SUPPLIER DUE DILIGENCE

Raw material procurement and due diligence

Company has supplier base of total 500 plus material suppliers. Out of this, ~ 350 plus are local suppliers. Company tries to source its raw materials from local vendors to the extent possible; but it needs to import some of the specialized raw materials as there is no local alternative. As a part of due diligence with respect to its raw material supply, company has introduced mechanism to evaluate local vendors based on various criteria such as compliance with statutory requirements, environment management system, safety management system, sourcing from conflict region etc. New local vendors are being evaluated based on checklist and audit through factory visit. Last year, 12 suppliers were audited and evaluated out of 21 newly introduced suppliers. Most of packing materials are sourced from suppliers within 10 KM radius of production sites to minimize transportation and associated environmental impacts. Going forward, company intends to strengthen mechanism for supplier due diligence and their confirmation on compliance.