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% 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 202; 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. 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 cautioush 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 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% per cent in FY25.
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 FY24 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,
4,700+ ABGites were held by Gyanodaya, our Learning and
Leadership Development Centre. In addition, 14,000+ 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
14,800+ 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 Well-being 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 checkups. 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
In FY24 your Company recorded net sales of USD 8.4 billion (I 69,810
crores) and EBITDA of USD 1.6 billion (I 13,586 crores).
Your Company has embarked on a capacity expansion drive on a scale that
is globally unprecedented in the cement sector. As a result of the ongoing projects, your
Company has recently reached a historic milestone of 150+ MTPA capacity. This capacity
surpasses 150% of the capacity in the United States and constitutes 80% of Europe's
capacity.
From the first cement unit that we commissioned in the early 1980s with
one MTPA capacity to now the World's third largest cement company, outside of China,
UltraTech's journey has been marked by scorching growth, ambitious bets and flawless
execution.
In FY24, your Company expanded its cement production capacity by 13.81
MTPA and in FY25 up to June 2024, UltraTech has added 8.7 MTPA capacity across several
locations. Of this total, 20.87 MTPA capacity was added through greenfield and brownfield
expansions alone. Currently, capacity expansion projects are underway in 16 locations
across India which will add another 34 MTPA. Additionally, your Company is in the process
of closing the proposed acquisition of Kesoram Cement. Together, these efforts place your
Company within striking distance of the 200 MTPA capacity target announced at last year's
Annual General Meeting.
India's infrastructure sector is poised for remarkable growth, with an
estimated 15.3 percent compound annual growth rate (CAGR) in investments, projected over
the next five years. This growth is expected to result in a cumulative expenditure of USD
1.45 trillion, as per Morgan Stanley. The rapid expansion of production capacity, coupled
with the significant strengthening of brand equity in the marketplace, positions your
Company to harness these longterm growth opportunities effectively.
UltraTech's growth trajectory mirrors India's growth story. It is
heartening that our growth momentum has accelerated, enabling us to be at the forefront of
India's infrastructure development. With a mix of integrated cement plants, grinding
units, and bulk terminals across 59 locations in India, along with 300+ ready mix concrete
plants, UltraTech's scale and capacity footprint is unparalleled. And this scale will
further enable your Company to service India's growing demand for cement across the
country. UltraTech, as a national champion, is a key enabler of India's development.
Sustainability
As a leading global cement company, UltraTech is one of the leaders in
setting the sustainability agenda for the sector. As a founding member of the Global
Cement and Concrete Association, your Company plays a pivotal role in catalysing
multi-stakeholder collaborations in the ecosystem.
At the heart of our sustainability agenda is our commitment to
achieving Net Zero by 2050. Your Company has put in place a clear roadmap to realising
this ambitious goal. We focus on achieving key milestones across our sustainability areas:
Decarbonisation, Energy Transition, Circular Economy, Biodiversity, and Water Management.
Significant progress has been made in these areas, particularly in energy transition. Your
Company achieved its EP100 commitment ahead of the 2035 target year, doubling its energy
productivity from the base year of 2010. This exemplifies our commitment to operational
efficiency and reducing environmental impact.
As part of its RE100 commitment, your Company has significantly
increased its renewable energy capacity by 77% and WHRS capacity by 32% in FY24 compared
to FY23. Your Company now boasts 890 MW of Green Energy, including 612 MW of renewable
energy and 278 MW of WHRS capacity. This has helped achieve 22% electricity substitution
by green power in FY24. With planned increases in renewable energy and WHRS capacity, your
Company will soon reach an astounding 1000 MW of Green Energy. UltraTech aims to increase
the overall share of green energy in its total energy mix to 85% by 2030.
Our tremendous progress in key sustainability areas has earned us
national and international recognition. The Carbon Disclosure Project (CDP), a global
non-profit organisation, awarded your Company a 'B' score for 'Climate Action' and an 'A-'
rating for 'Water Security' in their latest 2023 rating.
Your Company has also been ranked among the top ten companies globally
in the sector by S&P Global's CSA 2023. UltraTech is the only cement company from
India to feature in the global top sectoral list.
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