India: Mahindra Farm Services–01,02,03,04/Confidential

Date Filed
23 Oct 2006
Status
Closed
Phase
Dispute Resolution (DR), Compliance
Country
India

Case Tracker

Eligibility
Eligibility
Assessment
Assessment
Dispute Resolution
Mediation
Transferred
Compliance
Appraisal
Closed
CURRENT Status
Appraisal (COMPLIANCE)
Closed

Project Information

Region
South Asia
Institution
IFC
Name & Number
Mahindra Farm Services 11230
Company
Mahindra Shubhlabh Services Limited
Sector
Agribusiness
Department
Manufacturing, Agribusiness & Services
Category
B
Commitment

$2.2 million (Equity)

Synopsis

Complaint

The Mahindra ShubhLabh Services Ltd (MSSL) project was intended to be an agricultural services project in multiple states of India. IFC held $2.2 million in equity in MSSL, a subsidiary of Mahindra & Mahindra Ltd., India’s largest farm equipment company. Between October 2006 and February 2007, CAO received four complaints regarding the project and requesting confidentiality. The complaints asserted that the business practices of MSSL caused a loss of livelihood for franchisees of the company’s Agricultural Service Centers (ASC) and to loss of income for the farmers the ASC’s were intended to serve.

CAO Action

Despite extensive negotiations undertaken by the CAO Ombudsman between the company and the individual complainants, it was determined that the complaint was not amenable to resolution. This impasse centered on a divergence of opinion as to how the case ought to be closed- arbitration or mediation. As such, the case was transferred to CAO Compliance for appraisal in March 2008. CAO Compliance conducted an appraisal for audit of the project, which concluded that the case did not merit an audit. MSSL in fact shifted its business from ASCs to the retail sale of agrichemicals, which the complainants believe are environmentally hazardous rather than eco friendly, as the original IFC-supported project committed.

Status

The Appraisal Report for Audit, completed in June 2008, determined that non-deliverance of potential positive financial outcomes for the ASCs could not be deemed a loss of livelihood. Nevertheless, the Report highlighted that the question as to whether small businesses that signed the franchise agreement were misled by projections or whether they fully understood the commercial implications of the project could not be answered through an audit of social and environmental outcomes. The complaint was closed in June 2008.

Case Documents

  • Dispute Resolution

    Assessment Report(s)
    Preliminary Assessment Report
    Jul 31, 2007
    English
    Preliminary Assessment Report
    Preliminary Assessment Report
    Jul 31, 2007
    Hindi
    Preliminary Assessment Report
    Preliminary Assessment Report
    Jul 31, 2007
    Teluga
    Preliminary Assessment Report
    Final Assessment Report
    Mar 27, 2008
    English
    Final Assessment Report
    Final Assessment Report
    Mar 27, 2008
    Hindi
    Final Assessment Report
    Final Assessment Report
    Mar 27, 2008
    Teluga
    Final Assessment Report
  • Appraisal Report(s)
    CAO Appraisal Report for Audit of IFC
    Jun 17, 2008
    English
    CAO Appraisal Report for Audit of IFC
    CAO Appraisal Report for Audit of IFC
    Jun 17, 2008
    Hindi
    CAO Appraisal Report for Audit of IFC
    CAO Appraisal Report for Audit of IFC
    Jun 17, 2008
    Teluga
    CAO Appraisal Report for Audit of IFC