Grasim Industries Ltd Directors Report.

To the Members,

Your Directors are pleased to present the 73rd Annual Report of your Company along with the Audited Financial Statements for the financial year ended 31st March 2020.

FINANCIAL HIGHLIGHTS

Your Companys financial performance for the year ended 31st March 2020, is summarised below:

Consolidated Standalone
Particulars 2019-20 2018-19 (restated*) 2019-20 2018-19
Revenue from Operations 77,625.10 77,200.25 18,609.40 20,550.43
Other Income 966.61 827.69 525.45 567.98
Total Revenue 78,591.71 78,027.94 19,134.85 21,118.41
Earnings Before Interest, Taxes, Depreciation and Amortisation 13,846.03 13,404.03 2,835.99 4,639.14
(EBITDA)
Less: Finance Costs 2,338.50 2,009.85 303.85 199.05
Less: Depreciation and Amortisation Expenses 4,040.82 3,571.38 846.76 760.39
Profit Before Share in Profit/(Loss) of Equity Accounted Investees, 7,466.71 7,822.80 1,685.38 3,679.70
Exceptional Items and Tax
Share in Profit/(Loss) of Equity Accounted Investees 562.22 29.06 - -
Exceptional Items (1,382.10) (2,688.40) (294.08) (2,368.01)
Profit Before Tax (PBT) 6,646.83 5,163.46 1,391.30 1,311.69
Tax Expenses (30.65) 2,418.72 121.35 796.39
Profit for the Period Attributable to: 6,677.48 2,744.74 1,269.95 515.30
Shareholders of the Company 4,425.19 1,692.99 1,269.95 515.30
Non-Controlling Interest 2,252.29 1,051.75 - -
Other Comprehensive Income for the Year Attributable to: (5,002.00) (2,781.26) (5,069.64) (2,798.07)
Shareholders of the Company (5,067.74) (2,822.50) (5,069.64) (2,798.07)
Non-Controlling Interest 65.74 41.24 - -
Total Comprehensive Income for the Year Attributable to: 1,675.48 (36.52) (3,799.69) (2,282.77)
Shareholders of the Company (642.55) (1,129.51) (3,799.69) (2,282.77)
Non-Controlling Interest 2,318.03 1,092.99 - -
Profit for the Period attributable to Shareholders of the Company 4,425.19 1,692.99 1,269.95 515.30
Opening Balance in Retained Earnings 3,940.83 3,453.58 3,796.06 3,765.46
- Gain/(Loss) on Re-measurement of Defined Benefit Plans (83.56) (4.13) (57.42) (5.49)
- Gain on Sale of non-current Investments transferred to retained 345.51 21.39 355.66 -
earnings from equity instruments through OCI
- Gain/(Loss) on merger of Cement business of Century Textiles - (165.16) - -
Limited with UltraTech Cement Limited
- Stake Dilution in Subsidiary Companies (524.91) (0.57) - -
- Ind AS 116 (Leases) transition impact (45.31) - (3.69) -
- Idea Cellular Limited (now known as Vodafone Idea Limited) - 636.67 - -
not consolidated as an Associate w.e.f. 31st August, 2018
- Other Adjustments 7.86 3.67 - -
Amount available for Appropriation 8,065.61 5,638.44 5,360.56 4,275.27
Add/Less: Transfer (to)/from Debenture Redemption Reserve 72.18 (76.15) (24.51) (23.38)
Less: Transfer to General Reserve (2,865.57) (1,032.60) - -
Less: Transfer to Special Reserve Fund (103.73) (107.47) - -
Less: Dividend Paid on Equity Shares (including Corporate (542.89) (481.39) (515.01) (455.83)
DividendTax)
Closing Balance in Retained Earnings 4,625.60 3,940.83 4,821.04 3,796.06

* refer note 4.12 (A) of Consolidated accounts

DIVIDEND

Based on your Companys performance, the Directors are pleased to recommend for your approval, a dividend of

Rs 4 (Rupees Four Only) per equity share of Rs 2 each of your Company (dividend @ 200% of the face value), for the financial year ended 31st March 2020. The dividend, if approved by the members, would involve a cash outflow of Rs 263 Crore.

In terms of the provisions of regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations) as amended from time to time, your Company has formulated a Dividend Distribution Policy. This Policy is given in Annexure ‘A to this Report and is available on your Companys website, www.grasim.com.

Dividend declared by your Company for the financial year ended 31st March 2020, is in compliance with the Dividend Distribution Policy.

TRANSFER TO RESERVES

The Board of Directors of your Company has decided not to transfer any amount to the General Reserves, for the financial year ended 31st March 2020.

PERFORMANCE REVIEW

On a consolidated basis, the revenue from operations for FY 2019-20, increased to Rs 77,625.10 Crore which was marginally higher than that of the previous year (Rs 77,200.25 Crore in FY 2018-19). The consolidated EBITDA increased to Rs 13,846.03 Crore for FY 2019-20 which was 3% higher than that of the previous year (Rs 13,404.03 Crore in FY 2018-19).

On a standalone basis, revenue from operations for FY 2019-20, is Rs 18,609.40 Crore which was 9.45% lower than that of the previous year (Rs 20,550.43 Crore in FY 2018-19). The standalone EBITDA is Rs 2,835.99 Crore for FY 2019-20 which was 38.87% lower than that of the previous year (Rs 4,639.14 Crore in FY 2018-19).

The Management Discussion and Analysis Section focuses on your Companys strategies for growth and the performance review of the businesses/operations in depth.

STRATEGIC INITIATIVES

Aditya Birla Power Composites Limited

Aditya Birla Power Composites Limited (ABPCL) was incorporated on 15th October 2019 as a wholly owned subsidiary of your Company. In terms of a Joint Venture

Agreement (JVA) signed between Grasim Industries Limited (Grasim) and Maschinenfabrik Reinhausen Gmbh (MR) of Germany, on 22nd October 2019, for the manufacture and sale of Composite Hollow Core Insulators (‘CHCI) to serve the power transmission & distribution industry globally, ABPCL stands converted into a Joint Venture Company.

In terms of JVA, the share capital of ABPCL is held by Grasim and MR in the ratio 51:49 respectively and Grasim has nominated 3 Directors and MR has nominated 2 Directors on the Board of ABPCL.

ABPCL is in the process of setting up a state-of-the-art CHCI manufacturing plant at Halol, Gujarat, India at a project cost of about Rs 100 Crore. The work of setting up the Plant at Halol is in progress and is expected to be commissioned by February 2021.

Amalgamation of Grasim Premium Fabric Private Limited with your Company

Grasim Premium Fabric Private Limited (‘GPFPL) (previously known as Soktas India Private Limited) was acquired by your Company in FY 2018-19 from SKTA TEKSTIL SANAYI VE TICARET ANONIM SIRKETI. GPFPL became a wholly owned subsidiary of your Company on 29th March 2019 and has its state-of-the-art manufacturing facility at Kolhapur, Maharashtra. GPFPL sells premium fabric in India under the ‘SKTA , ‘Giza House and ‘Excellence by SKTA brands. GPFPL is also a preferred supplier to leading Indian and Global menswear brands.

The Board of Directors of your Company approved the draft Scheme of Arrangement between GPFPL (previously known as Soktas India Private Limited) and Grasim Industries Limited and their respective shareholders and all concerned (the Scheme) under sections 230 to 232 of the Companies Act, 2013.

The Scheme is subject to the requisite approvals including National Company Law Tribunal (NCLT) and other relevant regulatory authorities. The Appointed Date of the Scheme is 1st April 2019 or such other date as the Board of Directors of both the Companies or as the NCLT may direct. As the entire share capital of GPFPL is held by your Company along with its nominees, no equity shares of your Company would be allotted in lieu or exchange of its holding of GPFPL.

NCLT, Indore Bench at Ahmedabad has dispensed with convening of the meetings of equity shareholders and the creditors of the Company, since the amalgamation is between the Company and GPFPL. The proceedings are pending before NCLT, Mumbai Bench.

Amalgamation of Sun God Trading and Investment Limited with ABNL Investment Limited

ABNL Investment Limited is a wholly-owned subsidiary of your Company and Sun God Trading and Investment Limited is a step down subsidiary of your Company and a wholly-owned subsidiary of ABNL Investment Limited.

The Board of Directors of ABNL Investment Limited and Sun God Trading and Investment Limited, approved the Scheme of Amalgamation between Sun God Trading and Investment Limited and ABNL Investment Limited and their respective shareholders and all concerned (the Scheme) under section 233 of the Companies Act, 2013.

The members and creditors of ABNL Investment Limited and the members of Sun God Trading and Investment Limited at their respective meetings held on 2nd March 2020 have accorded their consent to the Scheme. The Appointed Date of the Scheme is 1st April 2019 or any other date as the Board of Directors of Sun God Trading and Investment Limited or ABNL Investment Limited may direct. As the entire share capital of Sun God Trading and Investment Limited is held by ABNL Investment Limited along with its nominees, no equity shares of ABNL Investment Limited would be allotted in lieu or in exchange of its holding in it.

The necessary application has been filed before the Regional Director at Ahmedabad, whose order is awaited.

Amalgamation of Aditya Birla Solar Limited (ABSL) with Aditya Birla Renewables Limited (ABReL)

ABSL and ABReL are wholly-owned subsidiaries of your Company, both engaged in the business of electric power generation using solar energy. The Board of Directors of both companies have approved the scheme of Arrangement between ABSL and ABReL under sections 230 and 232 of the Companies Act, 2013. The Appointed Date of the Scheme is 1st April 2019 or such other date as the Board of Directors of ABSL or ABReL may decide or National Company Law Tribunal (NCLT) may direct. As per the Share Exchange Ratio, for every 1,000 fully paid up equity shares of Rs 10/- each in ABSL, 1,202 equity shares in ABReL of Rs 10/- each fully paid up shall be issued.

ABSL and ABReL have filed a joint application with the NCLT, Mumbai Bench on 27th March 2020 for amalgamation of ABSL with ABReL and seeking dispensation from convening meeting of shareholders, as your Company is the sole member of ABSL and ABReL and has accorded its consent to the Scheme. The proceedings are pending before NCLT, Mumbai Bench.

Voluntary winding up of Aditya Birla Idea Payments Bank Limited

Your Company holds 51% in the capital of Aditya Birla Idea Payments Bank Limited (ABIPBL).

Due to unanticipated developments in the business landscape leading to a seemingly unviable business model, the Board of Directors and shareholders of ABIPBL have, subject to receipt of requisite regulatory consents and approvals, approved the voluntary winding up of ABIPBL.

The Liquidator has been appointed and the liquidation is in progress.

Alteration to the Articles of Association (AOA)

Aditya Birla Idea Payments Bank Limited (ABIPBL), now a subsidiary of the Company, was granted a license to operate Payments Bank by Reserve Bank of India in April 2017.

In order to comply with one of the conditions of the license, the members at 70th Annual General Meeting held on 22nd September 2017, approved alteration to the AOA by inserting new articles 63A to 63D, after the existing article 63 of the AOA of the Company.

As part of the liquidation process, RBI has cancelled the Payments Bank license of ABIPBL w.e.f. 28th July 2020. Consequently, it is proposed to obtain consent of the members for deleting articles 63A to 63D from the AOA of the Company, as stated in the Notice of this Annual General Meeting.

Your Directors commend the above for your approval.

Amendment to the Object Clause of the Memorandum of Association (MOA)

Your Company is a leading manufacturer of viscose staple fibre (VSF) and Chemicals (Chlor Alkali) in India. Your Company manufactures various chemicals like Caustic Soda, Calcium Hypochlorite, Phosphoric Acid, Sodium Hypochlorite, Aluminium Chloride (Anhydrous) etc. many of which are used for processing/disinfecting edible food items.

In order to meet the registration requirement of Food Safety and Standards Authority of India, Clause 4.L of the MOA needs to be amended to inter-alia include Food processing aids or Food processing chemicals, as included in the Notice of the Annual General Meeting of the Company.

Your Directors commend the above for your approval.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, Listing Regulations and Ind AS 110 - Consolidated Financial Statements (CFS)/and Ind AS 28 - Investment in Associates/and Joint Ventures, the Audited Consolidated Financial Statements forms integral part of this Annual Report.

SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES

The following are the changes in the subsidiaries, associates and joint venture companies of your Company:

Name of the Company Change in Status Effective Date
Aditya Birla Power Composites Limited Became a wholly owned subsidiary 15th October 2019
Aditya Birla Power Composites Limited Became a Joint Venture 10th December 2019

In accordance with the provisions of section 129(3) of the Companies Act, 2013, read with rule 5 of the Companies (Accounts) Rules, 2014, a statement containing the salient features of financial statements of each of the subsidiaries/ associates/joint venture companies of your Company, in the prescribed Form AOC-1, is given in Annexure ‘B to this Report.

The said Form also highlights the financial performance of each of the subsidiaries/associates/joint venture companies included in the CFS pursuant to rule 8(1) of the Companies (Accounts) Rules, 2014.

In accordance with the provisions of section 136(1) of the Companies Act, 2013, the Annual Report of your Company, containing inter-alia the audited standalone and consolidated financial statements, has been placed on the website of your Company, www.grasim.com. Further, the audited financial statements along with related information and other reports of each of the subsidiary companies is also available on the website of your Company, www.grasim.com.

All documents referred to in the Notice will also be available electronically for inspection without any fee by the members from the date of circulation of the Notice of the Annual General Meeting up to the date of Annual General Meeting. Members seeking to inspect such documents can send an email at grasim.secretarial@adityabirla.com.

Your Company does not have any material unlisted subsidiary company. UltraTech Cement Limited and Aditya Birla Capital Limited are the material listed subsidiary companies of your Company. The Audit Committee and the Board reviews the financial statements, significant transactions and working of all the subsidiary companies, and the minutes of unlisted subsidiary companies are placed before the Board.

CONVENING ANNUAL GENERAL MEETING THROUGH AUDIO VISUAL MEANS

Considering the present COVID-19 pandemic, the Ministry of Corporate Affairs (‘MCA) has vide its General Circular No. 20/2020 dated 5th May 2020 read with General Circular No. 14/2020 dated 8th April 2020; General Circular No. 17/2020 dated 13th April 2020 (collectively referred to as ‘MCA Circulars) and other applicable circulars issued by the Securities and Exchange Board of India (‘SEBI) permitted convening the Annual General Meeting through Video Conference (VC)/Other Audio Visual Means (OAVM), without the physical presence of the Members at a common venue. In compliance with the MCA Circulars, applicable provisions of the Companies Act, 2013 and Listing Regulations, the 73rd Annual General Meeting of your Company will be convened and conducted through VC/OAVM.

ULTRATECH CEMENT LIMITED (ULTRATECH)

Acquisition of the Century Cement Business

The Scheme of Demerger for acquisition of the Century Cement Business by UltraTech was made effective from 1st October 2019. UltraTechs financials were restated from 20th May 2018, to include the financials of the acquired Century Cement Business in terms of the NCLT order sanctioning the Scheme of Demerger. Consequently, the CFS of the Company has also been restated as mentioned in note 4.12 (A) of CFS.

With this acquisition, UltraTechs cement manufacturing capacity stands augmented to 114.8 MTPA, including its overseas capacity. This makes UltraTech the 3rd largest cement Company in the world, outside of China, and also the largest cement Company in the 2nd largest market, globally. It is also the only Company in the world to have a capacity of over 100 MTPA in a single country, outside of China. This acquisition has further strengthened UltraTechs leadership position in the Central, Eastern and Southern Indian markets.

Bangladesh Operations

During the year, UltraTechs wholly owned subsidiary, UltraTech Cement Middle East Investments Limited, divested its entire shareholding in Emirates Cement

Bangladesh Limited and Emirates Power Company Limited to HeidelbergCement Bangladesh Limited at a final Enterprise Value of BDT equivalent of US$ 30.2 million.

ADITYA BIRLA CAPITAL LIMITED (ABCL)

Issue and Allotment of equity shares on preferential basis:

During the Financial year 2019-20, ABCL allotted 21 Crore equity shares at Rs 100 each (face value of Rs 10 each at a premium of Rs 90 each) on a preferential basis to (i) Grasim Industries Limited (the ‘Promoter), (ii) other members of its Promoter Group, (iii) Jomei Investments Limited (‘Jomei), (iv) PI Opportunities Fund-I (‘PI Opportunities), after obtaining approval from its shareholders and other statutory authorities including Stock Exchanges, Competition Commission of India and Department of Economic Affairs.

Your Company has in accordance with the Listing Regulations adopted the Policy for determining Material Subsidiaries. The said Policy is available on your Companys website, www.grasim.com.

SHARE CAPITAL

During the FY 2019-20:

your Company issued and allotted 2,00,575 equity shares of Rs 2/- each pursuant to the exercise of Stock Options and Restricted Stock Units in terms of the Employees Stock Option Schemes of your Company.

your Company has not issued any shares with differential voting rights or any sweat equity shares.

PURCHASE OF TREASURY SHARES

As on 31st March 2020, Grasim Employees Welfare Trust (Trust) constituted in terms of the Companys Employee Stock Option Scheme, 2018 (‘ESOS 2018), holds 13,57,375 equity shares of your Company. During the financial year, the Trust did not acquire any equity shares of your Company from the secondary market. As per Ind AS, purchase of own equity shares are treated as treasury shares.

DEPOSITS

During the FY 2019-20, your Company has not accepted or renewed any deposits within the meaning of section 73 of the Companies Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014, and, as such, no amount of principal or interest was outstanding, as on the date of the Balance Sheet.

ISSUE OF NON-CONVERTIBLE DEBENTURES

During FY 2019-20, your Company has issued 17,500 fully paid-up, Unsecured, Redeemable Non-Convertible Debentures of face value of Rs 10 Lakh each, at par, in three tranches, as per the details set out hereunder:

Date of Issue Number of Non- Convertible Debentures Issue Size (Rs in Crore) Tenure Rate of Interest Date of Maturity
02.04.2019 5,000 500 5 years 7.85% 15.04.2024
13 days
04.06.2019 7,500 750 5 years 7.60% 04.06.2024
17.02.2020 5,000 500 3 years 6.65% 17.02.2023

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Pursuant to section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014, disclosures relating to loans, advances and investments as on 31st March 2020 are given in the Notes to the Financial Statements. There are no guarantees issued, or securities provided by your Company in terms of section 186 of the Companies Act, 2013, read with the rules issued thereunder.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report for the year under review, as stipulated under regulation 34 of the Listing Regulations, is presented in a separate section, and forms an integral part of this Report. It, inter-alia, provides details about the Indian economy, business performance review of the Companys various businesses and other material developments during the FY 2019-20, including impact of COVID-19 on businesses of the Company.

CORPORATE GOVERNANCE

Your Directors re-affirm their continued commitment to the best practices of Corporate Governance. Corporate Governance principles form an integral part of the core values of your Company.

The Corporate Governance Report for the year under review, as stipulated under regulation 34 of the Listing Regulations, is presented in a separate section, and forms an integral part of this Report. A certificate from the Auditors on its compliance is given in Annexure C to this Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Directors

In accordance with the provisions of section 152 and other applicable provisions, if any, of the Companies Act, 2013 read with Companies (Appointment & Qualification of Directors) Rules, 2014, and the Articles of Association of the Company, Mrs. Rajashree Birla (DIN: 00022995) and Mr. Shailendra K. Jain (DIN: 00022454), Directors of your Company, are liable to retire by rotation at the Annual General Meeting and, being eligible, have offered themselves for re-appointment.

In terms of the provisions of the Listing Regulations, with effect from 1st April 2019, no listed company shall appoint or continue the appointment of a Non-Executive Director who has attained the age of 75 years, unless a special resolution is passed to that effect. Mrs. Rajashree Birla will be attaining the age of 75 years in September 2020 and Mr. Shailendra K. Jain has attained the age of 75 years in December 2018, and his continuation as a Non-Executive Director was then approved by the members at the Annual General Meeting held on 14th September 2018. Resolutions seeking their re-appointment and continuation as Directors, along with their brief profile forms part of the Notice of the Annual General Meeting.

Subject to the approval of the shareholders, and based on the recommendations of the Nomination and Remuneration Committee, the Board at its meeting held on 13th June 2020 appointed Dr. Santrupt Misra (DIN:00013625) as an Additional Director (Non-Executive and Non-Independent) of the Company, subject to retirement by rotation, with effect from 13th June 2020. In terms of the provisions of the Companies Act, 2013, Dr. Santrupt Misra will hold office up to the date of the Annual General Meeting.

Resolution seeking the appointment of Dr. Santrupt Misra as Non-Executive (Non-Independent) Director along with his brief profile forms part of the Notice of the Annual General Meeting.

Subject to the approval of the shareholders, and based on the recommendations of the Nomination and Remuneration Committee, the Board at its meeting held on 13th August 2020 appointed Mr. Vipin Anand (DIN: 05190124) as an Additional Director (Non-Executive and Non-Independent) of the Company, subject to retirement by rotation, with effect from 13th August 2020. In terms of the provisions of the Companies Act, 2013, Mr. Vipin Anand will hold office up to the date of the Annual General Meeting.

Resolution seeking the appointment of Mr. Vipin Anand as Non-Executive (Non-Independent) Director along with his brief profile forms part of the Notice of the Annual General Meeting.

Your Directors commend the Resolutions for your approval for the aforesaid appointments/ re-appointments/continuations.

Pursuant to the Groups Policy of rotation of senior leaders, Mr. Sushil Agarwal, Whole-time Director & CFO relinquished his role as Chief Financial Officer of Grasim Industries Limited and as a member of its Board. Mr. Agarwal has ceased to be a Director on the Board of the Company, with effect from close of business hours on 30th June 2019.

Term of (Late) Mr. M. L. Apte and Mr. B. V. Bhargava as Independent Directors of the Company expired post conclusion of 72nd Annual General Meeting of the Company held on 23rd August 2019. The Board placed on record its sincere appreciation for the valuable contribution and services rendered by Mr. Sushil Agarwal, (Late) Mr. M. L. Apte and Mr. B. V. Bhargava during their tenure as the Directors of the Company.

Mr. Himanshu Kapania relinquished his role as the Non-Executive Director (Vice Chairman) of the Company, with effect from close of business hours on 31st December 2019, to pursue another role in the Aditya Birla Group. The Board placed on record its sincere appreciation for the valuable contribution and services rendered by Mr. Himanshu Kapania during his tenure as the Non-Executive Director (Vice Chairman) of the Company.

Ms. Usha Sangwan has resigned from the Board of the Company, on personal and health grounds effective from 16th May 2020. The Board placed on record its sincere appreciation for the valuable contribution and services rendered by Ms. Usha Sangwan during her tenure as the Non-Executive Director of the Company.

Key Managerial Personnel

Pursuant to the provisions of sections 2(51) and 203 of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Key Managerial Personnel of the Company as on 31st March 2020 are Mr. Dilip Gaur, Managing Director, Mr. Ashish Adukia, Chief Financial Officer and Mrs. Hutokshi R. Wadia, President and Company Secretary.

During the year under review, Mr. Sushil Agarwal, relinquished his office as Whole-time Director & CFO. He ceased to be the Key Managerial Personnel of the Company, with effect from the close of business hours on 30th June 2019. The Board of Directors at its meeting held on 24th May 2019, appointed Mr. Ashish Adukia as the Chief Financial Officer of the Company, with effect from 1st July 2019.

MEETINGS OF THE BOARD

The Board of Directors of the Company met 7 times during the year to deliberate on various matters. The meetings were held on 5th April 2019, 11th April 2019, 24th May 2019, 12th July 2019, 14th August 2019, 14th November 2019 and 10th February 2020.

Further details are provided in the Corporate Governance Report, which forms an integral part of this Annual Report.

DECLARATION OF INDEPENDENCE

Definition of ‘Independence of Directors is derived from regulation 16(1)(b) of the Listing Regulations and section 149(6) of the Companies Act, 2013 and rules framed thereunder. Your Company has received declarations from all the Independent Directors of your Company confirming that they meet the criteria of independence as prescribed under section 149(6) of the Companies Act, 2013 and regulation 16(1)(b) of the Listing Regulations.

FORMAL ANNUAL EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and the Listing Regulations, the Board of Directors has carried out an annual evaluation of its own performance, its Committees, Independent Directors, Non-Executive Directors, Executive Director, and the Chairman of the Board.

The Nomination and Remuneration Committee of the Board has laid down the manner in which formal annual evaluation of the performance of the Board, its Committees and Individual Directors has to be made. It includes circulation of evaluation forms separately for evaluation of the Board and its Committees, Independent Directors/Non-Executive Directors/Executive Director and the Chairman of your Company.

The performance of Non-Independent Directors, the Board as a whole, and the Committees of the Board has been evaluated by Independent Directors in a separate meeting. At the same meeting, the Independent Directors also evaluated the performance of the Chairman of your Company, after taking into account the views of Executive Director and Non-Executive Directors. Evaluation as done by the Independent Directors was submitted to the Nomination and Remuneration Committee and subsequently to the Board.

The performance of the Board and its Committees was evaluated by the Nomination and Remuneration Committee after seeking inputs from all the Directors, on the basis of criteria such as the Board/ Committee composition and structure, effectiveness of the Board/Committee process, information and functioning, etc.

The performance evaluation of all the Directors of your Company (including Independent Directors, Executive Director and Non-Executive Directors and Chairman), is done at the Nomination and Remuneration Committee meeting and the Board meeting by all the Board members, excluding the Director being evaluated on the basis of criteria, such as contribution at the meetings, strategic perspective or inputs regarding the growth and performance of your Company, among others. Following the meetings of Independent Directors and of Nomination and Remuneration Committee, the Board at its meeting discussed the performance of the Board, as a whole, its Committees and Individual Directors.

The new Directors inducted into the Board attends an orientation programme. The details of the programme for familiarisation of Independent Directors of your Company are provided in the Corporate Governance Report, which forms part of this Annual Report and are also available on your Companys website, www.grasim.com.

DIRECTORS RESPONSIBILITY STATEMENT

The audited accounts for the year under review are in conformity with the requirements of the Companies Act, 2013 and the Accounting Standards. The financial statements reflect fairly the form and substance of transactions carried out during the year under review and reasonably present your Companys financial condition and results of operations.

Pursuant to section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of its knowledge and ability, confirm that: a) in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) the accounting policies selected have been applied consistently, and judgements and estimates are made that are reasonable and prudent, so as to give a true and fair view of the state of affairs of your Company as at 31st March 2020 and of the profit of your Company for the year ended on that date;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records, in accordance with the provisions of the Act for safeguarding the assets of your Company, and for preventing and detecting fraud and other irregularities;

d) Annual Accounts have been prepared on a ‘going concern basis;

e) your Company has laid down proper internal financial controls, and that such internal financial controls are adequate and were operating effectively; and

f) your Company has devised proper systems to ensure compliance with the provisions of all applicable laws, and that such systems were adequate and operating effectively.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under section 134(3)(m) of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, is set out in Annexure ‘D to this Report.

AUDITORS AND AUDIT REPORTS

Statutory Auditors

Pursuant to the provisions of section 139(1) of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, as amended from time to time, B S R & Co. LLP Chartered Accountants (ICAI Firm Registration No. 101248W/W-100022) and S R B C & CO, LLP, Chartered Accountants (ICAI Firm Registration No. 324982E/E300003) have been appointed as Joint Statutory Auditors of the Company for a period of five consecutive years, till the conclusion of the 74th Annual General Meeting of the Company, to be held in the year 2021 and 75th Annual General Meeting of the Company to be held in the year 2022, respectively.

Pursuant to the provisions of section 139(1) of the Companies Act, 2013, as amended with effect from 7th May 2018, ratification of the appointment of the statutory auditors, by the Members at every Annual General Meeting during the period of their appointment, has been withdrawn from section 139(1) of the Companies Act, 2013 with effect from that date. In view of the above, no resolution is proposed for ratification of appointment of the Joint Statutory Auditors at the Annual General Meeting, and a note in respect of the same has been included in the Notice of the Annual General Meeting.

The Joint Statutory Auditors have confirmed that they are not disqualified to continue as Auditors, and are eligible to hold office as Auditors of the Company. As authorised by the shareholders, the Board, on the recommendation of the Audit Committee, has ratified the appointment of the Joint Statutory Auditors for their respective remaining terms at such remuneration, as may be mutually agreed between the Board of Directors and the Joint Statutory Auditors, from time to time.

The observations made by the Joint Statutory Auditors on the Financial Statements of the Company, in their Report for the financial year ended 31st March 2020, read with the Explanatory Notes therein, are self-explanatory and, therefore, do not call for any further explanation or comments from the Board under section 134(3)(f) of the Companies Act, 2013. The Auditors Report does not contain any qualification, reservation, disclaimer or adverse remark.

Cost Auditors

The cost accounts and records as required to be maintained under section 148(1) of Companies Act, 2013 are duly made and maintained by your Company. Pursuant to the provisions of section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, as amended, notifications/circulars issued by the Ministry of Corporate Affairs from time to time, your Board has, on the recommendation of the Audit Committee, re-appointed the following Cost Auditors for FY 2020-21:

Name of the Cost Auditor Division of the Company Remuneration
M/s. D. C. Dave & Co., Cost Accountants, Mumbai (Registration No. 000611) M/s. M. R. Dudani & Co., Cost Accountants, Mumbai (Registration No. FRN - 104041) All Divisions of the Company, except Viscose FilamentYarn- Century Rayon Division Viscose Filament Yarn-Century Rayon Division Not exceeding Rs 15.00 Lakh plus applicable taxes and reimbursement of out-of-pocket expenses Not exceeding Rs 2.20 Lakh plus applicable taxes and reimbursement of out-of-pocket expenses

Your Company has received consent from M/s. D. C. Dave & Co. and M/s. M. R. Dudani & Co., Cost Accountants, to act as the Cost Auditors of your Company for the FY 2020-21, along with separate certificates confirming each of their eligibility.

As required under the Companies Act, 2013, a resolution ratifying the remuneration payable to the cost auditors has been placed before the Members for their approval, at the Annual General Meeting.

SECRETARIAL AUDITORS

Pursuant to the provisions of section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has re-appointed M/s. BNP & Associates, Company Secretaries, Mumbai, to conduct the secretarial audit for FY 2021. The Secretarial Audit Report, issued by M/s. BNP & Associates, Company Secretaries for the FY 2019-20, is set out in Annexure ‘E to this Report.

The Secretarial Audit Report does not contain any qualification, reservation, disclaimer or adverse remark.

Your Company is in compliance with the Secretarial Standards specified by the Institute of Company Secretaries of India.

REPORTING OF FRAUDS BY AUDITORS

During the year under review, neither the statutory auditors nor the secretarial auditor have reported to the Audit Committee under section 143(12) of the Companies Act, 2013 any instances of fraud committed against your Company by its officers and employees, details of which would need to be mentioned in the Boards Report.

DISCLOSURES

Contracts and Arrangements with Related Parties

During FY 2019-20, all contracts/ arrangements/ transactions entered into by your Company with Related Parties were on arms length basis and in the ordinary course of business. There are no material transactions with any Related Party as defined under section 188 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014. All Related Party transactions have been approved by the Audit Committee of your Company. Your Company has implemented Related Party Transactions Policy and Standard Operating Procedures for the purpose of identification and monitoring of such transactions.

The details of contracts and arrangements with Related Parties of your Company for the financial year ended

31st March 2020, are given in Notes to the Standalone Financial Statements, forming part of this Annual Report.

The Policy on Related Party Transactions, as approved by the Board, is available on your Companys website, www.grasim.com.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

Your Company has established a robust Vigil Mechanism for reporting of concerns through the Whistle Blower Policy of your Company, which is in compliance of the provisions of section 177 of the Companies Act, 2013, read with rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, and the Listing Regulations. The Policy provides for framework and process whereby concerns can be raised by its employees against any kind of discrimination, harassment, victimisation or any other unfair practice being adopted against them. Adequate safeguards are provided against victimisation to those who avail of the mechanism, and access to the Chairman of the Audit Committee, in exceptional cases, is provided to them. The details of the Vigil Mechanism are also provided in the Corporate Governance Report, which forms part of this Annual Report and the Whistle Blower Policy has been uploaded on the website of your Company, www.grasim.com.

CORPORATE SOCIAL RESPONSIBILITY

In terms of the provisions of section 135 of the Companies Act, 2013, read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors of your Company has a Corporate Social Responsibility (CSR) Committee, which is chaired by Mrs. Rajashree Birla. The other Members of the Committee are Ms. Anita Ramachandran, Independent Director, Mr. Shailendra K. Jain, Non-Executive Director and Mr. Dilip Gaur, Managing Director. Dr. Pragnya Ram, Group Executive President, CSR, is a permanent invitee to the Committee. The Corporate Social Responsibility Policy (CSR Policy), indicating the activities undertaken by your Company, is available on your Companys website, www.grasim.com.

Your Company is a caring corporate citizen and lays significant emphasis on development of the host communities around which it operates. Your Company, with this intent, has identified several projects relating to Social Empowerment and Welfare, Infrastructure Developments, Sustainable Livelihood, Health Care and Education, during the year, and initiated various activities in neighbouring villages around its plant locations. The initiatives undertaken by your Company on CSR activities, during the FY 2019-20, are set out in Annexure ‘F to this Report, in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. Your Company has spent a sum of Rs 58.98 Crore, which is more than 2% of the average net profits of the last three years for the purposes of CSR.

RISK MANAGEMENT

Pursuant to the requirement of Listing Regulations, your Company has constituted Risk Management Committee, which is mandated to review the risk management plan/process of your Company. Risk evaluation and management is an ongoing process within the Organisation. Your Companys Risk Management Committee periodically assesses risk in the internal and external environment, and incorporates Risk Mitigation Plans in its strategy, business and operation plans. Your Company has comprehensive risk management framework, which is periodically reviewed by the Risk Management Committee.

BUSINESS RESPONSIBILITY REPORT

As per regulation 34(2)(f) of the Listing Regulations, a separate section on Business Responsibility Report, describing the initiatives taken by your Company from environmental, social and governance perspective, forms an integral part of this Annual Report.

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return of your Company as on 31st March 2020 in Form MGT-9, in accordance with section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, is given in Annexure ‘G to this Report. The same is also available on your Companys website, www.grasim.com

INTERNAL FINANCIAL CONTROLS

Your Company has in place adequate internal financial control system commensurate with the size of its operations. Internal control systems comprising of policies and procedures are designed to ensure sound management of your Companys operations, safe keeping of its assets, optimal utilisation of resources, reliability of its financial information and compliance. Systems and procedures are periodically reviewed to keep pace with the growing size and complexity of your Companys operations. During the year under review, no material or serious observation has been received from the Auditors of your Company citing inefficiency or inadequacy of such controls.

REMUNERATION POLICY

The Remuneration Policy of your Company, as formulated by the Nomination and Remuneration Committee of the Board of Directors is given in Annexure ‘H to this Report and is also available on your Companys website, www.grasim.com.

COMMITTEES OF THE BOARD

Audit Committee

The Audit Committee comprises of Mr. Arun Thiagarajan, Mr. O. P. Rungta, Mr. N. Mohanraj and Mr. Dilip Gaur as its Members. The Committee comprises of majority of Independent Directors with Mr. Arun Thiagarajan being the Chairman. The CFO of your Company is the permanent invitee at the Audit Committee meeting.

Further details relating to the Audit Committee are provided in the Corporate Governance Report, which forms an integral part of this Annual Report.

All the recommendations made by the Audit Committee, during the year, were accepted by the Board of Directors of your Company.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee as on 31st March 2020 comprises of Mr. O. P. Rungta, Mr. Cyril Shroff and Mr. Kumar Mangalam Birla as its members.

Further details relating to the Nomination and Remuneration Committee are provided in the Corporate Governance Report, which forms an integral part of this Annual Report.

Corporate Social Responsibility Committee

The Corporate Social Responsibility Committee comprises of Mrs. Rajashree Birla, Ms. Anita Ramachandran, Mr. Shailendra K. Jain and Mr. Dilip Gaur as its members. Mrs. Rajashree Birla is the Chairperson of the Corporate Social Responsibility Committee.

Further details relating to the Corporate Social Responsibility Committee are provided in the Corporate Governance Report, which forms an integral part of this Annual Report.

Stakeholders Relationship Committee

Stakeholders Relationship Committee comprises of Mr. O. P. Rungta, Mr. Cyril Shroff and Mr. Dilip Gaur as its members. The Committee looks into matters relating to transfer/transmission of securities; non-receipt of dividends; non-receipt of annual report etc.

Further details pertaining to Stakeholders Relationship Committee are provided in the Corporate Governance Report, which forms an integral part of this Annual Report.

RESEARCH AND DEVELOPMENT (R&D)

The R&D projects portfolio is focused on improving the relative market position of our businesses in the face of increasingly volatile and competitive business environment. The focus is on developing and commercializing premium differentiated products, improving our competitive cost position, product quality and environmental sustainability. To support these goals, the businesses are managing a pipeline of projects that are addressing near and mid-term needs, as well as the exploration of future opportunities.

PULP & FIBRE BUSINESS

The Pulp R&D Technology team is focused on increasing process efficiencies. Your Company has installed and optimised an oxygen-delignification (ODL) step in pulp making process at the Harihar plant, leading to significant reduction in water-consumption and effluent. Improvements in the biogas operations at Harihar pulp plant have allowed to double the biogas production. Use of algorithm based on machine learning concepts in bleaching process and improvements in digester process have enabled reduction in pulp viscosity variations leading to improvement in stability of fiber plant. Digitisation initiative to connect pulp and fiber plants has been piloted successfully at Birla Cellulosic Kharach site and our pulp plants, providing the fiber producing plants with real time access of pulp quality data. This is now being extended to external pulp suppliers.

The focus areas for innovations in Viscose Staple Fibre (VSF) production facilities aim at increasing productivity, customer experience of product quality, sustainability and specialty products. Our agenda is to advance the development,andprogresstheimplementationofprocess technologies which reduce in-process consumption of material and energy. This is translating into reduced cost of production while enhancing sustainability. One example is the increased efficiency of the gaseous emission control technology and its implementation in new installations at China and Vilayat plants. Thus, we are implementing our public commitments for reducing the environmental footprint. Responding to the reducing availability of water, we have been on a journey to reduce water consumption at our plants. At our Nagda plant, this year we have further embarked on fully closed-loop recycling of water by designing a fit-for-purpose zero liquid discharge (ZLD) system, that is now under construction.

Aditya Birla Science and Technology Company Limited (ABSTC) has gained understanding of effluent stream characteristics and variation in their treatments, and this is indicating potential to reduce cost of recovering chemicals such as zinc and provide cleaner effluent, and a pilot plant is under construction at Birla Cellulosic, Kharach. Similarly, recent years understanding of the fundamentals of fiber dryers have been used to increase productivity, reduce energy consumption and improve uniformity of fiber drying.

Our work towards customers experience aimed at achieving higher efficiency in yarn spinning and improved yarn quality from our grey fibers. We also progressed with launch of specialty products, resulting in new offerings at different stages of commercialization. Working with external labs and customers, we developed and scaled-up rapidly Purocel EcoFlush: a short-cut Non Woven fibers for wipes with enhanced flushability. Another new product is the Liva Reviva fiber where we have incorporated cotton-waste (from garmenting industry) as partial replacement to dissolving-grade pulp in the viscose making process. This aligns with the global trend of waste-management, and has helped us earn top points in the Canopy style ratings for sustainability credentials among cellulosic fiber producers. Livaeco, a recently launched fiber with enhanced sustainability credentials and physical source verification, has received recognition and traction from garment Brand owners, and this approach has been extended to multiple plants and products. The differentiated products pipeline continues to progress with additional products through development, customer acceptance tests, scale-up and product launch.

Man-made cellulosic fibers are being seen as potential alternative to regulations aiming to reduce use of plastics in packaging, and ABSTC is leading such development for business, and is evaluating potential of viscose based solutions for carry bags.

Our digitalization program has aimed at assisting business decision making through data driven approaches for improvement in energy efficiency, asset uptime, quality, productivity and supply chain efficiency. Optimisation of Activated Carbon Process has resulted in improved CS2 recovery. Pulp Logistics cost optimisation model is developed and is being piloted. As a start, we are developing digital-twin solutions at Vilayat for Chiller, Multiple Effect Evaporator and Fibre Dryer processes for improving energy economy, plant capacity and product quality through improved process control.

Your Company has employed a fiber quality gradation system since 2013, and this year a more comprehensive system has been institutionalized in alignment with our line-benchmarking exercise and continuous improvement principles. This improvement focuses not only on product features, but also on process parameters that are known to impact product. This will promote consistency to the next level and is aligned with our fibre quality improvement initiative that relies on ‘Product by Process approach using Six Sigma principles. Of the 23 fiber lines (covering 80% of total capacity) that were identified as mechanically capable of producing benchmark quality fiber, several hardware improvement and process optimisation actions have now enabled 22 lines to achieve the benchmark quality level. We aim to achieve the same in last remaining line in FY21. A further focus of this year will be to use process led innovations to overcome the capex intensive mechanical limitations of the currently less-capable fiber lines.

Our proprietary Excel process based on in-house developed environment-friendly solvent-spinning technology has been stabilized at the recently commissioned 45 TPD plant, now achieving the target production capacity and solvent recovery norms. The focus of technology development is now on developing new value-added products, enhancing sustainability and improving productivity and cost structure for future expansions. A new prototypic set-up for developing non-fibrillating Excel for premium knit applications is commissioned in the pilot plant for evaluation of new sustainable chemistries developed at lab scale. A specialty coarse denier Excel product developed at pilot scale for carpet application have gone through customer acceptance test. External collaborations have been established to complement our in-house R&D efforts for developing a circular process that utilizes cellulose from recycled garment waste and non-plant sources as feedstock.

Textile Research and Application Development Centre (TRADC) continues to bring contemporary, innovative and cost-effective solutions for the Global Fashion Industry. The quality of such developments is established through adoption by niche brands, such as Modal/Linen and Viscose/Linen fabric by Van Huesen Womens wear. Development in denims has allowed use of Excel fiber in place of cotton. A global brand has selected cotton blend with dope-dyed viscose for their casual bottom-wear segment. Similarly, handloom sector found Modal and Excel blends to be superior to conventional cotton in Sarees and Scarves, thus shifting government co-operatives and retails orders from cotton to Modal or Excel. Development based on Core-Spun Technology has drawn attention of one of the largest garment exporters and textile units.

The RD&T activities thus span a wide range of present and future necessities of the P&F Business.

Viscose Filament Yarn (VFY)

Your Company has been successful in creating new Viscose Filament Yarns to enter segments where it was never considered. This led to new products like VFY with lesser filament & crispier fabric feel, monofilament VFY, bi-shrinkage yarns and VFY with unique effects for different fabric weaves. Your Company has launched Raysil Prim, a high performance spool spun yarn with new pulp blend and upgraded technology. These, with new construct and blends, further the objective to create fashion fabrics.

On process side, your Company is exploring possibilities to introduce robotic inspection & packing automation in SSY, Project Suraksha (for creating safety with Video Analytics) and digital interventions for quality enhancement. Technology upgradation and process innovation is done in-house including building SSY machines for expansions. Indian Rayon has also installed ETP water recycling plant and 2nd recycling plant is coming up shortly. The unit has undertaken project for installation of water desalination plant for 100% self-dependence on water.

Chemical Business

Your Companys R&D efforts are focused on building innovative products, developing new applications, improving productivity, creating platforms to strengthen core-businesses, improving water & energy efficiencies and recovery/reuse of waste products – with underlying theme to be big in our customers life.

Chlor-alkali businesss R&D efforts focused on water treatmentsolutions,disinfectantsasaplatform,improving salt water beneficiation from sea water, developing value-added Chlorine offerings. Your Company has patents including ones for water treatment & beneficiation, for effluent treatment chemicals for recovery & reuse, fire retardant chemicals, immunization & anti-infection clean chemicals, etc.

Water Treatment Chemicals have considerably grown based on tailor made applications developed at our dedicated– Aditya Birla Water Application Development Centre (ABWADC) – including that for city waste water treatment for major cities in India, for power plants and for paper pulp industry. Your Company has commercialized solutions for oil-water separation and colour removal from wastewater. ABWADC is working with Common Effluent Treatment Plants (CETPs) to meet treated wastewater quality. Collaboration with National Chemical Laboratory, NEERI, IITs, CLRI and NITs has progressed further during the year. Project sponsored by DST with a NIT for removal of fluoride from drinking water is at advanced stage of development. Technologies and processes developed at ABWADC have been transferred to other Units of Chemical business.

Various improvements in existing processes were achieved, including in CaCl2 stream handling, bleach salt, new high basicity coagulations, debottlenecking of Super Coagulant process, among others. This has helped improve efficiencies as well as quality. Your Company is focused on process improvements for basic raw material blends to achieve process accelerations and engineering improvements. Your Company has successfully created newer grades for new applications of products like Chlorinated Paraffin Wax. Newer products are evaluated continually including new chlorine derivatives, extending current chlorine chains for products in agri-inputs and adding value to waste. Moreover, given significant cost of brine purification, a focused work on optimisation of brine treatment process, effluent regeneration was done to reduce load on operationalised Zero Liquid Discharge.

Advanced Material – Epoxy Resins

Your Companys R&D team is involved in developing new products in Composites segment, Electrical & Electronic segment, Wind Turbine blades of length of over 90 meters, Epoxy systems which has long pot life & long gel-time with better control over exotherm and timely technical services for our customers. To cater to the Civil and Coating segment, your Company is developing solvent and water based epoxy solutions as adhesives and coatings for various substrates like marble, cement, wood, glass, concrete, etc. We have also developed BPA-free water-based coating solutions for food packaging, powder coating, etc.

Apart from these application developments, your Company also works on synthesizing new backbone molecules with multiple functionality for making our products green, and process development for recycling these products.

Agri-business

During the year, in line with Honble Prime Ministers Visionofdoublingfarmerincomeby2022,yourCompanys Agri-business defined its purpose as ‘Farmers Prosperity. Thus, R&D approach is to innovate to deliver products that are customised, functional and with world-class quality. This year, a patent was granted for Customised Fertiliser Process and patents are also filed for product and process of slow release urea. Your Company is providing thrust on Purak segment (non-Urea business) which includes innovative and patented product Oorja (a soil conditioner – being expanded to newer crops and in new states across India) and Birla Shaktiman Vardan (soil and crop-specific customised fertiliser). Several innovative products are at various stages of development – from testing & piloting to refinement & commercialisation – like new variants of customised fertilisers, new Oorja variants, new NP inputs, slow release urea, among others.

Insulators

Your Companys Insulators business has accelerated its R&D efforts with focus on process & working environment improvements. Two patents have been filed: (1) an international patent (in USA) on a unique automation process developed in-house which helps precisely maintain all key kiln parameters automatically during the firing process and (2) a patent on development of unique special glaze that eliminated dry finishing step (that generates dust; thus improving environmental conditions for workers) while giving superior finish.

Your Company has also accelerated its new product development to solve for emerging customer needs. These include bottom RTV coated porcelain insulators for Transmission lines that can withstand the highest pollution levels in India and a new Semi-conductive glaze coating on the porcelain insulators that reduces the tendency for electrical discharge specially in icy zones like in Europe and North America.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF YOUR COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THE FINANCIAL STATEMENT RELATES AND THE DATE OF THE REPORT

No material changes and commitments, which could affect your Companys financial position, have occurred between the end of the financial year and the date of this Report. There has been no change in the nature of business of your Company.

IMPACT OF COVID-19 ON BUSINESS

In March, 2020 i.e. the last month of FY 2020, the COVID-19 pandemic developed rapidly into a global crisis, forcing governments to enforce lock-downs of all economic activity. For the Company, the focus immediately shifted to ensuring the health and well-being of all employees and ensuing business continuity. Implementation of adequate policies and procedures to enable ‘work from home for employees to work remotely and securely and ensure Business Continuity Plan. Given that employee safety and government directives, operations at all the plants of the Company except the Fertiliser plant at Jagdishpur, UP were suspended. The operations have since been resumed at all the plants in the month of May/June, 2020 following guidelines of the government authorities, though capacity utilizations remain low. Your Company has taken measures to maintain adequate financial liquidity and to ensure availability of raw materials and needed resources for sustained operations. Regular updates on the impact of COVID-19 on the businesses of the Company are being filed with the Stock Exchanges.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under section 197(12) of the Companies Act, 2013, read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as Annexure ‘I to this Report.

In accordance with the provisions of section 197(12) of the Companies Act, 2013 read with rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees drawing remuneration in excess of the limits, set out in the aforesaid rules, forms part of this Report. In line with the provisions of section 136(1) of the Companies Act, 2013, the Report and Accounts, as set out therein, are being sent to all the Members of your Company excluding the aforesaid information about the employees. Any Member, who is interested in obtaining these particulars about employees, may write to the Company Secretary at grasim.secretarial@adityabirla.com.

EMPLOYEE STOCK OPTION SCHEMES (ESOS)

ESOS-2006

During the year under review, the Stakeholders Relationship Committee of the Board of Directors allotted 66,195 Equity Shares of Rs 2/- of your Company to Options Grantees, pursuant to the exercise of the Stock Options under ESOS-2006.

ESOS-2013

During the year under review, the Nomination and Remuneration Committee of the Board of Directors approved vesting of 48,716 Stock Options and 21,877 Restricted Stock Units (RSUs) to the Eligible Employees, subject to the provisions of the ESOS-2013, statutory provisions, as may be applicable from time to time, and the rules and procedures set out by your Company in this regard.

Further, the Stakeholders Relationship Committee of the Board of Directors allotted 1,34,380 equity shares of

Rs 2/- of your Company to the Stock Options and RSUs Grantees, pursuant to the exercise of the Stock Options and RSUs, under ESOS-2013.

ESOS-2018

Pursuant to the approval of the shareholders at the Annual General Meeting held on 14th September 2018, the Board of Directors of your Company and the Nomination and Remuneration Committee, a new scheme viz. ‘Grasim Industries Limited Employee Stock Option Scheme 2018 (‘ESOS–2018) in terms of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (‘the SEBI SBEB Regulations) has been formulated. The ESOS 2018 is being administered by the Nomination and Remuneration Committee through the Grasim Employees Welfare Trust (Trust).

During the year under review, the Nomination and Remuneration Committee of the Board of Directors approved grant of 79,936 Stock Options and 33,459 Restricted Stock Units (RSUs) to the Eligible Employees, including Chief Financial Officer of the Company, under ESOS-2018 and also approved vesting of 2,43,534 Stock Options to the Eligible Employees, subject to the provisions of the ESOS-2018, statutory provisions, as may be applicable from time to time, and the rules and procedures set out by the Company in this regard.

The details of Employee Stock Options granted pursuant to ESOS-2006 and the Employee Stock Options and RSUs granted pursuant to ESOS-2013 and ESOS-2018, as also the other disclosures in compliance with the provisions of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, are available on your Companys website, www.grasim.com.

A certificate from the Statutory Auditors, with respect to implementation of your Companys Employees Stock Option Schemes will be available electronically for inspection without any fee by the members from the date of circulation of the Notice of the Annual General Meeting up to the date of Annual General Meeting. Members seeking to inspect such documents can send an email at grasim.secretarial@adityabirla.com.

PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

Your Company has zero tolerance for sexual harassment at workplace. The Company has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act) and the rules framed thereunder. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

Your Company has complied with provisions relating to the constitution of Internal Complaints Committee under the POSH Act. During the year under review, your Company received four complaints of sexual harassment under the aforesaid Act, out of which three complaints were resolved as on 31st March 2020 and the remaining one complaint was resolved in July 2020.

HUMAN RESOURCES

Your Companys human resources is the strong foundation for creating many possibilities for its business. During the year under review, your Company added greater employee talent through seamless integration of acquired assets. The efficient operations of manufacturing units, market development and expansion for various products was the highlight of our people effort.

Continuous people development for developing knowledge and skills coupled with the Talent Management practices will deliver the talent needs of the organisation. Your Companys employee engagement score reflects high engagement and pride in being part of the organisation.

The Groups Corporate Human Resources plays a critical role in your Companys talent management process.

AWARDS AND ACCOLADES

Some of the significant accolades earned by your Company during the year include:

Grasim ranked #70 in Worlds Best Employers 2019: Asia 200 Best over a Billion 2019 in Forbes List

Grasim ranks #38 in Indias Most Respected Companies list and #14 in most Women friendly and Growth plans - BusinessWorld and TechSci Research survey.

Grasim has bagged the Dun & Bradstreet Corporate Award 2019 as the Top Company for its stellar performance in the Indian Textiles sector.

Grasim is a winner of Business Todays Business Leaders of Madhya Pradesh Awards 2019 in ‘Best Manufacturing Company category.

Grasim was awarded the IT Infrastructure Management ICON at the CIO Power List 2019.

Grasim Pulp & Fiber Business won the award for Cloud & IOT at the Smart Manufacturing Awards 2019 organized by The Indian Express Group.

Grasims Indo Gulf Fertilisers Unit was ranked Top rated plant with 61 per cent score in the Grain by Grain, prepared by the NGO Centre for Science and Environment (CSE) 2019. It received the Four Leaves award for its superior performance in energy use and GHG emissions, its good EHS (environment, health and safety) measures, and social responsibility, and above all, its transparency in sharing information.

IP Excellence in India 2019 awarded to Grasim Pulp & Fiber Business by Questel is an Intellectual Property analytics company

Grasim has been awarded Global Agriculture Award 2019 under the Technology Leadership by the Indian Chamber of Food & Agriculture

‘Winner - Environment Leadership Category, Manufacturing Sector By Frost and Sullivan for ‘Innovative Method of Effluent Colour Removal & Conversion of Lignin Sludge into Vermicomposting in Pulp Plant

Grasims Harihar Unit won CII-ITC Sustainability Awards 2019: Excellence in Environment Management

NITI Aayog has conferred an award to Grasim Pulp & Fiber Business for its ‘Excellent contribution in the field of Patents awards were presented at ‘Fox Asia Health, Education & IPR Awards 2020

Grasims Staple Fibre Division Unit was conferred ‘ICC Social Impact Awards 2020 (Runner Up) in the category of ‘Healthcare

Grasims Staple Fibre Division Unit was conferred CSR Awards as ‘Overall Winner in Large Scale Category during ‘Amity CSR Conclave 2020

Grasims Staple Fibre Division Unit wins the prestigious Golden Peacock Award for CSR in the Textile and Apparel sector for the year 2019.

Grasims Jaya Shree Textiles & Vikram Woollens Units Winner of ‘Outstanding Accomplishment in Corporate Excellence at the CII-ITC Sustainability Awards 2019

Grasims Jaya Shree Textiles Unit was awarded Certificate of Merit in the Textiles (Large Units) at the National Energy Conservation Award (NECA) – 2019 by the Bureau of Energy Efficiency

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

Competition Commission of India (CCI) has passed an order under section 4 of the Competition Act, 2002 dated 16 March 2020, imposing a penalty of Rs 301.61 Crore on your Company in respect of its domestic Man-Made Fibre turnover. Your Company believes that it has not indulged in any such activities and that it has strong case, in the above matter.

The Deputy Commissioner of Income Tax (DCIT) has vide Order dated 14th March 2019 raised a demand of

Rs 5,872.13 Crore on account of dividend distribution tax (including interest) under the provisions of Income Tax Act, 1961 alleging that the demerger of financial services business is not a qualifying demerger and holding that the value of shares allotted by Aditya Birla Capital Limited (ABCL) to the shareholders of the Company in consideration of the transfer and vesting of the financial services business into ABCL [in terms of the of Composite Scheme of Arrangement between Aditya Birla Nuvo Limited and Grasim Industries Limited and Aditya Birla Financial Services Limited (now known as ABCL) duly approved by the National Company Law Tribunal, Ahmedabad Bench] amounted to distribution of dividend by the Company. Your Company has challenged the said order by filing an appeal before the Commissioner of Income Tax (Appeal) and the appeal is presently pending before the Commissioner of Income Tax (Appeal).

Your Company, backed by independent experts opinion, believes that the said order is not tenable in law and accordingly no provision has been made in the books of account.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise;

2. Issue of shares (including sweat equity shares) to employees of your Company under any Scheme save and except ESOS referred to in this report;

3. There were no revisions in the financial statements;

4. There has been no change in the nature of business of your Company; and

5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and your Companys operations in the future, except as mentioned above.

ACKNOWLEDGEMENTS

Your Directors express their deep sense of gratitude to the banks, financial institutions, stakeholders, business associates, Central and State Governments for their co-operation and support and look forward to their continued support in future.

Your Directors very warmly thank all our employees for their contribution to your Companys performance. We applaud them for their superior levels of competence, dedication and commitment to your Company. We have immense respect for every person who risked their lives and safety to fight this pandemic.

For and on behalf of the Board
Kumar Mangalam Birla
Chairman
(DIN: 00012813)
Mumbai, 13th August 2020