GHCL Ltd Management Discussions.

DISCLAIMER:

Readers are cautioned that this Management Discussion and Analysis contains forward-looking statements that involve risks and uncertainties. When used in this discussion, the words "anticipate" "believe" "estimate" "intend" "will", and "expected" and other similar expressions as they relate to the Company or its business are intended to identify such forward looking statements, whether as a result of new information, future events, or otherwise. Actual results, performances or achievements and risks and opportunities could differ materially from those expressed or implied in such forwardlooking statements. The important factors that would make a difference to the Companys operations include economic conditions affecting demand supply and price conditions in the domestic and overseas markets, raw material prices, changes in the Governmental regulations, labour negotiations, tax laws and other statutes, economic development within India and the countries within which the Company conducts business and incidental factors. The Company undertakes no obligation to publicly amend, modify or revise any forward-looking statements on the basis, of any subsequent developments, information or events. This report is prepared on the basis of public information available on website / report / articles etc. of various institutions. The following discussion and analysis should be read in conjunction with the Companys financial statements included herein and the notes thereto.

MANAGEMENT DISCUSSION AND ANALYSIS

The management of GHCL Limited presents the analysis of division-wise performance of the Company for the financial year ended March 31, 2021 and its outlook for the future. This outlook is based on assessment of the current business environment. It may vary due to future economic and other developments, both in India and abroad.

REVIEW OF ECONOMY Overview of World Economy

The January 2021 edition of the International Monetary Funds World Economic Outlook Update has projected the global economy to grow at 5.5% in 2021 and at 4.2% in 2022.

The global economy has been showing signs of recovery since the harsh lockdowns imposed across the world to curb the spread of COVID-19. The global trade volumes are forecasted to grow at about 8% in 2021, before moderating down to 6% in 2022. It is expected that the services sector would see a slower recovery than the merchandise volumes due to the subdued footfall in the tourism industry and business travels, until the transmission declines across the globe.

As the global markets slowly start to take an upward trajectory, it is expected that global activity would remain well below the pre-COVID projections of January 2020. The strength of the projected recovery rates would vary across countries, depending on the severity of the health crisis, the extent of the domestic disruptions to activity and the effectiveness of the policy support that the governments have rolled out to stabilize their respective economies.

Diverse recovery paths are projected for the emerging market and developing economies. Due to the effective containment measures, a forceful public investment response, and central bank liquidity support, a stronger recovery rate has been projected for China, in contrast to other economies. Subdued oil prices and cross-border tourism could act as a roadblock in faster economic recovery. The COVID-19 pandemic had taken its toll on each and every segment of the society and is expected to reverse the progress made in the reduction of poverty in the last two decades. It is expected that close to 90 million people are likely to fall below the extreme poverty threshold during 2020-21. Notable revision has also been made for India, by 2.7 percentage points for 2021, due to heightened activities and stronger- than-expected economic recovery in 2020, after the nationwide lockdowns were eased.

Overview of Indian Economy

In its January 2021 update of World Economic Outlook, the International Monetary Fund (IMF) projected Indias growth at 11.5% in 2021, that would moderate down to 6.8% in 2022. The IMF has highlighted that India, along with China are the two major countries from the group of emerging market and developing markets, that would register positive growth in 2021.

The Economic Survey 2020-21, presented by the Union Minister for Finance and Corporate Affairs, highlighted a V-shaped economic

recovery for India due to the mega vaccination drive, robust recovery in the services sector, along with significant growth in consumer spending and investments. The economic recovery is also expected to be boosted by the resurgence in power demand, rail freight, GST collection, steel consumption, etc. As per IMF, India is set to become the fastest-growing economy in the next two years. A positive outlook coupled with the gradual scaling down of the lockdowns, along with an astute support for Atmanirbhar Bharat Mission has placed the economy firmly on the path of recovery.

Real GDP is set to register a growth of 11% in 2021-22 and the nominal GDP is to grow by 15.4%, the highest since independence. The recovery path would entail a growth in real GDP by 2.4% over the absolute 2019-20 levels, implying that the economy would take two years to achieve and go past the prepandemic levels.

Due to the implementation of some of the harshest lockdowns amongst all countries, a 23.9% contraction in GDP during Q1 ofFY 202021 was anticipatory. Since the relaxations, there has been tremendous industrial and commercial activities that has not only reached pre-pandemic levels but has also surpassed previous year levels.

The Economic Survey also highlighted the resilience shown by the manufacturing sector and a shift in consumers mode of spending that led to a boom in digital transactions. Bank credit remained subdued in FY 2020-21. However, the agricultural sector witnessed a surge in credit growth of 7.4% in October 2020, compared to October 2019. The credit flow also extended to other sectors such as construction, trade and hospitality. The services sector witnessed the highest credit growth of 9.5% in October 2020 from 6.5% in October 2019.

The external debt as a ratio to GDP rose marginally to 21.6% at the end of September 2020 from 20.6% at the end of March 2020. India climbed 14 rungs in the World Banks Ease of Doing Business 2020 Survey to stand at the 63rd position, among 190 countries. This helped India to remain as one of the preferred investment destinations in FY 2020-21, with FDI pouring in amidst the prospect of a quicker recovery among the emerging economies. Net FPI inflows recorded an all-time monthly high of US$ 9.8 billion in November 2020, making India the only country among the emerging markets to receive equity FII inflows in 2020.

During FY 2020-21, Standard & Poors credit rating for India stood at BBB(-) with a stable outlook, Moodys credit rating

stood at Baa3 with a negative outlook, Fitchs credit rating was reported at BBB (-) with a negative outlook, whereas, DBRSs credit rating for India stood at BBB with a negative outlook.

During the unlock phase, there were numerous measures undertaken to ramp up Indias fiscal spending. A favourable monetary policy by the Government of India ensured the abundant availability of liquidity and brought immediate relief to debtors.

The COVID-19 pandemic led to a sharp decline in global trade, lower commodity prices and tighter external financing conditions. Indias forex reserves reached an all-time high of US$ 586.1 billion in the first week of January 2021, covering 18 months worth of imports. With a current account surplus of US$ 34.7 billion, India is poised to end an Annual Current Account Surplus after a period of 17 years.

India recognised the impacts of the pandemic both on the supply and demand in the economy. The government rolled out a slew of reforms to ensure that the supply-side disruptions, which were inevitable during the lockdown, are minimized to a great extent in the long run. The demand-side policy focused on ensuring that all essential commodities were taken care of, which included direct benefit transfers to the vulnerable segments of the society and the worlds largest food subsidy program targeting 80.96 crore beneficiaries. The Government of India also launched Emergency Credit Line Guarantee Scheme to provide much needed relief to stressed sectors by helping entities sustain employment and meet liabilities.

COMPANY PERFORMANCE- PERFORMANCE HIGHLIGHTS

• Revenue for the financial year ended 31st March 2021 is INR 2,849.71 Crore as against INR 3,272.44 Crore for the previous Financial Year ended 31st March 2020.

• Profit before financial expenses and depreciation for the financial year ended 31st March 2021 is INR 645.80 Crore as compared to INR 753.16 Crore for the previous Financial Year ended 31st March 2020.

• PBT (Profit Before Tax) for the financial year ended 31st March, 2021 is at INR 422.40 Crore against INR 504.47 Crore for the previous Financial Year ended 31st March 2020.

DETAILS OF SIGNIFICANT CHANGES IN THE KEY FINANCIAL RATIOS & RETURN ON NET WORTH

As per the Schedule V to the Listing Regulations read with Regulation 34(3) of the Listing Regulations, details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in Key Financial Ratios and any changes in Return on Net Worth of the Company including explanations therefore are given below:

Sl. No. Particulars Current FY ended March 31, 2021 Previous FY ended March 31, 2020 Changes between current FY & Previous FY Explanations for the Changes
1 Debtors Turnover 9.28 8.83 5.13%
2 Inventory Turnover 1.73 2.04 -15.20%
3 Interest Coverage Ratio 5.68 5.27 7.83%
4 Current Ratio 1.70 1.37 25.23% Reduction in Borrowings
5 Debt Equity Ratio 0.31 0.57 -45.87% Reduction in Borrowings
6 Operating Profit Margin (%) 18.16% 19.12% -5.05%
7 Net Profit Margin (%) or sector- specific equivalent ratios, as applicable 10.98% 12.42% -11.59%
8 Return on Net Worth 12.58% 18.35% -31.43% Lower Profit due to Covid-19

INORGANIC CHEMICALS (SODA ASH) GLOBAL SODA ASH INDUSTRY

DEMAND-SUPPLY SCENARIO

DEMAND

As per latest estimates of IHS Chemical (Market Advisory Service), the total Global Soda Ash capacity at the start of 2021 was around 72 million MT and demand was approximately 62 million MT. A 6% drop in overall global demand was witnessed in 2020 due to the pandemic. Soda Ash markets are expected to remain stable in 2021 and a growth estimate of 7% is expected compared to 2020.

The pandemic caused a large scale disruption in 2020 impacting nearly all industries Globally. The Global operating rates are currently around 80-85%. Though the impact of Covid-19 was reduced during the 2nd Half of 2020, the production rates and demand has now started to reach pre-Covid levels. Major dent of around 13% in production output in Indian Soda Ash industry was witnessed compared to speculated dent of only 6%.

SUPPLY

US still remains the largest Soda Ash exporter in the world followed by Turkey and then China. China still remains the largest Soda Ash producer in the world with production totalled 28 Million MT in 2020 (down 1.6% Y/Y compared to 2019).

China continues to be the largest Soda Ash producer in the world, having a capacity of around 31 Million MT per annum, which is 43% of the global capacity. Soda Ash production is higher than previous year by 3.7%. As per IHS Chemical report, Chinas operating rates were around 88% in 2020, reporting a production of around 28 million MT. Domestic consumptions was around 26.6 million MT (up 3.6% against last year), with 1.4 million MT being exported. 46% of the total export done by China in 2020 was to South East Asia. Flat glass sector was the largest Soda Ash consuming sector at 37% of the total demand. The impact of Corona Virus pandemic on demand/supply scenario wasnt as negative speculated.

EU - Soda Ash market in Europe is still trying to reach Pre-Covid Levels The average operating rate in 2020 was at 84%,

Spain Export down 10% YoY in 2020 and Bulgaria export up 8% YoY in 2020.Most of the volume lost was to Turkey who have emerged as the major producer /exporter of Soda Ash. Strong economic and industrial output growth is expected in in EU 2021. Container glass sector is the largest consumer of Soda Ash at 40% followed by Flat glass at 23% in 2020. GDP is expected to grow at 4% in 2021 compared to 2020. Sodium bicarb production in UK increased 13% in the back drop of good demand.

US capacity was 13.5 million TPA in 2020, they produced around 10 million MT of soda ash, and their annual production represents an operating rate of 74%. Domestic demand fell by 6.3% & production rate fell by 15% in 2020. South American import demand fell by 10.2% in 2020. US Soda Ash average export prices saw a drop of $16 per MT in 2020 compared to 2019. Soda Ash prices for 2021 domestic US contracts saw a drop of $5 per MT. In March 2021, reports are emerging of improved economic activity and attempts to increase pricing on account of increased costs.

INDUSTRY OUTLOOK

Global

The world estimated 2020 distribution of soda ash by end use is as under:

Glass 51%
Detergent & Soap formulations 13%
Chemical 18%
Alumina /Metals and mining 5%
Others (Environmental Protection/ Effluent 13%
treatment etc.)

It is estimated that globally at the back drop of pandemic and related lockdowns & restrictions container glass industry (mainly liquor and beer bottle sector) was highly affected in 2020, whilst demand for Soda Ash into inorganic chemicals increased by 1%.

INDIAN SCENARIO

Indian economy and production remained disturbed considering YoY comparison. After a slow start in H1 of 2020 due to pandemic, H2 was relatively better. A drop in demand in Soda Ash and high ocean freight lead to Imports falling by around 23% . Indian manufacturers also increase focus on exports to balance out lower domestic demand. Exports increased 95% in 2020.

A big slump in GDP of Indian subcontinent is witnessed, however 2021 seems positive with demand and supply cycles back to pre-Covid levels.

The Indian Soda Ash market constitutes to be of two varieties - Light grade (majorly used in detergent and other chemical industries) & Dense grade (majorly used in Glass industry), with a share of 55% and 45% respectively in 2020. It is expected that Dense grade Soda Ash will have higher growth rates in 2021 on the back of improved performance by the Glass Industry.

Total installed capacity of Soda Ash in India is 4.2 million tons, with an estimated production of about 3.77 million tons in the financial year 2020-21. The total size of the Indian soda ash market is estimated to be about 3.73 million tons and currently almost 20% of the Indian demand is being met by imports. Almost all the major industry players are located in the state of Gujarat due to the closeness and ready availability of the main raw materials namely limestone and salt.

Sourcing of these key raw materials like Lime Stone & Salt are posing a major challenge to the industry as no fresh Lime Stone mines or Land Bank for Salt Works is being allotted by the Govt. of Gujarat.

GHCL SODA ASH BUSINESS

GHCL Limited is a leading producer of soda ash in India and is well poised to tap opportunities in both the detergents, glass & chemical Industries. The total soda ash business contributes about 67% of total standalone revenue of the company.

In India, the company has a significant advantage in maintaining tight control on cost of soda ash due to its captive sources of some raw materials i.e. salt, limestone & lignite.

Meanwhile due to uncertainty of demand changes and low sales expectation, few steps were taken well in advance to control costs like: replace pet coke with Coal, plant production ramp up with optimized cost parameters, drop or defer avoidable expenditures, etc.

GHCL shares highly successful client relationships and is the preferred supplier to all major soda ash consumers. Its clients include Hindustan Unilever Limited, P&G, Patanjali Ayurveda Limited, Fena Group, HNG Group, Gujarat Guardian Limited, Gujarat Borosil Limited, Piramal Glass Limited, ST. Gobain & Philips.

The brownfield capacity addition, which GHCL embarked upon last year had to be partly deferred due to the pandemic and is expected to be fully operational by the end of the current year. Only part benefit of enhanced production was therefore received in the financial year 2020-21.

OPPORTUNITY AND CONCERNS

The slowdown in economy due to weaker demand and fall in production output last year have affected all domestic industries including GHCL. Proper planning with strategic decisions on Supply Chain by holding stocks closer to customers helped GHCL survive tougher times of pandemic.

With promotion of renewable energy sources (solar panels) and electric vehicles (Lithium Carbonate batteries) by government might help give a boost to demand of SA. Also with the economy back on track and production levels operating at pre-Covid levels gives a sign of healthy demand for FY 21 barring any negative impact of the 2nd wave.

Threat of cheaper imports from Iran, Russia, USA & Turkey remains an area of concern, as imposition of Anti-dumping duty on USA and Turkey for SA imports has not been accepted by the finance ministry. Application for imposing ADD on Iran & Russia is filed and the results for the same is awaited.

CONSUMER PRODUCTS BUSINESS:

The Consumer Products Division (CPD) is into production and trading of edible (Branded) & Industrial Salts, mainly used in manufacturing of Caustic Soda, Soda Ash. The division operates through its salt harvesting facility spread over 3,500 acres at Vedaranyam, Tamil Nadu. Company also owns a refinery near Chennai for production of edible salt under the brand name of i-FLO

The edible salt has a range of varieties like i-FLO Free Flow salt, Crystal Salt and the premium Triple refined salt. i-FLO Triple Refined salt is manufactured in the state-of-art facility at Thiruporur, near Chennai. In order to remain compliant with the food safety norms and produce standardized quality of products, the manufacturing facility is accredited with "Halal Certification" and "ISO 22000:2005" for food safety and Quality Management System.

With Covid 19 pandemic dominating major part of the financial year 2020-21, the division had to go through turbulent times. A

major slice of business for consumer product division owes to its sales of Industrial grade salt. Salt production saw a major downfall during last two years due to unseasonal rains as the salt production entirely depends on climatic conditions and it worsened due to Covid 19. The lockdown has caused labour shortages and severely reduced transportation, partly because of inter-district travel restrictions. These issues have combined to reduce production during the peak months. The salt production was delayed because of the extended monsoon, lowering production by 15-20 per cent over the same period of previous year. It is expected that a total salt production of 1.40 - 1.50 lakhs MT for the upcoming financial year 2021-22. Coupling with above issues it was also observed that salt demand took a big hit this year due to frequent lockdowns. Though the trend tends to change in subsequent unlock phase, the business stayed marred by supply chain issues and logistic challenges.

CONSUMER BEHAVIOUR TRENDS:

A consumer behaviour trend in the use for salt in daily life was an indeed a notable trend during these Covid times. A 40% increase in demand was seen for crystal salt for its use as a hygienic agent and its medical benefits was reported in southern parts of India. A post lockdown era is seeing online buying bouncing back to prominence. Consumers will prefer to buy more on online as they would not want to venture out frequently and rely more on door step deliveries. This has also paved way for exploring new digital marketing strategies. GHCL - CPD is observing this shift and is arming itself to bridge the gap between consumers and product by working towards serviceability and availability of its products. This will lead to enhancement of its online presence leading to more visibility and connectivity for the brand. Honey as a product is set to find new customers and will be used as a commodity and health product. It is expected that people will now invest in their health to increase immunity to fight infections during this time of a prolonged pandemic. As hygiene and cleanliness take precedence in consumers mind our division is taking great precautions in product handling by disinfecting the manufacturing centers and training team on safe food handling practices. Consumers will now be more careful in understanding the food labels like never before. Ingredients used and claims made by products will be scrutinized before they make a choice to buy it. GHCL CPD is taking utmost care and is meticulously working towards proving the end user the best quality and user experience.

DIGITAL MARKETING INITIATIVES:

Covid-19 has resulted in unprecedented adoption of digitalization and therefore, opened new avenues for marketers to rise above the noise and get their customers tuned in to their products. GHCL CPD left no stone unturned during the Covid times and has made a valuable online presence. An increased budget is also in the pipeline to reach out to our target customers who are spending a lot of their time online. It is also being observed that many users are online on weekdays than weekends. Engaging these audiences through various online activities and bringing communities together on various platforms like Facebook, Instagram and WhatsApp will be a primary factor in digital marketing and GHCL CPD is working towards it effectively for a seamless brand connectivity.

TEXTILES - OUTLOOK & GROWTH

The start of FY 2020-21 was hit hard with worldwide lockdowns with the pandemic spreading very fast across continents. Majority of the retail stores were closed and only essentials were open. By the second half the largest market USA had opened up and with multi billion dollars in aids. This resulted into a strong growth in demand for textiles products, specifically home textiles as majority of the offices worked from home. The UK and EU has been much slower where vaccinating the population is presiding over opening up the economy. A spurted demand has been created in the home textiles business which can be attributed to the negative sentiments towards China including the restriction of buying products from the Xinjiang region in China. The high demand for ELS cotton (Pima, Giza, etc.) resulted in the cotton price going upto more than 90+ US cents from about 50 US cents in just 8-9 months creating a big strain on the cost for manufactures of made-ups and garments. Looking at the current scenario with the pandemic worldwide it still looks that the WFH culture will continue this coming FY and hence the demand for home textiles shall be strong.

GHCL - TEXTILES

GHCL textile yarn manufacturing facilities has 1.85 Lakh spindles, 3320 rotors, 24 TFO machines and 5 Airjet Spinning based in Madurai area in Tamil Nadu. Its Home Textiles (Weaving, Processing and Cut & Sew of Bed Textiles) has a state-of-the art facility in Vapi, Gujarat comprising of 190 Air Jet looms, 45 million meter of wide width processing capacity, 12 million meter of weaving capacity and 30 million meter of cut & sew.

GHCLs Home Textiles division continue to build on the 4-pillar strategy of Sustainability, Traceability, Innovation and Excellence. The fourth pillar of Excellence, which has been added this season, is all about "Exceeding Expectations"

Our ongoing allegiance to sustainability, traceability and excellence has helped us to create these innovative ranges which have the potential to reduce our environmental footprint.

Our latest collections during this March market week are a reflection of our perseverance and promise towards better products and practices.

Our mission on sustainability reaches new heights with our "Earthology" collection - Eco Cotton, Eco Corn Cotton and Eden Dyes. These new sustainable ranges offer exciting new concepts of decomposable CVC fabrics - vegetable dyes and products made from renewable resources.

We presented our (patent pending), new fit story called Fab-Fit Luxe for the perfect fit on every bed. Fab- fit Luxe, the true sense of innovation, offers everyday benefits to the end consumer.

Traceability being a strong "pillar of practice" at GHCL, has led us to develop TRUE Trace platform based on QR code technology that has been fully implemented and audited by third party accreditations. TRUE TRACE platform offers a B2B & B2C level of confidence for special cottons (viz. Egyptian cotton, etc.) on its authenticity and source traceability.

Weavestry - the "best of all sheets" is made with a balanced hybrid weave and selected cotton fibres that are carefully woven and processed to perform at their best. The range offers products that can withstand upto 240 washes giving it a life of about 10 years.

The "Lazy Sheet" designed for casual comfort is a part of our Luxe - Lounging bedding concept that provides cozy and comfortable solutions for an all-day bed and work from home themes.

"Inno- Non-Iron" delivers a completely new approach first in the market to the non-iron technology, for a perfect pristine sheet, wash after wash.

Our Beauty Range of sleep kits is a gift for someone you care and offers wellness benefits for a niche segment of customers.

During the market week we launched our fashion bedding collection and top of the bed (TOB) line. Our TOB collections run very much in sync with our Sheet World themes and fabric substrates and allow us to offer same innovation levels in our Fashion bedding products. Our TOB ranges are scalable and sellable with core sheet lines to coordinate for the end customer.

GHCLs yarn spinning division is producing value added yarn Viz. GIZA, PIMA Australian Yarn for both domestic and international market. Many specialized products are producing against tailor-made application (specialized yarn) which will help to popularize our brand name through customer communication which includes our True Trace technology. Our product basket increased to multifold penetrating to new market for different applications to maintain the sustainability. The yarn division is using sustainable cotton to the extent of 50% during the current year and it is bench marking to use around 90% sustainable cotton over a period.

Covid-19 has disrupted the demand and supply chain across the country and globe and yarn division is not an exception to it. The State/Central Govt. enforced the lockdown on 24th March 2020 to till 17th May 2020. Thereafter subsequent relaxation released by the Govt. of Tamil Nadu on 4th May 2020 and accordingly the manufacturing operations restored by 50% capacity utilisation from 6th May 2020 onwards and 100% of capacity utilisation from July onwards by adhering SOP prescribed by Govt. time to time.

The Indian textile industry has clawed back faster than expected in the second half of year 2020-21 and after the first wave of Covid-19 pandemic, Half year ended march 31st 2021 became remarkable year for Textiles Industry especially the spinning industry. Sudden surge in yarn demand and continuous uptrend in yarn price helped spinning industry to return back to growth. Increase in consumption of apparel in kids, Casual wear, hospitality sector and reshuffling of global market share of Textile industry brings huge opportunity in highly value added product like Supima, Giza, contamination free and organic both in coarser counts for knitting and finer counts weaving.

GHCL Yarn Division has reduced the receivable and stock of finished goods significantly and highly penetrated into the value added and brand established customer segment.

OPPORTUNITIES, THREATS AND RISK MITIGANTS:

At GHCL, our strengths revolve around our penchant for innovation and consistent product development with the aim of creating a clear differentiation from competition, our strong passion for sustainability and the circular economy, our thought leadership in creating intellectual property and our ability to collaborate with multiple agencies to realise our four- pillar strategy.

Our key weakness was our limited product basked and our lack of diversification in the field of Home Textiles, hence this March market week we have launched out TOB collection. This will help us to be considered a one stop solution to our customers.

The fact that retailers continue to explore risk mitigation options pertaining to their country of origin sourcing strategies, is an obvious opportunity for us, especially when it comes to China, with regard to the uncertainty pertaining to trade policies including the negativity related to the Xinjiang cotton region & the current pandemic, and to Pakistan when it comes to unfavourable geo-political conditions. Foreign exchange risks are a reality in this business, but with the robust mechanics of our treasury department, we are able to take proactive measures to mitigate or minimize potential risks. In addition, increase in yarn and fabric prices at current levels does create us in a disadvantage position. But, with close cooperation with spinning division, Home Textiles division should be able to mitigate some of these challenges related to high yarn / fabric prices etc.

In view of the scale of disruption caused by the pandemic, it is evident that the current downturn is fundamentally different from recessions. Possible lock down and impact on its supply chain and end user demand may affect the textile business adversely in the coming year too. Prevailing Covid 19 condition in Western and European countries may temporarily affect the export. Whereas USA looks to be in the track to normalization by this year end. At the same time reshuffle of global business scenario due to Covid 19 brings high opportunities for export to such countries.

In spinning industry, if the current market price of yarn sustains to next financial year, growth for the next financial year will be flourishing.

Adopting principles like cash conservation, supply chain resilience and innovation will help businesses in treading a new path in this uncertain environment.

INTERNAL CONTROLS AND RISK MANAGEMENT

GHCL Limited has a well-established framework of internal controls across all the businesses and in all the areas of its operations. The Company has adequate monitoring procedures and has appointed competent personnel to safeguard its assets, protect loss from unauthorized use or disposition ensuring reliably authorized, accurately recorded and transparently reported transactions. Establishment of highly efficient management information and reporting systems combined with robust corporate policies form the overall control mechanisms.

The Company conducts its business with integrity, high standards of ethical behaviour and in compliance with all applicable laws and regulations that govern its business. To supplement the internal control mechanism, the Company has appointed an external independent internal audit agency to carry out concurrent internal audit at all its locations. The Audit Committee of the Board of Directors reviews the internal control systems on a regular basis to improve their effectiveness besides verifying statutory compliances. The Audit Committee meets periodically to discuss findings of the internal auditors along with the remedial actions that have been recorded or have been taken by the management to address weaknesses of the system. The statutory audits are conducted by globally recognized Big 4 audit agencies to ensure that the companys practices are in line with global best practices. A compliance management tool has also been adopted recently to ensure timely compliance with legal, financial, environmental, labour and other relevant regulations.

At GHCL, Risk Management and Internal Audit functions complement each other to form an elaborate risk management system that evaluates the efficacy of the framework relating to risk identification and mitigation. The Company strives to adopt a de-risking strategy in its operations while making growth investments. This involves setting up and monitoring risks on a regular basis. GHCL has Risk Management Committee in line with the requirement of Regulation 21 of the Listing Regulations.

The Company applies Risk Management in a well-defined, integrated framework, which promotes awareness of risks and an understanding of the Companys risk tolerances. The management monitors the internal control system, designed to identify, assess, monitor and manage risks, associated with the Company. Each risk is provided with different number of control measures depending upon its potential impact and probability of occurrence. The risk management framework incorporates both financial and non-financial risks, as explained in the section on "Risks and Opportunities" on page 34.

HUMAN CAPITAL MANAGEMENT

Human Capital Management has always been a key focus area for GHCL Limited, which is evident from the fact that Employees are one of our key stakeholders. It is our firm belief that nurturing and strengthening the human resource or human capital is of utmost importance. Therefore, the HR function plays a critical role in creating a unique organizational structure and corporate identity for the Company through various initiatives, incentives and learning and development programmes. Good human resource is vital for the success of any business, therefore GHCL regularly revisits its policies and practices to ensure that they comply with the values of the Company and can be benchmarked against the leaders in the industry. For more details on Human Capital Management at GHCL, refer to Human Capital section on page 54 of the report.

CSR Initiatives

GHCL Limited, since beginning, has been determined to focus on the holistic development, including the growth of society as a whole, particularly in the region of its operations. This is done with the aim to establish social license to operate and maintain a harmonious relationship with local stakeholders. For last two years, more focus has been given on expanding the CSR footprint in our operational areas along with meeting the expectations of the people. In doing so, our NGO partners, through GHCL Foundation, play a pivotal role in strategically planning and systematically executing our CSR initiatives. For more details on Corporate Social Responsibility at GHCL Limited, refer to Social & Relationship Capital section on page 64 of the report.