MANAGEMENT DISCUSSION AND ANALYSIS Review of Economic Scenario and impact of Union Budget 2015-16 The Indian economy is showing positive signals of regaining growth momentum, especially in core areas of Manufacturing and Infrastructure. Inflation coming under control, improvement in consumer sentiment and a stronger GDP growth will certainly help fuel growth for the sector while the recent volatility in currency is a cause for concern. The Union Budget 2015-16 is forward looking and recognizes the growth opportunity in the economy while looking to contain the Fiscal Deficit. The FMCG Sector and Indian consumers The Indian FMCG sector is around $15 Billion and continues to grow at a healthy pace, though it has slowed down versus the historical growth rate. The long term prospects remain bright. There is significant opportunity to grow penetration, trial and consumption. We have strong Indian companies and most major multinationals operating in this area offering a wide array of products to the Indian consumer. Outlook, Risks and Opportunities The Indian economy brsents significant opportunity with a growing population, category whitespace and rising incomes. We do expect growth rate in the categories we compete to be around high single digits. However, currency volatility, supply bottlenecks and intense competition brsent significant near term challenges. Your Company endeavours to overcome these risks and to sustain and improve its market position behind superior innovation, by driving favourable price/mix, consumer relevant communication and a relentless focus on productivity. Performance Overview The Company operates in a single reportable business and geographical segment. The Company's core business is manufacturing, marketing and distribution of Hygiene and Health Care products. Under these businesses it has in its portfolio: VICKS-India's No-1 Healthcare brand, WHISPER-India's leading Feminine Hygiene brand (in value terms) and OLD SPICE. The discussion on financial performance of the Company and its various businesses is elaborated in the Directors' Report. Risk Management During the Financial Year, your Company has set up a Risk Management Committee in accordance with the requirements of Listing Agreement to monitor the risks and their mitigating actions. The Company has also adopted a Risk Management Policy. Business, Finance & Operational risks The Company's risk management policy is in line with the parent Company's global guidelines and as such adequate measures have been adopted by the Company to anticipate, plan and mitigate the spectrum of risks it faces. On business risks (competition, consumer brferences and technology changes) the Company undertakes a Competition Response Model program. For financing risks, it has a robust operational contingency and legal plan. It also undertakes Business Contingency Plan for key vendors and natural disasters. The Company also has adequate Insurance coverage to protect the value of its assets. This coverage duly covers any risks relating to business interruption resulting from property damage and legal liability resulting from property damage or personal injury. The Company has in place a very stringent and responsive system under which all its distributors and vendors are assessed before being selected. Regulatory and Compliance risks Your Company operates within the letter and spirit of all applicable laws. General compliance with legal requirements is an important component of P&G's Worldwide Business Conduct-Manual and the same directs the following action from every employee: • To obey all legal requirements at all times; • To understand exactly what legal requirements apply to the work function; • To consult the legal personnel if there are conflicting legal requirements in different jurisdictions; • To strictly follow the directions from the legal personnel; • To address and resolve, in a timely manner, any legal compliance issues that have been identified; • Absolutely no violation of any law; • To immediately report any instance of violations to the Legal Department. Your Company has set in place the requisite mechanism for meeting with the compliance requirements, periodic monitoring to avoid any non-compliance, and regular updates to keep pace with the regulatory changes. Security Risks Your Company has installed combrhensive security programs supported by latest technology and trained manpower to protect employees and assets, at all its offices and plants. Security measures are overseen by a specially designated Global Security Manager - India, and reputed security agencies has been appointed to provide guard force for ensuring asset protection, overall brmises security and access control of personnel and material. Evacuation drills are conducted once a year to ensure readiness and effectiveness. There is also a system for continuous monitoring of security alerts across the country and a pan India emergency notification system for reaching out to our employees in time of crisis has been implemented. A global policy is in place to issue travel advisories to all employees, in case there is any adverse situation at any place in the world. If the situation warrants, travel bans are imposed. During the Financial Year under review, no security breaches or major incidents occurred at any of the Company's plants. A combrhensive security risk assessment is carried out regularly and. adequate security measures are implemented to cater to change security scenario. Your Company has installed the best of the security measures and processes to protect its personnel and assets. Internal Auditor During the Financial Year, the Board of Directors appointed Mr. Hari Shankar Dasgupta as the Internal Auditor of the Company for the Financial Year 2014-15. Internal Controls & their adequacy Your Company has strong Internal Controls Environment and Risk Assessment/Management systems. These systems enables Company to comply with Internal Company policies, procedures, standard guidelines and local laws to help protect Company's Assets and Confidential information against financial losses and unauthorized use. The robust controls environment at your Company is efficiently managed through: o Controls Self Assessments (CSA's): are performed by the organization to assess process compliances with standards brscribed by Company in the Controls check list and to identify process outages. The organization undertakes a process review supported by random sample checking to evaluate process effectiveness which- enables organization to identify control weaknesses and initiate actions to mitigate them. o Stewardship Reviews, led by a team of three fulltime Internal Controls experts ensure that all key processes in the area of Selling, Distribution, Trade and Marketing Spending, Vendor Payments, and Plant Operations are reviewed and assessed at frequent intervals. The observations and findings are shared with senior management for implementing quality action plans to further enhance the strength of the process. The assessment of key areas are also supplemented by an independent internal audit by P&G's Global Internal Audit team. This team comprises of internal experts who have experience across the different markets that P&G operates in. o Governance and stewardship boards comprising of the Managing Director, Chief Financial Officer, Chief Human Resource Officer and Chief Legal Officer. It reviews the Key Legal issues, Ethics Culture and Internal Controls to create a standard, structured approach to identify Governance risks and proactively mitigate them. During the Financial Year under review, the Global Internal Audit (GIA) performed audits of key areas covering : marketing, distribution and legal entity stewardship, across these audits, controls were rated as 'Strong with low controls risks'. Local management has developed and executed quality action plans to remediate all the findings reported by GIA during their engagement. HR Initiatives The Company operates in a highly competitive environment vis-a-vis attracting the best talent for its operations and i therefore the human resources management function has ', assumed vital importance in the Company. The Company focuses on attracting, motivating and retaining the best talent. Its people systems like talent supply, performance management and talent development are robust and competitive. We have put in place robust HR programs to ensure that the organization is geared up to sustain the growth. Attracting & Retaining Talent: India continues to be a key market for Global talent. In this scenario, our recruiting focus, innovative campus initiatives (digital and face to face), foray into social media helped us reach a large number of prospective candidates. We continue to strengthen our position as Employer of Choice. Our policies on leadership pipeline, talent planning, mentoring and diversity & inclusion policies continued to ensure that we attract and retain the best talent. We continue to partner closely with the top institutes in India and invest in both business and technical campuses, where we are a brferred employer. Providing challenging and meaningful careers, competitive compensation & benefits, leadership development opportunities continues to enable us to attract the best talent that will keep the Company growing from strength to strength. We continued to be ranked among the top few companies in the Annual Nielsen Campus survey. Developing Talent: Our organization survey scores were strong showing good increase in areas of diversity & inclusion, culture of innovation and career & guidance. New hires into the Company are given a thorough on- boarding through our "i-LEAD Program" to ensure that they are early contributors in their roles and feel valued. Clear career paths help employees to plan their career goals and understand the skills needed for their development. The Company performance management system is robust, clearly assesses and differentiates employees on the basis of performance. We continue to build our talent through experiences both in India as well as internationally, ensuring that the benefits of a global organization are leveraged. A renewed leadership development program called "P&G Leadership Academy", Jeveraging virtual learning platforms and innovative learning methodologies beyond the classroom has been launched to ensure we focus on building leadership at all levels in the organization. All these initiatives make our retention among the best in the industry. The number of employees as on June 30, 2015 was 377. The Statements in the Management Discussion and Analysis Report may be seen as forward looking statements. The actual results may differ materially for those exbrssed or implied in the statement depending on circumstances. |