Chairman’s speech at the 75th AGM

Key highlights are as follows:

• Grasim has exemplified the pioneer spirit at every stage of its growth. As it turns 75 years young, your Company is ready to embark on yet another transformational growth journey.
• A journey that will be marked by the strong growth of our existing scale businesses as well as by the creation of new growth engines. The strategic foray into paints and B2B E-commerce are decisive steps in that direction.
• Both Paints and B2B E-commerce businesses complement the existing lines of business within the Grasim umbrella. They cater to a large market, offer access to new customers pools, and hold the promise of creating sustained stakeholder value.
• The VSF business has set an ambitious target to achieve Net Zero Carbon emissions across all its operations by 2040
• Witnessing a strong demand in the Advanced Materials (epoxy) business, your Company has decided to double its capacity to 246 KTPA by FY25.
• The Paints business is focused on project execution and is on track to achieving the plant commissioning timelines starting from Q4 of FY24.
• For FY23, Grasim has earmarked Rs. 3,117 crore for the existing lines of businesses excluding the paints and B2B ecommerce business.
• The Board of your Company has approved a total capex amount of Rs.10,000 Crore for the paints business, out of which Rs. 605 Crore has been spent till FY22. Additionally, the company has earmarked Rs.2,000 Crore for the B2B e-commerce business.

Dear Shareholders,

The month of August marks the completion of 75 years of India’s Independence, and in the words of our Honourable PM, this is ‘Azadi Ka Amrit Mahotsav’. I salute all those who dedicated their lives to the country during the last 75 years. India’s emergence as the fastest growing large economy in the world is a fitting tribute to their sacrifice.

The Aditya Birla Group’s legacy is closely entwined with India’s evolution. My great grandfather, Mr. G.D. Birla’s enduring bond with Mahatma Gandhi shaped our business philosophy and the arc of our group’s journey. He was committed to creating the backbone of India’s Industrial economy. And to use business as a force for good. Grasim, in many ways, is a symbol of that founding ethos. Grasim’s growth over 75 years, therefore, has been infused with the spirit of nation-building.

The remarkable journey of Grasim over the last 75 years is a story of entrepreneurship, resilience, dynamism, audacity, and triumph. Your Company’s evolution has been marked by continuous regeneration each decade as the business consolidated existing entities and then diversified to seek new areas of growth. From the foundation of fibre and textiles, we forayed into chemicals and subsequently created several high-growth platforms like cement and financial services.

Grasim has exemplified the pioneer spirit at every stage of its growth. And as it turns 75 years young, your Company is ready to embark on yet another transformational growth journey. A journey that will be marked by the strong growth of our existing scale businesses as well as by the creation of new growth engines. The strategic foray into paints and B2B E-commerce are decisive steps in that direction.

Both these businesses complement the existing lines of business within the Grasim umbrella. They cater to a large market, offer access to new customers pools, and hold the promise of creating sustained stakeholder value.

Let me now briefly touch upon the overall economic environment before I share my thoughts on your Company’s performance in FY22.

The Global economy recovered from the pandemic shock in 2022 on the back of supportive fiscal and monetary policies and mass vaccination programmes.

However, at the end of FY22, the war in Ukraine and the subsequent economic sanctions on Russia posed a large shock. It disrupted energy markets & supply chains and added to the already evolving inflationary pressures and concerns over consumer demand. Consequently, growth forecasts have been slashed. The International Monetary Fund (IMF) now expects the world economy to grow by 3.6% in CY22, which is 0.8 percentage points lower than its pre-war projections. 

Many economies have experienced a sharp surge in inflation recently, particularly in food and fuel prices, taking their inflation rates to multi-decade highs. Central banks have been forced to respond to surging prices with aggressive rate hikes.

The Indian economy has not remained unscathed by these global developments. Partly on account of the elevated commodity prices in global markets, India’s inflation has pushed higher than the target of the Reserve Bank of India (RBI). The central bank is doing a commendable job of managing inflation by calibrating its policy tools.

On the positive side, economic activity in India has witnessed a sharp recovery to pre-pandemic levels on the back of a rapid and widespread rollout of the vaccination programme.

Even as the global headwinds are being felt, India’s growth recovery is progressing well, and most estimates peg economic growth during FY23 around the 7% range. India, therefore, is poised to be the fastest-growing major economy in the world and an engine of global growth.
  
The above trends lend confidence to a robust economic narrative for India in the medium-term, which augurs well for the corporate sector as well.

Let me now briefly update you on your Company’s performance during the financial year gone by.

Your Company’s Performance

The inherent dynamism that has marked Grasim’s momentous journey over 75 years was more than visible in your Company’s performance in FY22. 2021-22 has been a year of growth on the bedrock of a strong ESG foundation. 

On a Consolidated basis, Grasim's Revenue for FY22 stood at Rs. 95,701 Crore, up 25% YoY. EBITDA at Rs. 17,772 Crore increased 13% YoY. 

On a Standalone basis, Grasim's Revenue for FY22 stood at Rs.20,857 Crore, up 68% YoY. Standalone EBITDA increased 98% over the previous year to Rs. 4,111 Crore. We started FY23 on a very strong note, with record EBITDA generation at the consolidated and standalone levels, during the first quarter of this fiscal year.

Let me cover the performance of the key business segments.

The VSF business has clearly emerged stronger from the pandemic-induced disruption on the back of an unrelenting focus on core fundamentals — cost leadership, operational excellence, VAP Focus and sustainability-driven investments.

The VSF business reported a robust increase of 38% YoY in production volume to 623ktpa in FY22. Sales volume also witnessed a 30% YoY increase to 602KTPA. The higher production and sales volume was on the back of the commissioning of the 600 TPD brownfield expansion at Vilayat. This plant is now the single largest Integrated VSF plant globally. 

On the sustainability front, the VSF business has set an ambitious target to achieve Net Zero Carbon emissions across all its operations by 2040. The Nagda unit set a new benchmark by commissioning a Zero Liquid Discharge plant (ZLD), a global first in the Man-Made Cellulose Fibre industry.

The Chemical business reported a watershed performance in FY22, with both the Chlor-Alkali and Advanced material business clocking solid results. 

Global caustic soda prices rallied through the year on the back of a robust recovery in demand due to the phasing out of covid-related restrictions and other geopolitical factors. The business continues to expand and enrich the current product portfolio mix to enable increased chlorine integration.

The performance of the Advanced Materials business was robust, driven by solid demand from end-user segments like Auto and Wind Power. Witnessing a strong demand in the Advanced Materials business, your Company has decided to double its capacity to 246 KTPA by FY25.

On the sustainability front, improving the share of renewable energy in the overall power mix, and setting up Zero Liquid Discharge plants are key priority areas of the Chemicals business.

Shifting focus to the Paints business. We have accelerated our pace of investments in the paints business by doubling the capital expenditure commitment to Rs.10,000 crore. This will enable your Company to create a more significant Pan-India presence leveraging the ecosystem available under the Grasim umbrella. The business is focused on project execution and is on track to achieving the plant commissioning timelines starting from Q4 of FY24. The business has obtained land possession at all its six sites, and the civil construction work has commenced at four sites.

The Textiles business witnessed a strong recovery in operational and financial performance with a rebound in textile demand during H2FY22.

The performance of the Insulators business for FY22 improved, driven by demand from overseas markets and higher export realisation.

Your company’s reporting journey on the ESG front has been equally impressive. Grasim adopted the TCFD or Task Force on Climate-related Financial Disclosures framework in FY22. In a strong endorsement of your Company’s ESG credentials, it has now been included in the FTSE4Good Index.

Moving on to the Capital Expenditure.

The total capex spent by the Company in its existing businesses towards capacity creation and modernisation of plants stood at Rs.1,958 Crore in FY22. For FY23 your company has earmarked Rs. 3,117 crore for the existing lines of businesses excluding the paints and B2B ecommerce business. The Board of your Company has approved a total capex amount of Rs.10,000 Crore for the paints business, out of which Rs. 605 Crore has been spent till FY22. Additionally, the company has earmarked Rs.2,000 Crore for the B2B e-commerce business.

Let me now talk briefly  about the performance of Grasim’s subsidiary companies.

Your company’s subsidiary, UltraTech Cement recorded net revenues of Rs. 52,599 Crore and an EBITDA of Rs. 12,022 crore in FY22.

The Indian cement industry is expected to add ~80 million tonnes of capacity by FY24, the highest during the last ten years, driven by increased spending on housing and infrastructure. As India’s building solutions champion, UltraTech is committed to meeting the nation’s future needs for housing, roads, and other infrastructure.

Your company financial services subsidiary, Aditya Birla Capital has built a platform with high quality, scale, and a retail franchise over the years.

Aditya Birla Capital’s revenue grew 15% year-on-year to Rs. 22,230 Crore. The consolidated profit after tax (after minority interest) reflected a growth of 51% year-on-year to Rs. 1,706 Crore, the highest ever recorded by the Company. The retailisation strategy has led to the active customer base growing to a significant ~ 35 million, a 36% year-on-year growth.

Your company has also sharpened its focus on its Renewables business. The total cumulative installed capacity of Aditya Birla Renewables stood at 551MW in FY22.

Dividend

The Board of Directors of Grasim has recommended a dividend of Rs.5 per equity share and a special dividend of Rs.5 per equity share for the year ended 31st March 2022, taking the total dividend to Rs. 10 per equity share

Dear Shareholders,
Over the last 75 years, Your Company has actively contributed to the social and economic development of the communities in which it operates. This is done through focused interventions across education and capacity building, infrastructure, healthcare, and social reforms to enrich lives and create livelihood opportunities.

Your Company’s CSR activities are implemented under the aegis of the Aditya Birla Centre for Community Initiatives and Rural Development, led by Mrs. Rajashree Birla, your Director. Your Company aims to enable these communities to reap the benefits of the nation’s rapid economic growth and become active participants in the exciting journey ahead.

In FY22, Grasim was able to enrich the lives of over 1.6 million people across 9 states through focused interventions. Your company’s CSR spend has traditionally been over and above the statutory requirement of 2% of average net profit. In FY22, the total spends touched Rs. 43 Cr.

On behalf of the Company’s Board, I convey our deep sense of gratitude to all our stakeholders, business associates, and the Central & State Governments for their constant support. The commitment of all our employees to the growth of our Company is invaluable. Finally, let me express my deepest gratitude to each one of you, our shareholders. I look forward to your continued trust, confidence, and support.

Across businesses, we are at the cusp of a transformational growth cycle. As a business house, we have always made investment decisions based on long-term fundamental drivers like market opportunity, demography, technology etc. Our strong leadership position across key businesses has come on the back of bold but calibrated long-term bets. Given the inherent strengths of your Company we are again at a moment where we are uniquely positioned to invest for long-term growth and explore new paradigms. An exciting journey beckons.

Thank you very much!

— Mr. Kumar Mangalam Birla,
Chairman