Godrej Industries Ltd Management Discussions

Net Profit Margin: Net profit margin of the Company improved significantly. This is mainly due to the strong business performance of the Chemicals Business and also due to the increase in Dividend income from Group Companies.

Return on Equity / Networth: The significant increase in operating margin and Net Profit Margin on account of the strong Chemicals Business performance and increased Dividend Income from Group Companies, has helped in improve the Return on Equity / Networth. Additionally, the market value of quoted investment stands at a very healthy Rs. 66,293 crore at the end of the fiscal year.

Return on capital employed: Significant increased Operating profit of Chemicals Division and dividend from group companies has increased the profitability of the Company. The capital employed of the Company has increased due to capital expense in Chemicals Division and strategic investment in subsidiary. Return on Capital employed has increased from 3.8% to 8.02%.

CHEMICALS DIVISION

We are a leading Chemical player, focused on green chemistry, with business operating in Oleo-Chemicals, Surfactants, Specialty Chemicals and Biotech products.

The Chemicals Business has invested significantly in enhancing its R&D and Innovation capabilities by hiring many experts across HPC, paints and coatings, Agrochemicals, Lubricants and Metal Working, and Food and Beverages space. The Chemicals Business has also significantly strengthened its commercial team to be able to build best in class relationships with its customers and provide unique solutions to their specific product and technical challenges.

The Chemicals Business has state-of-the-art manufacturing facilities at Ambernath (near Mumbai, Maharashtra) and Valia (Near Ankleshwar, Gujarat). Both our Manufacturing facilities at Valia and Ambernath are “Responsible Care” certified factories and are also recognized by the Union of Japanese Scientists & Engineers (JUSE) for 5S Workplace Management system. Additionally, our Valia Factory is a “GreenCo Platinum” certified factory. Both these manufacturing facilities have several certifications including Kosher.

During the year, our Chemicals Business acquired an Ethoxylation manufacturing facility at Kheda Gujarat, which will support the expansion of our portfolio for our focus segments. During the year, our Chemicals Business signed a Business Transfer Agreement for acquisition of a Food Additives business having a manufacturing facility at Goa. This business acquisition was completed in April 2025 and will help our Chemicals Business to expand our product offering to the Food and Beverages Segment. Both these business acquisitions are in line with our strategy and our commitment to grow in a profitable and sustainable manner. It will help us increase our basket of Specialty products and grow our specialty chemicals business.

Our Chemicals Business recorded a 13% increase in Sales Volume, recorded a Total Income of Rs.3,392 crore, a growth of 26% and an Operating Profit (PBIT) of Rs.361 crore, a growth of 42%. The Chemicals Business has a good global presence and exports to over 65 countries. In Fiscal Year 2024-25, the Chemicals Business recorded export sales of Rs. 960 crore, a growth of 24%. Our Exports now account for nearly a third of our overall sales.

The Chemicals Business is one of the largest consumers of Rapeseed oil and Palm based feedstocks. The Business has a robust procurement and risk mitigation framework to protect itself against market volatility in terms of price and availability.

PIIHPOSE

The most trusted global partner for green chemistries, creating value for our stakeholders and accelerating towards a sustainable future.

Evolve as a leading global oleochemicals and surfactants player, with a rapidly building specialty and biotech portfolio, driven by best-in-class manufacturing and sustainable practices across the value chain.

Delight customers with world class innovation and deep application expertise, delivering industry leading green solutions, taken to market personally and digitally.

All this executed by a highly engaged and expert team.

Lets review product category wise performance.

Oleochemicals

Our Oleochemicals products consist of Fatty Alcohol, Fatty Acids and Glycerin which has application in several end user industries like Home care, Personal care, Paints and Coatings, Oil and Gas, Food & Beverages, Pharma, Textiles, Industrial applications, etc.

Fatty Alcohol

Fatty Alcohol portfolio has a mix of mid chain and long chain Alcohols. It uses feedstock based on Palm oil and Rapeseed oil. Our Fatty Alcohols are used in Personal care products, Home and Industrial cleaning products, Pharmaceuticals, Textile Auxiliaries and several Industrial applications. Fatty alcohol contributes to 23% of the turnover of the division and a good share of it is from exports. The Fatty Alcohol portfolio did well despite supply chain challenges faced for imports and exports. Operating profit has significantly increased due to increased sales Volume, higher sales value realisation, strong demand and supply chain efficiencies.

Fatty Acids

Fatty Acid portfolio has Palm fatty acid-based products and Rapeseed oil based products. Our Fatty Acids are used in Home and Personal Care products, Food products, Rubber and Tyre Industry, Pharmaceuticals, Oil and Gas Industry, Textile Auxiliaries and several Industrial applications. Fatty acids contributes to 42% of the turnover of the division. Operating profit has significantly increased due to increased sales Volume, higher sales value realisation, strong domestic demand and supply chain efficiencies.

Glycerine

Glycerine is used in Pharmaceutical, Food products, Home and Personal Care products and other applications. Glycerine accounted for 5% of the turnover of this division. Demand for Glycerine in the country is higher than the domestic manufacturing capacities. This gap is filled up by import of Refined Glycerine. During the year, Glycerine had strong demand from across end user industry which led to better sales value realisation, resulting in healthy operating margins.

Surfactants

Surfactants portfolio has products based on Lauryl Alcohol like Sodium Lauryl Ether Sulphate (SLES), Sodium Lauryl Sulphate (SLS) and Alpha Olefin Sulfonate (AOS). Our Products find several applications across Industries ranging from Home and Personal Care to Polymers, Oilfields and Construction Chemicals. Our Surfactants portfolio contributes to 21% of the turnover of the Chemicals division. Demand from home and personal care industry remained stable in the current fiscal year. We enjoy product approvals from several multinational companies which helps us in participating in their Global Sourcing Programmes. Though the surfactants industry operates in a highly competitive space, our Surfactants Business did well and we recorded a 11% growth in volume.

Specialty Chemicals

Our range of Specialty Chemicals and Oleo Derivatives products include Emulsifying Waxes, Esters, Biocides, Secondary surfactants, other Specialty chemicals and ready blends. These products are crafted with a deep understanding of the varied needs of our customers and the latest consumer trends. We focus on delivering value by offering a broader range of alternatives and a bigger basket of product offerings. This portfolio accounted for 9% of the turnover of this division.

We are investing well by building manufacturing capacities, by business acquisitions and investing in people with focus on Applications and research. This portfolio has done well in the current fiscal year and recorded a volume growth of 13%.

Biotech

Our Biotech Product portfolio includes Bio-Surfactants made from renewable feedstocks. It is one of the most promising Glycolipids available. It combines green chemistry with customer needs and is produced biologically through fermentation using renewable vegetable oil feedstocks. Our Biotech products have application in Skin care, hair care, colour cosmetics, home care and agriculture. The Biotech portfolio is in early stages of growth, and we believe that this portfolio will grow exponentially in the future, forming an important part of this division.

Other Initiatives

For achieving the ambition of growing at a faster pace, your Company understands the importance of investing in Research and Innovation. Your Company has expanded the infrastructure at Nadir Godrej Centre for Science, Technology and Applications Research (NGSTAR), an 8,000 sq. ft. state-of-the- art center located at Ambernath, Maharashtra. The facility is well equipped with advanced analytical instruments, best-in-class safety features and an applications and microbiology lab, which will serve us well as we innovate and develop new and improved products and applications. It will also help us strengthen our green and sustainable product range, in line with our Green, Efficient and Milder (GEM) strategy. The facility has been built considering the end use industry in which our division will be catering to as a major supplier.

Your Company accords very high importance to safety and ensures that people and business processes are safe. Your Company has launched “Aim for Zero” a safety initiative to drive a safety-first environment at the factory. Our Valia and Ambernath Factory installed a fixed fall protection system that is helpful during tanker loading and unloading operations. Additionally, women employees at all our factories underwent a special firefighting training.

Your Company is committed to building a working environment which encourages Diversity and Inclusion. As part of our commitment to fostering diversity across all levels, Ambernath Factory has on boarded women employees in production operations. All necessary statutory and regulatory approvals have been granted and we have successfully integrated women into second and third shift operations as well. We will continue to onboard more women in different areas of our business and especially in manufacturing operations.

Your Company continues to focus on the use of renewable energy. We achieve this by use of biomass briquettes, Solar roof top, wind energy, and other initiatives. We also have a cogeneration plant which runs on biomass briquette & contributes to increase in our renewable energy as well as in GHG reduction.

Outlook

The outlook for our Chemicals Business looks very good. With the Business investing well in building manufacturing capacities, investing in people capabilities and technology and the Business strategy of driving volume growth playing out well, the growth potential of the business looks promising. The Business and the Company is placed well to benefit from the India growth story.

However, the Israel-Iran conflict (with US support to Israel), Russia-Ukraine war and the Israel-Gaza situation has created an environment of uncertainty in the global trade and business. The Trump- initiated US tariffs and certain policies which lead to non-tariff barriers will also impact international trade and relations. The India-Pakistan tensions continue and will have to be watched.

Finance and Investments

During the fiscal year, your Company continued to earn return from its investments in the form of Dividend of Rs.732 crore (previous year Rs.240 crore).

Godrej Capital Limited, a subsidiary of your Company, which operates in the housing finance and nonbanking finance (NBFC) space through its subsidiaries is growing well and we see a strong potential for continued growth and profitability. Your Company has further invested 772 crore in Godrej Capital Limited during the fiscal year. Godrej Capital Limited is the Holding Company of Godrej Housing Finance Limited & Godrej Finance Limited.

Human Resource Development and Industrial Relations

Throughout the review period, positive industrial relations prevailed across all our manufacturing locations. Our ongoing commitment to workers welfare was evident through the creation of a supportive work environment using various approaches. Proactive measures, including the Grievance Handling Mechanism, were implemented to address workers diverse needs effectively. We accord the highest importance to safety and several awareness sessions are organised throughout the year.

In terms of Human Resource Development, initiatives were undertaken to engage employees and enhance their performance. We provided innovative learning platforms, utilizing both digital and classroom methods, to facilitate continuous growth and development. Concurrently, we prioritized the health and wellbeing of our workforce, organizing sessions and webinars focusing on mental and physical wellness. Efforts to strengthen our organizational culture were underscored by amplifying the voices of employees and stakeholders and undertaking necessary actions based on feedback.

Consistent and transparent leadership communication played a pivotal role in cultivating a high- performance culture throughout the year. Additionally, employee contributions were duly acknowledged and celebrated in various internal and external forums. These collective endeavors aimed to bolster employee motivation, enrich their experience, and ultimately drive exceptional business outcomes.

As of March 31, 2025, the total number of permanent employees in our Company was 1,148.

Policy to Prevent Sexual Harassment at the Work Place

We are dedicated to fostering an environment where employees can collaborate without facing any form of sexual harassment, exploitation, or intimidation. Our commitment to preventing sexual harassment at the workplace is reflected in the reinforcement of our existing policy. Each employee is briefed on the Companys staunch stance against sexual harassment, emphasizing that such behavior is not only unlawful but also contrary to the principles of our Godrej Industries Group.

To enhance awareness regarding workplace harassment, we have implemented an online training module accessible to all employees, along with in-person sessions conducted across our various locations. These training sessions cover legislative updates, details regarding the Internal Complaints Committee, and procedures for addressing grievances. Further, we have amplified communication around anti-sexual harassment through other means like posters, emailers to drive awareness on a continued basis.

In line with legal requirements, we have established two distinct committees ?one overseeing the Corporate Office, Manufacturing locations in Maharashtra and branches across India, and the other specifically for the Valia factory in Gujarat. Ms. Divya Murthy presides over both committees. While the law applies primarily to female employees, our company policy extends protection to all employees and premises nationwide.

Our online platform ‘Conduct and our telephonic hotline run by Deloitte facilitate the reporting and tracking of complaints related to sexual harassment. There was one complaint filed during the review period. Further we remain vigilant in our compliance efforts. As per Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013, the committee has prepared a report indicating one complaint received.

Internal Control Systems and their Adequacy

Your Company has a proper and adequate system of Internal Controls, to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposal and that transactions are authorized, recorded and reported correctly. Your Companys Corporate Audit and Assurance Department, issues well documented operating procedures and authorities with adequate built-in controls at the beginning of any activity and revised procedures, if there is any major change. The internal control is supplemented by an extensive programme of internal, external audits and periodic review by the management. The system is designed to adequately ensure that financial and other records are reliable for preparing financial information and other data and for maintaining accountability of assets. Corporate Audit & Assurance Department during the year, facilitated a review of your Companys risk management programme. The risks and mitigation measures were reviewed by your Companys Risk Committee and corrective measures initiated. During the year the Corporate Audit & Assurance Department carried out various reviews and provided assurance on compliances to lay down policies, processes and internal controls.

Information Security

In FY25, your Company continued to strengthen its Information Security framework by building upon the initiatives and progress made in previous years. The organization maintained its focus on key pillars such as employee awareness, digital risk management, and overall cybersecurity posture improvement. Regular awareness programs were conducted to ensure employees remain vigilant and informed about emerging threats, reinforcing a culture of security across the organization.

A key area of focus during the year was the enhancement of Data Leak Prevention (DLP) capabilities. Company invested in expanding and fine-tuning its DLP controls to prevent unauthorized sharing of sensitive information and to safeguard critical data assets more effectively. The organization also successfully completed the ISO 27001 audit to ensure continued certification, reaffirming its commitment to globally recognized information security standards and best practices.

To proactively assess and strengthen its security readiness, Company undertook a comprehensive red teaming activity. This simulated real-world cyberattack scenario helped identify potential vulnerabilities and provided actionable insights for strengthening defences. The findings were used to further mature the organizations incident response and threat mitigation strategies.

Company also continued to monitor and enhance its digital risk posture, with targeted initiatives aimed at improving the maturity of security processes, aligned with frameworks such as NIST. Consistent efforts were made to maintain a BitSight score of 800, reinforcing the organizations commitment to strong external risk ratings and third-party assurance.

These sustained and focused efforts reflect Companys unwavering dedication to cybersecurity excellence, ensuring that its security posture evolves in step with an increasingly complex and dynamic threat landscape.

Opportunities and Threats

With the India growth story playing out well and the Indian Chemicals sector being one of the sectors which can contribute to the India growth story, we see a good potential and opportunity of growth for your Company. Your Company which is a leading player in the oleochemicals and surfactants space and is rapidly building the specialty and biotech portfolio driven by best-in-class manufacturing and sustainable practices is well positioned in creating value for our stakeholders. With heightened awareness about the Planet and sustainable practices amongst the public and customers, your Company which focuses on delivering green solutions, building application expertise and having sustainable practices, could be in a position to positively impact the planet and grow in a profitable and sustainable manner.

The geo-political tensions due to the India-Pakistan situation, Russia-Ukraine war, Israel-Iran war (with US backing of Israel), Israel-Gaza situation and other tensions have created an environment of uncertainty in global trade and business. The Trump driven US tariffs and non-tariff barriers add to the global uncertainty. Due to the above, your company may face challenges in terms of exports, shipping and logistics.

Risks and Concerns

Your Company had put a risk management framework in place post a comprehensive review of its risk management process. The review involved understanding the existing risk management initiatives, zero- based identification and assessment of risks in our business as also the relative control measures and arriving at the desired counter measures keeping in mind the risk appetite of the organization. The Risk Committee has periodically reviewed the risks in the business and recommended appropriate risk mitigating actions.

The Commodity based businesses are likely to be affected by vagaries of the weather, demand for edible oil, oilseed production, etc. The business is exposed to commodity price risks relating to raw materials which account for the largest portion of the costs of Chemicals businesses.

The Chemicals business growth will also depend on the growth of end user industries like polymer, detergent, cosmetic and personal care. As a significant employer and chemicals producer, to ensure occupational safety, employment standards, production safety, and environmental protection, your Company maintains strict safety, health, environmental protection and quality control programs to monitor and control these operational risks.

Macro-economic factors including economic and political developments, natural calamities which affect the industrial sector generally would also affect the businesses of your Company. Legislative changes resulting in a change in the taxes, duties and levies, whether local or central, also impact business performance and relative competitiveness of the businesses.

Cautionary Statement

Some of the statements in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates and expectations may be ‘forward looking statements within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied. Important developments that could affect the Companys operations include a downtrend in industry, significant changes in political and economic environment in India and abroad, tax laws, import duties, litigation and labour relations.