What our Chairman has to say

DEAR SHAREHOLDERS,

It gives me immense pleasure to present to you the 30th Annual Report of your Company.

The year under review was marked by major challenges — the post demonetisation slowdown, initial troubles of GST migration, and rising input costs which impacted the economy. However, with consumption and industrial output improving, economic growth accelerated in the latter half of the year.

While Mr. Saugata Gupta, the MD and CEO of your Company, will share a detailed overview of the performance in his message, I would like to highlight that your Company worked diligently to mitigate the headwinds during the year, reporting modest volume and earnings growth amidst these macroeconomic challenges and structural reforms. Through concerted efforts, it has set a strong foundation to shape the future in the years to come

MACRO ENVIRONMENT

According to World Bank’s Global Economic Prospects report, global growth has eased but remains robust and is projected to reach 3.1 percent in 2018, similar to the estimated growth in 2017. It is expected to edge down over the next two years as global slack dissipates, trade and investment moderate, and financing conditions tighten. Growth in advanced economies is forecasted to decelerate toward potential rates as monetary policy is normalised and the effects of U.S. fiscal stimulus wane. In emerging market and developing economies (EMDEs), growth in commodity importers will remain strong, while the rebound in commodity exporters is projected to mature over the next two years.

India is now the world’s sixth largest economy, as per International Monetary Fund’s latest World Economic Outlook report. I believe that there are significant medium and long-term growth prospects in India. GST should help transform and strengthen the overall business environment in the long-term. It will be an enabler of growth for the organised sector, while bringing the unorganised sector into the formal economy. The World Bank has projected India’s GDP growth at 7.3 per cent for 2018-19 and expects it to accelerate further to 7.5 per cent in 2019-20. India was also ranked at the 100th position, up 30 places, in the World Bank’s Ease of Doing Business 2017 rankings and was declared the only country in South Asia to feature as one of the 10 economies that improved the most.

India’s growth in the current fiscal will be buoyed by an increased demand in the rural economy. Agriculture, non‑farming activities and a better global climate will facilitate this surge along with rising domestic consumption. We are enthused by the Government’s agrarian agenda of doubling farmers’ income by 2022, by helping reduce cultivation costs, ensuring profitable prices, processing of farm waste and creating non-farm sources of income. The hope for a revival in rural, however, rests on normal monsoons, which boosts grain production and helps curb food price inflation. The Government’s focus on increasing employment opportunities, developing infrastructure and growing education avenues will add to the upbeat sentiment. Factors like rising income, rising urbanisation, rise of nuclear households, as well as a growing workforce should drive growth in India's organised FMCG sector. However, macro challenges like rising oil prices and trade protectionism by developed economies could have a dampening effect.

ENABLING INCLUSIVE GROWTH

Our purpose is to transform in a sustainable manner, the lives of those we touch, by nurturing and empowering them to maximise their true potential. I am very proud of the fact that our focus in business went hand in hand with our pursuit to preserve the environment and help communities thrive. Aligned to the UN Sustainable Development Goals 2030 (SDGs), your Company has made significant progress in areas of sustainable procurement, energy management, water management, waste management, product responsibility and future-ready capability building. We have significantly reduced energy consumption, cut greenhouse gas emissions and taken improved measures towards achieving water stewardship.

Our shift to renewable energy and conservation initiatives, through the Energy Conservation programme, has resulted in 31% reduction in energy intensity from the baseline year (FY2012-13). 80% of our in-house water consumption is conserved from the capacity created by farm ponds and other conservation projects. The Company also achieved 54% reduction of greenhouse gas (GHG) emission intensity against the baseline year FY2012-13.

31%

Reduction in energy intensity (from the baseline FY2012-13)

54%

Reduction of greenhouse gas emission intensity against the baseline year FY2012-13

Our farmer outreach programme, “Kalpavriksha” launched this year to help farmers double their incomes, has already made a difference to the lives of more than 3,000 farmer families by providing them training on scientific farming practices and helping them with day-to-day queries.

At Marico we are deeply committed to creating a sustainable environment and are constantly on the lookout for innovative and disruptive ideas. The Marico Innovation Foundation (MIF), a not-for-profit arm of the Company, continues to act as a catalyst for innovators helping them accelerate growth. With the MIF Scale-Up Programme, we have created a platform for innovators to be mentored by domain experts. The mentors devote their time and experience in developing an implementable plan and the entire process is monitored through pre-determined milestones. Some of these mentors are your Company’s members. We have also instituted the MIF Awards to recognise and award unheralded innovations in the country.

I would encourage our shareholders to read the latest Sustainability Report which is available on your Company’s website www.marico.com.

Your Company’s efforts to achieve and sustain the highest standards of corporate governance were duly recognised during the year. In February 2018, your Company was ranked among the Top 10 in corporate governance among all constituent companies 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), with the financial support of the Government of Japan.

LOOKING AHEAD

At Marico, we continue to reaffirm our commitment to deliver a sustainable long-term business and earnings growth by leveraging our key enablers – brands, talent and culture. Your Company has identified 5 areas of transformation where it will develop top quartile capability, processes and executional excellence ahead of growth – Innovation, Go to Market Transformation, Talent Value Proposition, IT & Analytics and Value Management. We are creating an integrated platform for an interconnected business and shopping experience by bringing together Marico employees, partners, customers, distributors and wholesalers, thereby building a ‘Marico of the Future’.

Over the medium-term, Marico aims to attain leadership in two core categories of leave-in hair nourishment and male grooming in its chosen markets in South Asia, South East Asia, Middle East and North Africa and South Africa. We believe we are well-positioned to achieve our aspirations of becoming a leading emerging market MNC. We will also intensify our endeavour to achieve inclusive growth for your Company and all stakeholders, especially in the area of environmental sustainability.

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

I would like to take this opportunity to thank all our Marico members for their continuous engagement, commitment and support during the year. I also convey my deep appreciation to all our business partners, vendors and other business associates, for all they do which makes our Company successful. Finally, a very special thank you to all our shareholders for the faith they have bestowed on us over the years. We look forward to your continued support as we strengthen our today for our tomorrow.

Warm regards,

Harsh Mariwala