Atul was established in 1947 as part of the Lalbhai Group of companies (the “Group”), one of India’s large business houses. The Group’s main businesses now include textiles, chemicals, engineering and finance. The Sponsors have a 41% shareholding in Atul, with the balance held by the general public (35%), financial institutions (6%) and other corporates (18%).

The proposed IFC investment is a corporate loan of up to US$15 million on IFC’s own account that will help Atul meet its funding needs, including: capital expenditures to expand capacity for existing products; capital expenditures to diversify into new product lines

12.50 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	12.50
Equity

* These investment figures are indicative

Atul Ltd. owns two manufacturing sites in Gujarat State, India: 1,250-acre Atul site and 33-acre Ankleshwar site. There are six manufacturing divisions at Atul site, which include aromatics, agrochemicals, bulk chemicals & intermediates, colors, pharmaceuticals & intermediates, and polymers. Aromatics division is located at Ankleshwar site. The Atul site is located by the Par River, which is approximately 8-km from the Arabian Sea. Majority of the Atul site is undeveloped, and Atul preserves the undeveloped part as a natural protection area, cooperating with World Wildlife Fund (WWF) – India. There are approximately 1,100 houses in Atul’s residential colony inside the Atul Site. The other nearby farming community is approximately 1.5 km from Atul site. The major land usage in the Par River basin is mango orchard. There are no endangered species in or near the Atul site. The Ankleshwar site is located inside a chemical industry park – Ankleshwar industrial estate, which is one of the largest in India and well organized.

This investment is expected to have the following development impacts. It will help strengthen and expand the operations of a mid-tier company to enable it to become internationally competitive and help the Company’s efforts to reduce water conservation. The Company is also expected to step up its social contributions in local communities and also actively maintain and increase more than one million trees planted in its campus.

Long-term partner and access to capital: Through this investment IFC signals to market players that IFC supports existing clients, who are committed to working closely with IFC in addressing strategic priorities, through various economic cycles. Over the course of the relationship, IFC's longer tenor funding has helped the Company weather the recent financial crisis and diversify its product portfolio into more higher and stable margin products. Atul sees the strengthening of its capital structure through long-term financing as a direct benefit from IFC’s involvement. Standard setting - Cleaner production: Atul’s total water requirement after the proposed expansion is estimated at nearly 21,000m3/day (at an estimated cost of $2 million per year) and is sourced from River Par. IFC’s Advisory program has agreed to assist Atul on water management and conservation. This may be one of the first significant water conservation projects in India in the chemicals manufacturing sector.

The E&S review of this project consisted of appraising technical, environmental, health, safety and social information submitted by the project sponsor, and undertaking field visits in March 2010. The environmental and social (E&S) appraisal team visited the main project site, located in Atul, in the state of Gujarat, India. The E&S team also held meetings with the management team of Atul, with their water audit consultant and nearby community leaders of both the local farming and fishing communities.

The key environmental and social issues for this project include the following:

- Process water consumption and water saving
- Wastewater treatment and discharge
- Air emissions and abatement
- Solid and hazardous waste management
- Occupational health and safety
- Operational hazards and emergency response
- Road transportation and community safety
- Community engagement and development

Atul has presented plans to address these impacts to ensure that the proposed project will, upon implementation of the specific agreed measures, comply with the environmental and social requirements, the host country laws and regulations and the IFC Environment and Social Performance Standards and the World Bank Group (WBG) environmental, health and safety guidelines. The information about how these potential impacts will be addressed by Atul is summarized in the Environmental and Social Review Summary (ESRS).