Grasim Industries Ltd Directors Report.

Dear Members,

Your Directors are pleased to present the 74th Annual Report in the form of second Integrated Report of your Company along with the Audited Financial Statements (Consolidated and Standalone) for the financial year ended 31st March 2021.

FINANCIAL HIGHLIGHTS

Your Companys financial performance for the financial year ended 31st March 2021, is summarised below:

Financial Results

Consolidated

Standalone

2020-21 2019-20 Restated# 2020-21 2019-20 Restated##
Revenue from Operations 76,397.81 75,140.71 12,386.36 16,081.87
Other Income 1,051.96 968.81 513.68 525.61
Total Revenue 77,449.77 76,109.52 12,900.04 16,607.48
Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) 15,766.22 13,615.29 2,078.00 2,661.05
Less: Finance Costs 1,808.88 2,275.69 235.95 237.88
Less: Depreciation and Amortisation Expenses 4,033.40 4,004.23 828.17 813.51
Profit Before Share in Profit/(Loss) of Equity Accounted Investees, Exceptional Items and Tax 9,923.94 7,335.37 1,013.88 1,609.66
Share in Profit/(Loss) of Equity Accounted Investees 189.22 562.22 - -
Exceptional Items (341.73) (1,406.05) (80.99) (318.03)
Profit Before Tax (PBT) from Continuing Operations 9,771.43 6,491.54 932.89 1,291.63
Tax Expenses from Continuing Operations 3,022.19 (84.32) 122.44 66.35
Profit for the Period from Continuing Operations Attributable to: 6,749.24 6,575.86 810.45 1,225.28
Shareholders of the Company 4,128.41 4,349.02 810.45 1,225.28
Non-Controlling Interest 2,620.83 2,226.84 - -
Profit Before Tax (PBT) from Discontinued Operations 162.79 221.60 145.44 72.54
Exceptional Items 166.50 23.95 - 23.95
Tax Expenses from Discontinued Operations 66.10 70.40 50.89 33.77
Provision of Impairment of Assets classified as Held for Sale (25.73) (112.43) - -
Profit for the Period from Discontinued Operations Attributable to: 237.46 62.72 94.55 62.72
Shareholders of the Company 176.41 62.72 94.55 62.72
Non-Controlling Interest 61.05 - - -
Other Comprehensive Income for the Year Attributable to: 4,840.92 (5,001.08) 4,588.91 (5,070.01)
Shareholders of the Company 4,780.54 (5,067.05) 4,588.91 (5,070.01)
Non-Controlling Interest 60.38 65.97 - -
Total Comprehensive Income for the Year Attributable to: 11,827.62 1,637.50 5,493.91 (3,782.01)
Shareholders of the Company 9,085.36 (655.31) 5,493.91 (3,782.01)
Non-Controlling Interest 2,742.26 2,292.81 - -
Profit for the Period attributable to Shareholders of the Company 4,304.82 4,411.74 905.00 1,288.00
Opening Balance in Retained Earnings 4,605.56 3,940.83 4,838.60 3,796.06
Due to Classification of Discontinuing operations to Continuing Operations - (7.28) - -
- Gain/(Loss) on Re-measurement of Defined Benefit Plans 81.96 (82.87) 48.58 (57.79)
- Gain on Sale of non-current Investments transferred to retained earnings from equity instruments through OCI - 345.51 - 355.66
- Stake Dilution in Subsidiary Companies (7.97) (524.91) - -
- Ind AS 116 (Leases) transition impact - (45.31) - (3.81)
- Other Adjustments - 7.86 - -
Amount available for Appropriation 8,982.68 8,045.57 5,792.18 5,378.12
Add/Less: Transfer (to)/from Debenture Redemption Reserve (11.50) 72.18 - (24.51)
Less: Transfer to General Reserve (2,581.87) (2,865.57) - -
Less: Transfer to Special Reserve Fund (107.14) (103.73) - -
Less: Dividend Paid on Equity Shares (including Corporate Dividend Tax) (262.65) (542.89) (262.65) (515.01)
Closing Balance in Retained Earnings 6,021.21 4,605.56 5,529.53 4,838.60

# refer note 4.3 and 4.4 of consolidated financial statements ## refer note 4.4 and 4.5 of standalone financial statements

DIVIDEND

Based on your Companys performance, the Board of Directors of your Company has recommended dividend of H5 per equity share and a special dividend of H4 per equity share, taking the total dividend to H9 per equity share of face value of H2 each (dividend @450% of the face value), for the financial year ended 31st March 2021. The dividend, if approved by the members, would involve a cash outflow of H592.27 Crore.

In view of the changes made under the Income Tax Act, 1961, by the Finance Act, 2020, dividend paid or distributed by the Company shall be taxable in the hands of the shareholders. Your Company shall, accordingly, make the payment of the dividend after deduction of tax at source.

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 and is also available on your Companys website and can be accessed at https://www.grasim.com/investors/policies- and-code-of-conduct

Dividend recommended for the financial year ended 31st March 2021, 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 2021.

PERFORMANCE REVIEW

On a consolidated basis, the revenue from operations for FY 2020-21, stood at H76,397.81 Crore registering a growth of 1.67 % as compared to the previous year (H75,140.71 Crore in

FY 2019-20). The consolidated EBITDA increased to H15,766.22 Crore for FY 2020-21 which was 15.80 % higher than that of the previous year (H13,615.29 Crore in FY 2019-20).

On a standalone basis, revenue from operations for FY 2020-21 stood at H12,386.36 Crore which was 22.98 % lower than that of the previous year (H16,081.87 Crore in FY 2019-20). The standalone EBITDA is H2,078 Crore for FY 2020-21 which was 21.91 % lower than that of the previous year (H2,661.05 Crore in FY 2019-20).

STRATEGIC INITIATIVES AND SIGNIFICANT DEVELOPMENTS

Divestment of Indo Gulf Fertiliser Business

The Board of Directors of the Company, at its meeting held on 12th November 2020 approved the transfer of the Companys business of manufacture, trading and sale of urea, customised fertilisers, agri-inputs, crop protection, plant and soil health products and specialty fertilisers (Fertiliser Business), as a going concern, on a slump sale basis, to Indorama India Private Limited (IIPL) through a Scheme of Arrangement between the Grasim Industries Limited (the Company) and IIPL and their respective shareholders and creditors under sections 230-232 of the Companies Act, 2013 (Scheme) and other provisions of applicable law, for a lump sum consideration of H2,649 Crore, to be paid by IIPL to the Company, subject to customary closing adjustments as mentioned in the Scheme to be carried out upon effectiveness of the Scheme.

Appointed Date of the Scheme is the Effective Date, or such other date as may be agreed to in writing between the Boards of the Company and IIPL and approved by the Tribunals.

The Scheme is subject to the approval of the shareholders and creditors, and necessary regulatory approvals including approval from Securities and Exchange Board of India (SEBI), the

jurisdictional Honble National Company Law Tribunals (NCLT) and the Competition Commission of India (CCI).

The Scheme has been approved by CCI, Stock Exchanges and SEBI. The Scheme was approved by the shareholders and creditors of the Company at their respective meetings held on 16th April 2021. Honble NCLT Kolkata Bench vide its order dated 26th March 2021 dispensed holding of meetings of shareholders and creditors of IIPL.

Petition for approval of the Scheme has been filed with jurisdictional NCLTs and hearing for the same is pending.

The Scheme, inter-alia, will be beneficial to the Company, as it will help the Company to pursue growth opportunities in its core businesses and unlock value with overall improvement in working capital cycle due to release of blocked funds from long receivable cycle involved in the said business. As the Scheme involves transfer of the fertiliser business through a slump sale, for a lump sum consideration, no shares will be allotted by IIPL to the shareholders of the Company. Therefore, the shareholding of the Company will not be affected by the Scheme.

Entering into Paints as new line of Business

The Board of Directors at its meeting held on 22nd January 2021 approved entering into Paints as new line of business. The shareholders approval for alteration to the Object Clause thereby permitting the Company to foray into Paints business was obtained at the Extra Ordinary General Meeting held 22nd February 2021.

Historically, the Indian paints industry has been growing at a healthy rate. The organised segment constitutes approximately 70% by value of the total paints market and has historically grown faster than the unorganised segment and therefore gained market share from the unorganised segment.

The Companys entry into this consumer-oriented business will further diversify its portfolio, provide scale and growth and will also offer a wide choice to Indian consumers as the Company plans to introduce the latest as well as a wide range of paint products.

The Companys entry into this high growth sector is expected to help painters/applicators and all traditional and emerging channel partners across India to expand their existing business and grow. The Companys Board of Directors has approved an initial capital expenditure of approximately H5,000 Crore over the next 3 years.

Entry in the paints sector will add size, scale and diversity to the existing business portfolio of the Company. The Company

believes that this sector is likely to be value accretive to its stakeholders.

Aditya Birla Power Composites Limited

Aditya Birla Power Composites Limited (ABPCL), is a joint venture between the Company and Maschinenfabrik Reinhausen Gmbh (MR)wherein the Company holds 51% of share capital and the balance share capital (49%) is held by MR.

ABPCL is in the process of setting up a state-of-the-art Composite Hollow Core Insulators (CHCI) manufacturing plant at Halol, Gujarat, India at a project cost of about H100 Crore for the manufacture and sale of CHCI to serve the power transmission & distribution industry globally. The work of setting up the Plant at Halol is in progress and will be commissioned in FY 2021-22.

Amalgamation of Grasim Premium Fabric Private Limited (GPFPL) with your Company

The Scheme of Arrangement between GPFPL and Grasim Industries Limited (Grasim) and their respective shareholders and all concerned (Scheme) under sections 230 to 232 of the Companies Act, 2013 was approved by the Board of Directors of your Company and GPFPL and necessary application/petitions for approving merger were filed with jurisdictional NCLTs.

Honble NCLT Indore Bench at Ahmedabad approved the Scheme vide its order dated 12th November 2020 as amended vide its order dated 28th January 2021. Your Company has filed the copy of the order with Registrar of Companies (ROC), Gwalior. Honble NCLT Mumbai Bench approved the Scheme vide its order dated 23rd March 2021.

On receipt of the certified copy of the order from Honble NCLT Mumbai, same will be filed with the ROC, Pune by GPFPL. The Scheme will be effective on the date of filing of the said order with appointed date being 1st April 2019.

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

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

ABNL Investment Limited has filed copy of the order of Regional Director (North-Western Region), Ahmedabad with Registrar of Companies, Ahmedabad. On receipt of the certified copy of the

order by Sun God Trading and Investment Limited, same will be filed with the Registrar of Companies, Gwalior.

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. A joint application was filed by ABSL and ABReL with the Honble NCLT, Mumbai Bench on 27th March 2020. Honble NCLT Mumbai Bench vide its order dated 17th February 2021 dispensed with the requirement of convening meetings of shareholders and creditors of both ABSL and ABReL. ABSL and ABReL are in the process of filing petition seeking sanction of the merger and the dissolution of ABSL.

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

During the year under review, there were no changes in the direct subsidiaries, associates and joint venture companies of your Company.

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 and can be accessed at https://www.grasim.com/ investors/results-reports-and-presentations.

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 and can be accessed at https://www.grasim.com/investors/results- reports-and-presentations.

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.

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 and can be accessed at https://www.grasim. com/investors/policies-and-code-of-conduct.

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; and General Circular No. 02/2021 dated 13th January 2021 and Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/79 dated 12th May 2020 and Circular No. SEBI/HO/CFD/CMD2/CIR/P/2021/11 dated 15th January 2021 issued by the Securities and Exchange Board of India (SEBI) (collectively referred to as MCA and SEBI Circulars) 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 & SEBI Circulars, applicable provisions of the Companies Act, 2013 and Listing Regulations, the 74th Annual General Meeting of your Company will be convened and conducted through VC/OAVM.

UltraTech Cement Limited (UltraTech)

During the year, UltraTech Nathdwara Cement Limited (UNCL) through its subsidiary, Krishna Holdings Pte. Ltd, ("Krishna"), a company incorporated in Singapore has completed the divestment of its entire equity shareholding of 92.5% in its cement subsidiary and has recorded net gain on divestment of C437.68 Crore.

In terms of the order of the National Company Law Appellate Tribunal (NCLAT) dated 14th November, 2018, approving the Resolution Plan submitted by UTCL under the Insolvency and Bankruptcy Code, 2016 for acquisition of Binani Cement Limited, subsequently renamed UNCL, a loan of

US$ 230.4 million in 3B Binani Glassfibre SARL, (3B) a company registered in Luxembourg, was assigned to UNCL from IDBI Bank Limited. Assignment of the loan was along with securities, which included pledge over all assets and shares of 3B in various forms in favour of UNCL. Since 3B was in continuous default in servicing the loan, UNCL enforced its pledge of 3B shares, consequent to which UNCL became owner of 100% equity of 3B w.e.f 12th March, 2021. 3Bs Board has also been re-constituted. UNCL has taken this step to safeguard and expedite the recovery of its loan from 3B. Till the time UNCL is able to recover its loan, the investment in 3B will be treated as investment held for sale.

Aditya Birla Capital Limited (ABCL)

Aditya Birla Sun Life AMC Limited (ABSLAMC), a material subsidiary of ABCL, filed a draft red herring prospectus (DRHP) dated 19th April 2021 with the Securities and Exchange Board of India for an initial public offering by way of an offer for sale (IPO) of up to 3,88,80,000 equity shares of face value of C5 each constituting up to 13.50% of the paid-up share capital of ABSLAMC, subject to relevant approvals as required and other considerations. The above IPO comprises of an offer for sale of up to 28,50,880 equity shares of face value of C5 each held by ABCL in ABSLAMC.

SHARE CAPITAL

Issued, subscribed and paid-up capital of the Company stood at H1,31,60,89,688 as at 31st March 2021 comprising of 65,80,44,844 equity shares of H2 each fully paid up.

During the year under review, your Company issued and allotted 2,45,906 equity shares of H2 each pursuant to the exercise of Stock Options and Restricted Stock Units in terms of the Employees Stock Option Schemes of your Company.

PURCHASE OF TREASURY SHARES

As on 31st March 2021, Grasim Employees Welfare Trust (Trust) constituted in terms of the Companys Employee Stock Option Scheme 2018 (ESOS-2018) holds 13,18,344 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 2020-21, 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 2020-21, your Company has issued 5,000 fully paid-up, Unsecured, Redeemable Non-Convertible Debentures of face value of H10 Lakh each, at par, on private placement basis, as per the details set out hereunder:

Number

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 2021 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

The Management Discussion and Analysis 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, risks and concerns and other material developments during FY 2020-21, 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. Your Company was compliant with the provisions relating to Corporate Governance.

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

Appointment/Re-appointment of 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, Mr. Kumar Mangalam Birla (DIN: 00012813) and

Dr. Santrupt Misra (DIN: 00013625), Directors of your Company, are liable to retire by rotation at the ensuing Annual General Meeting and, being eligible, have offered themselves for re-appointment. Brief profiles of Mr. Kumar Mangalam Birla and Dr. Santrupt Misra are provided in the Corporate Governance Report which forms an integral part of this Annual Report.

• Mr. Dilip Gaur was appointed as the Managing Director of the Company for a term of 5 years, with effect from 1st April 2016 to hold office up to 31st March 2021. Subject to the approval of the shareholders, and based on the recommendations of the Nomination and Remuneration Committee and taking into account his expertise, business acumen, outstanding leadership, his present performance and business needs, the Board at its meeting held on 12th February 2021 has re-appointed Mr. Dilip Gaur as the Managing Director of the Company for a further period of one year with effect from 1st April 2021.

Resolution seeking re-appointment of Mr. Dilip Gaur, Managing 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 24th May 2021 appointed Mr. V. Chandrasekaran (DIN: 03126243) and Mr. Adesh Kumar Gupta (DIN: 00020403) as Additional Directors, qualifying as the Independent Directors of the Company, not liable to retire by rotation, for a period of five years commencing with effect from 24th May 2021. In terms of the provisions of the Companies Act, 2013, Mr. V. Chandrasekaran and Mr. Adesh Kumar Gupta will hold office up to the ensuing Annual General Meeting.

Resolutions seeking the appointment of Mr. V. Chandrasekaran and Mr. Adesh Kumar Gupta as Independent Directors along with their brief profile forms part of the Notice of the Annual General Meeting.

Your Directors commend the resolutions pertaining to appointment/re-appointment of aforesaid Directors for your approval.

Cessation of Directors

• Mr. Arun Thiagarajan retired as an Independent Director of the Company upon completion of his first term of 5 years on 6th May 2021.

• Mr. O.P. Rungta, Independent Director resigned from the Board of Directors of the Company with effect from close of business hours of 24th May 2021 due to health reasons on

r account of his advanced age. There was no other material g reason for his resignation except as stated.

 df The Board placed on record its sincere appreciation df for the valuable contribution and services rendered by d Mr. Arun Thiagarajan and Mr. O.P. Rungta during their tenure as 3l the Independent Directors of the Company.

 e There is no pecuniary or business relationship between the 6 Non-Executive Directors and the Company, except for the sitting jl fees and commission payable to the Non-Executive Directors, in f accordance with the applicable laws and with the approval of g the shareholders.

 g, Key Managerial Personnel

s Pursuant to the provisions of sections 2(51) and 203 of the e Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Mr. Dilip Gaur, Managing Director, Mr. Ashish Adukia, Chief g Financial Officer and Mrs. Hutokshi R. Wadia, President and ge Company Secretary are the Key Managerial Personnel of the e Company as on 31st March 2021.

Mr. Sailesh Daga has been appointed as the Company d Secretary and Compliance Officer of the Company in place of d Mrs. Hutokshi R. Wadia with effect from 1st April 2021. n Mrs. Hutokshi R. Wadia ceased to be the Company Secretary n and Compliance Officer of the Company with effect from close a of business hours on 31st March 2021. g

t The Board noted the same and placed on record its s sincere appreciation for the valuable contribution made by n Mrs. Hutokshi R. Wadia during her tenure as the Company , Secretary and Compliance Officer of the Company. d

MEETINGS OF THE BOARD

n The Board of Directors of the Company met 7 (Seven) g times during the year to deliberate on various matters. The 3l meetings were held on 13th June 2020, 13th August 2020, 1st October 2020, 12th November 2020, 22nd January 2021, 12th February 2021 and 24th March 2021. o

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

INDEPENDENT DIRECTORS

f Definition of Independence of Directors is derived from n 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 e Directors of your Company confirming that they meet the if criteria of independence as prescribed under section 149(6) n of the Companies Act, 2013 and regulation 16(1)(b) of the

Listing Regulations. Your Companys Board is of the opinion that the Independent Directors possess requisite qualifications, experience, and expertise in leadership, governance, sustainability, strategy planning, technical expertise, financial management, legal expertise, risk management, sales & marketing, human resource development and they hold highest standards of integrity.

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 NonExecutive 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

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The Board expressed satisfaction on the overall functioning of the Board and its Committees. The Board was also satisfied with the contribution of directors, in their respective capacities, which reflected the overall engagement of the individual directors.

The new Director inducted on the Companys Board attends an orientation programme. The details of the programme for familiarisation of Independent Directors are provided in the Corporate Governance Report, which forms part of this Annual Report and are also available on your Companys website at https://www.grasim.com/investors/corporate-governance.

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) i n 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 2021 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) the Directors have laid down proper internal financial controls, and that such internal financial controls are adequate and were operating effectively; and

f) the Directors have 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.

INTEGRATED REPORT

The Company has voluntarily provided Integrated Report. This report is prepared in alignment with the Integrated Reporting Framework laid down by the International Integrated Reporting Council (IIRC) and aims at presenting the value creation approach for our stakeholders.

AUDITORS AND AUDIT REPORTS STATUTORY AUDITORS

Pursuant to the provisions of section 139 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, as amended from time to time, M/s. B S R & Co. LLP Chartered Accountants (ICAI Firm Registration No. 101248W/W-100022) and M/s. 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, to hold office till the conclusion of the 74th Annual General Meeting of the Company, to be held in the calender year 2021 and 75th Annual General Meeting of the Company to be held in the calender year 2022, respectively.

M/s. B S R & Co. LLP are due to retire at the ensuing 74th Annual General Meeting of the Company. M/s. B S R & Co. LLP has confirmed that they are eligible to be re-appointed in accordance with the provisions of the Act and Rules made thereunder. The Board of Directors, upon the recommendation of the Audit Committee, propose re-appointment of M/s. B S R & Co. LLP for a second term of 5 years, to the shareholders for their approval. Resolution seeking your approval forms part of the Notice convening the Annual General Meeting.

Pursuant to the provisions of section 139 of the Companies Act, 2013, as amended with effect from 7th May 2018, the requirement of 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. In view of the above, no resolution is proposed for ratification of appointment of M/s. S R B C & Co. LLP, Chartered Accountants at the Annual General Meeting, and a note in respect of the same has been included in the Notice of the Annual General Meeting. However, they have confirmed that they are eligible to continue to act as Statutory Auditors of your Company.

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 2021, 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 under section 148(1) of the Companies Act, 2013 are duly prepared 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, appointed M/s. D. C. Dave & Co., Cost Accountants, Mumbai, M/s. M. R. Dudani & Co., Cost Accountants, Mumbai and M/s. K G Goyal and Associates, Cost Accountants, Jaipur as the Cost Auditors for FY 2021-22 to conduct cost audit for various divisions and units of the Company as detailed under:

Name of the Cost Auditor Division of the Company Remuneration
M/s. D. C. Dave & Co., All Divisions of the Not exceeding
Cost Accountants, Mumbai (Registration No. 000611) Company, except Viscose Filament Yarn- Century Rayon Division and Indo Gulf Fertilisers Unit H15.00 Lakh plus applicable taxes and reimbursement of out-of-pocket expenses
M/s. M. R. Dudani & Co., Cost Accountants, Mumbai (Registration No. FRN-104041) Viscose Filament Yarn - Century Rayon Division Not exceeding H2.20 Lakh plus applicable taxes and reimbursement of out-of-pocket expenses
M/s. K G Goyal and Associates, Cost Accountants, Jaipur Indo Gulf Fertilisers Unit (IGF Unit) Not exceeding H2.00 Lakh plus applicable taxes and reimbursement of
(Registration No. FRN-000024) out-of-pocket expenses, to be paid on proportionate basis till divestment of IGF Unit

Your Company has received consent from M/s. D. C. Dave & Co., M/s. M. R. Dudani & Co. and M/s. K G Goyal and Associates, Cost Accountants, to act as the Cost Auditors of your Company for FY 2021-22, along with separate certificates confirming each of their eligibility.

As required under the Companies Act, 2013, a resolution seeking ratification of the remuneration payable to the cost auditors has been incorporated in the Notice of the Annual General Meeting for approval by the Members at the ensuing 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 appointed M/s. BNP & Associates, Company Secretaries, Mumbai, to conduct the secretarial audit for FY 2021-22. The Secretarial Audit Report, issued by M/s. BNP & Associates, Company Secretaries for the FY 2020-21, is set out in Annexure E to this Report.

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

The Secretarial Compliance Report for the financial year ended 31st March 2021, in relation to compliance of all applicable SEBI Regulations/circulars/guidelines issued thereunder, pursuant to requirement of regulation 24A of the Listing Regulations, is available on the website of the Company and can be accessed at https://www.grasim.com/investors/board-and-shareholder- meeting.

SECRETARIAL STANDARDS

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, Cost Auditors and the Secretarial Auditors 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 2020-21, 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 and are reviewed by it on a quarterly basis. 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 2021,

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 and can be accessed at: https://www.grasim.com/investors/policies-and- code-of-conduct.

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 and can be accessed at https://www.grasim.com/ investors/policies-and-code-of-conduct.

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, Legacy Documentation & Archives, 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 and can be accessed at: https://www.grasim.com/investors/policies-and- code-of-conduct.

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, Rural Development, Sustainable Livelihood, Health Care and Education, during the year, and initiated various activities in neighboring villages around its plant locations. Your Company undertook several initiatives to help nation fight against COVID

crisis including supply of healthcare equipments, medical oxygen and oxygen concentrators, setting up hospital beds, distributing face masks, hand gloves, sanitiser bottles, creating COVID related awareness etc.

During the year, the Company spent H84.66 Crore of which H48.85 Crore was spent towards mandatory CSR obligations of the Company and additionally H35.81 Crore was spent towards voluntary CSR activities (totalling to around 3.76% of the average net profits of last three financial years) on CSR activities.

The initiatives undertaken by your Company on CSR activities, during the FY 2020-21, are set out in Annexure F to this Report, in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.

RISK MANAGEMENT

Pursuant to the requirement of Listing Regulations, your Company has constituted Risk Management Committee, which is inter-alia, mandated to review the risk management plan/process of your Company. Risk evaluation and management is an ongoing process within the organisation. The Committee periodically assesses risks 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 Committee. The scope of the Committee has been enhanced to include activities pertaining to overseeing sustainability activities, advising Board on sustainability practices etc. and accordingly the Risk Management Committee was renamed as Risk Management and Sustainability Committee (RMSC) effective from 24th May 2021.

There are no risks which in the opinion of the Board threaten the existence of the Company. However, some of the risks which may pose challenges are set out in the Management Discussion and Analysis which forms part of this Annual Report.

The Risk Management Policy is available on Companys website and can be accessed at https://www.grasim.com/investors/ policies-and-code-of-conduct.

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.

ANNUAL RETURN

In terms of the provisions of Section 92 and Section 134 of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return of your Company as on 31st March 2021 is available on Companys website and can be accessed at https://www.grasim.com/investors/board-and- shareholder-meeting.

INTERNAL CONTROLS

Your Company has in place adequate internal control system (including 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 Joint Statutory Auditors of your Company citing inefficiency or inadequacy of such controls.

REMUNERATION POLICY

The Companys remuneration policy is directed towards rewarding performance based on review of achievements. The remuneration policy is in consonance with existing industry practice. There has been no change in the policy during the financial year under review.

The Remuneration Policy of your Company, as formulated by the Nomination and Remuneration Committee of the Board of Directors is given in Annexure G to this Report and is also available on your Companys website and can be accessed at https://www.grasim.com/investors/policies-and-code-of- conduct.

STATUTORY COMMITTEES OF THE BOARD AUDIT COMMITTEE

The Audit Committee (reconstituted on 24th May 2021) comprises of Mr. N. Mohan Raj (Chairman), Mr. V. Chandrasekaran, Dr. Thomas M. Connelly, Jr. and Mr. Dilip Gaur as its Members. Majority of the members of Audit Committee are Independent Directors with Chairman also being an Independent Director. The CFO of your Company is the permanent invitee at the Audit Committee Meetings.

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 (reconstituted on 24th May 2021) comprises of Ms. Anita Ramachandran (Chairperson), Mr. Kumar Mangalam Birla, Dr. Santrupt Misra and Mr. Cyril Shroff 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 (Chairperson), Ms. Anita Ramachandran, Mr. Shailendra K. Jain and Mr. Dilip Gaur as its members.

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 (reconstituted on 24th May 2021) comprises of Ms. Anita Ramachandran (Chairperson), Mr. Shailendra K. Jain and Mr. Dilip Gaur as its members. The Committee looks into matters relating to transfer/ transmission of securities; non-receipt of dividend; 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 your Companys businesses in the face of increasingly volatile and competitive business environment. The focus is on developing and commercialising 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 Technology team is facilitating a comprehensive business quality improvement framework that seeks to enhance customer-centricity and the integration of pulp supply-chain and pulp quality. By employing a "product by process philosophy,"

significant improvement has been achieved in the consistency of pulp quality parameters. This has resulted in narrowing of the product specifications, and an enhanced ability to deliver higher quality pulp-grades more consistently. Furthermore, this has enabled the establishment of a more stringent A+ category of pulp quality, which caters to very demanding downstream pulp applications. The pulp team is now targeting to further improve its A+ product quality through process improvement. The Pulp team has also implemented digital transformation projects that seek to bring critical-to-customer information on the pulp supply in real-time to the downstream fiber units. Recently, agile processes and flexible working has enabled the pulp plants to quickly establish high levels of quality and uptime of process units amidst the disruptions caused by the Covid-19 pandemic.

Viscose Staple Fibre (VSF) production facilities have increasingly collaborated on reducing material consumption, increasing productivity, improving product quality, enhancing sustainability and developing specialty products. This is achieved through insightful developments in lab and pilot plant, and careful selection and implementation of the process technologies as well as process additives. One example in fiber making process is the increased efficiency of water utilisation to reduce effluent and improve recovery of chemicals from the effluent. Following demonstration in one line, plan is to implement on multiple lines and plants. Your Company is continuing to fulfill public commitments for reducing the environmental footprint by fully closed-loop recycling of water Nagda. Your Company has designed a zero liquid discharge (ZLD) system, and construction is nearing completion.

Aditya Birla Science and Technology Company Ltd. (ABSTC) has developed an understanding of the effluent streams characteristics as well as of the variations in the effluent treatments employed by different fibre units. This has resulted in the identification of cost saving potential through recovery of chemicals such as zinc, while also providing cleaner effluent. A pilot plant has been constructed at the Kharach plant where process data is being collected to aid the scale-up plan. Similarly, recent years understanding of the fundamentals of fiber dryer operation has been leveraged to increase productivity, reduce energy consumption and improve uniformity of fiber drying.

Our digitalisation 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. Process optimisation has resulted in improved CS2 recovery. Pulp Logistics cost optimisation model is developed and is being piloted. As a start, your Company is developing digital-twin solutions at its Vilayat Unit for Chiller MSFE and Fibre Dryer processes, with an objective of improving energy economy, plant capacity and product quality.

At the Pulp and Fibre business R&D, an unwavering focus on enhancing customer experience has driven us towards the timely launch of several key Speciality products. Amidst heightened hygiene concerns owing to Covid-19, your Company quickly established the anti-viral performance of Liva Antimicrobial fibres and facilitated quick commercial manufacturing of these fibres at three fibre plants. Thanks to the nimbleness and commitment of a diverse workforce spanning multiple functions and geographies, the timely supply of Liva Antimicrobial fibres fulfilled a much-needed societal need. Working with external labs and customers, your Company has rapidly scaled-up the in-house developed Purocel EcoFlush nonwoven fibers, which is now accepted by multiple customers for making environmentally friendly, 100% flushable wipes. Through the launch of Liva Reviva, your Company now offer lyocell or viscose fibres made from raw materials partially containing cotton waste. By up-cycling cotton waste otherwise destined for low-end applications, incineration or use in land-fills, Liva Reviva serves the pressing global need of textile circularity and waste reduction. Liva Reviva thus enables its consumers to be stylish while simultaneously being environmentally conscious. Your Company has actively collaborated with multiple startups in this space, with aim of increasing access to reclaimed pulp from used cotton clothing. LivaEco fiber is our offering of a rich bouquet of sustainability features while retaining the fashion quotient of the Liva brand. Every Livaeco™ garment contains a unique molecular tracer which helps the end buyer to trace the origin and full journey of the garment he/she is buying.

Man-made cellulosic fibres are increasingly being seen as potential alternative to plastics, especially in light of regulations aiming to reduce use of plastics in packaging, and ABSTC is leading such development for its business, and is evaluating the potential of viscose-based solutions for retail and apparel bags.

In order to provide a new thrust towards improving fibre quality across all of its manufacturing units, the Fiber business has constituted a high level Quality Steering Committee comprising of senior leaders from fiber plants, marketing and R&D for seamless collaboration. Going forward, the focus will be to enhance the Customer Experience - by providing the right quality of fibers to each customer with superior technical support and 100% OTIF (On Time In Full) delivery. The aim is to take a quantum leap from Customer Satisfaction to Customer Delight, by achieving next level of Quality and Consistency to meet changing customer requirement and to bring cultural transformation and outlook towards Quality.

Responding to high demand for NW fibre during the pandemic, technology for TiO2 incorporation for delustering of lyocell fibre (Excel) was quickly developed and commercial runs were conducted for customer evaluation. Your Company has also developed technology for introduction of physical tracer in its Excel fibre, the fibre thus being verifiable of its origin anywhere

in the subsequent value chain and customers hands. It has been successfully developed and scaled up to supply commercial volumes to key customers. Excel fibre using 20% cotton-recycle pulp from a USA based start-up was produced on the Companys pilot line and is being evaluated for market promotion with international brands. Also, a process for making high tenacity lyocell fibres using bacterial-cellulose pulp by the Australian start-up Nanollose was developed at lab scale and a joint patent application was filed.

Viscose Filament Yarn (VFY)

Your Company has been consistently developing new product variants according to consumers needs. During last year, your Company has successfully developed Antibacterial VFY, Monofilament, low and high denier/filament products etc. On new application side, your Company has created in-house facility to produce Air-textured Yarn from VFY, developed Lycra covered yarn (Spandex covered with PSY) which is stretchable, having usage in garment & Denim and developed Space dyed yarn for usage in fashion fabrics.

On the way to industry 4.0, exploring use of artificial intelligence based technology for defect identification before winding in order to supply defect free yarn to customer. To enhance productivity, Indigenously developed twin tube technology for coarse deniers on Pot spun Yarn Technology. Your Company is increasing its sustainability foot prints by using pulp manufactured with recycled cotton garment waste (5%) as an input raw material.

Chemical Business

Your Companys R&D department is continuously evolving and taking a more outside-in approach to Innovation, process improvement for cost optimisation, product development, application development to bring in new products & solutions to customers in water management and Plastic derivatives industry segments as key focus. In addition, there are certain segments on horizon where your Company is constantly evaluating the potential growth opportunities like Food, Home care, Disinfection and Hygiene where there is expertise and good synergy with its business.

Your Companys model of R&D also involves working on long term development with major customers and continuously looking at new technology that will help enhance performance of your Companys offerings. Water Treatment Business being focus, we have leveraged our R&D Centre - Aditya Birla Water Application Development Centre (ABWADC) - for solving water treatment problems in Potable Water, some major health problems (removal of Fluoride from groundwater- Jointly with MNIT), working on STP supporting the Namami Gange project, providing water and wastewater treatment solutions to Oil & Gas, Power, Pulp & Paper and Textile industry. ABWADC was awarded its 1st Patent this year in the area of Water treatment.

Your Companys R&D Centre is approved by Dept. of Scientific and Industrial Research (DSIR) and is executing collaborative projects with many renowned institutes like MNIT-Jaipur, NCL etc. In addition, the centre also worked with Industry to develop range of plasticisers (phthalate free) for various applications where PVC, PU, metal working fluids and additives in Paints and Coatings are used. This will be a good focus area going forward both in India and International market. New product development effort in area of Disinfection & Hygiene has been initiated to address the current and future needs of the society.

Various enhancements in production process was undertaken by the team that helped improved production in CBGP plant, resolved issues in Super coagulant plant, modified recipes in PAC liquid production for better product and Conversion of spent Aluminium Chloride solution into value added product. This has helped to improve operational efficiencies and quality of product. Your Company is focused on process improvements for basic raw material blends to achieve process accelerations and engineering improvements.

Advanced Material - Epoxy Resins

Your Companys R&D team is involved in synthesising mono, di, multifunctional epoxy building blocks, Reactive diluents of various viscosities, EEW, HyCl content, various hardeners or curing agents. You Companys team is engaged in developing process for synthesising building blocks for multifunctional epoxies, application development in powder coating segment for coating electronics parts, Adhesive product development in construction segment, process development for synthesising acrylic based water soluble coating solution for can coating applications, developing products for floor coating and construction segments, epoxy system solutions for composite segment to make low & high pressure pipes, LPG gas storage tanks, and developing products such as Ignition coil, potting system, for electrical and electronic industries.

Agri-business

In line with Honorable PMs Vision of doubling farmer income by 2022, your Company Agri-Business defined it purpose as Farmers Prosperity through Innovative Solutions. R&D approach is to innovate to deliver products that are customised, functional, with world-class quality and increase productivity. Your Company is continuously providing thrust on Purak segment (non-Urea business) which includes innovative and new variant of product Oorja. Several innovative products are at various stages of inhouse development have performed better in research farm trials. NPK soil and crop specific (CFG) and Water-Soluble Fertiliser introduced are cost effective in production and superior in quality resulting in increase in yield for various crops. The analytical infrastructure built has helped in sourcing and ensuring specific

quality requirements for seeds, agrochemicals and related raw materials.

Insulators

Your Companys Insulator Business has accelerated its R&D efforts with focus on process & working environment improvements. Your Company has worked towards indigenization and implemented following changes (a) Replacement of imported clay with indigenous clay to reduce import dependence and support domestic manufacturing with cost advantage, (b) Inhouse design optimisation of insulators for lower weight and better pollution performance. Your Company has also accelerated new product development to fulfill customer needs:

• New product development with specifications of narrow strength variations in product to meet export customers requirements.

• Use of latest 3D Simulation Software for Electric Field Magnitude Analysis of Composite Long Rod Insulators.

Textiles

Your Company is involved in driving innovation, servicing new customers with focus on sustainability and consumers emerging needs, and constantly improving its processes.

Your Company is the pioneer to launch a new linen range under the name Linen Club - Uncrushable, that offers a wrinkle-resist performance without compromising on natural linen properties.

Your Company has developed blends in both linen and wool with sustainable fibres such as Silk, Lyocell, Bamboo, etc. that offer Organic product certifications with complete traceability from farm to fashion.

As a response to the consumers demand, your Company has developed wool for athleisure/active wear using Super wash technology (1st in India) and yarn for protective wear applications using merino wool blended with Pyrotex. Your Company has also developed a new effect called Delave effect in linen yarn dyeing.

On process improvement front, your Company worked in collaboration with Aditya Birla Science & Technology Co Pvt Ltd. (ABSTC) to improve its by-product (grease) recovery percentage. Your Company has achieved sustainable improvement in recovery percentage with a gain of 0.48% against previous year by optimising our processes.

Your Company is also working in collaboration with Aditya Birla Science & Technology Co Pvt Ltd. (ABSTC) and other vendor for exploring feasibility of a developing hemp value chain in India. Your Company is also working with global partners e.g. CELC,

LP Studio, Wool Mark, etc. and other specialty fibre suppliers to explore and develop innovative yarns and fabric.

Thus, the wide span of the RD&T activities amply addresses the present and future needs of the Textile business.

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.

COVID-19

The impact of the second COVID wave started showing up from end of March 21 and within few weeks most of the state government-imposed lockdown and various curbs to control the spread of virus.

In the time of crisis, your Company acted as a responsible citizen and caring employer giving utmost priority to the health and welfare of the employees. Your Company undertook several initiatives to provide financial, medical, psychological and emotional support to the employees and their family, battling COVID.

Some key initiatives undertaken by the Company included providing reimbursement of hospitalization expenses beyond insurance coverage, providing ex-gratia payment to the kin of deceased, providing housing and education assistance to the family of deceased employee, providing family medical insurance to the kin of deceased, providing COVID CARE givers leave to help employees take care of their family members, providing emotional and psychological support by way of counselling sessions, providing tele-counselling by doctors for COVID treatment, helping employees with hospital beds, providing oxygen cylinders, arranging vaccination camps for employees and their families etc.

As a responsible citizen, your Company undertook several COVID relief measures for society at large which inter-alia included setting up hospital beds, distributing oxygen cylinders, oxygen concentrators, oximeters, sanitisers, hand gloves, arranging vaccination camps etc.

Your Companys plant operations across various states were impacted due to lockdown related restrictions imposed by government authorities. In Q1 FY 2021-22 the capacity utilisation of viscose, chemicals, insulators and textile plants

is likely to be lower than Q4 FY 2020-21, as the end markets were shut due to lockdown related restrictions imposed by state government. Your Company has taken necessary measures to maintain adequate financial liquidity and to ensure availability of raw materials and needed resources for sustained operations.

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 H 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@aditvabirla.com.

EMPLOYEE STOCK OPTION SCHEMES (ESOS)

ESOS-2006

During the year under review, the Stakeholders Relationship Committee of the Board of Directors allotted 6,975 equity shares of H2 each of the Company to Option Grantees, pursuant to the exercise of the Stock Options under ESOS-2006.

ESOS-2013

During the year under review, 18,274 Stock Options, which were due for vesting in the eligible employees, had not vested and lapsed pursuant to the approval of the Nomination and Remuneration Committee and in accordance with the provisions of the ESOS-2013 due to vesting criteria not being met.

Further, the Stakeholders Relationship Committee issued and allotted 2,38,931 equity shares of H2 each of the Company to Stock Options and RSU Grantees, pursuant to the exercise of the Stock Options and RSUs, under ESOS-2013.

ESOS-2018

During the year under review, the Nomination and Remuneration Committee of the Board of Directors approved grant of 3,22,925 Stock Options and 13,172 Restricted Stock Units (RSUs) to the eligible employees, including Managing Director of the Company,

under ESOS-2018 and also approved vesting of 3,051 Stock Options to the eligible employees. Further, 2,51,787 Stock Options which were due for vesting to the eligible employees had not vested and lapsed pursuant to the approval of Nomination and Remuneration Committee and in accordance with the provisions of ESOS -2018 due to vesting criteria not being met.

39,031 equity shares were transferred from the ESOS Trust account to the employees account on account of exercise of Options by the grantees.

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, and 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 and can be accessed at https://www.grasim.com/investors/board- and-shareholder-meeting.

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@aditvabirla.com.

POLICY ON 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 constituted Internal Complaints Committee to redress and resolve any complaints arising under the POSH Act. No complaint was received under the POSH Act during the year under review. As on 31st March 2021, there were no outstanding complaints under the aforesaid Act. The Company is committed to providing a safe and conducive work environment to all its employees and associates.

HUMAN RESOURCES

Your Companys human resource is the strong foundation for creating many possibilities for its business. The efficient operations of manufacturing units, market development and expansion for various products was the highlight of our people

offnrt

: 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

I 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 j during the year include:

• Your Company ranked 9th among the Indias Top Companies , for Sustainability and CSR by The Economic times and i Futurescape Responsible Business Rankings 2020.

• Birla Cellulose, Pulp & Fibre Business was accredited with the

Golden Peacock Global Award for Sustainability for the year 2020.

• Your Company won the Investor Relations Award 2020-ESG

i Disclosures by Investor Relations Society in collaboration with : BSE Limited and KPMG India.

i

• Staple Fibre Divison of the Company at Nagda won the World CSR Leadership Award-2020 for best COVID-19 solutions for community care.

• Grasilene Division of the Company won the "Energy Efficient Unit Award" at 21st CII National Award for Excellence in Energy Management 2020.

: • Domestic Chlor Alkali Business at Rehla, won 7th CSR INDIA

, 2020 Award for "Promotion of Health & Healthcare" by

Greentech Foundation.

 1 • Companys Pulp and Fibre business won the Special Award for

Resiliency at IDC Digital Transformation Awards 2020- India.

• Insulator Unit at Rishra won Par Excellence Award at NCQC

2020 (National Convention on Quality Concept).

• Companys Fashion Yarn won the Gold Award in India Green i Manufacturing Challenge for Excellence in Sustainability

by The International Research Institute for Manufacturing Industry, Mumbai.

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, • Companys Harihar Complex won the "Commendation for

: Significant Achievement in Environment Management" by CII

- ITC Sustainability award - 2020.

UPDATE ON MATERIAL ORDERS PASSED BY THE REGULATORS

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: • Competition Commission of India (CCI) had passed an

I order under section 4 of the Competition Act, 2002 dated 1 16th March 2020, imposing a penalty of H301.61 Crore on

your Company in respect of its domestic man-made fibre

turnover. Your Company had filed an appeal against the order before the Honble National Company Law Appellate Tribunal (NCLAT) and has obtained a stay by depositing H30 Crore with NCLAT on 11th November 2020. The matter is being heard by NCLAT.

• The Deputy Commissioner of Income Tax (DCIT) has vide Order dated 14th March 2019 raised a demand of H5,872.13 Crore on account of dividend distribution tax (including interest) alleging that the demerger of financial services business is not a qualified 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 pursuant to duly approved Scheme of Arrangement, amounted to distribution of dividend by the Company.

Your Company had challenged the said order by filing an appeal before the Commissioner of Income Tax (Appeal). The CIT (Appeal) upheld the order and reduced the quantum of demand from H5,872 Crore to H3,786 Crore. The Company has filed an appeal against the order of CIT (Appeal) before the Tribunal on 23rd November 2020 and has obtained stay on demand by furnishing the requisite security to Assessing Officer. The appeal is presently pending before the Tribunal.

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 matters 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 Schemes referred to in this report;

3. The Managing Director of the Company does not receive any remuneration or commission from any of its subsidiaries;

4. There were no revisions in the financial statement;

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

6. 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. The update on the status of material orders passed by the Regulators or Court or Tribunals in the previous years is provided separately in this Report;

7. There were no proceeding initiated under the Insolvency and Bankruptcy Code, 2016;

8. There was no instance of one time settlement with any Bank or Financial Institution; and

9. There was no failure to implement any Corporate Action. 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, 24th May 2021