According to IFC documents, IFC is proposing an investment up to $50 million in Hikal for a multi-year CAPEX program entailing several projects (the “Project”). The CAPEX plan proposals are spread across various business segments and production facilities to be implemented over the next 2-3 years as follows; i) pharmaceuticals (capacity expansion of existing products, expansion of manufacturing facilities for human health APIs and for animal health APIs at the Jigani facility); ii) crop protection (capacity expansion for existing products, expansion of the manufacturing facility at Mahad); iii) expansion of the R&D facility in Pune (pilot plant, laboratory and kilo laboratory; and iv) effluent treatment plant, solvent recovery unit and utility upgradation (e.g., at facilities where Zero Liquid Discharge system is not yet installed as described in the PS3 section below.)

At the pharmaceutical manufacturing facilities, Hikal has an API product pipeline across therapeutic areas related to diabetes, anti-thrombotics, hypertension, anti-inflammation and analgesic for human health. At crop protection manufacturing facilities, the product range of active ingredients and intermediates includes algaecides, insecticides, fungicides, biocides and others.

This is IFC’s third investment in Hikal. IFC made two direct investments in Hikal in July 2008 and March 2013 previously which are no longer active.

 The Project will be located at the Company’s existing manufacturing facilities in India including in Mahad (Maharashtra), Taloja (Maharashtra), Panoli (Gujarat), Jigani (Karnataka) and Pune (Maharashtra). 

Environmental and Social Categorization

This is a Category B project in accordance with IFC’s Environmental and Social Sustainability Policy. Key E&S risks and impacts include: ii) the Company’s E&S management system (ESMS) including organizational capacity so as to effectively manage operations in aligned with the Performance Standards, national requirements and good international industry practice (GIIP; ii) fair, safe and healthy working conditions including occupational health and safety (OHS) and COVID infection control aligned with local regulatory requirements and current good manufacturing practices (cGMPs) as applicable to the pharmaceutical and pesticide sector; iii) pollution prevention including emission and discharge of volatile organic compounds and other gaseous compounds; iv) compliance with local and international regulatory requirements for hazardous chemicals and material use aligned with GIIP; v) management of risks and impacts on communities associated with storage and transport of hazardous materials; vi) life and fire safety and onsite and & off-site emergency preparedness systems; and 7) cumulative impacts.

IFC's environmental and social (E&S) review included a virtual assessment in October 2021 and involved; i) discussions with Hikal’s senior management to discuss the Company’s environmental, health and safety (EHS) and social management capacity and performance in relation to the requirements of IFC's Performance Standards (PS) and the World Bank Group (WBG) EHS Guidelines (i.e., General; Pharmaceuticals and Biotechnology Manufacturing; Pesticides Formulation, Manufacturing and Packaging); ii) and review of E&S related documentation and information provided by the Company based on IFCs E&S appraisal questionnaire. The E&S performance of the previous investments in the Company was satisfactory.