Astec Lifesciences Ltd Management Discussions

Economic and Industry Overview

Global Economy and Outlook

Despite gloomy predictions, the world economy proved remarkably resilient in FY 2023-24 with steady growth and inflation slowing almost as quickly as it rose. The journey has been eventful, starting with supply chain disruptions in the aftermath of the pandemic, an energy and food crises triggered by Russia - Ukraine War, a considerable surge in Inflation, followed by a globally synchronized monetary policy tightening.

The baseline forecast for the World Economy is to continue growing at 3.2% during 2024 and 2025, at the same pace as in 2023. The forecast for global growth for 5 years from now - at 3.1% - is at its lowest in decades. A slight acceleration for Advanced Global Economies - where growth is expected to rise from 1.7% in 2024 to 1.8% in 2025 - will be offset by a modest slowdown in emerging market and developing economies from 4.3% in 2023 to 4.2% in both FY 2023-24 and FY 2024-25. The Global inflation is forecasted to decline from 5.9% in FY 2023-24 to 4.5% in FY 2024-25, with advances economies returning to their inflation targets sooner than emerging economies.

Indian Economy and Outlook

Despite continued inflationary pressures, tightened Liquidity Policy by Reserve Bank of India (RBI), continuous currency depreciation and rising geo-political tensions, India has maintained its position of the fastest growing economy in the world for the last couple of years. The real Gross Domestic product (GDP) is projected to expand at 7.6% in 2023-24 on the back of buoyant domestic demand. Indias economy is expected to grow at a slightly slower pace of 6.8% in FY 2024-25. This moderation is due to higher interest rates reducing borrowing and spending, and less government economic stimulus, which together are likely to temper overall demand.

This was a result of buoyant private consumption and strong capital formation bolstered by the Governments continued capital expenditure push even during the pandemic period. Governments continued policy thrust on capital expenditure through infrastructure spending was visible in the Union Budget for FY 2024-25 as well with increased capital investment outlay by ~11% to 11.11 Lakh Crore.

With overall rainfall in monsoon season 2023 falling below normal levels (led by El-Nino), Agriculture and allied sectors incremental growth stalled to around 1% in 2023-24 as compared to more than 4% in previous year. Indias total food grain production is estimated to have declined by around 6% in 2023-24 season due to lower rainfall and less water storages in reservoirs during rabi sowing season. Despite global economic challenges, Indias total merchandise exports have sustained near its record high level at $433.1 billion in FY 2023-24, which is marginally lower from $443.7 billion shipped in FY 2022-23.

The sustained resilience of Indian economy amidst global uncertainties is expected to continue in FY 202425 as well. As per consensus forecasts, Indias GDP growth in FY 2024-25 is expected to be in the range of 6.5% - 7%. The primary growth drivers include strong domestic demand, Governments firm focus on infrastructure spending and a rising work age population. CRISIL, in its India Outlook Report, said that the nature of Government spending will provide some support to the investment cycle and rural incomes.

Agrochemical Industry and Implications for the Company

India currently holds the distinction of being the worlds fourth-largest producer of agrochemicals and the 12th largest exporter of chemicals (excluding pharmaceuticals). The Indian agrochemicals sector is witnessing a resurgence after experiencing a subdued performance during the COVID-19 pandemic, embarking on a trajectory of robust growth.

As of 2024, the domestic agrochemicals market stands at an estimated $8.22 billion and is poised to reach $13.08 billion by 2029, boasting a Compound Annual Growth Rate (CAGR) of 4% during the forecast period (2024 - 2029). This upsurge is driven by practical factors, including significant Research and Development (R&D) efforts and key policy reforms affecting trade, marketing, production, manufacturing, product registration and intellectual property rights.

The increasing use of herbicides is notably driving the market development. Huge investments are being made in the development of new varieties of herbicides that are more effective and eco-friendly. Most modern herbicides are formulated to decompose within a short span after application. Applications of herbicides are spread across varieties of crops, including cereals, grains, fruits, vegetables, oilseeds and pulses.

However, the industry faces challenges such as stiff competition from cheap imports, particularly from China, which can impact profit margins for Indian producers. Moreover, global economic slowdowns, continued geo-political tensions and unpredictable weather patterns pose additional challenges by causing fluctuations in demand for agrochemicals. Despite these challenges, the Indian agrochemicals sector remains resilient, driven by innovation, strategic investments and a favourable regulatory environment.

KEY DRIVERS

• India ranks amongst the lowest in terms of application of crop protection chemicals per hectare as compared to other advanced agriculture producing nations. At the same time, India also has one of the lowest yields per hectare amongst its global peers. Given the high focus on increasing the yield per hectare, limited arable land and rising labour costs, there is a huge growth potential for crop protection products in the country.

• In terms of exports, Indian agrochemical companies have been witnessing sharp rise in demand for crop protection intermediates and active ingredients. As per the CRISIL research, the uptick in demand is being driven by multiple tailwinds such as ‘China plus one strategy adopted by global companies to reduce dependency on Chinese markets. This along with growing operational and compliance costs in China, import substitution and favourable currency are driving demand growth.

• Furthermore, Indian companies also benefit from R&D expertise, skilled manpower and improving regulatory framework.

Your Company is one of the leading players in triazole fungicides and is well placed to capitalize on opportunities arising in the domestic as well as the international markets with well-established market credentials. The Company has 4 (four) manufacturing facilities in Mahad, Maharashtra and has recently commissioned a state-of-the-art Research and Development (R&D) Center which will further augment your Companys R&D capabilities. Your Company has also commissioned another herbicide facility, which will be operational in FY 2024-25, to cater to growing Contract Manufacturing business. The Company has already built a strong reputation for its specialisation in multi-step synthesis undertaking complex chemical reactions with a focus on developing innovative manufacturing processes. Astecs strong progress made in backward integration projects is also expected to aid in margin expansion. While demand for triazole fungicides is expected to remain strong in both global as well as domestic markets, your Company is also focused on diversifying its operations by increasing proportion of contract manufacturing business.

Companys Financial and Operational Performance

In FY 2023-24, your Company recorded Total Income of 46,382.46 Lakh as compared to 64,122.63 Lakh in FY 2022-23 and Profit after Tax of (4,689.10) Lakh in FY 2023-24 as compared 2,559.39 Lakh in FY 2022-23.

Your Company, in line with the long-term strategic ambitions, continued to focus on Contract Development and Manufacturing Operations (CDMO) segment and achieved 1.7x growth in revenues from the segment as compared to the previous year. Share of CDMO sales increased to 60% in FY 2023-24 from 26% in FY

2022- 23. The capacity utilisation of the herbicide facility, which was commissioned in FY 2021-22, further increased supporting growth in CDMO sales. Your Company has completed Herbicide II plant, which would be operational in Q1 FY 2024-25, further enhancing Companys ability to cater to the market demand in CDMO Segment.

Your Companys enterprise business, however, faced volume headwinds in both exports as well as domestic markets. Unprecedented drop in volumes, primarily in the second half of the year, for key enterprise products was attributed to high inventories with customers and in the channel as well. At the same time, market prices of some of the triazole fungicides corrected sharply in the second half from last years high base leading to continued reduced realisations in FY 2023-24. As a result, your Company reported decline in revenues and margins in FY 2023-24 as compared to last year.

Geographically, export sales declined by 14.3% year-on-year while domestic sales fell by 47.1% year-on-year due to lower volumes of key enterprise products. Proportion of exports in total sales increased to 72% in FY

2023- 24 from 61% in the previous year. Domestic share was at 28% of total sales in FY 2023-24.

Gross margin stood at 30.3% in FY 2023-24 as compared to 36.1% in FY 2022-23. EBITDA margin declined to (0.1)% in FY 2023-24 from 13.9% in the previous year. Reduced realisations of key enterprise products and high cost inventories led to lower margins in FY 2023-24 as compared to the previous year. Higher salience in revenues and relatively stable profitability of CDMO business supported overall margin profile in an otherwise challenging year.

In April 2023, your Company also inaugurated a state-of-the-art Research & Development Center, named “Adi Godrej Center for Chemical Research and Development” in Rabale, Maharashtra. The facility, equipped with synthesis lab, formulation lab as well as sophisticated safety infrastructure, will enable your Company to expand offerings in CDMO space. This investment is ahead of time which will further aid your Company in improving product development, providing access to advanced equipment and facilities, fostering collaboration, and driving innovation. With improved capability to reduce the time-to-market for innovative solutions and provide end- to-end solutions supported by advanced labs and analytical instruments, the R&D Center will also make your Company a partner of choice for innovator companies across the globe. Astecs substantial investment in a future-ready R&D Center reflects its unwavering commitment towards long-term value creation despite challenges in the short run.

In the next Financial Year, Astec LifeSciences will continue to focus on scaling up R&D projects, diversification into other molecules as well as chemistries and expanding its customer base for contract manufacturing business. During the year, your Company also initiated expansion of herbicides plant at existing Mahad facility. With steadfast focus on R&D, business diversification and future-ready investments, your Company remains committed to maximising shareholder value in the medium to long-term.

Godrej Agrovet Limited, the Holding Company has maintained its shareholding in your Company of 1,26,99,054 Equity Shares (64.76% as on 31st March, 2024 and 64.77% as on 31st March, 2023).

Key Financial Highlights

Particulars (in ? Lakh)	FY 2023-24	FY 2022-23
Total Income	46,382.46	64,122.63
Earnings Before Exceptional Items, Interest, Tax, Depreciation and Amortization	(26.87)	8.931.40
Profit Before Tax	(6,174.79)	3,494.73
Profit After Tax	(4,689.10)	2,559.40
Total Comprehensive Income	(4,747.68)	2,537.58

Key Financial Ratios

The key financial ratios for Consolidated financials are as per the below table:

Particulars	FY 2023-24	FY 2022-23
Debtors Turnover Ratio	2.83	2.93
Inventory Turnover Ratio	1.30	1.67
Interest Coverage Ratio	-1.45	2.69
Current Ratio	1.00	0.95
Debt Equity Ratio	1.34	0.81
Operating Margin (%)	-7.97%	8.86%
Net Profit Margin (%)	-10.23%	4.07%
Return on Net worth (%)	-11.89%	6.27%

The Inventory Turnover ratio has decreased in FY 2023-24 due to sharp fall in demand of few products during the year

The Return on Net Worth, Operating Margin and Net Profit ratio for FY 2023-24 are negative due to sharp decline in profit for the year due to challenging market conditions as mentioned above.

The formulae used for computation of key financial ratios are as follows:

Debtors Turnover Ratio	Net Sales / Average Trade Receivable
Inventory Turnover Ratio	Cost of Goods sold / Average Inventory
Interest Coverage Ratio	Profit Before Interest and Taxes / Finance Costs
Current Ratio	Current Assets / Current Liabilities
Debt Equity Ratio	Total Debt / Shareholders Equity
Operating Profit Margin (%)	Profit Before Interest and Taxes / Net Sales
Net Profit Margin (%)	Profit After Tax / Net Sales
Return on Net Worth (%)	Profit After Tax / Average of Total Equity

Opportunities:

Indian chemical companies are expected to rapidly gain market share on the back of multiple favourable

factors listed below:

• China plus one strategy - As global companies look for alternate manufacturing locations outside China, the opportunity available to Indian manufacturers, including your Company, will be huge. Organizations with deep expertise in respect of technical or intermediate chemistries are likely to gain from this shift / diversification of the manufacturing base.

• Growth expectation in Exports - 50% of the Indian agrochemical industrys value is derived from exports which are expected to grow at a faster pace in the coming years, as compared to the domestic market owing to improved agricultural policies and reforms by the Government aiming to double Indias share in worlds agri-exports.

• Strong R&D and manufacturing capabilities of domestic players - Government has a huge focus on R&D within the sector. This factor coupled with the R&D skills and relatively lower labour costs in India sets a good platform to capitalise on the new opportunities in the agrochemical space.

• Improving domestic business environment - led by Governments focus on Make-in-India / Atmanirbhar Bharat projects / Performance Linked Incentive (PLI) schemes and ease of doing business, opens new doors for the Indian agrochemical players, including your Company.

• Ingredients going off-patent - Globally, around 22 active ingredients are expected to go off-patent over the next 10 years. The estimated market size for these products will be around $4.1 billion by 2026. Indian chemical sector is well placed to capitalise on such opportunities and to build a strong manufacturing base.

• Growing population and food security for the world - The agrochemicals have a significant role to play in supporting the agriculture sector thus contributing towards catering to the food and nutritional needs of the rising population of the world.

• Pest attacks due to climate change conditions - There is an increase in the emergence of pests-attacks and occurrence of diseases in plants due to the fluctuating climatic patterns emanating from the climate change. A substantial percentage of agricultural yield is lost to the pest attacks each year.

• Low consumption in India - India has relatively low per capital consumption of agrochemicals leaving room for a significant upside.

Strengths:

• Your Company has established presence in agrochemical business, leadership position in triazole fungicides manufacturing coupled with reputed clientele, comprising MNCs in domestic and export markets.

• Your Companys new state-of-the-art R&D centre will provide strong impetus to cater to rapidly growing Contract Development and Manufacturing Operations (CDMO) business and attract large numbers of innovators across the globe. By entering into partnerships with innovators at an early stage of a product cycle, we intend to build a stable and sustainable business.

• The herbicide plant commissioned in August 2021 is enabling in diversification of product portfolio and augmenting your Companys manufacturing capacity.

• Strong balance sheet with short term credit rating of A1+ from ICRA Limited.

Concerns:

• Unfavourable and erratic weather patterns and monsoon failure - Agrochemical sector is highly vulnerable to unfavourable local and global weather patterns since it directly impacts the application of crop protection products. Erratic and uneven South West monsoon can have material adverse impact on the overall demand for the products of the agrochemical companies. Your Companys presence into wider geographies through exports limits the risk, to a significant extent.

• Unavailability of raw materials - A large part of your Companys operations is dependent on imports of raw materials which may not be available in the domestic market. Your Company is exposed to risks associated with the non-availability of these materials from overseas markets.

• Foreign currency volatility and interest rates - Companys exports to the foreign markets leads to profits getting impacted by the volatility in the foreign currency and the interest rates. Company has foreign exchange policy in place to hedge the risk.

Segment-wise Performance or Product-wise performance:

Your Company has only 1 (One) reportable segment, i.e., Agrochemicals. The Total Income from Agrochemicals was 46,382.46 Lakh for the FY 2023-24.

Internal Control System:

Your Company has adequate internal controls in place designed and developed to:

a) Safeguard its assets from unauthorised use or losses

b) Conduct its business operations efficiently in line with the Companys policies

c) Maintain accuracy, completeness and reliability of the financial and accounting records

d) Comply with the applicable laws, rules and regulations

e) Detect and prevent any fraud the frauds in the accounting and reporting system

The Audit Committee of the Board of Directors oversees and evaluates the internal financial controls and risk managements system as well as spearheads the internal audit mechanism, on a regular basis.

Human Resources

The Company has adopted progressive Human Resources (HR) policies to develop and empower its valuable employee force. We provide ample, equal and fair opportunities to groom our employees and put them on career progression paths, without any form of discrimination in terms of religion, gender, race, colour, caste, etc. We take several initiatives to inspire our workforce and to care for them. As a part of Godrej Group, we have Whistleblower Policy and Prevention of Sexual Harassment Act Policy to empower our employees to be able to identify and report any wrong doings in the system. The Company believes in being an employer that provides all tools and guidance to its employees so that they can discover their full potential and add value to the organization through their skills and behaviour.

Our Value Proposition

• Our specialization in multi-step synthesis undertaking complex chemical reactions to produce key specialty chemicals with a focus on developing innovative manufacturing processes

• Our proven track record of timely delivery of products and services to our partners without compromising on compliance and quality, despite of tight deadlines

• Astec LifeSciences is a ‘Responsible Care Company

• DuPonts 14 element-based Process Safety Management System implemented across our Plants to ensure Safe Operations

• Adi Godrej Center for Chemical Research and Development, equipped with best-in class research infrastructure

• Laboratories for Product Synthesis, Analytical method development, Process Safety, Fluorination, Kilo & Flow Chemistry, and Formulation Development

• 4 multipurpose and multi-product manufacturing plants rendering us ability to handle multi-synthesis and complex chemistries

• A dedicated Herbicide manufacturing facility with high-potency blocks and zero-Liquid discharge facility

• All the manufacturing plants are fully/semi-automated with the DSC system to ensure best practices process monitoring and operations

• Best in class accreditations including Responsible Care, ISO 14001:2015 (EMS), ISO 9001:2015 (QMS), OHSAS 18001:2007 (OHSAS), for all our manufacturing l ocations

• Our team of visionary leaders along with the strong and dedicated management as well as highly experienced R&D & technology team together plan, develop and deliver solutions tailored to fit the needs of the customer.

Key Growth Drivers

Foresight and the ability to anticipate future trends - Key determinants of success

The increasing diversification of global chemical supply chains due to events over the past two years has positioned India at the vanguard of the global chemicals industry. With the Indian agrochemicals sector witnessing a robust influx of lucrative opportunities, Astec LifeSciences Limited continues to prioritize the expansion of its Contract Development and Manufacturing Operations (CDMO) portfolio. This expansion is backed by prudent manufacturing capacity coupled with state-of-the-art research and development capabilities. We are confident that these factors will drive our medium to long-term growth.

In our pursuit of growth, we have strategically selected growth enablers with the vision of creating a diverse portfolio of chemistries, products, and solutions to meet the demands of tomorrow. Our growth trajectory will be reinforced by fortifying our intangible assets, built upon the foundational pillars of our values - safety, responsibility, sustainability, quality, cost leadership and speed to market.

Manufacturing Capacity and Product Portfolio Diversification

Research & Development

Contract Development Manufacturing (CDMO) Portfolio Expansion

Contract Development and Manufacturing (CDMO)

The Global Agrochemicals market size is expected to grow to USD 328.52 billion by 2033, at a cAgR of 3.5% during the projected period. The global Contract Development and Manufacturing Operations (CDMO) market is poised to grow at a CAGR of 10% up to 2029. The global innovators are increasingly harnessing the cost effectiveness of CDMO model wherein Indian companies are emerging as preferred partners in this outsourcing boom. Your Company is strategically positioned to address the rapidly escalating market demand for outsourced development and manufacturing of intricate chemistries to support novel products within our sector. Your Company is actively developing a robust pipeline for its CDMO business. Underpinned by our agile approach, we emphasize cost and quality leadership, dynamic research infrastructure and a deeply ingrained culture of trust and integrity across all our practices. These attributes render Astec LifeSciences an attractive partner for companies seeking outsourcing solutions.

Contract Development and Manufacturing Operations (CDMO) Highlights - FY 2023-24

• Our CDMO business achieved 1.7x growth in revenues in FY 2023-24 to reach 273 Crore in topline, accounting for 60% of the total revenues

• Capacity utilization at our herbicides plant remained on track, meeting our expected performance levels

Way forward...

• Effective utilisation of the new R&D Centre with word-class infrastructure will boost our efforts towards adding new customers

• Capacity expansion of Herbicides facility is in-line as per our plans

Adi Godrej Center for Chemical Research and Development

In April 2023, your Company unveiled a pioneering, advanced Research & Development Center in Maharashtra. Christened the "Adi Godrej Center for Chemical Research and Development", this future-ready facility exemplifies your Companys steadfast commitment to offering cutting-edge solutions. With an unwavering focus on green chemistry, sustainability and accelerating go-to-market strategies for innovators, this investment is a testament to our forward-thinking approach, well ahead of current industry standards.

The R&D Center boasts state-of-the-art infrastructure, including a synthesis lab for product development and a formulation lab dedicated to crafting novel formulations within the crop protection domain. Complemented by advanced analytical instruments to drive research and development efforts, the Center further houses sophisticated process safety infrastructure to facilitate safe and sustainable chemical reactions.

Envisioned as a hub for cutting-edge research and development and equipped with state-of-the-art facilities, this investment will significantly augment our capabilities, solidifying our position as an attractive partner for Contract Development and Manufacturing Operations (CDMO) requirements of multinational companies of all sizes worldwide. This strategic investment underscores our commitment to staying ahead of the curve, paving the way for a promising future marked by innovation and growth.

Health and Safety

Safety goes beyond Statistics and reflects through behavior and culture...

Process Safety is of paramount importance in Agrochemicals

sector. Astec LifeSciences is committed to create operations that

focus on the well-being of our employees and the communities. It is

widely recognized and proven that managing EHS risks have a positive impact

on staff morale and employee productivity, in addition to improved financial performance.

We continue to go the extra mile in ensuring the health, safety and well-being of our workforce.

For our business to flourish sustainably, our operations need to be conducted in a responsible manner. And for our talent to thrive, it is imperative that we provide our people with a safe working environment. Therefore, we continuously strive to build a culture of safety which goes beyond mere statistics. We believe that any amount of profits and progress is not more than the safety of the people.

Safety, Health and Environment Policy (EHS)

Our EHS Policy demonstrates our commitment towards Health & Safety of employees and communities, which is integral to our operations.

Safety is a Law

Commitment for improvement

We continuously strive to improve our performance on EHS parameters.

By being signatory to ‘Responsible Care, we demonstrate our..

Commitment to Sustainability

Knowledge

Dissemination

We impart Safety trainings followed by refresher trainings to our employees to inculcate the.

Behavior of Safety

Responsible Care?

All our manufacturing plants are certified on EHS Management Standards. Competent teams are tasked with the responsibility for the implementation of the management system and continuous improvement of the plans in each site.

Our management systems ensure that we go one step further from mere compliance to local laws and regulations to exceeding the expectations of the regional rules, Astecs internal requirements and customer expectations.

Safety has no price, It is Priceless

Focus on Process Safety across our manufacturing plants is our key strategy for ensuring safe operations. At Astec, our continued exemplary safety performance is driven by Duponts world class PSM system which lends us an important competitive edge in the market. The System focuses on 14-elements of process safety and helps us achieve Operational Excellence through Operational Discipline. Process Safety Management is increasingly becoming the standard that is applied to many hazardous processes around the globe. Process safety principles and systems not only help manage our risks, they are effective tools for increasing the safety of our operations while also improving productivity, cost efficiency and quality.

Environmental Sustainability and CSR

Less is What You Need More

Your Company is committed towards reducing the environment

stress and demonstrating highest standards of Health, Safety and Rooted in the ^ principle of Environmental Sustainability. We, being the part of the Godrej G?^drej Gnou^ps ‘G??^d & G^reen,

legacy, see sustainability at the nucleus and not just the periphery ^Astec U^feS^{ciences is f}?^cused

of our business. We are a sensitive and Responsible Company ^{on creating a more inc:usive} &

allowed to use the ‘Responsible Care logo until 2024. We are ^greener l^ndia a^{nd protecting}

making conscious efforts towards reducing our carbon footprint by ^{the environment and assorted}

bringing down our energy consumption, waste generation and ^{resources of the} M^other E^arth.

water consumption/wastage. The Company has a dedicated

team that focuses on cleaner production technologies with higher yields and minimum waste generation supporting principles of waste reduction, recycle and reuse to demonstrate its commitment to "Good and Green". All the manufacturing activities of the Company conform to statutory Pollution Control Standards.

At the Group level, Godrej Agrovet, our major stakeholder, has set clear cut sustainability targets for 2026 to reduce the environmental impact

Leadership band for CDP Climate change Disclosure - “A-” which is well ahead of Asia Regional and the Global average score of "C"

CDP Forest (Palm Oil) & Water Disclosure Score - “B” which is above the Asia Regional and the Global average score of "C"

1st Agri company in India to set Greenhouse Gas emissions reduction target and action plan in line with SBTis Well Below 2⁰ C scenario Committed to reduce absolute Scope 1 & Scope 2 GHG emissions by 37.5% and Scope 3 emissions by 16.0% by FY 2034-35

29,750 MT of CO2 sequestered through watershed project in FY 2023-24 (accounting for 28% of our Carbon Footprint)

Targeting Carbon Neutrality by FY 2034-35

20x water positive company; sequestered 37 million m³ water

~77% energy used in our manufacturing plants comes from the renewable sources; Installed Solar rooftops at 20+ manufacturing sites ~100% of energy used in our Vegetable Oil business from the renewable portfolio of boiler fuel through waste of fruit bunches

Case Study

Building sustainable supply chain

Long-term sustainable development of our suppliers is critical to our joint success, and we value our relationship with suppliers who share the same approach and vision towards doing business. In line with our commitment, we have developed a Responsible Procurement Policy, which is an extension of our values and is applicable to all our suppliers. We expect our suppliers to operate in accordance with the principles as outlined in this Policy and adhere to all applicable laws and regulations. This Policy goes beyond mere compliance with the law by drawing upon internationally recognized standards in order to identify and define best practices from across the globe. This Policy outlines our expectations with regards to ethics, business integrity, human rights, health and safety, environment, the local community and quality of product and operations.

We have received signed code of conduct from ~75 suppliers, which covers our ~70% of procurement spends. We are in progress of assessing our suppliers on ESG. We have also integrated ESG clause into our PO.