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

This is a Category B project according to IFC's Policy on Environment and Social Sustainability (2012). Based on information reviewed by IFC, the proposed project will have limited adverse E&S impacts that are few, site specific, largely reversible and readily addressed through existing mitigation measures and good international industry practices (GIIP).

Key E&S issues and risks associated with the project include: 1) the Company's E&S management and monitoring systems capacity to assess and manage E&S risks and impacts arising out of its entire operational footprint including associated facilities in compliance with IFC PS requirements; 2) assurance of fair, safe and healthy labor working conditions in compliance to applicable labor regulations and IFC PS2 requirements including contractor management, worker accommodation, and gender based violence & harassment (GBVH) prevention; 3) management programs covering resource efficiency measures, greenhouse gas (GHG) emissions, monitoring and management of pollution, hazardous material management systems and pest control measures in compliance with IFC PS 3 requirements and applicable WBG EHS Guidelines; 4) community health and safety risks such as transport safety, offsite emergency preparedness, security practices, and GBVH/child protection (CP) risks in the community-facing raw milk procurement activities and transport fleet operations; and 5) stakeholder engagement and grievance mechanism.

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.


PS1: Assessment and Management of Environmental and Social Risks and Impacts

The Company has established Plant-level Environmental and Social Management Systems (ESMS) as per ISO standards. Considering the company’s wider operational footprint comprising of raw milk collection supply chain, transport fleet operations, milk chilling centers, integrated dairy processing plant, product distribution and logistics, farmer engagement activities, and associated facilities, the ESMS scope and coverage will be enhanced and strengthened under the IFC Project (ESAP#1) as explained in the following paragraphs.

Recently commissioned expansion project received environmental clearance in May 2025 as a Category B2 type requiring no environmental impact assessment study as per EIA Notification, 2006, with documents and clearance conditions publicly available on the regulator portal (Refer: https://parivesh.nic.in/newupgrade/#/proposal-summary/proposal-document?proposal=122661605&proposal_no=SIA%2FTN%2FINFRA2%2F530064%2F2025&proposal_id=122661604).

In the ongoing Plant operations, the Company identified health, safety and environment (HSE) risks and impacts through environmental aspect–impact analysis and hazard identification & risk assessment (HIRA) tool to develop appropriate HSE management programs. The Company’s associated facilities include: milk chilling centers (governed by State Pollution Control Board consents to operate DG sets and wastewater treatment plants); company owned and third party operated renewable energy plants; leased or owned worker accommodation/hostel facilities near the plant; company operated Milky mist exclusive parlours; and a 4.5 km transmission line currently under construction and traversing through government land parcels without private land requirement. As part of ESAP#1 requirements, the Corporate ESMS will cover the entire operations of Milky Mist, including the plants, supply chain and as relevant, the value chain. The ESMS shall assess lifecycle E&S risks for the above mentioned associated facilities, implement documented management programs, and monitor/report performance to senior management. Additionally, under the IFC agreement, the Company will conduct E&S screening and impact assessment, as required and implement an IFC PS aligned construction phase E&S management plan for any future expansion projects including renewable energy projects, transmission lines and other associated facilities.

Milky Mist has established a Board-level committee overseeing environmental and social risk management. At Plant level, a dedicated health and safety team has been established. Environmental staff manage pollution control systems. Plant EHS personnel are competent and familiar with applicable regulatory requirements, and they also periodically monitor milk chilling centers for pollution performance, H&S practices, and EHS compliance. As part of ESAP#1 requirements, the Company will establish a Corporate-level E&S organization to manage and implement the Corporate ESMS across the entire operational footprint including associated facilities.

A Corporate-level EHS department is required to support the Company’s geographic expansion and shall have end-to-end responsibility across the full operational footprint and value chain, establishing and managing a stand-alone IFC PS-1–compliant ESMS (including human resources and occupational health & safety management systems) from milk procurement through distribution. Corporate EHS Department shall manage E&S risks and impacts across the full lifecycle of projects and assets (planning to decommissioning) for Plants, Milk Chilling Centres and associated facilities such as Hostels/Staff accommodation, renewable energy assets, and transmission lines. The Corporate E&S function shall drive continual ESMS improvement (e.g., ammonia/hazardous materials management, emergency response, OHS, pollution control, resource efficiency), ensure timely regulatory compliance and reporting across geographies, institute internal and external audits, and implement internal and external reporting aligned with national and global reporting frameworks (such as SEBI's BRSR, GHG and GRI sustainability reporting).

Milky Mist has established documented HSE management programs integrated into its Plant ESMS (procedures, training, reporting tools, checklists, internal audits, and monitoring). Plant level HSE objectives and targets are set during annual management reviews. As part of ESAP#1 requirements, the Management Program scope will be expanded beyond the Plant to cover the full operational footprint and associated facilities and strengthen HSE auditing across these associated/off-plant facilities. The Corporate ESMS will enhance legal compliance tracking—preferably via enterprise software application and internal audits—to prevent lapses due to expired or missing permits/clearances.

The Plant has a documented onsite Emergency Response Plan (ERP) covering major fire, explosion, chemical/oil spills, wastewater overflow, and ammonia leaks, supported by a 50-member trained Emergency Response Team. Drills are conducted quarterly (mock drills) and semi-annually (fire drills) with the State Fire Department, and the Plant maintains appropriate life and fire safety infrastructure. As part of ESAP#1 requirements, the ERP will be updated to reflect recent project expansions. In addition, documented, generic ERPs shall be developed for milk chilling centres and other associated facility operations, integrated into the ESMS, and relevant stakeholders are trained on a regular basis.

As part of Plant ESMS, Company has established health, safety and environment (HSE) performance monitoring, review and internal auditing systems to measure the effectiveness of its management program at Plant level, as well as compliance with any related legal/ regulatory requirements on environmental quality and pollution monitoring. Production and Operations Management Team at every level receive and review periodic HSE performance, based on internal audit reports, systematic data collection and analysis. HSE performance reports are shared with the Board Committee. External E&S performance reporting will begin after listing as per market regulator guidelines. Under ESAP#1, the Corporate ESMS monitoring element will be expanded to include supply chain and associated facilities, internal and external audits, Board-level target setting and reviews, and structured permit-compliance and reporting reviews.


PS2: Labor and Working Conditions

Milky Mist has documented plant level human resource (HR) Policies and systems include Standing Orders approved by the Labour Commissioner (April 2022), which are aligned with applicable labour regulations. The HR Policies and systems largely aligned to local labor laws cover aspects such as recruitment, working conditions and terms of employment, non-discrimination and equal opportunity, prevention of sexual harassment (POSH), Grievance redressal, whistle blower (applicable to internal and external stakeholders), contractor labor management, employee safety and welfare, leave including special medical leave (menstrual leave) and vehicles.

Milky Mist has a large workforce across operations, with total headcount reported at 4,542 (of whom approximately 18% are female). Of these, 1278 are on the company rolls and 3264 employees are on third party rolls. These contracted employees work both inside and outside the plant premises in associate functions like procurement, sales, accommodation, transport fleet operations, milk chilling centers, and renewable energy facilities. The company has reasonably robust oversight on contract labour employed at the Plant, for whom personnel files are created, and biometric/face ID attendance systems are implemented. Working conditions and welfare measures, including access to subsidized canteen facilities and a health center, are provided on a non-discriminatory basis to both direct and contracted workers. The HR policies contain provision for non-discrimination and equal opportunity for its employees as well as prohibition of child, forced or bonded labor practices. The company does not prohibit the freedom to associate and workers’ right to form and join workers’ organization, but no workers’ union has been formed yet. As part of IFC investment and as per ESAP#2 requirements, Milky Mist will strengthen its HR management system to align with legal requirements and IFC PS2 by strengthening its annual, independent HR audits covering all direct and contracted workers across its operations and value chain, implementing corrective actions within defined timelines and updating key HR policies (working hours, overtime, accommodation, freedom of association and grievance mechanisms).

The company has implemented plant-level occupational health & safety (OHS) management systems aligned to ISO 45001 Standards, implemented by a dedicated plant level OHS team and supported by ~20 certified internal auditors. OHS training management systems are implemented. Internal health & safety audits are conducted quarterly and reviewed in mandatory senior management meetings. The company records and tracks accident/incident statistics including loss time injury frequency rates (LTIFR). In line with Factory regulations, the Company maintains an Occupational Health Centre with a visiting Doctor (twice in a week), a nurse, a one-bed facility, and a dedicated advanced life support (ALS) ambulance with drivers across three shifts, supported by first-aid trained employees and hygiene screening/training programs. Loss time injury (LTI) cases are referred to nearby government and private hospitals with response times monitored for improvement. The company reported one fatality in December 2025 - a lone fatal accident in the last 10 years of Plant operations - involving an off-roll contractor worker due to clothing entanglement in a conveyor belt system and the authorities were informed, root cause analysis (RCA) was undertaken and corrective & preventive actions (CAPA) were completed.

Milky Mist’s primary supply chain consists of ~76,000 dairy farmers across 22 districts spanning Tamil Nadu, Andhra Pradesh and Karnataka, of whom approximately half are women. The company’s engagement with the farmers is voluntary, and there is no direct contractual relationship mandating them to sell their produce to Milky Mist. The company has built a comprehensive a farmer engagement ecosystem around veterinary services, productivity support, financial inclusion, elimination of middlemen, competitive rates and direct payments every 7 to 10 days. The procurement and transport teams interact with the supply chain daily. Considering the risks inherent in community interactions with numerous decentralized fragmented and potentially vulnerable suppliers, the company will strengthen its Codes of Conduct for both employees as well as the dairy farmers in order to ensure safer communication, timely resolution of concerns, protection of vulnerable workers in the supply chain, promote animal welfare and have stronger protection of dairy-based livelihoods. An external grievance mechanism to address stakeholder concerns outside the company, including the community and suppliers, will also be developed (ESAP#2). As part of ESAP#3 under the IFC investment, in addition to the existing POSH compliant systems, the Company will develop and implement an integrated gender based violence & harassment (GBVH)/ sexual exploitation, abuse and harassment (SEAH) and child protection (CP) Safeguard Management System, aligned to good international industry practices, which would address GBV/SEAH and child safety issues within the company operational footprint, at the community interface and in the supply chain.

PS3: Resource Efficiency and Pollution Prevention

Milky Mist’s plant operations consume mainly electricity, bio-briquettes, biogas, diesel and water, and the company has implemented technically and financially feasible measures to improve resource efficiency across energy, water and material inputs. Plant management indicates the Plant operation is compliant with IFC EHS Guidelines for Dairy Processing with respect to waste, water and energy performance. The Company Board has set annual HSE targets to reduce energy and water intensity, increase solid-waste recycling and reduce landfill disposal, supported by established and monitored resource-efficiency key performance indicators (KPIs). GHG emissions estimation is underway with third-party support and Company is expected to disclose its GHG performance as per market listing regulations.

The Plant requires about 3 million liters per day of water on an average out of which a small portion is sourced from underground water pipeline laid by New Tirupur Area Development Corporation Limited - a utility agency. Balance portion of water is recycled through the Plant's advanced tertiary wastewater treatment facilities that converts wastewater from milk handling into processed water, resulting in ~70% water recycling.
The Plant sources electricity from the state utility grid and is currently constructing a dedicated 110kVA capacity transmission line of 4.5km long using government land parcels. However, as on date, the Company generates almost 90% of its daily energy demand from its owned and third-party EPC operated renewable energy plants. Additionally, within the Plant, almost 5% of daily energy demand is generated using biogas produced from wastewater treatment facilities (375 kW gas turbines) and steam turbines. Grid power requirement is less than 6% as on date. In line with its resource efficiency programs, energy audits and production section-wise real time energy consumption data is recorded, monitored and audited for energy conservation and identifying energy efficiency projects.
The sources of air emission at Milky Mist Plant operations include point source emissions from the stacks attached to air pollution control devices for steam boilers, biogas based gas turbines and stand-by diesel generator stacks. As per permit conditions, Company has provided adequate stack heights (45-50m high), air pollution control devices (such as bag filters and electrostatic precipitators) and noise attenuating devices (such as acoustic enclosures). In the process areas and milk powder plants, bag houses have been installed to control fugitive emissions and suspended particulate matter is monitored to maintain indoor hygiene and workplace quality. In line with permit conditions and factory regulations, the stack monitoring, ambient air quality, ambient noise levels are monitored and reported to SPCB once in six months while the regulator undertakes annual monitoring of permit conditions. Industrial hygiene monitoring is done annually and audited by 3rd party as per Factory regulations.

Milky Mist generates ~3.5 million liters per day of wastewater which is treated through a combination of advanced wastewater treatment technologies including aerobic (dissolved air flotation) and anaerobic (Up flow anerobic sludge blanket reactor) systems followed by continuous stirred tank reactor (to treat sludges and bio-degradable solid wastes). The Plant has installed advanced tertiary treatment systems, including triple-stage reverse osmosis (RO) and zero liquid discharge (ZLD) systems such as multiple effect evaporator (MEE) and agitated thin film dryer (ATFD). On average, the Plant recovers almost ~2.5 MLD of potable-quality water through these advanced treatment systems, with process wastewater and sewage treated separately. The treated process wastewater is reused almost entirely.

Hazardous waste generation is limited mainly to used oil, while biodegradable wastes are routed to the CSTR for biogas generation and other non-hazardous waste streams are largely recycled, reprocessed or reused through authorized recyclers, resulting in minimal landfill disposal. The food waste from the kitchen is sent to nearby piggeries. The salts generated from ZLD systems such as MEE and ATFD are currently stored onsite and yet to be disposed.

Milky Mist uses ammonia as a refrigerant in closed-loop systems at the Plant and in the milk chilling centers. In the Plant there are no separate storage tanks maintained for Ammonia while at MCCs there are small storage tanks maintained and operated as per Factory regulations. Inside the Plant, approximately 2.5 ton and 1.5 ton closed-loop ammonia refrigeration systems are installed to cater to the needs of its three production buildings/units and the system is equipped with ammonia leak detection sensors. As part of ESAP#1 requirements discussed under IFC PS1, the Company will strengthen its Ammonia handling, storage and use procedures to comply with good international industry practices and local regulations both in the Plant and MCCs.

In the Plant and MCCs, Company has outsourced pest control services to leading third party service contractor who have deployed their staff permanently in the Plant and they do not use any WHO Hazard Class Ia (extremely hazardous) or WHO Class Ib (highly hazardous) pesticides.


PS4: Community Health, Safety and Security

Company has established infrastructure and equipment testing regime in compliance to local Factory regulations. Stability of buildings is assessed and independently verified by authorized Chartered Engineers once in 3 years. Multiple industrial equipment’s testing inventory is maintained along with their testing schedule and latest copies of independent certification at the plant. Product distribution related transport fleet operations are monitored 24x7 through global positioning system (GPS) devices fitted in all company-owned fleet vehicles, with a dedicated logistics monitoring team to ensure timely deliveries and temperature control across the cold chain. As part of ESAP#1 requirements, Company will review and strengthen its transport fleet operations specifically focusing on raw milk supply chain related transport operations.

Unarmed security personnel have been deployed through third party security vendors authorized by government. The company briefs security personnel about policies on child labor and provides training on basic safety, first-aid, fire safety and emergency response. The security team is led by Plant Administration and Senior Security officer who are on-roll staff. Security team members comprising of supervisors and security guards are made part of the emergency response team with recurrent training on emergency situations as per on-site emergency management plan. Company reports no security incident in the past involving armed/unarmed security guards and local community members.

As part of ESAP#1 requirements, Company will formulate and establish a documented stakeholder engagement and grievance redress mechanism covering its entire operational footprint including suppliers, dairy farmers, vendors and communities in the vicinity of company operations. The company undertakes extensive corporate social responsibility (CSR) and farmer outreach programs. The company’s farmer engagement ecosystem includes subsidised veterinary and productivity support (artificial insemination, vaccination/deworming camps, veterinary services with contact numbers displayed at village collection centres, delivered by veterinary doctors and field teams), along with fodder/silage training and cattle nutrition programs delivered through zonal agricultural officers; village meetings and trainings that occur every 1–3 months and farmers are periodically invited to visit the Perundurai plant. However, engagement remains ad hoc and not designed as a structured forum for information disclosure and issue resolution.

Contact Person: Mr Prakash, Company Secretary
Company Name: Milky Mist Dairy Food Limited
Address: SF No. 43/1-4, Pattakaranpalayam, Perundurai, Erode Dist, Tamilnadu – 638057, India
Email: investor@milkymist.com
Phone: + 91 424 2533248/ 1800-419-9000
Website: www.milkymist.com

Broad Community Support is not applicable for this project.

S.no	Description	Anticipated Completion Date
1	Company agrees to formulate and institute an IFC PS 1 compliant Corporate Level Environmental and Social Management Systems (ESMS) comprising of overarching policies; E&S organization including capable resources; documented management programs; emergency response plans; and monitoring, review and stakeholder reporting systems. The scope of the Corporate ESMS shall cover the Company’s entire operational footprint including its dairy farmer networks as relevant, upcoming greenfield or brownfield expansions and associated facilities.	08/31/2027
2	The Company will review and strengthen its human resource management system in alignment with applicable legal regulations and IFC PS2. In particular, this will include the following: (i) Commission an annual independent third-party HR audit for 3 years - This audit will cover the entire HRMS and its applicability and implementation with respect to all direct employees, including company employees working outside the Perundurai plant (e.g. staff engaged in transportation, procurement, Milk chilling centers, Company owned Milky Mist Parlours and RE facilities). The audit will also cover contracted workers employed across the Company value chain within and outside the plant. Such audits shall be conducted on an annual basis for an initial 3 years of IFC’s investment; (ii) Implement the Corrective Action Plan emerging from the HR audit within specified timelines; (iii) Review and update HRMS including policies related to working hours, overtime, worker accommodation standards, grievance mechanism; (iv) Review, update, and where required, develop Code of Conduct for all employees on community interactions. This CoC would apply to all workers (direct and contracted) engaged in transportation, procurement, operation of franchisees, and any other activities which involve interactions with community members; (v) Review and update Supplier Code of Conduct in line with IFC Supply Chain requirements; (vi) Develop a dedicated Supplier Code of Conduct for all dairy farmers supplying milk to Milky Mist	01/31/2027
3	Company will implement a comprehensive, corporate-wide Gender Based Violence (GBV)/Sexual Exploitation, Abuse and Harassment (SEAH) and Child Protection (CP)policy and risk management system aligned with IFC Performance Standards and the Good International Industry Practice, addressing prevention, regular stakeholder training and sensitization program, reporting, and response covering all operations and activities of the Company. Develop and implement an integrated GBV/SEAH and Child Safeguarding Management System by engaging and retaining a qualified GBV/SEAH consultant or appropriate internal resources to support system development, training, and phased rollout. The Management System will focus on: i) establishing policies and codes of conduct (COC) for various stakeholders in the core operations as well as primary supply chain ; ii) strengthening workforce safeguards including regular training and sensitization of all community-facing staff and workers, VLCC incharge on the policy and COCs and encouraged to report incidences and grievances; iii) developing and implementing community-facing safeguards; iv) implementing survivor-centered grievance and incident management mechanisms; v) extending requirements to third-party workers; and vi) targeted measures to address under-reporting of SEAH and child protection, and technology-related risks, supported by training, monitoring systems, and external expert engagement.	08/31/2027