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| Summary of Project Information (SPI) |
| This Summary of Project Information 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. |
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| Project number | 24732 |
| Project name | DCM Shriram Consolidated Limited - II |
| Country | India |
| Sector | Food & Beverages |
| Department | Oil, Gas, Mining And Chemicals |
| Company name | DCM Shriram Consolidated Limited |
| Environmental category | B |
| Date SPI disclosed | February 24, 2006 |
| Projected board date | March 24, 2006 |
| Status | Active |
| Previous Events | Invested: March 7, 2008
Signed: June 12, 2006
Approved: May 31, 2006 |
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| Description of company and purpose of project |
DCM Shriram Consolidated Limited (“DSCL” or the “Company”), headquartered in New Delhi, is a diversified agribusiness and chemical company with four primary businesses – sugar, urea, polyvinyl chloride (“PVC”) and caustic soda/ chlorine. In FY ending March 2005, the Company had consolidated revenue of $420 million and net income of $23 million.
The Company currently runs two sugar mills in Uttar Pradesh (UP) State with a total crushing capacity of 14,000 tcd (tons crushing per day). The company is planning to expand its sugar operations through:
- expansion of an existing sugar mill from 7,500 tcd to 10,500 tcd;
- setting up of two greenfield sugar mills in UP with capacity of 8000 tcd each; and
- captive power cogeneration capacity of 12 MW in each of the greenfield mills.
The project is part of the company’s strategy to take advantage of the growth in India sugar market and strengthen its competitiveness through developing value-added business. Through the power co-generations sub-projects, the company expects to realize more value from bagasse and further improve its cost advantage. |
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| Project sponsor and major shareholders of project company |
DSCL is one of the four independent companies under the DCM Group. Delhi Cloth & General Mills Co. Ltd. (“DCM”) was founded in 1889 by the late Sir Shriram as a spinning mill in Delhi. Subsequently, it expanded and diversified into sugar, chemicals, engineering and food products. In 1990, the third generation of the Shriram family restructured the DCM group of companies into four independent companies, each held and managed by a separate branch of the family.
DSCL is owned by three Shriram brothers - Messrs. Ajay Shriram, Vikram Shriram and Ajit Shriram (the “Sponsors”), who have a 54.5% shareholding in DSCL. As a domestically listed company, the rest of its shares are held by the general public (12.7%), banks and financial institutions (13.5%), foreign institutional investors (4.2%), mutual funds (2.4%) and other corporates (12.6%). |
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| Total project cost and proposed IFC investment |
The total project cost is estimated at $106 million. The Proposed IFC investment is a $15 million A loan from IFC’s own account.
DSCL is IFC’s existing client and IFC has committed $30 million investment in the Company for a project in chemical expansion. |
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| Location of project and description of site |
| The two greenfield sugar mills and co-generations will be in rural areas of Hariawan and Loni, both in the District of Hardoi of UP. The expansion project is at the company’s exiting mill in the rural area of Ajbapur in the District of Lakhimpur of UP. |
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| Project Development Impact and IFC's Role |
Development Impact:
The project will contribute to the expansion of sugar production capacity in India, which has now become a deficit market. With the project, DSCL will build two new sugar mills with a capacity in line with international standards, which will contribute to lowering unit production costs. Production increases will also contribute to the stabilization of domestic prices.
Outgrowers will be major beneficiaries of the project as they will supply the company with sugar cane at a high price set by the State. The project will also result in additional employment in mostly rural areas.
The government will benefit from additional income taxes as a result of the expansion of a profitable company. At the same time, there will be cost for the government since the project may be eligible to receive investment subsidies and subsidies on cane price for a number of years.
IFC’s role:
IFC’s role is to help DSCL, which is a medium-sized, locally owned company in a highly capital-intensive business, mobilize long-term capital in line with its business requirements and to promote sustainable growth of the Company in its diverse lines of business.
Long term funding: Currently the average maturity of DSCL’s term debt is about 4 years. IFC proposes to provide an A Loan with a maturity of ten years, considerably longer than what is currently available to DSCL in the domestic market. Therefore, DSCL sees the strengthening of its capital structure as a direct long-term benefit from IFC’s involvement.
Enhancing long-term sustainability: Over the years, DSCL has taken a number of steps to make its operations fully compliant with local environmental and social regulations as well as to start aligning them with international best practices. IFC’s involvement is part of the Company’s long-term strategy to ensure that its operations are upgraded to meet international best practice norms. |
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| Environmental and social issues - Category B |
This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical, environmental and social information submitted by the project Sponsor; and visits to the Company’s sugar plants at Rupapur and Ajbapur as also the proposed new plant sites at Loni and Hariawan. The four locations are in Districts Hardoi (Rupapur, Loni and Hariawan) and Khiri Lakhimpur (Ajbabpur), Uttar Pradesh, India. The following potential environment, health and safety and social aspect of the project were analyzed:
- corporate environmental, social, and health and safety management systems;
- national and local government permitting requirements;
- land acquisition, compensation and physical and/or economic resettlement;
- community consultation and disclosure;
- sourcing of fiber; source of power and energy during construction and operation, including fuel storage if applicable;
- air emissions and noise during construction and operation;
- source and volumes of water consumed including efforts to minimize water use;
- recycling and treatment of process effluent and domestic waste water;
- community health and safety during both construction and operation;
- provision of housing, hygiene facilities, water, and power (including fuel storage) during construction and operation;
- hazardous materials management; minimization, recycling and disposal of solid and hazardous wastes during construction and operation;
- fire and life safety and emergency response;
- occupational health and safety during construction and operation;
- corporate social responsibility efforts, including HIV/AIDS awareness; and
- timely reporting on environmental and social performance to IFC.
To view the environmental documents for this project, click here |
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| Location of environmental documents in locally affected community |
DSCL Sugar – Ajbapur
P.O. Mullapur,
Jang Bahadur Ganj,
Distt. Lakhimpur Kheri 261505, Uttar Pradesh, India
Telephone: 05875-243206/243295
DSCL Sugar – Rupapur
P.O. Munder,
Distt. Hardoi 241123, Uttar Pradesh, India
Telephone: 05853-264307/264308
DSCL Sugar – Hariawan
P.O. Hariawan,
Distt. Hardoi 241405, Uttar Pradesh, India
Telephone: 09935-096324
DSCL Sugar – Loni
P.O. Anjhi Shahbad,
Distt. Hardoi 201102, Uttar Pradesh, India
Telephone: 09935-096323 |
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| To contact the project company, please write to: |
Mr. J. K. Jain, Chief Financial Officer
5th Floor, Kanchenjunga Building, 18 Barakhamba Road, New Delhi -110001
Telephone Number +91-11-23310688
Fax Number +91-11-23720325 |
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