15.1.2009

Environmental Summary – Belaya Dacha Trading

1 Project Description
ZAO Belaya Dacha Trading ("BDT" or "the Company"), a market leading company for the production of fresh cut ready-to-eat packaged salads and vegetable mixes, is considering a financing package provided by the European Bank for Reconstruction and Development ("EBRD") comprising an RUB equivalent of up to USD 10m equity investment and an up to USD 10m long-term senior secured loan. The project includes (i) purchase of land / land lease rights, construction and equipping of salads and vegetables processing facility in St. Petersburg to primarily produce salads and vegetables mixes under the “Belaya Dacha” brand, (ii) land acquisition/lease and/or equipment, fertilisers, machinery for the development of open field lettuce production in Central and Southern Russia in order to meet the Company’s own raw material needs.

2 Environmental classification and rationale
According to EBRD's Environmental Policy and Procedures this project has been categorised B/0. EBRD due diligence was structured to understand current environment, health and safety ("EHS") impacts of the Company and issues associated with the current operations in Moscow. The analysis of the greenfield plant in St Petersburg will be conducted once the site for the new facilities has been decided and will comprise a review of the OVOS (environmental impact assessment) to be undertaken for permitting purposes.

3 Information reviewed during the environmental appraisal
BDT submitted a range of information to the Bank including official reports submitted for permitting purposes, internal documents on environmental, health and safety management and an independent audit of Company’s supply chain quality management. The Bank's aim was, among other things, to assess the Company's management of EHS issues and assess compliance of current facilities with national and applicable EU standards.

4 Key environmental issues and mitigation
Key issues were as follows:

Environmental, health and safety impacts:
The construction and operation of the salad and vegetable processing plant may result in a number of environmental impacts. Such impacts include those linked to the construction process (e.g. increased noise, dust, traffic flows) and those linked to operations including access to substantial amounts of drinking quality water, disposal of contaminated waste waters and disposal of solid wastes. Construction, food processing, and primary agriculture all present occupational hazards (e.g. working with hazardous machinery and substances, manual handling issues, working at heights) which need to be recognised and managed by the Company.

Regulatory compliance:
The operations of BDT are currently compliant with national environmental requirements. The Company is subject to regular inspections by a range of government authorities including those in charge of environment, health and safety, and hygiene. In terms of European Union standards, the Bank has made a comparison of BDT’s activities against EU's Food, Drink and Milk Industries Reference Document on Best Available Techniques (BAT). For those areas identified as key issues for food industry BDT is generally complying with the requirements of BAT. Under its agreement with the Bank BDT is committed to maintaining compliance with both national and EU requirements for environment, health and safety.

Environmental management:
Being one of the main McDonald’s suppliers of iceberg lettuce BDT’s supply chain quality management was audited by independent consultant with positive compliance results. As a part of the ESAP the Company will implement ISO 14001, OHSAS 18001 management systems at corporate level. The Environmental Management System will develop key performance indicators based on EU IPPC BAT requirements as provided in Food, Drink and Milk processes as well as the IFC EHS Guidelines Plantation crop production of 30.04.2007.
5 Environmental opportunities
BDT are aware of the benefits of improving eco-efficiency and is already committed to implementing actions which minimize energy use and water consumption.

6 Summary of Environmental Action Plan
An environmental and social action plan ("ESAP") has been drafted and includes actions for industrial and solid waste minimisation, canalisation of storm and waste water by constructing an onsite WWTP, food safety measures improvement, and better labour relations management (workers representatives and collective bargaining) and stakeholder engagement. The ESAP also includes actions to implement an Environmental Management System compliant with ISO14001 and an occupational health and safety management system compliant with OHSAS18001.

7 Disclosure of Information and Consultation
The Company will carry out its activities in accordance with national requirements for public disclosure and consultation. Additionally, the Company is disclosing this summary of key environmental issues locally, in accordance with EBRD requirements, prior to the EBRD's final management review of the project.

8 Monitoring and Reporting
The Company will provide the Bank with an annual environmental report and immediate notification of any material incidents or accidents likely to have an effect on the environment or worker and public safety.



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