What Our Chairman has to Say

Dear Shareholders,

I continue to act as the Non-Executive Chairman of the Board, while Mr. Saugata Gupta, Managing Director, MD & CEO of your Company, continues to lead your Company’s growth initiatives. I also lead efforts to improve the collective functioning of the Board and am actively involved in the Company’s Corporate Social Responsibility initiatives. Your Company’s Board, comprising leaders with domain expertise from diverse fields such as business, strategy, finance, retail and human resources, continues to guide the top management in achieving its long-term goals.

While Saugata’s message will contain a detailed overview of the performance, I am pleased to inform you that we have posted a broad-based recovery in volume and earnings growth in FY19, in addition to bringing about a visible acceleration in new product introductions. Our strategic building blocks–brand, talent and culture–have been and continue to remain at the forefront of our efforts. We constantly strive to strengthen our foundation to create value for all our stakeholders in a sustainable manner. It is heartening to note that your Company crossed a turnover of a Billion US dollars this year.

Macro Environment

The outlook for the global economy has dimmed compared to that of a year ago. Global financing conditions have tightened, industrial production has moderated, trade tensions remain elevated, and some large emerging markets and developing economies have experienced significant financial market stress. With this weakness expected to persist into the first half of 2019, the World Economic Outlook, published by International Monetary Fund (IMF), projects a decline in growth in 2019 for 70% of the global economy. Global growth, which peaked at close to 4% in 2017, softened to 3.6% in 2018, and is projected to decline further to 3.3% in 2019.

The macro-environment in India was less eventful during the year under review than in the last couple of years when key structural reforms aimed at formalising the economy were implemented. Though there has been a deceleration in GDP growth lately, projections of a recovery from the next year are encouraging. IMF has projected India’s GDP growth at 7.3% for 2019 and expects it to accelerate further to 7.5% in 2020. The recovery should be supported by continued pickup in investment and robust consumption amid a more expansionary stance of monetary policy and some expected impetus from fiscal policy. The implementation of reform measures has helped foster an environment to boost investments and ease banking sector concerns. Notably, India moved up another 23 places to 77^th in the World Bank’s Ease of Doing Business rankings, becoming the top ranked country in South Asia for the first time. With a stable government at the Centre, the health of the rural economy is expected to only improve on the back of the government’s agrarian agenda, prospects of a near-normal monsoon and reasonable levels of food inflation. Poverty alleviation and inclusive growth are pronounced thrust areas of the new government. Together, these augur well for a healthy growth path for the economy. Further, reforms to hiring and dismissal regulations could help incentivise job creation and absorb the country’s large demographic dividend. Efforts may also be enhanced on land reform to facilitate and expedite infrastructure development. Rising incomes and urbanisation, increase in the number of nuclear households as well as a growing work force should continue to drive growth in India's organised FMCG sector. The economic slow-down in H2 of last fiscal, however, is a cause of some concern and the new government will need to think of some quick steps to avoid a recession.

Towards a Sustainable Future

At Marico, we believe it is fundamental to integrate sustainability into our core business strategy, to enable a long-term win-win solution for all stakeholders. We stand committed to our purpose 'to transform in a sustainable manner, the lives of those we touch, by nurturing and empowering them to maximise their true potential.'

Your Company made notable strides in the identified focus areas-Responsible Resource Consumption, Climate Change, Sustainable Supply Chain, Product Responsibility and Community Development. We made incremental reductions in energy consumption and greenhouse gas emissions during the year. Compared to that of FY13, energy intensity and greenhouse gas emissions intensity have come down by 25% and 56% respectively. Responding to the impact of climate change, we have enhanced the share of renewable energy utilised in our operations to 73%. In our pursuit of water stewardship, we have created 550,000 kilo litres of water harvest capacities across several water-stressed regions in the country. Marico is striving to make a measurable difference to the life of the farmer through its flagship programme 'Parachute Kalpavriksha'. The programme aims to help farmers achieve better productivity and yield with new-age techniques and technology. Till date, we have made a noticeable difference to the lives of over 11,800 farmer families.

At Marico, we encourage and are constantly on the lookout for innovative and disruptive ideas. The Marico Innovation Foundation (MIF), a not‑for‑profit wholly owned subsidiary of your Company, continues to work closely with startups that are innovative and impactful. The interventions made by MIF are precise and time bound with a measurable impact on business. The MIF Scale-Up Program is a sector agnostic program designed to identify key business challenges and provide implementable solutions for sustainable growth of member organisations. The program is designed for young innovations that are restrained from achieving scale in India due to limited resources and other such bottlenecks. Some of the common concerns are lack of business mind-set (for social start-ups), lack of in-house expertise and lack of collaborative connections. Through this program, MIF harnesses the network of senior mentors who are often members from Marico, industry experts, fellow CSR foundations, students from top business schools, corporate volunteers, impact investors and incubators/ accelerators. Instituted in 2006, the MIF Awards identifies and awards innovations that hold potential to generate large scale impact. As India’s oldest and largest innovation focussed awards, we present breakthrough innovations to an audience comprising corporate India, investors and media. It’s a platform for showcasing the next- big ideas for start-ups and an inspiring learning platform for a new generation of innovators.

Your Company continues to uphold the highest standards of corporate governance. Our efforts were duly recognised during the year. In February 2019, your Company was ranked among the top five companies in corporate governance among the constituents of the S&P BSE 100 Index in a study jointly conducted by International Finance Corporation (IFC), Institutional Investor Advisory Services India Limited (a proxy advisory firm based in Mumbai) and Bombay Stock Exchange Limited (BSE).

Looking Ahead

Your Company aims to become a leading emerging market multinational in the categories of leave-in hair nourishment, foods, skin care and male grooming in a few chosen markets in Asia and Africa. These are certainly exciting times to be in as the FMCG sector seems to be at an inflection point. Disruptions throughout the value chain – distribution, marketing and advertising, selling, logistics, etc. – are driving this evolution. Brand awareness has risen dramatically with the surge in mobile and internet penetration. With the marketplace buzzing with new products, which are now more easily available on new-age channels, discerning consumers are spoilt for choice. In such times, it is the ability to disrupt through innovation across the value chain that will set successful companies apart.

Our members have been an invaluable part of Marico’s journey so far and will continue to be so. I would like to thank the team for their continuous engagement, commitment and support. I am grateful to your Company’s Board for their continued guidance and support. I also convey heartfelt appreciation to all our business partners, vendors and other business associates who have continued to collaborate with your Company over the years. Finally, I would like to extend sincere gratitude to all our shareholders for their persistent faith in us over the years. We look forward to your continued support in our journey to the next milestone.

Warm regards,

Harsh Mariwala