Dear Shareholders

FY22 began with a deadly hold of the pandemic making it feel like we were stilltrapped in the middle of a year that started several months ago. But as is the nature ofchallenges they invariably push people and societies to adapt and evolve. The exigenciesof the pandemic freed thinking from its conventional shackles and pushed the boundaries ofinnovation. But these changes did not take place in a vacuum. Without the resilientpresence of frontline workers across sectors such innovation would not hold ground. Theconvergence of the new with the old was a key element in our collective quest to emergestronger from the pandemic. Even though the near-term global outlook remains uncertainthe promise of this decade still holds.

The global economic backdrop

Global economies recovered from the pandemic shock in 2022 on the back of supportivefiscal and monetary policies and mass vaccination programmes. However at the end of FY22the war in Ukraine and the subsequent economic sanctions on Russia posed a large shock. Itdisrupted energy markets and supply chains and added to the already evolving inflationarypressures and concerns over consumer demand. Consequently growth forecasts have beenslashed. The International Monetary Fund (IMF) now expects the world economy to grow by3.6% in CY22 that is 0.8 percentage points slower than its pre-war projections. Manyeconomies have experienced a sharp surge in inflation recently particularly in food andfuel prices taking their inflation rates well beyond the targets of central banks. Takingcognizance of the rapid pick-up in inflationary momentum interest rates have been hikedand are poised to go up further. The pace of rate hikes is turning out to be quite swiftas monetary authorities attempt to catch up with the rising inflation from theirultra-accommodative stance during the pandemic. As the stance of monetary policy shiftsthere is greater turbulence in currency markets. The dollar has been strengthening whileemerging economies have witnessed downward pressure on their currencies. At the same timeenergy and commodity markets have witnessed heightened volatility. Global supply chaindisruptions due to pandemic induced lock downs have been replaced by new disruptions dueto the war in Ukraine and the economic sanctions. While the global economic backdrop ischallenging there are reasons to remain optimistic. First despite the slowdown IMF'sprojection of world GDP growth in CY22 is still tracking the pre-pandemic average during2010s. Second fiscal support in developed economies remains above the pre-pandemic trendeven if somewhat diluted versus past years. Third mega-trends around sustainabilitygreen investments digitization and disintermediation remain well-entrenched and willsupport growth and productivity enhancement in the medium-term.

Thus while businesses will need to remain on guard regarding financial marketvolatility and cost pressures this year one could expect the medium-term growth recoveryto remain on track.

A new and stronger India

Despite the global macro-economic challenges I believe in India we are at the cusp ofan extraordinary decade. With the roll out of economic reforms as profound as thoseintroduced in 1991 a new generation of Indian entrepreneurs are embarking on audaciousjourneys. With the twin-balance sheet problem of stressed loans and over-leveragedcorporates behind us the coming decade will see an upsurge in capital expenditure acrossseveral sectors. The private sector is on the pathway of what I like to call the‘double-engine growth' riding high on both the conventional and the new economy.Investors are excited about growth prospects in core sectors as well as sunrise sectors.However in my view the word sunrise sector virtually applies to the entire landscape inIndia including conventional sectors like cement steel power and auto along withemerging areas like digital and renewables. Both hold the promise of high and sustainedgrowth.

TEXTILE INDUSTRY - BIRLA CENTURY

The Indian textile industry has picked up pace and recovered significantly afterwitnessing a few sluggish years. The geopolitical winds of change have resulted in Indiaemerging as the best option for many importers. This has been backed by the Indiangovernment's aggressive approach to closing various Free Trade Agreements (FTAs).Government announcements such as the Production Linked Incentive (PLI) scheme the settingup of mega textile parks and the extension of the Rebate of State and Central Taxes andLevies scheme will further support the sector. The industry buoyed by these factors ison the path to a speedy recovery.

This recovery was also reflected in our performance with growth seen across domesticand export segments of Birla Century. Strong demand in USA our key market and increaseddemand in the domestic market supported by demographic and socioeconomic factors bodeswell for our business. The focus on expanding the portfolio especially in terms ofnatural and recycled textiles will aid in capturing the upcoming market demand.

REAL ESTATE - BIRLA ESTATES

The Indian real estate sector is on a recovery trajectory despite the pandemic-inducedchallenges and ensuing restrictions. Large-scale infrastructure projects policy push fromthe government and demand for sustainable solutions have helped drive growth. Record-lowinterest rates affordability and other favourable factors have helped harness positivesentiments. Timely delivery transparency and trust have become key hygiene factors alongwith quality leading to a preference for organised players.

The need for bigger homes better amenities and increased environmental consciousnessis driving growth in the residential segment. The office space segment is seeing increaseddemand as technology firms continue to expand. With more offices looking to call employeesback onsite leasing activity has picked up especially in the latter half of the yearprimarily driven by the IT and ITES industry. Despite the challenging environment andinflationary pressures the strong rebound witnessed by the real estate sector has createda positive headway for the coming year.

The Birla Estates team has rapidly embraced digital and fast-tracked technologyadoption to enhance customer experience. This is demonstrated by the significant growth inbookings and the positive market response to newly launched projects. The focus onbuilding exceptional properties leveraging cutting-edge technology sustainable designand consumer insights makes Birla Estates stand out and capture market growth.

PULP & PAPER INDUSTRY - CENTURY PULP & PAPER

The pulp & paper industry has been under pressure due to increasing raw materialprices shortage of key inputs like wood and coal supply chain challenges and short-termdemand hurdles due to COVID-19 variants. At the same time the pandemic has brought focuson cleanliness creating new opportunities for tissue and toilet paper. The e-commerceboom over the last two years has led to a surge in corrugated and container board demand.Demand is also expected to pick up in FMCG healthcare & pharma packaged foods andthe textile sectors especially for eco-friendly packaging options. The reopening ofeducational institutions across the country and the implementation of the NationalEducation Policy (NEP) 2020 should also contribute to the demand for writing and printingpaper. The proposed ban on single-use plastic is expected to further fast-track theadoption of alternative environmentally conscious options.

Despite the challenging environment Century Pulp and paper has grown over pre-Covidlevels with near 100% capacity utilisation. Going forward the expected increase indemand from multiple downstream industries and the government's focus on eco-friendlyoptions opens up a host of possibilities for the business. We will be strategicallyworking on expanding our portfolio and our manufacturing and integration capacity tocapitalise on the available market opportunities.

Driving the future

As CTIL enters its 125th year it becomes imperative to continue building on the strongfoundation. Over the last couple of years we have become increasingly focused oninnovation customer-centricity and sustainability. Going forward we will double down onharnessing these as our core strengths to stay ahead of the curve in all the industries weserve.

INNOVATION

CTIL businesses are bound together by their focus on innovation and technology to drivegrowth. Innovation is key. We are always in the quest to add industry-defining value-addedproducts to our portfolio that help us serve our customers better. At the same timeinnovation is also fundamental to our journey of becoming more environmentallyconscious— be it by reducing our environmental footprint or introducing innatelysustainable products.

CUSTOMER-CENTRICITY

Customers form the cornerstone of CTIL's existence and this notion is incorporatedinto our vision mission and values. We have retained the position of ‘partner ofchoice' for our customers through our continuous engagement customised products andtailored services. Our persistent focus on customer needs and quality enables us tocontinue serving to the best of our capabilities.

SUSTAINABILITY

At CTIL sustainability is embedded in everything we do making it an integral part ofour businesses. Starting from our core strategy to the smallest business decisions andactions all must pass the sustainability impact test. We persistently create value forour stakeholders by making choices that create a positive impact on the environmentpeople and communities.

We have set out on a sustainable growth path with our talented workforce ourinnovative portfolio and optimised processes and platforms. Innovationcustomer-centricity and sustainability will remain key drivers for CTIL over the nextcouple of decades.