The project is sponsored by the SK Bangur Group of companies (the Group). The Group is majority owned by Mr. S.K. Bangur (the sponsor). In addition to West Coast, its flagship company, the Group includes Rama Newsprint Ltd – one of the largest newsprint producers in India with installed capacity of about 130,000 tpa and sales of above $70 million. It also comprises a number of small companies in the chemicals, cables, tea & coffee, and rubber businesses. West Coast and several of the Group companies are listed on the National Stock Exchange and/or on the Mumbai Stock Exchange. As of January 08, 2007, the SK Bangur Group, through a number of entities controlled by it, owns 53.86% of West Coast’s shares, while the rest of the shares are owned by the general public - 28.66% by individual investors, 12.77% by corporate bodies, and 4.71% by banks and financial institutions.

The total project cost is estimated at $303 million. IFC is considering an investment of up to $40 million in the form of an A loan for its own account.

40.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	40.0
Equity

* These investment figures are indicative

The expansion project is to be located at the existing plant site at Dandeli in the state of Karnataka in South West India.

The project will improve the competitiveness of West Coast. The installation of new and better technology equipment will allow the company to lower production cost through better utilization of raw materials and energy. Moreover, the company will improve its environmental performance, and upgrade its product quality while also achieving better economies of scale as a result of the capacity increase. Profitability should improve and consumers are expected to benefit from the widening product range and increasing proportion of value-added products. West Coast’s farm forestry research work (developing genetically enhanced seedlings) and farm forestry initiatives (contract forestry in adjoining districts) is expected to result in reduction in transportation cost due to a decrease in the average sourcing distance from about 700 km to about 200 km. West Coast is the only company with significant operations in Dandeli and the livelihood of people in and around Dandeli is linked to West Coast either directly or indirectly. The company currently employs about 4,200 people directly and through contractors and provides indirect employment to more than 15,000 people through its farm forestry program. Further growth of West Coast’s farm forestry program will create additional indirect employment opportunities for communities in and around Dandeli.

IFC’s involvement in the project will improve the company’s credibility in the domestic and international market due to IFC’s adherence to high standards of corporate governance and environmental, safety and social consciousness, and insurance coverage. The modernization and expansion project will significantly upgrade the environmental performance of West Coast’s operations in Dandeli. IFC’s participation will further ensure that the company achieves international ‘good practice’ standards in its environmental and social performance, which will in turn support the company’s sustainable growth. Even prior to formally engaging with the company, IFC had a number of meetings with West Coast’s management and provided inputs to help the company better address environmental and social aspects of the project. IFC will provide long term debt with longer grace period, which is not available in the market and without which it would not be possible to complete the financial plan of this sizable and ambitious investment. Thus, IFC will play an important role in stabilizing the company’s debt profile, ensuring a proper match of cash from operations with debt service requirements.

The project involves expansion and modernization of the sponsor’s existing plant, which has been in operation since 1958. Key environmental, social, health and safety issues that were assessed include:

- social, environmental, and health and safety management systems;
- government clearance and permitting process;
- management of construction impacts;
- fair, healthy and safe working conditions during construction and operation;
- hazardous materials management;
- air and noise emissions and ambient air quality;
- minimization, treatment and disposal of liquid, solid and hazardous wastes;
- occupational health, safety, hygiene, and emergency response planning;
- community health, safety, security and engagement; and
- corporate social responsibility and community development programs.

As required by the Government of the India (GoI), the sponsor commissioned an independent Rapid Environmental Impact Assessments (REIA) of the proposed development, which was submitted on November 16, 2006. The REIA concluded that mitigation measures can and are readily be designed to address the impacts identified, that adverse impacts are not expected to be diverse or irreversible and will be limited to project site, and that no physical or economic displacement of communities will occur. IFC currently has investments in three other pulp and/or paper manufacturing companies in India, all of which are E&S category B projects. For all of these reasons the project has been classified as a Category B.

The client has made copies of the REIA and other relevant environmental documents available for public review at the West Coast Paper Mills offices in Dandeli:

Bangur Nagar, Dandeli-581 325

As required by the Ministry of Environment and Forests, a public hearing on the REIA will be held at Ambedkar Hall in Dandeli on February 20, 2007 at 11.30 A.M.