage); (vi) EHS procedures for operation and maintenance of utilities such as boiler and effluent treatment plants and also covering the monitoring requirements; (vii) incident recording mechanism to record all reportable injuries, first aid cases, near misses and lost time accidents along with root cause analysis of cause of accident, immediate action taken, and corrective action required; (viii) monitoring KPIs; and (ix) employee and community grievance mechanism. All facilities will implement an ESMS aligned with the corporate guidance by 2021.

Policy:

Dodla does not have a formal E&S policy although it has developed a CSR policy which outlines commitment of the company to undertake CSR activities for making a positive contribution to society through social programs which are described under the stakeholder engagement section which is in compliance with the requirements of the Companies Act, 2013. Their CSR activities are primarily focussed on initiatives related to education. To meet the requirements under PS1 and as included in ESAP item#1, the company will develop and implement an EHSS policy documenting its E&S objectives and articulating company’s commitment to comply with the applicable laws and regulations as well as compliance with IFC Performance Standards.  

Organizational Capacity and Competency:

The E&S responsibilities of the company are overlooked by HR division with support from the quality team. There is a HR corporate head who is supported by HR representative at each of the respective facilities. Going forward, as included in ESAP item#2, in order to strengthen the management of EHS risks and impacts, the company will appoint a qualified EHS professional with the responsibility for environmental, health & safety and social management within the company. This EHS manager should report to the CFO or operations department. The responsibility would also include implementing an ESMS at all facilities, centres and company operations, implementing the E&S Action Plan (ESAP), oversee EHS performance at all operations, consolidate EHS monitoring data and report to senior management on EHS matters. The EHS manager will also be responsible to ensure compliance with IFC Performance Standards (PSs) requirements for existing and future operations and any gaps will be reported and addressed by senior management. Each operation will either appoint a qualified EHS professional or designate a staff member with the responsibilities for EHS matters. This professional will support the corporate EHS manager to manage EHS at operational level.

Monitoring & Reporting:

Environmental monitoring is governed largely by the permit requirements and is undertaken once annually by a third-party agency for ambient air quality, stack emissions (boiler and diesel generator sets), ambient noise levels and treated wastewater quality. The monitoring parameters and their thresholds are governed by the conditions specified in the CFO by SPCB. The company has in-house laboratory at most of its processing facilities and carries out testing of treated wastewater from Effluent Treatment Plant (ETP) on a daily basis.

As included in ESAP item#1, the company will establish a EHS procedure for monitoring and reporting on its EHS performance against specific KPIs. In addition to current parameters, monitoring of energy (electricity, diesel, petrol, LPG) and water consumption, liquid effluents, solid and hazardous waste management, occupational health & safety (OHS) fire safety and performance targets (e.g. GHG emissions) will be included and reported on a bi-annual basis to senior management. Annual EHS performance audits are expected to be carried out by the EHS manager and EHS local coordinator. The company will report to IFC annually on environmental and safety performance of all its operations.

Emergency Preparedness and Response:

Based on the identified hazards and risks, an on-site emergency response plan (ERP) will be developed and included as part of corporate ESMS (ESAP item#1) and implemented at each of the respective facilities. Accordingly, evacuation routes and assembly points will be designated and marked. The ERP will also include the requirement of conducting emergency response drills, including evacuation drills and fire drills, for different emergencies (including for ammonia leakage).

Fire protection systems have been provided at only four processing facilities (Nellore, Badvel, Kurnool and Palakod) as the requirement of obtaining NOC from fire department is applicable only to these facilities where building height exceeds 15 m. Going forward as included in ESAP item#3, the company will ensure provision of adequate fire protection system at all facilities including portable fire extinguishers, fire hydrant systems (with dedicated fire water storage) at key locations such as ammonia toner and boiler, manual fire alarms, ammonia leak detectors, emergency exits and marking of evacuation routes. The company will also assess the legal requirement of obtaining No Objection Certificate (NOC) for fire at all facilities from the local fire department.

Supply Chain:

Milk is mainly procured from farmers through a network of ~7,356 village level collection centers and 81 chilling centers as of December, 2018. Dodla sets-up its own collection centres where farmers come and sell milk directly or milk is supplied by milk-dealer who collects milk from farmers and supplies to the collection centre. The chilling centres are owned by the company and workforce at the chilling centers is both permanent workers and casual workers (4-10 at each chilling centre depending on capacity of milk being handled). The company does not have access to dairy farms and milk is supplied by farmers individually at the collection centres owned by the company where quality check on milk is performed before being sent for further processing. The collection centres, chilling centres and processing facilities are located in or adjacent to well-developed urban area and no potential impacts on biodiversity is expected either from company or supply chain operations based on preliminary screening done using IBAT.                                                      

 Dodla Dairy has a total workforce of 2,196 employees and employs an additional 2,391 contract workers as of December 2018 . The contract workers are typically involved in loading & unloading, housekeeping, security and gardening.

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

The company has in place an employee handbook applicable to all its full-time employees. The handbook covers general terms and conditions of service including code of conduct, working hours, leave and travel policy, appointment procedure, employee’s code of conduct, and employee benefits, such as social security and pension plan. There is a procedure in place for addressing sexual harassment at workplace and an internal complaint committee has been set-up as required under Indian laws. The employees are provided all the legal benefits including provident fund (PF), employee state insurance (ESI) coverage, gratuity, leave, and are covered under the group insurance policy as well as a medical insurance policy. The hiring and employment practices recognize the principles of non-discrimination and equal opportunity and has also been included as part of the employee handbook. The company does not have any explicit policy on non-deployment of child or forced labor in the workforce, but it was observed that the company has put notice on non-deployment of child labor across all facilities and also there was no evidence of any child or forced labour at any of the facilities that were visited.

Freedom of Association and Grievance Mechanism:

There is no existing staff/workers’ association although the company has neither formally nor informally restricted formation of association. Going forward as included in ESAP item#4, the company will update its HR manual and include: (a) grievance redressal mechanism meeting PS2 requirements covering both employees and contract workers including the provisions on anonymously raising grievances (to be developed as part of ESAP item#1); and (b) include an explicit policy statement on prevention of child and forced labor.

Occupational Health and Safety:

The company has not undertaken a formal OHS risk assessment of its operations and there have been incidences in the past related to ammonia leakage. While some of the facilities have provided sensors for detecting leakage of ammonia, it is yet to be done at other facilities. Going forward as included in ESAP item#5, the company will implement a standard operating procedure for ammonia handling (including provision of appropriate personal protective equipment and ammonia leak detectors) and identify other areas where safety could be improved through the dedicated EHS manager and coordinator to be deployed. Some of the safety measures that could be implemented would include: guarding/covering of moving parts; slip and trip prevention; electrical safety; development, implementation and display of emergency response plan; system for investigation, and documentation of accidents/incidents/near-misses. Also, as included in ESAP item#1, the company will develop an incident reporting mechanism to record all reportable injuries, first aid cases, near misses, lost time injury frequency rate, and lost time accidents along with cause of accident, immediate action taken, and corrective action required.

Workers Engaged by Third Parties:

The company hires contract workers through manpower supply firms. Going forward as included in ESAP item#6, the company will ensure that contract agreement with manpower supply firm includes specific requirements for compliance with applicable labour laws including for minimum wages, PF and Employees' State Insurance (ESIC) related benefits and leave provisions, non-deployment of child and forced labour, alignment of working hours and overtime payment (including provision for weekly off) with statutory requirements, occupational health and safety  and accommodation guidelines for the workers. The corporate HR and plant HR department will monitor the contractor compliance with various statutory requirements on providing wages, working hours, overtime, OHS, and benefits to their workers. The first audit report will be provided to IFC for review and comment. 

 Resource Efficiency:

Energy consumption:  The company has obtained ISO 50001 certification for two of its facilities at Nellore and Palamaner from the year 2011. The company monitors the water consumption and energy consumption data at all facilities. Annual average energy consumption (for all facilities) is 0.04 kWh/l of processed milk while the range is from 0.03-0.05 kWh/litre of processed milk which is below the industry benchmark of 0.1-0.2 kWh/litre of processed milk. Power at all facilities is provided by the national grid which is the main source for operating all equipment except boilers at each facility which are run on fuel wood/husk and diesel-based backup generators.

The company has taken some initiatives for energy efficiency to: (a) reduce energy consumption in lighting by replacement of lamps with energy efficiency LED lighting; (b) saving energy in compressed air generation and distribution system; (c) reducing energy consumption of cooling tower fan; (d) recovery and re use of steam condensate; and (e) optimization of air conditioning systems. These initiatives are presently being implemented at these two facilities and the plan is to introduce energy efficiency measures at all facilities in the next 5 years

Water consumption: The source of water is groundwater at all facilities and the company has obtained registration from the Central Ground Water Board (CGWB) for usage of water from borewells. Total water consumption for the year 2018 was 467 .7 million litres (for all facilities).  Results show that annual average water consumption (for all facilities) is 1.1 litre/litre of processed milk while the range is from 0.43 -1.91 litre/litre of processed (at Tumkur and Hyderabad facilities respectively). Only two facilities (Badvel and Hyderbad) have water consumption above 1.5 litre/litre of processed milk (industry benchmark is 1.0-1.5 litre/lite of processed milk).

Air Emissions and Ambient Air Quality:

The main sources of air emissions are the boilers (mainly fuel wood and husk based) with small capacity (ranging from 4-8 tonnes per hour) and diesel generators for electrical standby power. The boilers have been provided with air pollution control device such as bag filters at most locations. Ash from the boilers is sent for disposal outside for land filling. Monitoring of stack emissions and ambient air quality is presently undertaken on an annual basis by a third-party agency and meet the requirements stipulated by the SPCB. Given that capacity of boilers is less than 50 MWth, the requirement to comply with IFC/WBG EHS guidelines will not apply. 

Wastewater Discharges:

For domestic sewage, septic tanks are installed while Effluent Treatment Plants (ETP) are provided for treatment of process wastewater. On an average, 6 % of water is incorporated into final products, and 94% is reused for landscaping purposes after treatment in compliance with regulatory requirements. Quality of treated wastewater discharged from company operations is compliant for most parameters with WBG/IFC Guidelines for the dairy sector and with the standards specified in CFO issued by SPCB. The treated effluent is used for gardening purposes at all the facilities visited while at few facilities where the ETP is based on anaerobic digestion, the methane gas collected is utilized for boiler operation/canteen facility. Going forward as included in ESAP item#7, the company will ensure that the treated wastewater from the ETP at all facilities meets the legal discharge limits as well as WBG EHS guidelines on a continual basis. As part of this action, the company will review its wastewater treatment for adequacy with production capacity needs, energy and water usage with the objective of reduction in energy usage and fresh water consumption, encourage energy efficiency measures and water reuse.

Waste Management:

The major streams of hazardous waste generated include used oil from diesel generator sets which is sent to government licensed service providers for disposal. The ETP sludge is dried and used as fuel in boilers.

The non-hazardous waste streams like packaging waste are segregated and sold to external agencies for further recycling. The company will ensure that empty/discarded containers are stored in designated hazardous waste storage area and sent to government licensed service providers for disposal.

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. The boilers used fuelwood and based on available data on electricity and diesel/fuelwood consumption, the current GHG emissions (Scope 1 and Scope 2) are estimated to be around 35,900 tons of CO2 equivalents annually (Scope 1) and 17,900 tons of CO2 equivalents annually (Scope 2). Energy consumption from grid constitutes 90.6% of total energy consumption while 3.2 % is used by back-up diesel generators and 6.2% being generated through solar panels.                                                  

 All the facilities are located near highways to allow ease of transportation. As mentioned above under PS1, site emergency plan will be developed, and mock drills conducted on a regular basis. Transport of milk and milk products is by truck however the volume of this traffic is not likely to have impacts on nearby communities as the facilities are located in vicinity of good transportation networks.

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

 The company has established the Dodla foundation few months back especially targeted at CSR activities. The company has so far engaged in CSR activities such as renovation of school buildings and supporting animal husbandry activities in the nearby villages.  As per the requirements of the Companies Act 2013, Dodla is required to spend 2% of its average past 3 years’ net profit (after tax) on CSR activity as defined under the CSR Rules, 2014. The company has accordingly set up a CSR Committee at the Board of Directors level and for the year 2017-18, the total amount spent on CSR activities was of the tune of INR 6 million (about USD 85,714).                                                   

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

Dodla dairy Limited,

No: 8-2-293/82/A,

Plot No: 270 Q,

Road No : 10 -C ,

Jubilee Hills,

Hyderabad.

Any queries and/or comments about the project may be directed to:

Phone: 9849982484

Email: amsreddy@dodladairy.com