Annual-Report-Utcl-2019-20.Pdf
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The Chairman’s Letter to Shareholders Dear Shareholder, COVID-19 and the associated lockdowns across countries have triggered a once-in-a-century crisis for the society and the economy in 2020. January now seems like a month of a bygone era – such has been the enormity of change. This is a defining period in human and business history: one that will test the resilience of individuals, societies, corporations, and nations. Given the fog of uncertainty all around, it is hard to be prescient in these times. But there is little doubt on one reality: companies with quality leadership, sound business fundamentals, and a track record of winning in turbulent times, will emerge as champions in the new global order. Mr. Aditya Vikram Birla Global Economy It has been several months since the pandemic engulfed the world and yet there is a lot of uncertainty We live by his values. with respect to the extent of the economic contraction due to this Integrity, Commitment, crisis, and the subsequent pace of Passion, Seamlessness recovery. This year will see an economic and Speed. contraction, but this 2020 recession is turning out very different from the past recessions. It has been too 01-35 Corporate Overview 2 36-133 Statutory Reports 3 134-320 Financial Statements UltraTech Cement Limited Annual Report 2019-20 confidence. Some sectors, like airlines and zones during the lockdown, where economic strengthening its business relationships. hospitality, will take time to recover fully. activity remained severely constrained. The Aditya Birla Group is also closely And some supply chain disruption effects Correspondingly, India’s GDP is likely to examining the evolving changes in the will linger. The International Monetary Fund contract in FY21, which would be the first business environment and their implications, (IMF) and other agencies are predicting that such instance in over four decades. The to position itself well for leveraging the it could take about 5-6 quarters for global contraction is estimated to be particularly opportunities through and after the economic On the positive side, this GDP to inch back to pre-crisis levels, and the severe during Q1. revival. global economic trajectory thereafter will be recession is likely to be one below the pre-Covid trajectory for the next Responding to this challenge, both the As the events began to unfold worldwide of the shortest, assuming no few years. Reserve Bank of India (RBI) and Government in the last quarter of the financial year, we of India announced several policy measures anchored to our core strengths – our people, second wave of the pandemic As the world emerges from the current crisis, to provide relief to the affected sections of our processes, and our agility. In line with recurs. As present lockdowns the next few years are likely to be marked the economy, to reduce the possibility of the Group’s core philosophy of employee care and wellbeing, swift action was taken around the world get lifted, by lack of buoyancy in growth, subdued business failures and to support the process commodity prices and inflation, a cautious of recovery. Government has initiated to shut down our offices, manufacturing and businesses reopen, trend in project investments, heightened some remarkable reforms in agriculture, units, retail outlets and branches – where economic activity is likely to risks of de-globalisation and political mining, and public sector enterprises. necessary; and recalibrate operations where uncertainty; and increased dependence of Such pragmatic policies – along with feasible. Overnight, everyone switched to bounce back fairly quickly. financial systems on ultra-loose monetary the ambitious National Infrastructure a new paradigm of work from home and policy conditions. We will also have to watch Pipeline program that the Government had adopted digital technology seamlessly. out for potential post-Covid changes in announced in December 2019 – will support sudden – almost off the cliff; its spread has consumer behaviour (such as more virtual India’s medium-term growth rebound. In the been all – encompassing – affecting almost engagements) and of operating models of interim, however, the Indian economy – like every economy and sector, and the plunge organisations (such as work-from-home the global economy – will need to navigate in economic activity levels and employment norms, diversification of supply chain risks, through some difficult quarters. has been unprecedented. more use of e-commerce). Aditya Birla Group in Perspective In these turbulent and On the positive side, this recession is likely to Indian Economy Over a longer historical arc, the Aditya Birla be one of the shortest, assuming no second COVID-19 struck India at a time when Group has witnessed dramatic disruptions dynamic times, the Group’s wave of the pandemic recurs. As present the underlying economic conditions were across periods, businesses, and geographies. near-term focus is to hold lockdowns around the world get lifted, and subdued on account of heightened global And yet, we have come out stronger. Always. businesses reopen, economic activity is uncertainty and stress in the domestic A wide range of insights and experiences the ship steady and to see likely to bounce back fairly quickly. Around financial system. accumulated over diverse situations, allows it through the turbulence US$ 9– trillion stimulus from different the Group to fortify its businesses from both – by emphasising on governments globally will help to support Against this backdrop, a stringent national the immediate and the lingering effects of this recovery, along with the monetary lockdown to slow the spread of the economic pain, caused by the pandemic. conservation of cash, the actions by Central banks. These policies will pandemic started in the last week of FY20 safety of its teams and also help to restrict the second-order effects and remained active to varying degrees in In these turbulent and dynamic times, the like defaults and bankruptcies. different geographies through most of the Group’s near-term focus is to hold the ship assets, and strengthening its Q1 of FY21. It is estimated that about 80% of steady and to see it through the turbulence business relationships. Some scars of the crisis will remain in the India’s GDP originates from districts which – by emphasising on conservation of cash, form of subdued consumer and business were classified under the red and orange the safety of its teams and assets, and 01-35 Corporate Overview 4 36-133 Statutory Reports 5 134-320 Financial Statements UltraTech Cement Limited Annual Report 2019-20 This is not an easy transition for large, Faced with an unprecedented nationwide A crisis of such magnitude is a great and how your Company is resiliently diverse global organisations. But it was lockdown, our Group businesses proactively reminder of our responsibility to give responding to the new normal. I urge you to made possible due to the adaptability and created ‘Business Continuity Plans’ working back to society. True to its legacy, Aditya read the same. commitment of our employees, discipline through different scenarios. Our teams Birla Group has curated a multi-pronged of the leadership, strong processes, and engaged deeply and meaningfully with approach to help our communities fight Given your Company’s inherent strengths past investments in digital technologies. customers and value chain partners to COVID-19, with a commitment of over ` 500 and its financial stability, I am confident Our culture of learning hugely supported support them better in these extraordinary crores towards COVID-19 relief measures. that it will emerge stronger from this this quick switchover. A multi-generational times. This entailed a contribution of ` 400 crores unprecedented global crisis. workforce was an added advantage; as the to the PM-CARES Fund. In addition, we Moving on to the performance of your younger digital-native employees played Over the last few months, business models have also leveraged the capabilities of Company during FY20: a reverse mentor role in guiding the older have been reassessed, to identify strategic our apparel business to commence the employees to become digitally-savvy; the and tactical opportunities to improve production of one million triple-layer • Your Company recorded net revenues older employees enabled others to stay effectiveness, prune avoidable costs as surgical masks and 100,000 coverall of US$ 5.94 billion (` 42,125 crores) and calm, focused and productive in difficult well as prepare for the new normal. New garments. Several hundred thousand food EBITDA of US$ 1.40 billion (` 9,930 crores). times. Continuous listening to employees opportunities are continuously being ideated packets, provisions and disinfectants have through pulse surveys and guiding them and explored. For example, Aditya Birla been distributed to the needy across the Some major highlights of the year: to Make the Most of the situation led to a Fashion and Retail has made an emphatic country. Given the depth of our presence • Acquisition of the Cement Business of productive and winning mindset. A pulse foray into masks, our Chemicals Business in India, we have also earmarked over 300 Century Textiles and Industries Limited survey conducted with ABGites showed an is producing disinfectants, and the Fibre beds for COVID-19 patients at our network with a capacity of 14.6 MTPA. Post assuring trend – 86% were confident about Business is manufacturing antibacterial of hospitals in our units. this acquisition, your Company has delivering their Q1 goals of the new fiscal. fibre. strengthened its position in markets in This unflinching support to our employees, Maharashtra, Central and Eastern India. communities and other stakeholders is core The pandemic has also accelerated our shift to our DNA and will enable our long-term, to digitisation across businesses. A new • The process of integration was sustainable growth. wave of digital energy is being unleashed meticulously planned in advance. The rapid scaling of capacity utilisation and with a clear focus on getting closer to our Your Company’s Performance customers.