Granules CPLP

Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project number	28199
Company name	Granules India Limited
Country	India
Sector	Chemicals
Environmental category	C
Department	Global Manufacturing & Services
Status	Pending Disbursement

Date SPI disclosed	April 13, 2009
Projected board date	May 20, 2009
Previous Events	Signed: May 29, 2009

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

Granules India Limited (“Granules”) is a leading Contract Manufacturing Organization (“CMO”) supplying high volume Active Pharmaceutical Ingredients (“APIs”) and Pharmaceutical Formulation Intermediates (“PFIs”) to the bulk over-the-counter (“OTC”) drugs industry in the U.S., Europe, Latin America, Australia and India. Paracetamol (used in Tylenol and Panadol brand names in the U.S. and Europe, respectively) and ibuprofen (Advil and Motrin) are the company’s main products, but it also supplies the industry with guaifenesin (ultimately used in cough medications) and metformin (anti-diabetes drug ingredient).

The company has four production units in three locations in the vicinity of Hyderabad, in south India. Granules management and IFC’s industry specialist have identified a number of energy and water efficiency projects, including solvent recovery as well as cleaner production improvements at the company’s Jeedimetla API facility, which will have beneficial environmental impacts (together, the “Cleaner Production project”). For example, the company will recover more of the steam and condensate used in production and recycle them, thereby reducing its energy and water intake. Variable Frequency Drives (“VFDs”) and appropriate scaling of certain motors and cooling towers will further contribute to the company’s energy efficiency and bottom line.

Anticipated development impact of the project

The project benefits are described in detail below:

Energy and Water Efficiency:

Condensate recovery: Steam is used in operations, and then condensed into water. This is pure, distilled water which should be re-used completely. After proposed modification, the overall water consumption would be reduced but the cooling tower efficiency would also improve and boiler efficiency would increase;

Replacement of oversized motors – it is energy-inefficient to use motors that are too large for the equipment they serve;

Installation of VFDs – these will automatically reduce the electricity current drawn by the engine when its load is reduced, saving on energy costs;

Replacement of cooling towers: The cooling towers are not operating efficiently. The water temperature is 40 C. If it is brought down to 30 C, as designed, the batch times would be reduced due to faster cooling and hence energy used in agitation, centrifuge and pumping would be reduced. Additionally, cooling water circulation rate would reduce and one cooling water circulation pump can be shut off. Also, by isolating the tower that takes water from vacuum pumps, any solvent contamination can be restricted to that tower only and can be easily treated.

Solvent Recovery from reactors and waste water can be improved by a more efficient process of chilling vapor at normal pressure.

IFC's expected development contribution

IFC will assist Granules with their objective to improve their energy and water efficiency and will provide appropriately structured term financing for this Cleaner Production project. IFC will work with Granules to help quantify expected operational and environmental benefits from these investments, which are expected to include positive Climate Change impacts through a reduction of greenhouse gas emissions and improved energy efficiency. Actual outcomes will be monitored and can help have a positive demonstration effect among other clients in the same sector. This is the first Cleaner Production Loan that IFC will be extending to a Life Sciences sector client in India (and globally).

Environmental and social issues - Category C

This investment is designed to reduce the energy, water and solvent consumption of Granules’ manufacturing processes. As these will be environmentally beneficial changes; no adverse social or environmental impacts are expected to result from this project. This is therefore an Environmental and Social Category C project.

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