Electrotherm was founded by Mr. Mukesh Bhandari, a first generation entrepreneur in 1985. Mr. Bhandari and his family (the sponsors) hold around 34% in the company as of March 2007 with the rest being owned by institutional investors and the public. The company is listed at the Mumbai and Ahmadabad Stock exchanges. The company’s sales have been growing from $80 million in FY06 and estimated sales of $148 million in FY07 (March 31, 2007). The company reported net income of $4.2 million in FY06 and expects a net profit of $9.0 million for FY07. Electrotherm is principally active in three businesses including:

- Engineering, Capital Equipment & Projects;
- Iron and Steel Products; and
- Electric Vehicles.

The total project cost is estimated at $73 million. The proposed IFC loan amounts up to $25 million.

25.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	25.0
Equity

* These investment figures are indicative

The project site is located at Kutch district in Gujarat state in India. The company has existing facilities at the site, where it manufactures electric vehicles and iron & steel products. The site has an area of 250 acres, of which only 75 acres have been utilized so far.

The project will improve the competitiveness of Electrotherm while achieving economies of scale as a result of capacity expansion, backward integration, diversification and infusion of long term capital and equity; and hence increase the value added of its production. The project will help create supply for transmission towers & DI pipes, critical components in the expansion of power infrastructure & water supply and sewerage infrastructure in India respectively, thereby contributing to the supply of needed infrastructure. The project will also support Electrotherm’s new business venture of electric vehicles, thereby contributing to the establishment of new industry in India in response to local needs. The electric motorcycle products with lower prices and low running costs will provide affordable means of transport to the low-income households, enhancing their employment options and quality of life. By promoting the growth of electric vehicles, the project will also boost environment friendly products and technologies. In addition, the project will enhance the economic growth of Kutch region, one of the economically weaker regions in Gujarat that was hit by a massive earthquake in 2001, as a result of increased products availability, employment creation, local supply linkages and government revenue.

IFC will help the company improve its environmental and social practices through a time bound plan that is being discussed with the company.

This is a category B project according to IFC''s environmental and social review procedure. The review of this project consisted of appraising technical, environmental and social information submitted by the project company including. The appraisal team interviewed the corporate and site operations managers. Further, the appraisal included sites visits to the company’s existing plants at Palodia near Ahmedabad and Samakhiyari, Kutch (also the site for the proposed project) both locations in the state of Gujarat in India. The following potential environment, health and safety and social aspect of the project were analyzed: Social and Environment assessment and environmental, social, and health and safety management systems; Labor and working conditions; Pollution prevention and abatement; Community health, safety and security; and Land acquisition and compensation.

The company has presented plans: to address project related social and environmental impacts; and to ensure that the proposed project will upon implementation of the specific agreed measures, comply with the host country laws and regulations and IFC’s social and environment policies and performance standards and the environmental, health and safety guidelines. A discussion on the company’s plans to mitigate/minimize identified social and environmental impacts has been provided in the Environmental and Social Review Summary (ESRS) and an Environmental and Social Action Plan (ESAP).