CSR Programmes Rejuvenation of river and streams Farmers Producers Companies (Community mobilization) 1 Contents Board of Directors 2 Annual Report 2019-20 th Chairman’s Letter 3 Directors’ Report 5 Corporate Governance Report 40 Bajaj Consumer Care Limited 14 Bajaj Consumer Care Management Discussion and Analysis Report 68 Business Responsibility Report 81 Independent Auditors’ Report on Standalone Financial Statements 89 Balance Sheet (Standalone) 96 Statement of Profit and Loss (Standalone) 97 Cash Flow Statement (Standalone) 99 Notes to Financial Statements (Standalone) 100 Independent Auditors’ Report on Consolidated Financial Statements 128 Balance Sheet (Consolidated) 134 Statement of Profit and Loss (Consolidated) 135 Cash Flow Statement (Consolidated) 137 Notes to Financial Statements (Consolidated) 138 Salient Features of Financial Statements of Subsidiaries/Associates/Joint Ventures 168 Notice 169 2 Board of Directors Mr. Kushagra Nayan Bajaj Non-Executive Chairman Annual Report 2019-20 th Mr. Jaideep Nandi Managing Director (w.e.f. from July 01,2020) Mr. Sumit Malhotra Bajaj Consumer Care Limited 14 Bajaj Consumer Care Managing Director (upto June 30, 2020) Director & Advisor (w.e.f. July 01, 2020) Mr. Aditya Vikram Ramesh Somani Independent Director Mr. Dilip Cherian Statutory Auditors Independent Director Sidharth N Jain & Co. Chartered Accountants Mr. Gaurav Dalmia Independent Director Secretarial Auditors A.K. Jain & Co. Company Secretaries Ms. Lilian Jessie Paul Independent Director Bankers Kotak Mahindra Bank Limited Mr. D. K. Maloo Chief Financial Officer Corporation Bank HDFC Bank Limited Citibank N.A. Mr. Chandresh Chhaya Company Secretary & Compliance Officer Registrar & Transfer Agent KFin Technologies Private Limited Selenium Building, Tower B, Plot No. 31-32, Gachibowli Financial District, Nanakramguda, Hyderabad – 500 032 3 Annual Report 2019-20 th Chairman’s Letter Bajaj Consumer Care Limited 14 Bajaj Consumer Care Dear Stakeholders, The world today is confronting one of the greatest health threats of this generation, the COVID-19 situation is a global concern and we are all dealing with an unprecedented challenge. It has profoundly impacted the lives of people everywhere and the global economy. Our thoughts and prayers remain with the families of every one of those who have lost lives to this deadly disease. My heart felt gratitude to all front line workers across the world who have kept things running, especially to healthcare workers and first responders, who have continued to save lives. I believe that we will emerge out of this crisis wiser and stronger. Adversity has brought out the best in our teams, and by staying true to our purpose, we have made progress even in these tough times. We continue to stand by our employees, customers and the community. Macro-Economic Outlook The Indian economy was faced with huge losses in the first quarter and industry estimates that the GDP could contract by more than 40% during the period. The first quarter may suffer a contraction of 25%, which could hit India with the worst-ever recession As the pandemic cripples urban centres, India will have to rely on farm economy to provide much needed relief. Consumption growth in rural India has outpaced urban growth. With the extended closure in metros, wage reduction and a rise in unemployment across the country, consumer sentiments have weakened. With favourable monsoons and government support, the farmer community is expected to do much better. Overall, apart from the continuing resilience of agriculture and allied activities, other sectors of the economy will be adversely impacted by the pandemic, depending upon its intensity, spread and duration. Relatively modest upsides are expected to emanate from monetary, fiscal and other policy measures and the early containment of COVID-19. With some states are now restarting economic activities in a staggered manner and some markets opening up, the Indian economy does seem to show signs of recovery with goods movement rebounding close to pre-lockdown levels and goods and services tax (GST) collections rising sharply. GST collections are growing, though still 41% lower than the earlier year, reflecting a rise in consumption. The purchasing managers’ index for manufacturing (PMI) recovered to 47.2 in June from 30.8 in May. The Centre for Monitoring Indian Economy (CMIE) states that unemployment rates fell in June to 11.1% compared with an all-time high of 23% in the lockdown months of April and May, during which 122 million people lost their jobs. Demand needs to be stepped up in order to maintain the improved levels of capacity utilization. Company performance The performance during the year was hugely impacted due to disruption in sales in the latter half of March 20 led by lockdown, to contain the outbreak of COVID-19. We achieved operating revenue of ` 852 crores with a decline of 7% compared to the previous year. Our profit after tax has been at ` 185 crores, decline of 252 bps over previous year. The overall commodity prices were flattish for most part of the year with softening of LLP and PET bottles prices being offset with inflation in refined mustard oil and glass bottles. During the year, we have made significant investment behind our brands and market execution to increase market share and strengthen brand equity which has led to dilution in profitability margin. The Board of Directors have proposed a dividend of ` 2/- per share, subject to the approval of the shareholders at the ensuing AGM. 4 Brands Last year we gave Bajaj Almond Drops, our iconic hair oil brand, a new look and feel with brand new packaging. This year we have changed the communication strategy to focus more on nourishment from almond and Vitamin E, than the lightness of the oil. The communication also highlights our Key Brand Asset – The Iconic shape of the Bajaj Almond Drops bottle. This is helping your company in expanding the target audience for the Brand and build on its key imagery attributes of lightness, nourishment in an environmentally sustainable manner. Annual Report 2019-20 th The brand re-launch has been very successful and has resulted in market share as well as penetration gain. The value market share in the total hair oil segment touched an all-time high of 10.5% in Jan’20 (highest in past 3 years). This rise in market share has been driven by increase in household penetration. The penetration of Bajaj Almond Drops has gone up to 21%, with a rise of 1% in penetration within one year. In keeping with our purpose of creating innovative products to serve our customers, Bajaj Zero Grey Anti Greying Hair Oil was launched on Ecommerce platforms and in select Pharmacy outlets earlier this year. This oil helps delay greying of hair naturally. Bajaj Zero Grey Hair Oil is enriched with natural actives and increases the production of natural black Bajaj Consumer Care Limited 14 Bajaj Consumer Care colour of hair by 5 times. We also added an expert root applicator to enable ease of oiling. To support our customers through the pandemic, your company has decided to enter the hand sanitizer market with a brand new product, the Bajaj Nomarks Hand Sanitizer. The sanitizer marks the entry of Bajaj Consumer Care in the Personal Hygiene Segment. The product is aimed at serving our fellow countrymen in this time of Covid-19 where personal Health and Hygiene is essential. The new range of Hand - Sanitizers, have more than 70% alcohol which is required to give the user protection against germs. Use of alcohol does make the hand dry and hence we have added Neem and Aloe-Vera extracts to moisturize the hands. Strategy The COVID-19 pandemic, while completely changing the way we live and do business, has also given us an opportunity to be innovative in our approach. While we continue to drive productivity and implementing safety measures we will focus on innovation led growth to weather this crisis which is bound to have a lasting impact on all of us. Your company aspires to evolve into a complete FMCG company by introducing a culture of innovation to create newer path breaking products for consumers across the globe. We want your company to be recognised as providing innovative solutions to solve tomorrow’s problems for our customers. We will continue to work on micro segmentation of the Hair Oils market and analyse key markets in great depth to design and activate the ideal assortment and marketing mix in each state. We will start small and scale fast, while focusing on cost excellence and innovation to deliver sustained profitability along with accelerated growth. We continue our work on the Multi-year Transformational Program focused on building an organization geared to succeed in the long-term. Responsibility towards Society Your Company undertakes its CSR activities through the Bajaj Foundation. The Foundation focuses on the areas of Natural Resource Development, Human Resource Development and Enhancement of Livelihood Opportunities. I am proud to report that the Foundation has reached 1197 villages, benefitted 3,12,347 families and has covered a population of 14,44,255 till date. It is doing commendable work around conservation of water bodies, sustainable agriculture, women empowerment, skill and entrepreneurship development while focusing on rural infrastructure development at the same time. Employees & organization culture Our efforts to attract the best talent has helped us achieve a talent pool that is engaged and motivated to partner with your company in its journey of growth. During the lockdown period, the employees have continued to learn and develop through use of technology and creative impactful programs that is building a high performing team. It is a matter of great pride for your company to have been certified as a “Great Place to Work” consecutively for the second time. The trust index score of the survey results for the year has significantly moved up validating the efficacies of our developmental journey.