Dear Shareholders,
In an era marked by unprecedented global challenges, the imperative for
businesses to transcend conventional paradigms has never been more pressing. At the Aditya
Birla Group, we recognise that our success is intrinsically tied to the well-being of
society and the planet we inhabit.
As custodians of progress and stewards of sustainable growth, we
embrace the ethos of being a force for good in all facets of our operations.
At the heart of our philosophy lies the conviction that business can
and must serve as a catalyst for positive change. Beyond the pursuit of profit margins, we
envision a world where economic prosperity harmonises with social welfare and
environmental stewardship.
This vision guides our strategic decisions, propelling us to harness
the transformative power of business to create collective prosperity. Being a force for
good entails a multifaceted approach that extends across our entire value chain. From
fostering inclusive growth and empowering local communities to mitigating environmental
impact and creating prosperity for our nation and its people, our commitment to operating
responsibly is woven into the fabric of our business endeavours. It is part of our DNA and
our legacy. It defines who we are.
By creating value for all stakeholders - shareholders, employees,
customers, and society at large - we aim to nurture an ecosystem of mutual benefit and
collective advancement. This philosophy underpins our unwavering dedication to ethical
governance, transparent communication, and responsible business practices.
As we navigate the complexities of a rapidly evolving world, we remain
steadfast in our commitment to being agents of positive change.
Guided by our Purpose ‘To enrich lives, by building dynamic and
responsible businesses and institutions, that inspire trust', and by leveraging our
resources, expertise, and influence, we aspire to be a catalyst for meaningful impact,
shaping a future where business serves as a force for good in everything that we touch and
do.
Global Economy: Resilience in Motion
The global economy exhibited remarkable resilience and divergence
during 2023, defying fears of stagflation and recession. Increased government spending,
notable labour force participation, and continued household consumption growth supported
global economic growth last year. Despite substantial interest rate hikes by central
banks, economic activities worldwide grew steadily, buoyed by household demand fuelled by
pandemic savings and supportive policies in mortgage and housing markets. These growth
drivers mitigated the impact of policy rate increases. Major central banks, led by the US
Federal Reserve, have likely reached their peak rate hikes. Expectations are for rate cut
initiations during the latter part of 2024, signalling cautious optimism for the global
economy and financial markets. Global economic growth is estimated at 3.2 percent in 2023
and projected to continue at the same pace in 2024 and 2025, albeit these growth rates are
at historically low levels.
The US economy was a standout in 2023, with GDP growth exceeding
long-run averages at 4.9% in Q3 and 3.4% in Q4, driven by robust services growth and a
resurgence in manufacturing activity.
Guided by our Purpose ‘To enrich lives, by building dynamic and
responsible businesses and institutions, that inspire trust', and by leveraging our
resources, expertise, and influence, we aspire to be a catalyst for meaningful impact,
shaping a future where business serves as a force for good in everything that we touch and
do.
Simultaneously, as the Fed raised rates and supply constraints eased,
inflation declined to 1.7% in Q4, undershooting the 2% target. This "miracle" of
strong growth and low inflation defied the recessionary predictions of most economists.
In contrast, Europe slowed to just 0.4% GDP growth in 2023, weighed
down by reduced household spending from elevated energy costs tied to the Russia-Ukraine
conflict and tighter monetary policy. Prospects for 2024 remain subdued at 0.8% growth,
constrained by strained fiscal positions limiting any growth impetus.
China experienced a 5.2% growth rate in 2023 and is projected to expand
by 5% in 2024 and 4.5% in 2025, bolstered by policy support measures. However, a
protracted property crisis remains a major drag on growth.
Global economic prospects have improved as major economies have averted
a severe downturn, reducing inflation without raising unemployment. However, the outlook
remains cautiously optimistic. Persistent challenges include prolonged high interest
rates, debt sustainability issues, ongoing geopolitical tensions, and escalating climate
risks, all of which continue to impede growth.
India: Leading the Way
Yet, for India, the picture is promising amidst a globally uncertain
macroeconomic environment.
India's economy has shown resilience, with real GDP growth of 8.2% in
FY 2023-24, making it the fastest-growing major economy and the fifth largest globally.
Structural reforms and domestic household demand are key drivers of India's growth.
Inflation has eased, supported by monetary policy actions and supply-side interventions.
India is expected to grow at 7.2% in FY 2025.
The banking sector has seen improvements in earnings, governance, and
balance sheets. Non-banking financial companies (NBFCs) also show sound performance,
contributing to credit growth in the private sector. Prudent policies and regulatory
measures aim to safeguard financial stability in India. The Indian rupee has managed
relative stability supported by improved external balances, including a moderation in the
current account deficit and robust forex reserves. Increased services exports have been
supportive of the external balance. India's FinTech ecosystem, supported by initiatives
like the Unified Payments Interface (UPI), has transformed financial services, promoting
inclusion and digitisation.
Hence, despite global challenges, the Indian economy is poised for
sustained growth. We believe collective actions and focused measures by the government
have helped overcome past challenges and will realise India's growth potential in the
future. To summarise, the Indian economy has demonstrated resilience, supported by
reforms, low core inflation, and a sound financial sector. Continued focus on reforms will
see India emerge as a key global growth engine.
Aditya Birla Group:
In Perspective
Amid this economic backdrop, the Aditya Birla Group's strong
performance in FY 2023-24 stands as a testament to our unwavering commitment to
purpose-driven growth, driving sustained value creation for stakeholders across our
diverse business portfolio.
This success is underpinned by our exceptional talent pool, whose
dedication and entrepreneurial spirit are the true catalysts for our sustained
achievements.
This year, we have advanced our purpose-driven approach to business by
integrating our purpose in every stage of the employee life cycle: hiring, induction,
learning, performance appraisal and continuous employee connect.
Being the force for good for ABGites: By enabling employees to
develop capabilities and achieve their true potential. 186 learning events covering 4700+
ABGites were held by Gyanodaya, our Learning and Leadership Development Center. In
addition, 14000+ ABGites were covered through outreach programmes, done closer to the
employees in
our Units / offices all over the globe. Robust digital learning,
enabled 81% of the employees to learn at their convenience around topics of interest and
need.
Our leaders play a crucial role in strengthening the succession
pipeline. Through Business and Functional Talent Councils, they set the vision for their
respective areas, identify the future capabilities needed for success, review the
availability of talent, and agree on actions to enhance the talent pipeline.
This year, over 12,000 employees (99% of the eligible population)
underwent potential assessments, enabling us to identify high-potential talent across all
levels and prepare them for leadership succession.
As a result, 56% of critical mid and senior-level positions were filled
through our internal pipeline. Additionally, the internal and external hiring ratio for
senior management roles has improved from 59:41 to 75:25 over the past three years.
Our strong employer brand enabled us to attract high-quality talent for
three new businesses built grounds-up: Birla Opus, Birla Pivot and Novel Jewels. We hired
14800+ employees across levels in the management cadre, 75% of whom are millennials and
Gen Z.
We have maintained our focus on strengthening gender diversity,
ensuring more women are in mainstream roles and leading strategic responsibilities across
various functions and regions. Currently, women make up 15.6% of our management cadre,
with 277 women holding senior and top leadership positions. We are also making a special
effort to increase the representation of women in technical roles. For example, we have
appointed our first female unit head for the battery enclosure plant, enrolled 25 women in
a one-year apprenticeship programme in core mining who will be placed in UltraTech, and
have women serving as Territory Sales Managers at Birla Opus.
We strive to enrich the lives of our employees through integrated
healthcare solutions that focus on their physical and emotional well-being, as well as
that of their families. Our Digital Health and Wellbeing app, AB Multiply, has enrolled
26,000 employees for holistic wellness services. Additionally, over 9,000 employees have
benefited from company-sponsored annual physical health check-ups.
We have made significant efforts to reduce the stigma associated with
mental health, ensuring that employees and their families can access professional and
confidential counselling services when needed. Last year, over 1,000 employees or their
family members sought help, marking an increase of more than 25%.
The results of ABG Vibes 2023, our annual engagement survey, reflect
our commitment to being a force for good for our employees.
The scores have improved in all areas across employee segments compared
to the previous cycle:
91% of employees are proud to be associated with the Group,
93% would recommend the Group as a great place to work, and 87% see
themselves working with the Group two years from now (an 8% increase from the last cycle).
Additionally, 89% of employees find a sense of meaning and purpose in their work, and 91%
are optimistic about the future of the business.
Indeed, the Aditya Birla Group stands at an exciting juncture. Many of
our businesses are poised for transformational growth, while new ventures are emerging
with a lot of promise. We are not just expanding in size but also diversifying in scope
across various industries and regions.
Your Company's Performance
Your Company delivered an outstanding financial and operational
performance across all business segments in FY 2023-24, despite a challenging business
environment. This robust performance was propelled by record results in the Copper
business and Aluminium India Upstream business, and a strong recovery in Novelis.
Despite headwinds, your Company registered a consolidated EBITDA of
?25,728 crore on a turnover of ?2,15,962 crore.
Your Company's India Aluminium Upstream business reported
industry-best EBITDA margins driven by higher volumes and strategic cost optimisation. Our
Aluminium Downstream business experienced promising growth in EBITDA per tonne in the
reporting year, reflecting our strategic focus on enhancing this segment. Novelis
showcased improved EBITDA per tonne driven by stronger demand for beverage packaging and
record automotive shipments.
Your Company's Copper business achieved an all-time high EBITDA,
backed by record sales volumes, an enhanced product mix, and reliable operations. Copper
metal sales reached a record 506 KT in FY 2023-24 versus 439 KT while CCR sales also
touched a record 389 KT this year versus 347 KT in the previous year.
Novelis reported shipments of 3,673 KT, an adjusted EBITDA of $1.9
billion, and an adjusted EBITDA/ tonne of $510 in the reporting year. Novelis continued to
improve its product mix with the share of beverage can sheet constituting 56%, automotive
body sheets at 22%, specialties at 19%, and aerospace at 3%. Novelis retained its position
as the world's largest aluminium recycler, reporting a 63% share of recycled content
compared to 61% in the previous fiscal year.
Your Company continues to execute its well-structured capital
allocation plan, directing free cash flow towards organic growth, deleveraging, and
dividend distribution. Despite repaying ?5,145 crore of debt in the Hindalco India
business during the year, your Company maintained a strong balance sheet and solid
liquidity. This positions us well to drive our future organic growth plans through prudent
capital allocation.
Your Company's value enhancing growth strategy remains on track to
deliver organic growth projects totalling $6.9 billion over the next 3 to 5 years in
Novelis and Hindalco India.
Novelis is pacing its growth capex spends, prioritising $4.9 billion of
projects that are underway. Among these projects, Novelis' Bay Minette in North
America is the most significant. The highly efficient facility is being built to serve the
growing demand for sustainable aluminium solutions.
In the Hindalco India business, we are investing in enhancing
technologies and processes to design multiple products and solutions for a sustainable
future. We are collaborating with our customers to co-create critical components like
battery enclosures, motor housings, busbars, structural and safety components, and
lightweight load bodies. Many of these components, crafted with our engineered alloys and
precision manufacturing capabilities, mark a first for India.
Your Company continues to focus on value-added products in copper as
well, and is setting up a copper and e-waste recycling facility, and an Inner Grooved
Tubes project in Gujarat, India.
On the ESG front, your Company is making good progress on its climate
action targets. Our first-of-its-kind energy transition initiative is on track to begin
the ramp-up of 100 MW of round-the-clock carbon-free power for our Odisha smelter. This
project was recognised with the ‘Energy
Transition Changemaker' award at COP28, underscoring the
significance of this transformative initiative.
Your Company's recent global recognitions are testimony to our
differentiated ESG approach which includes targeted initiatives to achieve net zero, zero
waste to landfill, no net-loss to biodiversity, and water positivity, by 2050. As a result
of these efforts, we ranked among the top 1% in the aluminium industry in the S&P
global (DJSI) Sustainability Yearbook of 2024 for the third time in a row.
These affirmations signify our commitment to design pioneering
solutions for a greener, stronger and smarter future, driven by our belief that business
can and must serve as a catalyst for positive change.
Conclusion
Your Company's multidimensional achievements underscore what has
been a foundational philosophy of our group— that true corporate success is measured
by the enduring value we create for all our stakeholders. And that is our legacy, our
promise, and our future.
Kumar Mangalam Birla Chairman