Owens Corning II

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	26038
Company name	Owens Corning (India) Limited
Country	India
Sector	Nonmetallic Mineral Product Manufacturing
Environmental category	B
Department	Global Manufacturing & Services
Status	Active

Date SPI disclosed	May 31, 2007
Projected board date	July 3, 2007
Previous Events	Invested: February 21, 2008 Signed: August 27, 2007 Approved: August 13, 2007

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

Owens Corning (India) Ltd. (OCIL or the company), an existing IFC client, is the largest fiberglass manufacturer in India. The company has been expanding its manufacturing capacity from approximately 36,000 tons per annum (tpa) to 51,500 tpa at a cost of $39 million. The project comprises:

- rebuild, modernization & expansion of the existing glass melter,
- installation of additional downstream equipment to pull increased volumes of glass fiber, and
- energy and efficiency improvements.

OCIL has a world-class, state-of-art glass-fiber manufacturing facility at Taloja, 40 miles from Mumbai in the state of Maharashtra. OCIL is one of the lowest cost producers of glass-fiber amongst parent company Owens Corning’s (US) stable of glass-fiber factories worldwide. OCIL manufactures three main lines of products:

- chopped strand mat;
- rovings (a slightly twisted strand of fibers); and
- T-30, used in the composites industry.

In late July 2005, OCIL’s plant in Taloja was severely affected by heavy rains and the resultant massive floods. The plant had to be closed down for safety reasons and to limit damage to equipment and property. Prior to the floods, OCIL had proposed a cold repair for the melter including some modifications and ancillary repairs. The stoppage of the plant provided OCIL an opportunity to rebuild the melter completely to a capacity of 51,500 tpa to meet growing domestic demand. However, downstream fiberglass pulling capacity remains at 38,000 tpa and needs to be expanded so the the company can fully utilize the new melter.

Anticipated development impact of the project

IFC’s investment is expected to reinforce OCIL’s ongoing contribution in building a sustainable domestic fiberglass sector. In many applications, fiberglass provides a better alternative to traditional materials such as steel, wood and aluminum, in terms of cost and durability. OCIL, through working directly with fabricators and end users to develop applications, has actively helped the market grow in India by educating customers on the advantages of fiberglass reinforced plastics. Given India’s very low per capita consumption of fiberglass, there is considerable scope for ‘catch-up’ growth. Industries in India that stand to benefit from increased use of composites include infrastructure, electrical equipment, telecommunications, building and construction, automotive, and marine. Fiberglass is a key input to India’s growing wind turbine manufacturing industry.

IFC's expected development contribution

Since IFC’s original investment in OCIL, it has played an important role in stabilizing the company’s debt profile, ensuring a proper match of cash from operations with debt service requirements. OCIL appreciates IFC’s involvement as a true partner when it entered India’s nascent fiberglass sector. The company values IFC's fairness and finds comfort in its presence as a senior lender. Up to now it has relied heavily on OC for support, but going forward wants to evolve as strong independent entity and for this reason would like to continue with IFC as a lead lender. A repeat investment by IFC will signal confidence in the company and help attract a wider set of funding sources in its future growth plans.

Environmental and social issues - Category B

This is a Category B project according to IFC's environmental and social review procedure which consisted of appraising technical, environmental and social information submitted by the company. The appraisal team interviewed staff at both corporate and site operations, Human Resources and EHS managers. The appraisal included site visits to the company's existing plant at Taloja. The following environmental, health, safety and social aspects of relevance to the project were analyzed:

- social and environmental assessment;
- corporate environmental, social, occupational health and safety management system;
- community consultation disclosure and engagement;
- labor and working conditions including management of occupational health and safety; and
- pollution prevention and abatement (including management of resources like energy and water, management of hazardous and other materials, management of emissions, discharges, hazardous and other wastes) and management of impacts on ambient conditions.

The company already has adopted policies & practices that very significantly compliant in all material respects with host country Regulations, OC group standards and many of IFC’s standards. In tune with its philosophy of continuous improvement, the company has presented plans to address project related social and environmental impacts. The proposed project will, upon implementation of the specific agreed measures, comply with the host country laws and regulations, IFC's social and environmental policies and Performance Standards, and the WBG/IFC environmental health and safety guidelines. A summary discussion on the company's plans to mitigate/minimize identified social and environmental impacts has been provided in the Environmental and Social Review Summary (ESRS) and an Environmental and Social Action Plan (ESAP).

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