Gillette India Ltd Management Discussions.

ECONOMY AND MARKETS

The year 2020 was volatile with unprecedented challenges. The COVID-19 pandemic impacted each aspect of human life and the world economy including India. The Indian economy contracted by 7.3% in 2020-2021. The outbreak of the COVID-19, the subsequent lockdown and restrictions imposed to contain the spread of the COVID-19 pandemic resulted in supply chain disruptions. However, with easing of the lockdown, the economy displayed signs of recovery. The Government introduced several initiatives and measures which provided impetus and boosted the economy.

The pandemic also caused changes in the consumer landscape in India. The increased adoption of digitization and technologies have led to a surge in consumers shopping online. Movement restrictions have also led to creation of newer distribution channels. During 2020-2021, the rural market recorded double digit growth and outpaced the urban demand across categories including personal and household care.

OPPORTUNITIES, RISK AND OUTLOOK

The International Monetary Fund (IMF) projects the Indian economy to grow by 9.5% in 2021-2022. The trajectory of the pandemic continues to be unpredictable. However, the roll-out of vaccines and government initiatives are expected to boost the growth of the economy. New distribution channels are emerging, and digital penetration is increasing, creating opportunities for the FMCG industry. However, amidst this, it will be imperative for companies to navigate through these uncertainties and capitalize on the available opportunities with agility.

While there are short to medium term challenges owing to the pandemic, the long-term outlook for the FMCG sector remains positive. Your Company is well-positioned to sustain and improve its performance with a resilient workforce, leverage opportunities with agility, address challenges and overcome the risks.

PERFORMANCE OVERVIEW

The discussion on financial performance of the Company and its various businesses is elaborated in the Directors Report.

RISK MANAGEMENT

Your Company has set up a Risk Management Committee. The Company has also adopted a risk management policy. The Companys risk management policy is in line with the parent Companys global guidelines and as such adequate measures have been adopted by the Company to anticipate, plan and mitigate the spectrum of risks it faces.

BUSINESS, FINANCE & OPERATIONAL RISKS

On business risks, the Company undertakes a Competition Response Model program. For financing risks, it has a robust operational contingency plan. It also undertakes Business Contingency Plan for key vendors and natural disasters. The Company also has adequate Insurance coverage to protect the value of its assets. This coverage duly covers any risks relating to business interruption resulting from property damage and legal liability resulting from property damage or personal injury.

The Company has in place a very stringent and responsive system under which all its distributors and vendors are assessed before being selected.

REGULATORY AND COMPLIANCE RISKS

Your Company operates within the letter and spirit of all applicable laws. General compliance with legal requirements is an important component of P&Gs Worldwide Business Conduct Manual and the same directs the following action from every employee:

To obey all legal requirements at all times;

To understand exactly what legal requirements apply to the work function;

To consult the legal personnel if there are conflicting legal requirements in different jurisdictions;

To strictly follow the directions from the legal personnel;

To address and resolve, in a timely manner, any legal compliance issues that have been identified;

Absolutely no violation of any law; and

To immediately report any instance of violations to the Legal Department.

Your Company has set in place the requisite mechanism for meeting with the compliance requirements, periodic monitoring of compliance to avoid any deviations, and regular updates to keep pace with the regulatory changes.

SECURITY RISKS

Your Company has implemented comprehensive security programs supported by latest technology and trained manpower to protect employees and assets, at all its offices and plants. During the Financial Year under review, no major security breaches or incidents occurred at any of the Companys plants. A comprehensive security risk assessment is carried out regularly and adequate security measures are implemented to cater to changing security scenario.

Your Company has installed the best of the security measures and processes to protect its personnel and assets.

INTERNAL AUDITORp>

During the Financial Year, the Board of Directors had appointed Ms. Pooja Bhutra, Chartered Accountant, as the Internal Auditor of the Company for the Financial Year 2020-21.

INTERNAL CONTROLS & THEIR ADEQUACY

Your Company continues to prioritize sustainable control processes that are integral part of organization Culture. It has built strong Internal Controls Environment and Risk Assessment / Management systems. These systems enable the Company to comply with Internal Company policies, procedures, standard guidelines and local laws to help protect Companys assets and confidential information against financial losses and unauthorized use. The robust controls environment at your Company is efficiently managed through:

Controls Self-Assessments (CSAs) are performed during October to December period of every Financial Year across business processes. The purpose of this thorough exercise is to review and evaluate process compliances against standard

Control objective, activities and attributes. This enables the Company to proactively identify control weaknesses and initiate actions to sustainably mitigate them.

Stewardship and Global Internal Audit (GIA)

Reviews led by a team of three independent fulltime Internal Controls experts, their role is to ensure that all key processes i.e. selling, revenue, distribution, trade & marketing spends, vendor payments, and plant operations are reviewed and assessed at appropriate intervals. The observations and findings are shared with senior management for implementing quality action plans to strengthen overall controls environment in these processes. The assessments of High risks and SOX Compliance areas are assessed by an independent internal audit department lead by the Companys Global Internal Audit team. This team comprises of certified internal controls process experts and have experiences across different markets that the Company operates in. The action taken by the management to correct the processes is then reviewed and reported appropriately.

Governance Board comprises of the Managing Director, Group Chief Financial Officer, Chief Human Resource Officer, Supply Chain Leader and General Counsel. The Governance Board assesses and reviews enterprise level risks and works with process owners and functional managers to ensure that corrective action is taken, and risk is mitigated as appropriate.

During the Financial Year under review, all major issues identified have been 100% remediated by executing quality action plans in consultation with internal controls and stewardship experts.

HR INITIATIVES

Your Company operates in a highly competitive environment vis-a-vis attracting the best talent for its operations. Your Company focuses on attracting, motivating and retaining the best talent. Its people systems like talent supply, performance management and talent development are robust and competitive. We have put in place robust HR programs to ensure that the organization is geared up to deliver the future.

Attracting & Retaining Talent: India continues to be a key source for Global talent and an Employer of Choice in India. Given our build from within strategy and our focus on our core campus programs coupled with our innovative programs ensures we continue to be an Employer of Choice in our core campuses and beyond. We implemented a virtual internship this year for all our interns and supported them with the necessary infrastructure and high-impact live projects. COVID CARE was extended to them as applicable during the second wave. We have maintained best-in-class campus engagement over the year and are ranked in the Top 10 Employers in the Annual Universum Campus Survey.

Developing Talent: Our policies on leadership pipeline, talent planning, mentoring and diversity & inclusion continue to ensure that we attract and retain the best talent. Our new hires into the Company are given a thorough on-boarding to ensure that they are early contributors in their roles and feel valued. Building organization capability continues to be a key focus area for us as we continue to organize virtual learning sessions and trainings. Our Companys performance management system is robust and strives for Impact through Growth. It clearly assesses and differentiates employees on the basis of performance. We have established a CARE program to build the capability of our people managers. With our focus on inclusive development, we were recognized by Working Mothers Magazine as one of the Best Companies for Women in India. We have a robust talent management process to ensure we build world class leaders. This is supported by a strong Learning & Development program, leveraging internal and external experts to ensure our people are exposed and learn from the very best. The number of employees as on June 30, 2021 was 573.