The company is owned by the Goyal family, whose core business before starting the dairy business in 1992 was Steel. In 1973, Mr Amarjit Goyal started Modern Steels Limited, a publicly traded steel manufacturer and trader based in the Northern state of Punjab and with annual revenues of about US$62 million in FY2007. Modern Dairies was launched in 1992 by the son of Mr Amarjit Goyal, Mr Krishan Goyal, after the government liberalized the dairy industry in 1991. Mr. Krishan Goyal has been actively involved with the Confederation of Indian Industry (CII), a well respected association of private companies. He was Chairman of the CII, Chandigarh Council between 2003-06 and has been an advocate for progressive policy making for the dairy industry. Mr. Krishan Goyal also served as a member of the first Governing Board of Punjab Engineering College (Deemed University), Chandigarh, from 2004 to 2008. Modern Dairies is a publicly traded company, with 46% of the shares belonging to the general public, and the Goyal family retaining control with 54% of shareholding.

Total project cost amounts approximately $54 million. The project began in FY2006 and will end in FY2009. IFC is looking to invest in a debt and equity package of up to $15 million, for IFC’s own account.

15.44 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	8.50
Equity	6.94

* These investment figures are indicative

The factory is located at kilometer 136 on the National Highway No 1, outside the municipal limits of Karnal, in the state of Haryana. The company is headquartered in Chandigarh, the capital city of the states of Haryana and Punjab.

The project will support the continuing improvement of the Indian dairy sector to achieve greater efficiencies and milk quality. In addition to positive economic impact, the project will bring the following development impact: - Expand its milk processing capacity and install manufacturing equipment of dairy products; - Collect milk from over 60,000 rural households, in 1,800 village level centers (from the current 350), - Benefit farmers by promoting productivity, product quality, and increase in milk supply, - Benefit other suppliers (such as transportation companies), and clients thanks to increased local supply and expanded product range, - Contribute development of private sector in the dairy industry, typically more efficient than cooperatives, - Develop cogeneration capacity of 3.5MW.

- Providing necessary risk capital in the Indian dairy sector that has received little attention form equity investors until now; - Providing a Stamp of Approval to a medium sized company looking at expanding into overseas markets. - Assisting the company in enhancing its environmental, safety and social practices; - Assisting the company in improving transparency and Corporate Governance through change of auditors to well-known firm and a formal arm’s length agreement with Modern Dairies Farms; - Improving farmers’ production practices and installing chillers to improve the quality of milk supply; - Supporting renewable energy through increase in cogeneration capacity.

This is a Category B project. IFC''s early review of this investment identified the following environmental, social, health and safety issues: environmental, health and safety management systems; labor working conditions, including occupational health and safety; emergency preparedness and response; chemical storage and handling; and pollution prevention and control, especially wastewater treatment and reuse/discharge.

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:

- PS1 - Social and Environmental Assessment and Management System
- PS2 - Labor and Working Conditions
- PS3 - Pollution Prevention and Abatement
- PS4 – Community Health, Safety and Security

There are no issues related to land acquisition and involuntary resettlement, and no impact on indigenous people or cultural property under the project, nor is it expected to have any impacts on natural habitats, forests, or protected or sensitive areas. Further details are provided in the Environmental Review Summary, which is also available for review on IFC''s website.