It is with immense pleasure that I present to you the second Integrated Report of your Company. The year under review has presented a variety of challenges with economic growth in India weakening quarter-on-quarter amidst a severe liquidity slump, falling consumption trends, especially in rural, and last but not least, the outbreak of COVID-19 in March, which has not only elevated the economic challenges, but also adversely affected the society, at large.
The COVID-19 pandemic is dealing a severe blow to the global economy. Lockdowns and other restrictions needed to address the public health crisis, together with spontaneous reductions in economic activity by many consumers and producers, constitute an unprecedented combination of adverse shocks that is causing deep recession in many advanced economies as well as Emerging Market and Developing Economies (EMDEs). As per the World Economic Situation and Prospects as of mid-2020 released by the United Nations in May 2020, global Gross Domestic Product is expected to shrink by 3.2% in 2020, with only a gradual recovery of lost output projected for 2021.
In India, the uninspiring trajectory of key macro-indicators during the year under review, belied expectations of a strong reform-led push for growth. Subsequently, the severe curtailment of economic activities and social distancing necessitated by the outbreak of the coronavirus pandemic, has further clouded the near-term outlook. The World Bank has projected the Indian economy to contract by 3.2% in FY21.
However, the government has announced various fiscal and monetary measures to mitigate the economic fallout, the positive impact of which, is expected to be seen in the medium-term. Hopes of a faster recovery in the rural sector rest on improvement in agricultural output, on the back of a favourable monsoon forecast, good harvest of Rabi crops, recent APMC reforms, hike in Minimum Support Prices (MSPs) and higher allocation under MNREGA. The pace and sequence of recovery from the crisis will largely depend on the efficacy of public health and fiscal measures, containing the spread of the virus, minimising risks of reinfection, protecting jobs and incomes and restoring consumer confidence.
While Mr. Saugata Gupta, the Managing Director and CEO of your Company, will share an overview of the performance in his message, I would describe FY20 as a year of some hits and a few misses, as the business delivered a flat topline vis-à-vis last year, but posted healthy earnings growth due to improvement in profitability in an accommodative input cost environment. While we begin FY21 in the clutches of a pandemic, I believe in your Company’s ability to cope with the rapidly evolving dynamics in supply chain and consumer behaviour and emerge stronger from this crisis. It will be our constant endeavour to fortify the enterprise through resolute focus on, and consistent investment behind, what we believe are the strategic building blocks, i.e. brand, talent and culture, which will allow us to effectively adapt to the new normal, and stay true to our purpose of creating value for all stakeholders in a sustainable manner.
Sustainability at Marico
If the world today is moving slowly, but consistently, towards conscious and responsible action, it’s because of one simple idea: everyone can be a change-maker. It’s a precept that Marico has believed in for years. In every layer of our organisation, and in the DNA of every member, is embedded a desire to make a difference; to adopt every possible measure, big or small, that will take us further along the road to sustainability. Creation of shared value, defined as one of our strategic pillars, is fundamental to the purpose of your Company’s existence. We see it, not only in bottom lines and awards, but also in enhanced relationships, a safer, cleaner environment and a corporate ethos that has sustainability embedded in its very core.
During the year, your Company demonstrated steady progress and success in various programme that have been underway to create a sustainable ecosystem along the stated focus areas, namely responsible resource consumption, climate change, circular economy, sustainable supply chain, product responsibility and community development.
In response to climate change, your Company has been able to improve the share of renewable energy in its operations to 79% at the end of FY20. I am also pleased to share that Marico’s manufacturing unit at Perundurai, Tamil Nadu, was certified as ‘Carbon Neutral’ by DNL GV Assurance India Pvt. Ltd. and also achieved a ‘Platinum’ rating as per the GreenCo Rating System by CII-Godrej Green Business Centre.
Further to our commitment to addressing plastic waste management, your Company completed several successful trials to use recycled plastic under the ‘UpCycle’ programme, and have been actively working towards completely phasing out the use of PVC in our product packaging, by the end of next year. We also duly completed our Extended Producers Responsibility (EPR) commitment for FY20, to collect and effectively dispose 50% of post-consumer use multi-layer packaging waste.
Water is a core thrust area of our sustainability agenda and we aim to promote effective conservation and management of the country’s water resources. With the ‘Jalaashay’ initiative, we have been able to create 640 million litres of additional water harvest potential this year, which is equivalent to 3.2 times the water footprint in our operations. We also completed construction of 95 additional farm ponds in Tamil Nadu and Puducherry, and de-silting activity of 77 water bodies in Maharashtra.
Your Company strives to make a measurable difference to the life of the coconut farmer through our flagship programme, Parachute Kalpavriksha. The cumulative farmer enrolment under the programme now stands at 21,043, thereby covering over 1.28 Lakh acres of coconut farms.
Your Company stands united with all stakeholders to alleviate the hardships posed by the ongoing COVID-19 crisis. We have been able to contribute towards providing meals for migrant labourers, the police force, health-workers and other disadvantaged sections of society, in partnership with various government agencies. We also attempted to safeguard lives of those who are fighting the battle on ground – primary healthcare workers, the police force and emergency services staff, by providing personal protective equipment. Your Company also pledged contribution to the PM CARES Fund to support the government’s efforts to fight the pandemic.
Since its inception in 2003, the Marico Innovation Foundation has strived to fuel and nurture innovation in India. The Foundation also responded to the growing seriousness of the COVID-19 pandemic by launching a first of its kind grand challenge, Innovate2Beat COVID, in March 2020, to harness the power of innovation to solve current and potential challenges that our medical fraternity stands to face, with respect to the shortage of ventilators, respiratory solutions as well as PPE solutions in hospitals and medical centres during this crisis.
As an organisation, Marico has established a distinct culture that is unique, not just to the Company, but also to the way Mariconians function. Derived from the Company’s core values, our culture defines who we are and how we conduct ourselves on each and every day. It is the DNA of our organisation, which is embedded in every member across hierarchies and geographies.
Given the far-reaching economic impact of the COVID-19 crisis so far, the path to recovery from this setback is expected to be slow and gradual. The sudden and unprecedented disruptions in current times have emphasised that agility and consumer centricity are necessary attributes for an organisation to navigate through the challenging times unscathed, and effectively turn adversity into opportunity. Innovation and collaboration across the value chain will set successful companies apart. I am enthused by our recent foray into the Hygiene category, which is slated to be one of the fastest growing categories over the medium-term. We plan to build a winning portfolio and deliver sustained growth in this segment on the back of innovation, investment behind brand building and strong execution.
The near-term uncertainty notwithstanding, your Company remains steadfast in its efforts towards becoming a leading emerging market multinational, and consistently providing solutions to delight its consumers.
I continue to act as the Non-Executive Chairman of the Board, while Saugata 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 (CSR) 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 goal. Earlier this year, Mr. Sanjay Dube and Mr. Kanwar Bir Singh Anand were appointed as Independent Directors on the Board of Directors of your Company. I would like to take this opportunity to welcome them to Marico’s journey towards ‘Making a Difference’. Your Company stands committed to upholding the highest standards of corporate governance.
It is the passion and dedication of your Company’s team members that has enabled its progress so far and will be a key constituent to the success in future endeavours. I would like to thank each and every one of them for their constant engagement, commitment and support. I would also like to extend my sincere gratitude for the continued guidance and support of your Company’s Board. I also convey my heartfelt appreciation for all our business partners, vendors and other business associates, who have continued to collaborate with your Company over the years. We deeply value the overwhelming faith maintained by all our shareholders over the years. We sincerely look forward to your continued partnership as we chart the course of the best years for Marico.