DSCL and its subsidiaries are owned by three Shriram brothers - Messrs. Ajay Shriram, Vikram Shriram and Ajit Shriram along with their family members, relatives and wholly owned body corporates (the sponsors), who have a 54.95% shareholding in DSCL. The rest of DSCL’s shares are held by the general public (24.35%), banks and financial institutions (16.32%) and other corporates (4.38%). The sponsors do not own any significant business interests other than DSCL.

The proposed IFC exposure is up to $54 million comprising an A loan of up to $50 million and $4.0 million of loan equivalent exposure for cross currency swaps to hedge the company’s US dollar exposure.

54.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management	4.0
Guarantee
Loan	50.0
Equity

* These investment figures are indicative

The main project is located at Jhagadia Industrial Estate of Gujarat Industrial Development Corporation (GIDC), District Bharuch, Gujarat. The company also proposes to carry out modernization projects at its chemicals facility in Kota, Rajasthan and normal capital expenditure in other businesses. The headquarters of DSCL are located in Delhi.

The key development impacts will be:

- Increased Rural Inclusion: With IFC’s support the company intends to develop a systematic community development approach to:

- improve the overall effectiveness of its programs;
- ensure that its rural outreach is efficiently leveraged; and
- provide benefits for the economically underdeveloped areas around DSCL’s sugar mills so far not covered under any programs.

- Increased Competitiveness: Through implementing this project, DSCL’s Bharuch facility would achieve increased output and significantly lower energy costs, making it one of the low cost domestic facilities.

With the prior IFC project, DSCL has already achieved a number of important development milestones, such as a complete phasing-out of mercury cell based chlor-alkali production, creation of more than 100 jobs and enhancing its EHS practices. The Company also uses IFC as a sounding board for getting advice on developing new business lines and overseas markets. With the proposed investment, IFC’s key additionalities are expected to be:

- Swaps For Hedging Long Maturity Exposures:

The proposed cross currency swaps to convert IFC’s existing loans and the proposed new loan to DSCL into Indian rupees involve long term exposures and are not available to second-tier companies, such as DSCL, from the domestic market on commercially reasonable terms.

- Customized Long Term Debt Financing:

IFC’s proposed long term debt to DSCL is with a ten year maturity and four years of grace, customized to even out the company’s expected cash flow profile across the years and expected to span one complete chemicals cycle and at least one complete sugar cycle. IFC’s first loan to DSCL was the company’s first loan with a long maturity of ten years, which prompted two other banks to also offer similar maturities to DSCL. However, in the current scenario of tightening in the credit markets and DSCL’s recent profitability, long term debt of this grace period and maturity is not readily available to DSCL from the domestic market.

- Strengthening Community Development Efforts:

DSCL’s facilities are in multiple locations and each facility carries out its own efforts towards development of communities in its vicinity. DSCL now intends to develop a more organized approach to community development, along the lines of what IFC recently helped Cairn Energy develop in India. DSCL has sought IFC’s help firstly, in developing a systematic corporate wide community development effort to maximize its reach and resource utilization and, secondly in developing specific programs for the economically underdeveloped areas where DSCL’s two new sugar mills are located.

IFC’s other key roles are expected to be:
- providing help to DSCL in developing social responsibility reports as a more systematic means of providing information on
DSCL’s initiatives;
- providing technical assistance to DSCL’s rural retail chain in developing commercial opportunities from rural linkages.

IFC''s early review of this investment has identified the following environmental, social, health and safety issues: air emission, wastewater treatment and discharge, solid and hazardous waste management, operation hazard and hazardous material management, employee health and safety, fire protection and emergency response, community health/safety, and community relationship and development.

While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts that must be managed in a manner consistent with the following Performance Standards:

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

Based on this early review, it is anticipated that this project will require 30 days disclosure by IFC prior to Board and has been provisionally categorized as B.

For IFC’s existing loan to DSCL’s chemical facility in Kota, the latest environmental and social risk rating (ESRR) is B1-Good.

Further details are provided in the Environmental Review Summary available separately with this document.