Making a difference in the new normal
It is with immense pleasure that I present to you the second Integrated Report of yourCompany. The year under review has presented a variety of challenges with economic growthin India weakening quarter-on-quarter amidst a severe liquidity slump falling consumptiontrends especially in rural and last but not least the outbreak of COVID-19 in Marchwhich has not only elevated the economic challenges but also adversely affected thesociety at large.
The COVID-19 pandemic is dealing a severe blow to the global economy. Lockdowns andother restrictions needed to address the public health crisis together with spontaneousreductions in economic activity by many consumers and producers constitute anunprecedented combination of adverse shocks that is causing deep recession in manyadvanced economies as well as Emerging Market and Developing Economies (EMDEs). As per theWorld Economic Situation and Prospects as of mid-2020 released by the UnitedNations in May 2020 global Gross Domestic Product is expected to shrink by 3.2% in 2020with only a gradual recovery of lost output projected for 2021.
In India the uninspiring trajectory of key macro-indicators during the year underreview belied expectations of a strong reform-led push for growth. Subsequently thesevere curtailment of economic activities and social distancing necessitated by theoutbreak of the coronavirus pandemic has further clouded the near-term outlook. The WorldBank has projected the Indian economy to contract by 3.2% in FY21. However the governmenthas announced various fiscal and monetary measures to mitigate the economic fallout thepositive impact of which is expected to be seen in the medium-term. Hopes of a fasterrecovery in the rural sector rest on improvement in agricultural output on the back of afavourable monsoon forecast good harvest of Rabi crops recent APMC reforms hike inMinimum Support Prices (MSPs) and higher allocation under MNREGA. The pace and sequence ofrecovery from the crisis will largely depend on the efficacy of public health and fiscalmeasures containing the spread of the virus minimising risks of reinfection protectingjobs and incomes and restoring consumer confidence.
While Mr. Saugata Gupta the Managing Director and CEO of your Company will share anoverview of the performance in his message I would describe FY20 as a year of some hitsand a few misses as the business delivered a flat topline vis-a-vis last year but postedhealthy earnings growth due to improvement in profitability in an accommodative input costenvironment. While we begin FY21 in the clutches of a pandemic I believe in yourCompany's ability to cope with the rapidly evolving dynamics in supply chain and consumerbehaviour and emerge stronger from this crisis. It will be our constant endeavour tofortify the enterprise through resolute focus on and consistent investment behind whatwe believe are the strategic building blocks i.e. brand talent and culture which willallow us to effectively adapt to the new normal and stay true to our purpose of creatingvalue for all stakeholders in a sustainable manner.
Sustainability at Marico
If the world today is moving slowly but consistently towards conscious andresponsible action it's because of one simple idea: everyone can be a change-maker. It'sa precept that Marico has believed in for years. In every layer of our organisation andin the DNA of every member is embedded a desire to make a difference; to adopt everypossible measure big or small that will take us further along the road tosustainability. Creation of shared value defined as one of our strategic pillars isfundamental to the purpose of your Company's existence. We see it not only in bottomlines and awards but also in enhanced relationships a safer cleaner environment and acorporate ethos that has sustainability embedded in its very core.
During the year your Company demonstrated steady progress and success in variousprogramme that have been underway to create a sustainable ecosystem along the stated focusareas namely responsible resource consumption climate change circular economysustainable supply chain product responsibility and community development.
In response to climate change your Company has been able to improve the share ofrenewable energy in its operations to 79% at the end of FY20. I am also pleased to sharethat Marico's manufacturing unit at Perundurai Tamil Nadu was certified as 'CarbonNeutral' by DNL GV Assurance India Pvt. Ltd. and also achieved a 'Platinum' rating as perthe GreenCo Rating System by CII-Godrej Green Business Centre.
Further to our commitment to addressing plastic waste management your Companycompleted several successful trials to use recycled plastic under the 'UpCycle' programmeand have been actively working towards completely phasing out the use of PVC in ourproduct packaging by the end of next year. We also duly completed our Extended ProducersResponsibility (EPR) commitment for FY20 to collect and effectively dispose 50% ofpost-consumer use multi-layer packaging waste.
Water is a core thrust area of our sustainability agenda and we aim to promoteeffective conservation and management of the country's water resources. With theJalaashay' initiative we have been able to create 640 million litres of additional waterharvest potential this year which is equivalent to 3.2 times the water footprint in ouroperations. We also completed construction of 95 additional farm ponds in Tamil Nadu andPuducherry and de-silting activity of 77 water bodies in Maharashtra.
Your Company strives to make a measurable difference to the life of the coconut farmerthrough our flagship programme Parachute Kalpavriksha. The cumulative farmer enrolmentunder the programme now stands at 21043 thereby covering over 1.28 Lakh acres of coconutfarms.
Your Company stands united with all stakeholders to alleviate the hardships posed bythe ongoing COVID-19 crisis. We have been able to contribute towards providing meals formigrant labourers the police force health-workers and other disadvantaged sections ofsociety in partnership with various government agencies. We also attempted to safeguardlives of those who are fighting the battle on ground - primary healthcare workers thepolice force and emergency services staff by providing personal protective equipment.Your Company also pledged contribution to the PM CARES Fund to support the government'sefforts to fight the pandemic.
Since its inception in 2003 the Marico Innovation Foundation has strived to fuel andnurture innovation in India. The Foundation also responded to the growing seriousness ofthe COVID-19 pandemic by launching a first of its kind grand challenge Innovate2BeatCOVID in March 2020 to harness the power of innovation to solve current and potentialchallenges that our medical fraternity stands to face with respect to the shortage ofventilators respiratory solutions as well as PPE solutions in hospitals and medicalcentres during this crisis.
As an organisation Marico has established a distinct culture that is unique not justto the Company but also to the way Mariconians function. Derived from the Company's corevalues our culture defines who we are and how we conduct ourselves on each and every day.It is the DNA of our organisation which is embedded in every member across hierarchiesand geographies.
Given the far-reaching economic impact of the COVID-19 crisis so far the path torecovery from this setback is expected to be slow and gradual. The sudden andunprecedented disruptions in current times have emphasised that agility and consumercentricity are necessary attributes for an organisation to navigate through thechallenging times unscathed and effectively turn adversity into opportunity. Innovationand collaboration across the value chain will set successful companies apart. I amenthused by our recent foray into the Hygiene category which is slated to be one of thefastest growing categories over the medium-term. We plan to build a winning portfolio anddeliver sustained growth in this segment on the back of innovation investment behindbrand building and strong execution.
The near-term uncertainty notwithstanding your Company remains steadfast in itsefforts towards becoming a leading emerging market multinational and consistentlyproviding solutions to delight its consumers.
I continue to act as the Non-Executive Chairman of the Board while Saugata continuesto lead your Company's growth initiatives. I also lead efforts to improve the collectivefunctioning of the Board and am actively involved in the Company's Corporate SocialResponsibility (CSR) initiatives. Your Company's Board comprising leaders with domainexpertise from diverse fields such as business strategy finance retail and humanresources continues to guide the top Management in achieving its long term goal. Earlierthis year Mr. Sanjay Dube and Mr. Kanwar Bir Singh Anand were appointed as IndependentDirectors on the Board of Directors of your Company. I would like to take this opportunityto welcome them to Marico's journey towards 'Making a Difference'. Your Company standscommitted to upholding the highest standards of corporate governance.
It is the passion and dedication of your Company's team members that has enabled itsprogress so far and will be a key constituent to the success in future endeavours. I wouldlike to thank each and every one of them for their constant engagement commitment andsupport.
I would also like to extend my sincere gratitude for the continued guidance and supportof your Company's Board.
I also convey my heartfelt appreciation for all our business partners vendors andother business associates who have continued to collaborate with your Company over theyears. We deeply value the overwhelming faith maintained by all our shareholders over theyears. We sincerely look forward to your continued partnership as we chart the course ofthe best years for Marico.