To the Members,

The Directors are pleased to present the 72^nd Annual Report of your Company along with the Audited Financial Statements for the financial year ended 31^st March 2019.

FINANCIAL HIGHLIGHTS

Your Company’s financial performance for the year ended 31^st March 2019, is summarised below:

(Rs. in Crore)

DIVIDEND

Based on your Company’s performance, the Directors are pleased to recommend for your approval, a dividend of Rs. 7 (Rupees Seven Only) per equity share of Rs. 2 each of your Company (dividend @350% of the face value), for the financial year ended 31^st March 2019. The dividend, if approved by the members, would involve a cash outflow of Rs. 515.88 Crore (inclusive of Dividend Distribution Tax of Rs. 55.54 Crore).

In terms of the provisions of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended from time to time (“Listing Regulations”), your Company has formulated a Dividend Distribution Policy. This Policy is given in Annexure ‘A’ to this Report and is available on your Company’s website, www.grasim.com.

Dividend declared by your Company for the financial year ended 31^st March 2019, is in compliance with the Dividend Distribution Policy.

TRANSFER TO RESERVES

The Board of Directors of your Company has decided not to transfer any amount to the General Reserves, for the financial year ended 31^st March 2019.

PERFORMANCE REVIEW

On a consolidated basis, the revenue from operations for FY 2018-19, increased to Rs. 72,970.64 Crore which was 31% higher than that of the previous year (Rs. 55,893.51 Crore in FY 2017-18). The consolidated EBITDA increased to Rs. 12,819.85 Crore for FY 2018-19 which was 18% higher than that of the previous year (Rs. 10,883.37 Crore in FY 2017-18).

On a standalone basis, revenue from operations for FY 2018-19, increased to Rs. 20,550.43 Crore which was 30% higher than that of the previous year (Rs. 15,785.81 Crore in FY 2017-18). The standalone EBITDA increased to Rs. 4,639.14 Crore for FY 2018-19 which was 31% higher than that of the previous year (Rs. 3,541.54 Crore in FY 2017-18).

The Management Discussion and Analysis Section, focuses on your Company’s strategies for growth and the performance review of the businesses/operations in depth.

STRATEGIC INITIATIVES CHLOR ALKALI BUSINESS

During the year, your Company acquired Chlor-Alkali Business (“CAB”) of K. P R. Industries (India) Limited (“KPR”) by way of a slump sale. This acquisition is a strategic fit and further strengthens your Company’s leadership in the chlor-alkali sector. The CAB consists of an under-construction 200 TPD Chlor-Alkali project at Balabhadrapuram, Andhra Pradesh.

The acquisition is in line with your Company’s strategy to strengthen operations on the east coast of India. Further, the purchase of a partially-completed project, vis-a-vis a greenfield project, will translate into a shorter time-to-market. The acquired Business also has the potential for future expansions. Once operationalised, this plant, along with other ongoing expansion projects, will enhance your Company’s caustic soda capacity to 1,457 KTPA.

Caustic soda is one of the essential inputs for the manufacture of alumina. Given the expansion plans for the aluminium businesses, it will serve as an excellent sourcing point for leading aluminium players.

It is also used widely in various other industries, viz., viscose staple fibre, water treatment, pharma, chemicals, etc. The business is strategically located in proximity of various aluminium manufacturing plants, which offer significant growth opportunities.

The chlor-alkali division of your Company already operates seven state-of-the-art chlor-alkali plants, pan India. The completion of this chlor-alkali project in Andhra Pradesh enables your Company to serve the fastest growing market of caustic soda in India, and will also catalyse growth of the chlorine downstream sector in Andhra Pradesh.

ACQUISITION OF SOKTAS INDIA PRIVATE LIMITED (NOW KNOWN AS GRASIM PREMIUM FABRIC PRIVATE LIMITED)

During the year, your Company acquired 100% equity of Soktas India Private Limited (“SIPL”), from its current promoters, SOKTAS TEKSTIL SANAYI VE TICARET ANONIM SIRKETI, world renowned producer and marketer of fabrics at a consideration of Rs. 135 Crore. SIPL is in the business of manufacturing and the distribution of premium cotton fabrics. SIPL became a wholly owned subsidiary on 29^th March 2019 and has been renamed as Grasim Premium Fabric Private Limited (GPFPL).

Its state-of-the-art manufacturing facility is located at Kolhapur, Maharashtra and its plant capacity is about 10 million metres per annum of finished fabric. GPFPL sells premium fabrics in India under the “SOKTAS” “Giza House” and “Excellence by SOKTAS” brands. GPFPL is also a preferred supplier to leading Indian and Global menswear brands. The acquisition is in line with your Company’s Linen business strategy, to strengthen its presence in the premium fabric market. Increasing disposable income, fashion and quality orientation of Indian consumers has resulted in an increase in the demand for premium fabric over the years.

Your Company already has a significant presence in India’s premium linen fabric market, through its leading brand “Linen Club” It is India’s top linen fabric manufacturer. This acquisition is a compelling strategic fit with the linen business, and further strengthens our leadership in the premium fabric market in India. The brand Linen Club is well recognised in the evolving Indian fashion industry, which will be further bolstered by the “SOKTAS” “Giza House” and “Excellence by SOKTAS” brands.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Companies Act, 2013 (Act), read with the Companies (Accounts) Rules, 2014, Listing Regulations and Ind AS 110 - Consolidated Financial Statements/and Ind AS 28 - Investment in Associates/ and Joint Ventures, the Audited Consolidated Financial Statements forms integral part of this Annual Report.

SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES

The following are the changes in the subsidiaries, associates and joint venture companies of the Company:

In accordance with the provisions of Section 129(3) of the Companies Act, 2013, read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing the salient features of financial statements of each of the subsidiaries/ associates/joint venture companies of the Company, in the prescribed Form AOC-1, is given in Annexure ‘B’ to this Report.

The said Form also highlights the financial performance of each of the subsidiaries/associates/joint venture companies included in the CFS pursuant to Rule 8(1) of the Companies (Accounts) Rules, 2014.

In accordance with the provisions of Section 136(1) of the Companies Act, 2013, the Annual Report of your Company, containing interaliathe audited standalone and consolidated financial statements, has been placed on the website of your Company, www.grasim.com. Further, the audited financial statements along with related information and other reports of each of the subsidiary companies is also available on the website of your Company, www.grasim.com.

In accordance with Section 136 of the Companies Act, 2013, the financial statements of the subsidiary companies and related information are available for inspection by the Members of the Company at its registered office, during business hours, upto the date of the Annual General Meeting (AGM). Any Member desirous of obtaining a copy of the said financial statements may write to the Company Secretary at the Registered Office of your Company.

Your Company does not have any material unlisted subsidiary company. UltraTech Cement Limited and Aditya Birla Capital Limited are the material listed subsidiary companies of your Company. The Audit Committee and the Board reviews the financial statements, significant transactions and working of all the subsidiary companies, and the minutes of unlisted subsidiary companies are placed before the Board.

UltraTech Cement Limited (UltraTech)

a) The National Company Law Appellate Tribunal (NCLAT) by its order dated 14^th November 2018, approved the Resolution Plan of UltraTech for acquiring Binani Cement Limited (BCL) under the provisions of the Insolvency and Bankruptcy Code, 2016, as amended. BCL became a wholly-owned subsidiary of UltraTech with effect from 20^th November 2018 and it was re-named as UltraTech Nathdwara Cement Limited, with effect from 13^th December 2018.

b) The Board of Directors of UltraTech had approved a Scheme of Demerger amongst Century Textiles and Industries Limited (Century) and UltraTech and their respective shareholders and creditors (the Scheme). In terms of the Scheme, Century would demerge its cement business into UltraTech.

The National Company LawTribunal, Mumbai Bench (NCLT) has by its Order dated 3^rd July 2019 approved the Scheme and has fixed the Appointed Date as 20^th May 2018. The Scheme will be effective upon receipt of the required regulatory approvals for transfer of mining leases.

The Consolidated Financial Statements of the Company for the FY 2018-19 included in this Annual Report, are without giving impact of the Scheme.

Aditya Birla Capital Limited (ABCL)

a) ABCL and Aditya Birla ARC Limited, a subsidiary of the ABCL, entered into a strategic joint venture with Varde Partners (“Varde”) and created a joint platform to pursue investments in stressed and distressed assets in India. Varde is a global investment adviser focused on credit and value investing strategies.

b) The National Company Law Tribunal, Ahmedabad Bench by its order dated 14^th November 2018 approved of the amalgamation of Aditya Birla Money Limited (“ABML”) and Aditya Birla Commodities Broking Limited (“ABCBL”), with effect from 14^th December 2018. ABML is a subsidiary of ABCL and ABCBL is a wholly owned subsidiary of ABML and a step-down subsidiary of ABCL.

Your Company has in accordance with the amendments to the Listing Regulations revised the Policy for determining Material Subsidiaries. The said Policy is available on your Company’s website, www.grasim.com

SHARE CAPITAL

During the FY 2018-19:

- your Company allotted 2,26,928 equity shares of Rs. 2/- each pursuant to the exercise of Stock Options and Restricted Stock Units in terms of the Employees Stock Option Schemes of your Company.

- your Company has not issued any shares with differential voting rights or any sweat equity shares.

PURCHASE OF TREASURY SHARES

The Grasim Employees’ Welfare Trust constituted in terms of the Company’s Employee Stock Option Scheme, 2018 (“ESOS 2018”) acquired 13,57,375 equity shares of your Company from the secondary market, to be allotted to the eligible employees under ESOS 2018. As per the Ind AS, purchase of own equity shares are treated as treasury shares.

DEPOSITS

During the year under review, your Company has not accepted or renewed any deposits within the meaning of Section 73 of the Companies Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014, and, as such, no amount of principal or interest was outstanding, as on the date of the Balance Sheet.

ISSUE OF NON-CONVERTIBLE DEBENTURES

On 26^th March 2019, your Company has issued and allotted 5,000, 7.65%, fully paid-up, Unsecured, Redeemable Non-Convertible Debentures of face value of Rupees Ten Lakh each, having a tenure of 3 years and 20 days, with maturity date being 15^th April 2022, at an issue price of Rupees Ten Lakh each, aggregating to Rs. 500 Crore, on private placement basis.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Pursuant to Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014, disclosures on particulars relating to loans, advances and investments as on 31^st March 2019 are given in the Notes to the Financial Statements. There are no guarantees issued, or securities provided by your Company in terms of Section 186 of the Companies Act, 2013, read with the Rules issued thereunder.

ABRIDGED ANNUAL REPORT

In terms of the provisions of Section 136(1) of the Companies Act, 2013, Rule 10 of Companies (Accounts) Rules, 2014, and Regulation 36 of the Listing Regulations, the Board of Directors has decided to circulate the Abridged Annual Report containing salient features of the Balance Sheet and Statement of Profit and Loss, and other documents to the shareholders for the FY 2018-19, under the relevant laws.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 of the Listing Regulations, is presented in a separate section, and forms an integral part of this Report. It, inter alia, provides details about the Indian economy, business performance review of the Companies various businesses and other material developments during the FY 2018-19.

CORPORATE GOVERNANCE

Your Directors re-affirm their continued commitment to the best practices of Corporate Governance. Corporate Governance principles form an integral part of the core values of your Company.

In terms of Regulation 34 of the Listing Regulations, a separate report on Corporate Governance, along with a certificate from the Auditors on its compliance is given in Annexure ‘C’ to this Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL Directors

- In accordance with the provisions of Section 152 and other applicable provisions, if any, of the Companies Act, 2013 read with Companies (Appointment & Qualification of Directors) Rules,2014, and the Articles of Association of the Company, Mr. Kumar Mangalam Birla (DIN: 00012813) and Ms. Usha Sangwan (DIN: 02609263), NonExecutive Directors of your Company, are liable to retire by rotation at the ensuing Annual General Meeting (AGM) and, being eligible, have offered themselves for re-appointment. Resolutions seeking shareholders’ approval for the re-appointment of Mr. Kumar Mangalam Birla and Ms. Usha Sangwan have been included in the Notice of the ensuing AGM.

- In terms of the Regulation 17(1A) of the Listing Regulations, approval of the shareholders, by way of a special resolution, is required for the continuation of directorship of non-executive directors, who have attained the age of 75 years.

Mr. Arun Thiagarajan (DIN: 00292757), Independent Director, of your Company will attain the age of 75 years, in September 2019. The Nomination and Remuneration Committee had after considering various attributes, including the experience of Mr. Thiagarajan recommended his continuation as Non-Executive Independent Director on the Board of the Company, till the end of his term. Based on the recommendation of the Nomination and Remuneration Committee, the Board has, subject to the approval of the shareholders, consented to the continuation of Directorship of Mr. Arun Thiagarajan till the end of his tenure. Shareholders’ approval by way of a special resolution for the continuation of Directorship of Mr. Arun Thiagarajan till the end of his tenure has been included in the Notice of the ensuing AGM.

- Mr. Cyril Shroff, Dr. Thomas M. Connelly, Jr., Mr. M. L. Apte and Mr. B. V. Bhargava were appointed as Independent Directors at the AGM of your Company held on 6^th September 2014, for a period of 5 consecutive years. Mr. O. P. Rungta was appointed as an Independent Director, at the AGM of your Company held on 19^th September 2015, for a term of 5 consecutive years, with effect from 25^th September 2014.

Based on the report of performance evaluation and the recommendations of the Nomination and Remuneration Committee, the Board has, subject to the approval of the shareholders approved the re-appointment of the following Independent Directors:

- Mr. Cyril Shroff and Dr. Thomas M. Connelly, Jr., for a further term of 5 years commencing from 23^rd August 2019;

- Mr. O. P Rungta for a further term of 5 years commencing from 25^th September 2019 Shareholders’ approval by way of special resolutions for the above Independent Directors have been included in the Notice of the ensuing AGM.

- Mr. M. L. Apte and Mr. B. V. Bhargava whose existing term of office as Independent Directors is up to the conclusion of the ensuing AGM and who are eligible for re-appointment as Independent Directors have expressed their unwillingness to be re-appointed at the ensuing AGM, due to personal reasons. The Board placed on record its deep appreciation for the contribution made by Mr. M. L. Apte and Mr. B. V. Bhargava during their tenure as Independent Directors of the Company.

Subject to the approval of the shareholders, and based on the recommendations of the Nomination and Remuneration Committee, the Board at its meeting held on 12^th July 2019 appointed Mr. N. Mohanraj (DIN: 00181969) as an Additional Independent Director of the Company, for a period of 5 years commencing from 12^th July 2019.

The resolution seeking the appointment of Mr. N. Mohanraj as an Independent Director has been included in the Notice of the ensuing AGM.

Your Directors commend the Resolutions for your approval for the aforesaid appointment/ re-appointment continuation.

A brief resume of the Directors being appointed forms part of the Notice of the ensuing AGM.

- Pursuant to the Group’s Policy of rotation of senior leaders, Mr. Sushil Agarwal, Whole-time Director & CFO has relinquished his role as Chief Financial Officer of Grasim Industries Limited and as a member of its Board, with effect from the close of business hours on 30^th June 2019. Mr. Agarwal has ceased to be a Director on the Board of the Company, with effect from close of business hours on 30^th June 2019.

Mr. Sushil Agarwal was appointed as the Chief Financial Officer of the Company and inducted as a Whole-time Director on the Board of the Company, with effect from 1^st July 2015. He was given additional responsibility of Group Chief Financial Officer (Group CFO) on 1^st April 2016. Mr. Sushil Agarwal has made significant contributions to your Company’s growth, notable being the amalgamation of Aditya Birla Chemicals (India) Limited with Grasim Industries Limited, merger of Aditya Birla Nuvo Limited with Grasim Industries Limited and demerger of its financial services business to Aditya Birla Capital Limited and other merger and acquisition transactions.

Mr. Sushil Agarwal is a long-serving member of the Aditya Birla Group and has held variety of roles across the Group. Over 30 years with the Group, he has closely worked with several businesses of the Group including Financial Services, where he was the COO of Birla Global Finance Limited and the CEO of Birla Insurance Advisory. He was conferred the Chairman’s Award as an Exceptional Achiever in 2000 and an Outstanding Leader Award in the year 2013.

The Board placed on record its deep appreciation for the substantial contribution and services rendered by Mr. Sushil Agarwal during his tenure with your Company as the Whole- time Director & CFO.

Key Managerial Personnel

Pursuant to the provisions of Sections 2(51), and 203 of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Key Managerial Personnel of the Company as on 31^st March 2019 are Mr. Dilip Gaur, Managing Director, Mr. Sushil Agarwal, Whole-time Director & Chief Financial Officer and Mrs. Hutokshi R. Wadia, President and Company Secretary.

Consequent to Mr. Sushil Agarwal, relinquishing his office as Whole-time Director & CFO, he ceased to be the Key Managerial Personnel of the Company, with effect from the close of business hours on 30^th June 2019.

In line with the Group’s talent movement plans and its strategy of bringing talent into significant roles and based on the recommendations of the Nomination and Remuneration Committee and Audit Committee, the Board of Directors at its meeting held on 24^th May 2019, appointed Mr. Ashish Adukia as the Chief Financial Officer of the Company, with effect from 1^st July 2019.

Mr. Ashish Adukia joined the Group in August 2014 as President and Head-Group Corporate Finance, Aditya Birla Management Corporation Private Limited. In his last role Mr. Adukia was Senior President and Head-Group Corporate Finance. He has contributed significantly to mergers and acquisitions and capital raising initiatives of the Group, and has been responsible for Business Planning and the Group MIS, amongst other key financial initiatives. He has worked closely with the Chairman and Business Leaders on many strategic and critical projects, maximising value creation from the Corporate Centre to the Group’s key business issues. His major contributions include systematically providing funding solutions and meeting objectives of cost optimization and long-term impact, providing capital restructuring solutions and numerous major mergers and acquisition transactions within the Group.

Prior to joining the Group, Mr. Adukia was Executive Director - Investment Banking at Morgan Stanley India Co. Ltd. Earlier in his career, he has been with Citigroup and PriceWaterhouse Coopers Private Limited.

MEETINGS OF THE BOARD

The Board of Directors of the Company met 4 times during the year to deliberate on various matters. The meetings were held on 23^rd May 2018, 14^th August 2018, 14^th November 2018 and 7^th February 2019. Further details are provided in the Corporate Governance Report, which forms an integral part of this Annual Report.

DECLARATION OF INDEPENDENCE

Definition of ‘Independence’ of Directors is derived from Regulation 16(1)(b) of the Listing Regulations and Section 149(6) of the Companies Act, 2013 and Rules framed thereunder. Your Company has received declarations from all the Independent Directors of your Company confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 16( 1)(b) of the Listing Regulations.

FORMAL ANNUAL EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and the Listing Regulations, the Board of Directors has carried out an annual evaluation of its own performance, its Committees, Independent Directors, Non-Executive Directors, Executive Directors, and the Chairman of the Board.

The Nomination and Remuneration Committee of the Board has laid down the manner in which formal annual evaluation of the performance of the Board, its Committees and Individual Directors has to be made. It includes circulation of evaluation forms separately for evaluation of the Board and its Committees, Independent Directors/Non-Executive Directors/Executive Directors and the Chairman of your Company.

The performance of Non-Independent Directors, the Board as a whole, and the Committees of the Board has been evaluated by Independent Directors in a separate meeting. At the same meeting, the Independent Directors also evaluated the performance of the Chairman of your Company, after taking into account the views of Executive Directors and Non-Executive Directors. Evaluation as done by the Independent Directors was submitted to the Nomination and Remuneration Committee and subsequently to the Board.

The performance of the Board and its Committees was evaluated by the Nomination and Remuneration Committee after seeking inputs from all the Directors, on the basis of criteria such as the Board/Committee composition and structure, effectiveness of the Board/ Committee process, information and functioning, etc.

The performance evaluation of all the Directors of your Company, (including Independent Directors, Executive and Non-Executive Directors and Chairman), is done at the Nomination and Remuneration Committee meeting and the Board meeting by all the Board members, excluding the Director being evaluated on the basis of criteria, such as contribution at the meetings, strategic perspective or inputs regarding the growth and performance of your Company, among others. Following the meetings of Independent Directors and of Nomination and Remuneration Committee, the Board at its meeting discussed the performance of the Board, as a whole, its committees and individual Directors.

The new Directors inducted into the Board attends an orientation programme. The details of the programme for familiarisation of Independent Directors of your Company are provided in the Corporate Governance Report, which forms part of this Annual Report and are also available on your Company’s website, www.grasim.com.

DIRECTORS’ RESPONSIBILITY STATEMENT

The audited accounts for the year under review are in conformity with the requirements of the Companies Act, 2013 and the Accounting Standards. The financial statements reflect fairly the form and substance of transactions carried out during the year under review and reasonably present your Company’s financial condition and results of operations.

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of its knowledge and ability, confirm that:

a) in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) the accounting policies selected have been applied consistently, and judgements and estimates are made that are reasonable and prudent, so as to give a true and fair view of the state of affairs of your Company as at 31^st March 2019 and of the profit of your Company for the year ended on that date;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records, in accordance with the provisions of the Act for safeguarding the assets of your Company, and for preventing and detecting fraud and other irregularities;

d) Annual Accounts have been prepared on a ‘going concern’ basis;

e) your Company has laid down proper internal financial controls, and that such internal financial controls are adequate and were operating effectively; and

f) your Company has devised proper systems to ensure compliance with the provisions of all applicable laws, and that such systems were adequate and operating effectively.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134(3)(m) of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, is set out in Annexure ‘D’ to this Report.

AUDITORS AND AUDIT REPORTS STATUTORY AUDITORS

Pursuant to the provisions of Section 139(1) of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, as amended from time to time, B S R & Co. LLP Chartered Accountants (ICAI Firm Registration No. 101248W/W-100022) and S R B C & Co, LLP, Chartered Accountants (ICAI Firm Registration No. 324982E/E300003) have been appointed as Joint Statutory Auditors of the Company for a period of five consecutive years, till the conclusion of the 74^th AGM of the Company, to be held in the year 2021 and 75^th AGM of the Company to be held in the year 2022, respectively.

Pursuant to the provisions of Section 139(1) of the Companies Act, 2013, as amended with effect from 7^th May 2018, ratification of the appointment of the statutory auditors, by the Members at every AGM during the period of their appointment, has been withdrawn from the Section 139(1) of the Companies Act, 2013 with effect from that date. In view of the above, no resolution is proposed for ratification of appointment of the Joint Statutory Auditors at the ensuing AGM, and a note in respect of the same has been included in the Notice of the ensuing AGM.

The Joint Statutory Auditors have confirmed that they are not disqualified to continue as Auditors, and are eligible to hold office as Auditors of the Company. As authorised by the shareholders, the Board, on the recommendation of the Audit Committee, has ratified the appointment of the Joint Statutory Auditors for their respective remaining terms at such remuneration, as may be mutually agreed between the Board of Directors and the Joint Statutory Auditors, from time to time.

The observations made by the Joint Statutory Auditors on the Financial Statements of the Company, in their Report for the financial year ended 31^st March 2019, read with the Explanatory Notes therein, are self-explanatory and, therefore, do not call for any further explanation or comments from the Board under Section 134(3)(f) of the Companies Act, 2013. The Auditors’ Report does not contain any qualification, reservation, disclaimer or adverse remark.

COST AUDITORS

The cost accounts and records as required to be maintained under Section 148(1) of Companies Act, 2013 are duly made and maintained by your Company. Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, as amended, notifications/circulars issued by the Ministry of Corporate Affairs from time to time, your Board has, on the recommendation of the Audit Committee, re-appointed the following Cost Auditors for FY 2019-20:

Your Company has received consent from M/s. D. C. Dave & Co. and M/s. M. R. Dudani & Co., Cost Accountants, to act as the Cost Auditors of your Company for the FY 2019-20, along with separate certificates confirming each of their eligibility.

As required under the Companies Act, 2013, a resolution ratifying the remuneration payable to the cost auditors has been placed before the Members for their approval, at the ensuing AGM.

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has re-appointed M/s. BNP & Associates, Company Secretaries, Mumbai, to conduct the secretarial audit for FY 2019-20. The Secretarial Audit Report, issued by M/s. BNP & Associates, Company Secretaries for the FY 2018-19, is set out in Annexure ‘E’ to this Report.

The Secretarial Audit Report does not contain any qualification, reservation, disclaimer or adverse remark.

Your Company is in compliance with the Secretarial Standards specified by the Institute of Company Secretaries of India.

REPORTING OF FRAUDS BY AUDITORS

During the year under review, neither the statutory auditors nor the secretarial auditor have reported to the Audit Committee under Section 143(12) of the Companies Act, 2013 any instances of fraud committed against your Company by its officers and employees, details of which would need to be mentioned in the Board’s Report.

DISCLOSURES

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

During FY 2018-19, all contracts / arrangements / transactions entered into by your Company with Related Parties were on arm’s length basis and in the ordinary course of business. There are no material transactions with any Related Party as defined under section 188 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014. All Related Party transactions have been approved by the Audit Committee of your Company. Your Company has implemented Related Party Transactions Policy and Standard Operating Procedures for the purpose of identification and monitoring of such transactions.

The details of contracts and arrangements with Related Parties of your Company for the financial year ended 31^st March 2019, are given in Notes to the Standalone Financial Statements, forming part of this Annual Report.

The Policy on Related Party Transactions, as approved by the Board, is available on your Company’s website, www.grasim.com.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

Your Company has established a robust Vigil Mechanism for reporting of concerns through the Whistle Blower Policy of your Company, which is in compliance of the provisions of Section 177 of the Companies Act, 2013, read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, and the Listing Regulations. The Policy provides for framework and process whereby concerns can be raised by its employees against any kind of discrimination, harassment, victimisation or any other unfair practice being adopted against them. Adequate safeguards are provided against victimisation to those who avail of the mechanism, and access to the Chairman of the Audit Committee, in exceptional cases, is provided to them. The details of the Vigil Mechanism are also provided in the Corporate Governance Report, which forms part of this Annual Report and the Whistle Blower Policy has been uploaded on the website of your Company, www.grasim.com.

CORPORATE SOCIAL RESPONSIBILITY

In terms of the provisions of Section 135 of the Companies Act, 2013, read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors of your Company has a Corporate Social Responsibility (CSR) Committee, which is chaired by Mrs. Rajashree Birla. The other Members of the Committee are Mr. B. V. Bhargava, Independent Director, Mr. Shailendra K. Jain, Non-Executive Director and Mr. Dilip Gaur, Managing Director. Dr. Pragnya Ram, Group Executive President, CSR, is a permanent invitee to the Committee. The Corporate Social Responsibility Policy (CSR Policy), indicating the activities undertaken by your Company, is available on your Company’s website, www.grasim.com.

Your Company is a caring corporate citizen and lays significant emphasis on development of the host communities around which it operates. Your Company, with this intent, has identified several projects relating to Social Empowerment and Welfare, Infrastructure Developments, Sustainable Livelihood, Health Care and Education, during the year, and initiated various activities in neighbouring villages around its plant locations. The initiatives undertaken by your Company on CSR activities, during the FY 2018-19, are set out in Annexure ‘F’ to this Report, in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. Your Company has spent a sum of Rs. 47.14 Crore, which is more than 2% of the average net profits of the last three years for the purposes of CSR.

RISK MANAGEMENT

Pursuant to the requirement of Listing Regulations, your Company has constituted Risk Management Committee, which is mandated to review the risk management plan/process of your Company. Risk evaluation and management is an ongoing process within the Organisation. Your Company’s Risk Management Committee periodically assesses risk in the internal and external environment, and incorporates Risk Mitigation Plans in its strategy, business and operation plans. Your Company has comprehensive risk management framework, which is periodically reviewed by the Risk Management Committee.

BUSINESS RESPONSIBILITY REPORT

As per Regulation 34(2)(f) of the Listing Regulations, a separate section on Business Responsibility Report, describing the initiatives taken by your Company from environmental, social and governance perspective, forms an integral part of this Annual Report.

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return of your Company as on 31^st March 2019 in Form MGT-9, in accordance with Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, is given in Annexure ‘G’ to this Report. The same is also available on your Company’s website, www.grasim.com

INTERNAL FINANCIAL CONTROLS

Your Company has in place adequate internal financial control system commensurate with the size of its operations. Internal control systems comprising of policies and procedures are designed to ensure sound management of your Company’s operations, safe keeping of its assets, optimal utilisation of resources, reliability of its financial information and compliance. Systems and procedures are periodically reviewed to keep pace with the growing size and complexity of your Company’s operations. During the year under review, no material or serious observation has been received from the Auditors of your Company citing inefficiency or inadequacy of such controls.

REMUNERATION POLICY

The Remuneration Policy of your Company, as formulated by the Nomination and Remuneration Committee of the Board of Directors is given in Annexure ‘H’ to this Report and is also available on your Company’s website, www.grasim.com.

COMMITTEES OF THE BOARD AUDIT COMMITTEE

The Audit Committee comprises of Mr. Arun Thiagarajan, Mr. B. V. Bhargava, Mr. M. L. Apte and Mr. Dilip Gaur as its Members. The Committee comprises of majority of Independent Directors with Mr. Arun Thiagarajan being the Chairman. The CFO of your Company is the permanent invitee.

Further details relating to the Audit Committee are provided in the Corporate Governance Report, which forms an integral part of this Annual Report.

All the recommendations made by the Audit Committee, during the year, were accepted by the Board of Directors of your Company.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee comprises of Mr. M. L. Apte, Mr. Cyril Shroff and Mr. Kumar Mangalam Birla as its members. Further details relating to the Nomination and Remuneration Committee are provided in the Corporate Governance Report, which forms an integral part of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Corporate Social Responsibility Committee comprises of Mrs. Rajashree Birla, Mr. B. V. Bhargava, Mr. Shailendra K. Jain and Mr. Dilip Gaur as its members. Further details relating to the Corporate Social Responsibility Committee are provided in the Corporate Governance Report, which forms an integral part of this Annual Report.

STAKEHOLDERS’ RELATIONSHIP COMMITTEE

Stakeholders’ Relationship Committee looks into matters relating to transfer/transmission of securities; non-receipt of dividends; non-receipt of annual report etc. Further details pertaining to Stakeholders Relationship Committee are provided in the Corporate Governance Report, which forms an integral part of this Annual Report.

RESEARCH AND DEVELOPMENT (R&D)

The R&D investment continues to be focused on enhancing our relative market position in an increasingly competitive environment. Focused programmes are driving innovations in the critical areas of product quality, cost reduction, new product offerings and environmental sustainability. Our portfolio of programmes addresses near-term needs through the implementation of recently developed technologies while filling the pipeline with future opportunities to achieve our long-term goals.

Pulp and Fibre Business

The Pulp R&D and Technology teams have focused their efforts on increasing capacity, improving quality and opening new specialty markets. The Domsjo Plant (a joint venture) is working to increase pulp capacity by addressing the bottleneck in evaporation through improved efficiencies and reduced process flows. Domsjo is also improving pulp quality through stabilising wood chip uniformity, improved bleaching to reduce viscosity variations, and standardised mill operating strategies. These improvements have also supported increasing our pulp specialty products growth with the introduction of new customers in filament yarn and casing applications. In addition, the new pulp quality brand, Ultra, is now fully accepted by a Cellulose Acetate customer.

Across Pulp JV plants, advanced process control systems in the digester and bleaching areas have been developed to enhance consistency, and the system is under stabilisation.

A digitization initiative aimed at seamlessly connecting Pulp plant processes with the consuming Fibre plants is progressing. The first technology platform to allow sharing real-time pulp quality and dispatch data with the Fibre sites has been piloted successfully.

This allows to improve fibre spinning consistency. Full-scale implementation plans are being developed. A new pulp blending methodology has led to improved pulp ratio control and viscose spinning solution consistency. These systems enable further improvements through the development of models for predictive control.

FIBRE RD&T

Production efficiency and improved customer experience are prime focus areas for innovations in Viscose Staple Fibre (VSF) production facilities. One key initiative has been expanding the gradual implementation of technologies, which reduce in-process material consumption amounts. Process developments reducing the usage of energy and water are also reducing costs, while enhancing sustainability. While we are in the process of implementing our public commitments for reducing the environmental footprint, we are doing so by improving emission control technologies to also reduce our overall usage of chemicals and energy.

Our work to improve our customers’ experience includes specific technologies to improve non-woven spunlacing process performance, dope-dyed fibre uniformity leading to higher efficiency yarn spinning and quality, and improved spinning performance for greige fibres. In addition, our increased effort on differentiated products has resulted in several new offerings at different stages of commercialisation. Liva Sno, a fibre with high whiteness, is now produced in regular campaigns for applications like uniforms, melange and patterned fabrics. This provides an environmentally friendly alternative to customers’ existing downstream processes for producing yarns and fabrics with high whiteness. Livaeco, a fibre recently launched with molecular tagging, provides supply-chain traceability for our branded products that incorporate special sustainability attributes. The differentiated products pipeline continues to progress with three additional value-added products from our pilot plant, having gone through customer acceptance tests. These will be scaled-up to commercial production and sales in the coming year. Methodical innovation processes, coupled to business needs, are guiding our selection of new products for development.

Overall fibre quality continues to improve with the objective of bringing fibre lines to global benchmark quality levels by adopting the “Product by Process” approach using Six Sigma principles. During FY19, continued upgrades to our production lines has resulted in 78% of capacity now being mechanically capable of producing benchmark quality. We are aggressively addressing a key quality challenge, the growing vortex (MVS) type yarn-spinning demand, which requires especially low fibre imperfection levels. MVS Grade production has been increased from 64% in FY17 to 82% during this year, and our goal is to achieve 90 % in FY 20. As a result of these efforts, customer complaints were reduced from 4.0/10Kt in FY17 to 2.9 in FY19 and were further reduced to 2.1 in FY19. The Quality Initiative focus for the coming year will be improving the process stability and product quality of non-benchmark production lines through innovative solutions requiring little new capital.

Our journey in the Excel® project reached a critical milestone with the commissioning of the new 45 TPD plant based on the environment-friendly solvent spinning technology developed in-house. The new technology offers a higher performance product with improved sustainability as a key growth alternative for our business. The new plant has set the platform for rapid “take-off” of our technology in the coming years.

Textile Research and Application Development Centre (TRADC) continues to be a significant contributor to ensure global leadership through development of innovative applications, such as Men’s range, Home Textiles, Warp knit range which were considered as challenges for VSF In collaboration with internal and external customers, TRADC brings contemporary, innovative and cost-effective solutions for the Global Fashion Industry, through continuous improvement in quality by process development, with an eye on sustainability. Recently a brand has selected our dope-dyed fibres for blending with polyester for Sportswear. Similarly, Cotton/Modal denim development is under mini-bulk conversion at premier textile unit. Modal and Excel are finding application in the place of 100% cotton in Sarees and Dhoti.

Enabling Capabilities

A multi-disciplinary team is responsible for the innovation agenda of the Pulp and Fibre business. Starting with early tests of concepts in laboratory, a screening process leads to short-listing. The selected concepts are then taken through iterative processes of developments and testings, and then through scale-up in fibre pilot plants. The fibres are taken through customer processes of yarn, fabric and garment making. In-house, external and customer-facilities are all engaged for effective delivery in minimum time. Successful products are then transferred to plants for commercial implementation, and placed in the market.

Chemical Business

Your Company’s Chlor-Alkali business has accelerated its R&D efforts as its Aditya Birla Water Application & Product Development Centre. The objective is targeted and focused product and market development and transforming from commodity to specialty chemicals mind-set with focus on innovation and application development. Your Company has focused on customer-oriented R&D and providing solutions and solving problems at customer sites. The R&D team also delivered improvement in existing processes in terms of efficiency and quality. This has benefitted the operating plants, not only on costs but also on setting better safety and environmental standards.

Your Company also filed two patents in the areas of water treatment, on raw material and process improvement. Your Company also partnered with several institutions of repute, viz., Institute of Chemical Technology, Mumbai; Malaviya National Institute of Technology, Jaipur; Central Institute for Brackish Water Aquaculture, Chennai; National Environmental Engineering Research Institute, Nagpur and Vasant Dada Sugar Institute, Pune, on various projects. Two new applications were also established for usage of chlorinated-alkanes. Similarly, research efforts led to usage of one of the ingredients into efficient drip-irrigation system. In line with providing sustainable solutions, your Company undertook a research project with a building materials company to utilise by-product of the chemical process to enhance cementing properties.

Specialty Formulations and New Products: Your Company has been a pioneer in developing several new specialty formulations for water treatment, that are customised and targeted solutions for specific industries such as sugar, paper and pulp, oil refinery, edible oil, textile, dye, aquaculture, etc. We have successfully commercialised these formulations in the areas of refinery wastewater treatment, handling of dispersed dye residue, processing of ceramic ingredients, etc. There is a pipeline of at least 5 more products with initial success and ready for commercialisation soon. Such specialty formulations not only enable us to differentiate vis-a-vis competition, but also help us in getting higher realisation than the base product. Your Company strengthened its water treatment portfolio with successful design and commissioning of a new product in collaboration with the US based consultant.

Focused Market Development: Our sales and marketing team has focused on application and performance selling. This is based on gaining deep understanding of customer processes and product applications and providing customised solutions to customers. The marketing team was able to identify the latent potential of nascent and high growth segments, such as Aquaculture and Public Hygiene. Unique value propositions and new brands were developed for these segments and targeted marketing development activities were executed, e.g., conducting workshops and technical discussions with aquaculture farmers in collaboration with CIFE (Centre for Central Institute of Fisheries Education), conducting trials at places of mega religious congregations, etc.

Processes: We took up initiatives in reduction in input consumption for brine treatment and improvement in the quality of filtered brine through secondary process like ion exchange. Further, other process improvements such as Filtration in brine treatment in stages such as recycling of ion exchange effluent to reduce the acidic effluent & recovery Alkaline effluent was also taken up. Your company also partnered with Aditya Birla Science and Technology Centre for improvements in salt quality with efficiency in brine improvements using refining process.

Health, Safety and Environment monitoring: We developed a Central Manufacturing Cockpit to monitor plant parameters at central level to enhance proves efficiency. We also designed and deployed Suraksha application to enhance safe movement of Chlorine via tonners. These measures are setting new industry standards beyond compliances.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF YOUR COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THE FINANCIAL STATEMENT RELATES AND THE DATE OF THE REPORT

No material changes and commitments, which could affect your Company’s financial position, have occurred between the end of the financial year and the date of this Report. There has been no change in the nature of business of your Company.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as Annexure ‘I’ to this Report.

In accordance with the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees drawing remuneration in excess of the limits, set out in the aforesaid Rules, forms part of this Report. In line with the provisions of Section 136(1) of the Companies Act, 2013, the Report and Accounts, as set out therein, are being sent to all the Members of your Company excluding the aforesaid information about the employees. Any Member, who is interested in obtaining these particulars about employees, may write to your Company Secretary at the Registered Office of your Company.

EMPLOYEE STOCK OPTION SCHEMES (ESOS) ESOS-2006

During the year under review, the Stakeholders’ Relationship Committee of the Board of Directors allotted 86,835 Equity Shares of Rs. 2/- of your Company to Options Grantees, pursuant to the exercise of the Stock Options under ESOS-2006.

ESOS-2013

During the year under review, the Nomination and Remuneration Committee of the Board of Directors approved vesting of 48,447 Stock Options and 16,665 Restricted Stock Units (RSUs) to the Eligible Employees, subject to the provisions of the ESOS-2013, statutory provisions, as may be applicable from time to time, and the rules and procedures set out by your Company in this regard.

Further, the Stakeholders’ Relationship Committee of the Board of Directors allotted 1,40,093 equity shares of Rs. 2/- of your Company to the Stock Options and RSUs Grantees, pursuant to the exercise of the Stock Options and RSUs, under ESOS-2013.

ESOS-2018

Pursuant to the approval of the shareholders at the Annual General Meeting held on 14^th September 2018, the Board of Directors of your Company and the Nomination and Remuneration Committee, a new scheme viz. ‘Grasim Industries Limited Employee Stock Option Scheme 2018’ (“ESOS-2018”) in terms of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (“the SEBI SBEB Regulations”) has been formulated. The ESOS 2018 is being administered by the Nomination and Remuneration Committee through the Grasim Employees’ Welfare Trust (Trust).

During the year under review, a total of 11,18,480 Stock Options and 2,80,384 RSUs were granted to the eligible employees, including Managing Director and Whole-time Director and CFO of your Company, under the said Scheme.

The details of Employee Stock Options granted pursuant to ESOS-2006 and the Employee Stock Options and RSUs granted pursuant to ESOS-2013 and ESOS-2018, as also the other disclosures in compliance with the provisions of the Securities and Exchange Board of India (Employee Share Based Employee Benefits) Regulations, 2014, are available on your Company’s website, www.grasim.com

A certificate from the Statutory Auditors, with respect to implementation of your Company’s Employees Stock Option Schemes will be placed at the ensuing AGM for inspection by the Members, and a copy will also be available for inspection at the Registered Office of your Company.

PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

Your Company has zero tolerance for sexual harassment at workplace. The Company has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act) and the rules framed thereunder. Your Company has complied with provisions relating to the constitution of Internal Complaints Committee under the POSH Act. During the year under review, your Company received one complaint of sexual harassment, and the same has been resolved. There were no complaints pending as on 31^st March 2019, under the aforesaid Act.

HUMAN RESOURCES

Your Company’s human resources is the strong foundation for creating many possibilities for its business. During the year under review, your Company added greater employee talent through seamless integration of acquired assets. The efficient operations of manufacturing units, market development and expansion for various products was the highlight of our people effort.

Continuous people development for developing knowledge and skills coupled with theTalent Management practices will deliver the talent needs of the organisation. Your Company’s employee engagement score reflects high engagement and pride in being part of the organisation.

The Group’s Corporate Human Resources plays a critical role in your Company’s talent management process.

AWARDS AND ACCOLADES

Some of the significant accolades earned by your Company during the year include:

- The Dun & Bradstreet Corporate Award 2019 as the Top Company for its stellar performance in the Indian textiles sector.

- Golden Peacock Award for Sustainability-2018 awarded to your Company’s Harihar Pulp unit

- ”Excellence in Operations” in Manufacturing and Logistics at the IDC Insights Awards 2018

- Grasim Pulp and Fibre won the award for Next Gen Technologies award at the ETCIO Annual Conclave 2019 presented by The Economic Times, India’s leading business publication.

- 3 Export Awards by SRTEPC (The Synthetic & Rayon Textiles Export Promotion Council): Viscose Staple Fibre (Gold), Exports of fibre/yarn to “Focus SAARC” countries (Gold), and Second Best Overall Export Performance (Silver)

- Certificate of Appreciation for Sustainable and Impactful CSR projects in Gujarat (Vilayat) from Gujarat CSR Authority (Govt. of Gujarat)-Gujarat State CSR Awards 2019

- Liva won a Gold in the prestigious Abby Awards, Goa Fest 2019 for Innovative use of emerging technology.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise;

2. Issue of shares (including sweat equity shares) to employees of your Company under any Scheme save and except ESOS referred to in this report;

3. There were no revisions in the financial statements;

4. There has been no change in the nature of business of your Company; and

5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and your Company’s operations in the future.

ACKNOWLEDGEMENTS

Your Directors express their deep sense of gratitude to the banks, financial institutions, stakeholders, business associates, Central and State Governments for their co-operation and support and look forward to their continued support in future.

We very warmly thank all our employees for their contribution to your Company’s performance. We applaud them for their superior levels of competence, dedication and commitment to your Company.

For and on behalf of the Board

Kumar Mangalam Birla

Chairman

(DIN: 00012813)

Mumbai, 12^th July 2019