IFC’s appraisal considered the environmental and social management planning process and documentation for the Project and gaps, if any, between these and IFC’s 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 implementation of these measures, the Project is expected to be designed and operated in accordance with Performance Standards objectives.
PS 1: Assessment and Management of Environmental and Social Risks and Impacts
Environmental and Social Policy & Management System: The company adopted an overarching Sustainability Policy, defining a framework of providing a safe workplace free of safety hazards and risks; socially and environmentally responsible in community neighbourhoods, conserving natural resources by adopting 3R concepts; reducing energy consumption; increasing renewable energy share; conduct rigorous audits, evaluations, and self-assessment; work with suppliers who promote best environmental and sustainable practices. In addition, the company has adopted multiple E&S-related policies such as biodiversity protection, energy, greenhouse gas (GHG) emissions, renewable energy resources and water, sustainability, corporate social responsibility (CSR), and employee well-being.
The company has established plant-level environmental and social management systems (ESMS) certified as per ISO 14001(Environmental Management), ISO 45001(Occupational Health and Safety Management), and SA 8000 (Social accountability) across all its manufacturing plants, including Laksar and Banmore. The Laksar and Banmore ESMSs are commensurate with the operational E&S risks, compliant with national law, and meet the requirements of IFC PSs. The ESMS consists of documented manuals, operational procedures, training management systems, reporting templates, checklists, audits, monitoring, and reporting mechanisms.
Impact Identification and Assessment: Both Laksar and Banmore plants have valid E&S operational permits. According to the national legal requirements, the brownfield capacity expansion of the tyre industry does not require prior environmental and social impact assessment (ESIA) and an environmental clearance process. Nevertheless, the company completed the Environmental and Social Impact Assessments (ESIAs) per the national law and requirements of IFC PSs for the expansion at the Banmore and Laksar plants in compliance with the ESAP for the equity investment JK Tyre-III # 41967. However, as the scope of expansion of facilities has been changed, the company will augment the prepared ESIAs for the Laksar and Banmore expansion projects, covering aspects such as increased resource use (energy, water), air emissions, wastewater, waste generation, health and safety, and climate risk assessment (ESAP #1). The company manages contractors following the requirements of national law and standards. However, for the expansion of Laksar and Banmore plants, the company will augment the management of contractors and ensure that the contractors prepare and implement a suite of site-specific construction Environmental and Social Management Plans (CESMPs) and the Environmental Monitoring Plan based on the updated ESIA, national law, WBG General EHS guidelines (2007), WBG EHS Guidelines for Metal Plastic and Rubber Manufacturing (2007) and the company's ESMS related plans and procedures. The CESMPs will include but not be limited to an air quality management plan, waste management plan, occupational health and safety plan, water and wastewater management plan, hazardous materials management plan, noise management plan, dust management plan, spill prevention and response plan, emergency preparedness and response plan (EPRP); transport and traffic management plan; workers accommodation plan, security management plan; community health and safety plan; chance find procedure; stakeholder engagement plan and community grievance redress mechanism (GRM).
Organizational Capacity and Competencies: The Group Chief Sustainability Officer leads the corporate environmental management function. At the plant level, the engineering and utility maintenance head is supported by a qualified team responsible for environmental management, including water cycle management, waste management, and pollution control. In contrast, qualified health and safety staff within the human resources (HR) department are responsible for OHS risk management.
Emergency Preparedness and Response: Both the plants have documented onsite emergency preparedness and response (EPR) plans that are aligned with national law. The onsite emergency plan covers natural disasters like floods, storms, earthquakes, fires and explosions, accidents, major spills, gas leaks, pandemics, and bulk storage failures. The company actively maintains the emergency response infrastructure, undertakes regular mock drills and training programs for on-site staff, and communicates its emergency preparedness and response policies with government authorities. The company will prepare the off-site emergency preparedness and response plan covering the off-site emergency risks while transporting the raw materials and finished products, including hazardous chemicals and wastes (ESAP #1).
Monitoring and Review: As part of the ESMS, the company has established a monitoring, reviewing, and reporting system to monitor E&S performance according to national law and standards. The environmental monitoring plan for air, water, and noise quality will be upgraded to include applicable standards in the WBG General EHS guidelines (2007) and WBG EHS Guidelines for Metal Plastic and Rubber (2007). The company's monitoring and review system involves periodic external and internal reporting on E&S performance, ISO-related internal and external. The company has a monthly reporting system for all plants, whereby Banmore and Laksar plants report monthly based on established key performance indicators (KPIs), including updates on the workforce, planned headcounts, workers' grievances, and workplace injuries.
PS 2: Labor and Working Conditions
Human Resource (HR) Policies and Procedures: The company has adopted a set of HR policies and procedures at the corporate level ranging from corporate ethics and employee code of conduct, social accountability policy, recruitment, compensation and benefits, working time and leave social security, and performance evaluation that applies to the entire workforce at the corporate level and manufacturing sites. There is a policy on women's safety that meets the requirement of the Prevention of Sexual Harassment (POSH) Act, 2013. The HR policies comply with the national labor law and are aligned with IFC PS2 requirements, though some additional plant-specific policies need to be developed. Each plant has its own dedicated HR team. However, the company's HR policies and procedures have to be consistently applied across the manufacturing sites to all worker categories, largely due to the Standing Order Laws Act, which determines terms of employment at the state and site levels. As a part of revised equity investment ESAP#2, the company has agreed to ensure that corporate-level and facility-specific policies and procedures align with PS2, including provisions for forced labor, child labor, freedom of association, overtime, and minimum wage. If changes to align specific policies with existing standing orders are required, the company will communicate those to all worker categories at the relevant sites.
The company has updated the software that detects and monitors under-aged workers as part of the HR management system update. The Banmore and Laksar plants have over 5000 workers, of whom 40% are contract workers hired through third-party contractors to perform supplementary jobs such as loading/unloading, cleaning service, canteen service workers, and security guards. There are no female staff in the plants. The company has signed up for IFC‘s India Gender Collaborative, which brings together companies focusing on gender support and inclusion.
The company has implemented various corrective actions on labor & working conditions agreed under IFCs equity investment and is committed to implement the remaining actions to ensure alignment and compliance with the local labor law and IFC PS2 for direct and contracted workers. Per ESAP#2, the company will undertake independent third-party annual labor audits at the Laksar and Banmore plants for two consecutive years, extendable to the third year if required, to demonstrate completion of implementation of corrective action plan and compliance with the local labor laws and IFC PS2 requirements. The company will conduct six-monthly reviews of the contractor management plan and contracted workers' conditions in practice and share the results with IFC for at least two years post-commitment. The existing standard operating procedure (SOP) for contractor management will be revised based on the findings from the ongoing reviews. (ESAP #3)
Additionally, for the forthcoming expansion at the Banmore plant, the company will ensure compliance of the construction labor camp with the requirements of the IFC guidance note on workers' accommodation process and standards (https://www.ifc.org/en/insights-reports/2000/publications-gpn-workersaccommodation) (ESAP#1). The company will expand the scope of services of the project management consultant hired for monitoring and supervising construction at the Banmore plant to include EHS supervision and performance monitoring of contractors in line with national standards, IFC PSs, and construction EHS manual.
Freedom of Association: The Laksar and Banmore plants maintain valid long-term agreements with their workers' unions. In Laksar, the Long-Term Productivity Linked Wage Settlement with registered unions gets negotiated every three years, and the next round of negotiations were ongoing at the time of IFC appraisal. The agreement reached is disclosed on the factory notice boards to invite objections/suggestions. Based on that, the final agreement is signed with all the trade unions. Issues typically negotiated are benefits, allowances, tenures of different categories of workers, increases in leaves, mediclaim limits, etc.
Retrenchment: There has been no retrenchment or collective dismissal of employees at any of the two plants in the past three years. The company implemented the voluntary retirement scheme at CIL when the plant was acquired. A voluntary separation scheme is currently in place, and the company pays a one-time allowance in addition to the legal requirements. This has been agreed upon with the Trade Unions and is based on mutual negotiation. As a part of its commitment to revised equity ESAP, the company will be establishing a retrenchment policy aligned with national labor law and IFC PS2 requirements, based on the principle of non-discrimination and supported transition, reflecting the consultation with workers and trade union/s and the government, and collective bargaining agreements if they exist.
Grievance Mechanism: The HR department has established a workers' grievance mechanism in the form of a Help Desk in the canteen in both plants which is also accessible to third-party contract workers to file complaints. The grievance mechanism display board, suggestions, and complaint boxes are installed to receive grievances, including anonymous complaints and feedback, as evident from the recent supervision visit to the Laksar plant under equity investment. The grievance register is also held at the time office. A grievance redress mechanism (GRM) Committee is established with the Union leader, Union member, Head HR, Head production, and Labor Contractor as members. The meeting is held quarterly, minutes are recorded, and the database is maintained. The company will ensure that the GRM procedure, developed under equity investment, will be monitored for effective implementation and made more effective through feedback from workers, trade unions, and contractors, ensuring compliance with IFC PS2 requirements.
Occupation Health and Safety (OHS): The company has established an OHS Management System certified per ISO 14001 and the British Safety Council at both plants. This includes OHS policies and safe work procedures, risk assessment and mitigation procedures, accident and incident analysis, EPR plans, life and fire safety measures, safety training and emergency drills, and incident management.
The company has adopted the design of the new sheds that incorporate superior natural lighting and more efficient Air Handling Unit (AHU) systems, significantly enhancing working conditions for employees. The company also regularly monitors the work zone's indoor air quality, including volatile organic compounds (VOCs), and ensures that the results comply with the national OHSA standards. The company provides personal protection equipment’s (PPEs) to the workers, including safety shoes, hand gloves, earplugs, and masks, and ensures they are rigorously used. In 2024, there were no fatalities, and the lost time injury frequency rate (number of lost time injury cases per million worked hours) was 1.97 at the Laksar plant, which is lower than the international sector benchmark. The company will upgrade its OHS management procedures to include climate risks (increased temperature, heatwaves) on workers' health and safety during construction and operation. (ESAP#4)
Supply Chain: The key raw material in tyre production is natural rubber (NR). About 60% NR is sourced from India and the balance 40% is imported from Malaysia, Indonesia, Thailand, and Vietnam. IFC's contextual risk screening analysis indicates risks associated with child/forced labor and safe working conditions in rubber plantations, especially in Southeast Asia. Although national legal requirements more regulate Indian producers, potential new production areas in India might present similar challenges regarding working conditions in small production units. JK Tyre manages the natural rubber supply chain centrally at the corporate level. As part of its ESMS, the company has developed the NR Supply Chain Management System (SCMS). The SCMS procedure for domestic supplies provides for the supplier code of conduct, vendor registration with rubber board or regulatory license, vendor assessment (evaluation and approval) process, which includes self-declaration/undertaking on good working conditions, compliance with labor law, commitment to prohibiting child and forced labor risk in its operations, and primary supply chain. It also involves on-site inspection, verification, contractual obligation to meet the SCMS requirements, and biannual audit using a vendor performance monitoring checklist.
For international supplies, the process involves physical/virtual assessment/verification of the information submitted in self-declaration and sustainability certifications, which cover criteria for child and forced labor and working conditions. IFC reviewed the SCMS established by the company and assessed that it is reasonably good for the domestic supply chain and needs to be further strengthened on international supply chain. As part of the equity project, JK Tyre has agreed to further strengthen its international supply chain, which includes mapping all “natural rubber processing plants” (re-milling plants) from which its international suppliers source NR for JK Tyre, assessing the supply chain risk (for example, by verifying if re-milling plants are certified by “Rubberway” or equivalent standards), covering PS2 and PS6 risk aspects by an independent third-party consultant approved by IFC by 31 March 2025, and evaluating the adequacy of “Rubberway” and other certification standards to meet IFC PS 2/PS6 requirements on the supply chain. JK Tyre will report the SCMS and PS2 compliance implementation outcomes in the Annual Monitoring Report (AMR).
PS3: Resource Efficiency and Pollution Prevention
Resource Efficiency: In line with its Sustainability Policy the Company has published its “Sustainability Targets 2030” which are aligned to PS3 requirements on resource efficiency. The company aims to achieve a 2-5% annual reduction in specific energy and water consumption over the next decade. The Laksar and Banmore plant’s water consumption meets the water consumption indicator of WBG EHS Guidelines for Metal, Plastic, and Rubber Product Manufacturing (2007). Thermal energy consumption at company level is at 8.70 giga joules per ton of produced tyres. The Banmore plant's coal consumption rate is 0.128 tons per ton of manufactured product, while the CIL Laksar plant's consumption is higher at 0.76 tons per ton of product. However, with the transition to 132 KVA grid-based power and the phase-out of the 7.5 MW coal-fired captive power plant, the Laksar plant's coal consumption is projected to decrease. The current boiler capacities will suffice to meet the steam demand of the proposed expansion as part of the proposed project, and no additional boiler capacity is anticipated.
Greenhouse Gas (GHG) Emissions: The company has implemented several measures to reduce greenhouse gas (GHG) emissions. These initiatives include completing 10.7 MW rooftop solar power installations at the Laksar and Banmore plants, with another 10 MW in the pipeline, currently contributing approximately 10% RE in the energy mix. Additionally, the Banmore plant has transitioned to 80% biomass usage. As a result of these efforts, the GHG intensity has been reduced by 58 % to 0.91 CO2e per ton in FY 2024 from the base year FY 2014 at Banmore and by 39%% at Laksar to 1.35 CO2e per ton in FY 2024 from base year FY 2018. In FY 25, the Laksar plant will be phasing out of a 7.5 MW coal-based captive power plant. Moreover, the company has been `replacing 35%-60% of carbon black, depending on the type of tyre, with silica to enhance tyre properties. This substitution will decrease Scope 3 emissions from the carbon black supply chain. Additionally, the nitrogen curing completed recently in the Laksar plant which will reduce the steam requirement, saving 100 MT/day of steam requirement. The total GHG emissions for the project are estimated to be 120,850 tCO2e per year (58,195 tCO2e Scope 1 emissions and 62,655 tCO2e Scope 2 emissions).
Pollution Control: The company has implemented air pollution control measures, including electrostatic precipitators (ESP) for all boiler stacks, bag filters & fume extractors in Banbury raw material mixing areas. Fugitive dust from the coal yard is effectively managed through frequent water sprinkling, complete mechanization of coal handling, and feeding and storage of coal in a covered shed. The boilers air emission monitoring results for the Banmore and Laksar plants indicate compliance with the national air emission standards and WBG General EHS Guideline (2007) air emission levels for small combustion facilities.
Process and sanitary wastewater are treated in on-site Effluent Treatment Plants (ETPS) and Sewage Treatment Plants (STPs). The effluent quality monitoring results indicate compliance with national effluent standards and WBG EHS Guidelines for Metal, Plastic, Rubber Products Manufacturing (2007) effluent levels. Both plants have implemented Zero-liquid Discharge (ZLD) and have been audited and certified for ZLD. The existing capacities of ETPs and STPs are sufficient to handle the increased load of process and sanitary wastewater generated due to the expansion of the proposed plant's production capacity.
Regarding waste management, both plants have implemented zero landfill waste disposal policies. All generated waste is sorted and directed to specialized and licensed recycling facilities, while coal combustion ash is sold to cement industries for reuse. Combustion wastes such as bottom ash, boiler slag, and fly ash are sold to three nearby cement industries in the Laksar plant and nearby brick manufacturing industries in Banmore in compliance with the national regulatory requirement, which mandates 100% reuse of the coal combustion ash.
As a manufacturer and brand owner, the company is covered under Extended Producer Responsibility (EPR) obligations under Hazardous and Other Wastes (Management and Transboundary Movement) Amendment Rules, 2022, of the Government of India that mandate the producers to recycle the tyre waste equivalent to the weight of new tyres manufactured in the previous year. The company has started to address its obligations under the EPR by purchasing certificates from the recyclers, who are registered with the Central Pollution Control Board (CPCB). The company will comply with the national regulatory requirement and report the compliance with the EPR obligations in the Annual Monitoring Report to the IFC.
Hazardous Material Management: The company operations include handling chemicals such as ammonia, sulfur, and liquid nitrogen stored across both plants. The company's occupational health and safety management system (OHSMS) has established procedures for handling and storing chemicals/hazardous substances such as sulfur, corrosive chemicals, gas cylinders, and ammonia.
PS 4: Community Health, Safety, and Security
Community Health and Safety: The company's ERP is aligned with the Disaster Management Plan prepared by the district administration. The nearest community is at Dabki Kalan about 0.5 km from the Laksar plant boundary. There have been no historical incidents affecting the community so far. No village roads are used for transportation, causing a disturbance or safety risks to the community. The plants are on the highway with adequate access and dedicated truck parking space within the factory premises.
Life and Fire Safety (L&FS): The company has designed and instituted L&FS infrastructure per the Indian National Building and Fire Safety Code requirements applicable to industrial buildings and local fire safety requirements. Moreover, L&FS systems are updated and maintained per original equipment manufacturer (OEM) requirements aligned with the national Fire Safety Code. The company is mandated by OEM to audit the L&FS system thrice a year. The L&FS infrastructure includes a fire tender, fire water reservoir, fire water pumping systems, perimeter, and building-wise fire hydrant system, smoke detectors and fire alarms in offices, fire signages, fire blankets and fire suits, common assembly point, fire manual call points, ambulance, healthcare facility, etc.
Security Personnel: The plants have a security management system involving armed and unarmed security personnel hired directly by the company and through authorized third-party security agencies.
The company has prepared and implemented the security management plan in compliance with previous equity investment ESAP requirements. The plan encompasses various aspects, including security risk mapping, security arrangements, hiring and training security personnel, selection and management of security guards, screening and verification, equipping security personnel, and monitoring. Given the company's gender inclusion plan in employment, many active labor unions, and the legacy of workers' protests, there is a need to address security risks from the presence of armed guards from both gender and community perspectives. Therefore, the company will consistently monitor and assess the need for armed security personnel at the Laksar and Banmore plants against potential security risks for the company, including risks to employees and the community and GBV risks resulting from the presence of armed guards, and implement the appropriate mitigation the risks to address risks, including the possibility of disarming the security guards.
PS 6: Biodiversity and Sustainable Management of Living Natural Resources
Natural Rubber (NR) production is associated with the risk of degrading natural habitats. As a part of with previous equity investment ESAP, the company updated its NR supply chain management system (SCMS) to select, manage, and monitor suppliers to mitigate PS6 risks in the supply chain. Its updated SCMS includes the supplier selection process, vendor information assessment, vendor audit, vendor rating, and procuring the NR from suppliers with sustainability certifications such as Ecovadis, GPSNR, FSC, etc. The company has commenced procurement of European Union Deforestation Regulation (EUDR) regulated NR to produce tyre products for European Union markets. As per the information shared by the company, the Rubber Board of India regulates the domestic NR market, which has initiated the geo-mapping process to align with the EUDR requirements.
Going forward, as the entire NR production and tyre manufacturing industry is working towards meeting EUDR requirement that includes 100% traceability, monitoring, and verification, and purchasing products that meet a no-deforestation commitment, the company also plans to further augment its NR SCMS to align with the EUDR requirement. The EUDR compliance will assist JK Tyre in meeting the IFC PS6 requirement. Also, as part of the equity project, the company and IFC have agreed to assess the PS2 and PS6 risk in the company's international supply chain through an independent third-party consultant, strengthen its SCMS, and prepare a road map with agreed milestones and targets for certified and/or traceable rubber supply to comply with the no-deforestation commitment. The company will annually report its NR supply chain mapping, exposure to deforestation risk in the NR supply chain, implementation of SCMS (including audits, verifications, and traceability aspects), and compliance of the supply chain with PS2 and PS6 requirements in the AMR.
