Dear Shareholders,
The major global economies are expected to see a downward trend in their GDP growth in
short to medium term due to challenges like rising interest rates, slowdown in
manufacturing, rise in prices of commodities and supplies, geo-political conflicts, and
disruptions in supply chains. The recent report of International Monetary Fund (IMF) has
highlighted the geopolitical tensions and China's economic slowdown are the key
contributors to the slowdown in global GDP growth in 2022, with the United States, Europe,
and China experiencing varying levels of deceleration. According to the report, the
advanced economies are expected to be the most affected by the slowdown, while emerging
markets and developing economies may experience a less pronounced impact.
Despite the uncertain economic outlook, there are opportunities for an accelerated
recovery if significant risks such as inflation and geopolitical conflicts are adequately
addressed. Countries across the world must proactively mitigate inflationary pressures and
provide fiscal support to vulnerable segments of society. Implementation of structural
reforms in domestic market and enhancing international cooperation will play a vital role
in addressing concerns such as supply chain constraints, commodity price increases, energy
shortages, while preventing excessive debt in low-income countries.
As far as India is concerned, the economy showed robust recovery in 2022, with a GDP
growth rate of 6.8%, thus making it one of the fastest-growing economies globally. India
is expected to maintain strong performance with projected GDP growth rates of 5.9% in 2023
and 6.3% in 2024, fast overcoming the challenges of the pandemic and geopolitical tensions
of 2022. The growth is supported by robust consumer demand and increased focus on
infrastructure development by the government.
The Indian tobacco industry plays a significant role in the country's economy,
contributing to significant employment opportunities, revenue generation, and foreign
exchange earnings. The industry is influenced by various factors that shape its supply and
demand dynamics. The price of tobacco significantly impacts demand, as higher prices
reduce affordability and subsequently decrease consumer demand. Additionally, the ease of
availability and accessibility spurs increase in demand. Further, governmental regulation
plays a crucial role in shaping the industry, primarily through taxation policies that
raise tobacco prices and thereby impact consumption. Despite higher taxes and strict
regulations on tobacco products, the industry has witnessed growth due to factors such as
rising incomes, changing lifestyles, and demand for low-tar and filtered cigarettes.
However, challenges exist, including health considerations, the rise in illicit cigarette
trade including electronic nicotine delivery devices, and the restrictions on sales and
promotion activities. The government, on its part to support the industry, is taking steps
to curb the illicit cigarette trade and stabilize the legal cigarette market.
On the Company financials, we have reported a strong financial performance in FY23,
with gross sales value reaching Rs. 9,409 Crore, a growth of 28.5% Y-o-Y and net profit
touching the figure of Rs. 608 Crore. Gross sales from domestic and international sales
have reached Rs. 7,852 Crore and Rs. 955 Crore respectively, registering a Y-o-Y growth of
26.2% and 69.9%. Considering this, the Board of Directors has recommended a dividend of Rs
44 per share, as compared to Rs 28 per share paid for the last financial year. We are also
proud to announce that Godfrey Phillips India has been recognized as "A Great Place
to Work" for the fifth consecutive year, a remarkable achievement among large
corporations. I want to reiterate our commitment to being a responsible corporate citizen.
As part of our social sector commitment, Godfrey Phillips India, a company whose core
product is an agricultural commodity, is dedicated to protecting the marginalized farming
community and ensuring sustainability of their livelihoods. Operating in tobacco farming,
the company focuses on pressing community issues in the drought-prone area it operates in,
such as limited access to safe water, sanitation, education, and social protection.
Godfrey
Phillips India strives to achieve short-term goals of improving farming efficiencies
and long-term plans for environmental conservation to mitigate the impact of climate
change on agriculture. Few of our notable initiatives include eliminating child labour,
raising awareness on the importance of education, enhancing farmers' earning potential,
and conserving water and soil through the construction of check dams, desiltation, pond
developments and providing safe water and healthcare to communities through community RO
water plants, health camps, and borewell recharges, etc. We continue to remain focused in
contributing to the overall well-being of our supply-side ecosystem.
In closing, I would like to express my sincere appreciation to our employees and senior
management team for their hard work, commitment, and determination in achieving strong
financial results in successive years, and the Board of Directors for its valuable
guidance and unwavering support. I would also like to extend my gratitude to the
customers, channel partners, farming community, bankers, other stakeholders, and
government authorities for their continued confidence in the Company. Also, I would like
to thank you dear shareholders as it is your steadfast trust and support that drives us to
strive for excellence.
Sincerely, Bina Modi