Indian Indices
Nifty
17,698.15 39.15
(0.22%)
Sensex
59,462.78 130.18
( 0.22%)
Bank Nifty
39,042.30 162.45
( 0.42%)
Nifty IT
29,885.90 -347.80
( -1.15%)
Global Indices
Nasdaq
13,047.19 267.28
(2.09%)
Dow Jones
33,761.05 424.38
(1.27%)
Hang Seng
20,175.62 93.19
(0.46%)
Nikkei 225
28,546.98 727.65
(2.62%)
Forex
USD-INR
79.34 0.15
(0.18%)
EUR-INR
81.85 0.57
(0.70%)
GBP-INR
96.85 0.61
(0.63%)
JPY-INR
0.60 0.01
(1.03%)

EQUITY - MARKET SCREENER

UltraTech Cement Ltd
Industry :  Cement - North India
BSE Code
ISIN Demat
Book Value()
532538
INE481G01011
1706.8088995
NSE Symbol
P/E(TTM)
Mar.Cap( Cr.)
ULTRACEMCO
27.33
189628.05
EPS(TTM)
Face Value()
Div & Yield %
240.39
10
0.58
 

As on: Aug 14, 2022 10:11 PM

Management Discussion and Analysis

The Indian cement industry will add 80-100 million tonnes capacity by FY25, driven by increased spending on housing and infrastructure. With the Union Budget 2022-23 providing higher allocation for infrastructure, affordable housing and road projects, the cement industry is poised for a volume surge.

Dear Shareholders,

Your Directors present the 22nd Annual Report together with the audited accounts of your Company for the year ended 31st March, 2022.

OVERVIEW AND THE STATE OF YOUR COMPANY'S AFFAIRS

The International Monetary Fund ("IMF") lowered its global growth forecast by 0.8 percentage points to 3.6%, as inflation rises and supply chains continue to be in disarray. With ongoing supply chain disruptions and high energy prices continuing in 2022, inflation is expected to remain elevated for an extended period of time, and is likely to come down only gradually as supply - demand imbalances wane and the effects of monetary policy responses in major economies kick in.

Towards the end of FY22, the war in Ukraine and subsequent sanctions that disrupted global commodity markets and supply chains further aggravated the situation. Further more, the frequent and wide-ranging lockdowns in China - including in key manufacturing hubs - have also had a far reaching impact on global supply chains. Other global risks may crystallise as geopolitical tensions remain high.

India is expected to remain the fastest growing major economy over 2021-24, according to the World Bank, the IMF and the Asian Development Bank. The country recorded GDP of 8.7% for FY22, with the industrial sector staging a sharp rebound from a contraction of 7% in FY21. The services sector expanded by 8.2%, owing to the rapid growth in software and IT-enabled services exports while agriculture and allied sectors grew by 3.9%, with food grain production for the kharif season at a record level of 150.5 million tonnes.

The recent times have put to test the resilience of health systems, economies, governments across the globe in face of the pandemic. With the pandemic continuing to evolve, the need for an effective global health strategy has never been so pronounced. Worldwide access to vaccines, tests, and treatments is essential to reduce the risk from other COVID-19 variants.

Since the onset of the COVID-19 pandemic in March 2020, monetary policies have been geared towards mitigating the adverse impact of the unprecedented demand and supply-side shocks inflicted on the economy. This, in turn, led to an overall stable economic environment. Several high frequency indicators, such as electricity consumption, PMI manufacturing, exports, and e-way bill creation, GST collections reflect this. This bodes well for the Indian economy in 2022-23, barring any geopolitical and economic surprises.

Cement Industry FY22

The first half of FY22 witnessed a sharp recovery in demand, supported by the low base of the pandemic-hit H1FY21. However, H2FY22 was impacted as the demand for cement declined due to unexpected rains in different parts of the country, ban on construction activities in the National Capital Region ("NCR") and shortages of labour and sand in the eastern region.

Although the macroeconomic factors around India's cement industry remain positive and will be driven by a revival in demand, the sector is facing headwinds from a surge in costs. The key cost constituents - coal, pet coke and diesel, have seen a significant escalation in prices.

The increase in diesel prices resulted in an increase in transport and logistics costs, putting further pressure on businesses. These commodity prices are not under the control of any constituent and there is little that the efficiency improvement programs can do to cushion the impact of rising costs.

As per a recent report by a credit rating agency, the Indian cement industry will add 80-100 million tonnes capacity by FY25, driven by increased spending on housing and infrastructure. With the Union Budget 2022-23 providing higher allocation for infrastructure, affordable housing and road projects, the cement industry is poised for a volume surge. Further, the Union Government's thrust on developing and improving public infrastructure (roads, highways, metros and railways, airports, ports, logistics) through projects like PM GatiShakti, National Infrastructure Pipeline ("NIP"), Urban Rejuvenation Mission: AMRUT and Smart Cities Mission is likely to boost cement demand. Demand for affordable houses, with ticket size <' 4050 lakhs, is expected to rise in Tier 2 and 3 cities. The affordable rental housing scheme, which is a sub-scheme under the Pradhan Mantri Awas Yojana ("PMAY"), is also likely to drive demand for cement in low-cost housing.

Given its PAN India presence, your Company has the advantage to cater to demand across the country. This coupled with its focus on controlling costs, conserving cash, advancing employee well-being and sustainability, makes your Company well placed to tide over the uncertainties arising out of the pandemic and deliver a robust performance.

BUSINESS PERFORMANCE

Production and capacity utilisation (grey cement)

Particulars FY22 FY21 % change
Installed capacity in India (MTPA) 114.55 111.35 2.87
Production (MMT) 86.98 79.70 9.13
Capacity Utilisation 77% 71% 6

MTPA - Million Metric Tonnes Per Annum;

MMT- Million Metric Tonnes

Cement production in FY22 was higher by 9% at 86.98 million tonnes as compared to FY21 while capacity utilisation was at 77% as against 71%.

Sales volume

(Figures in MMT)

Particulars FY22 FY21 % change
Grey Cement - India 87.25 80.18 8.8
Grey Cement - Overseas 4.93 4.90 4.8
White Cement 1.46 1.32 11.2
Others 0.35 - -
Total Sales Volume 93.99 86.42 8.8

Domestic sales volume registered a growth of 9% in FY22.

Cement consumption started improving on the back of consistent rural demand and pick-up in infrastructure activities.

FINANCIAL PERFORMANCE

(Rs. in crores)

Standalone

Consolidated

FY22 FY21 FY22 FY21
Net Turnover 49,729 42,677 51,708 44,239
Domestic 49,479 42,363 49,528 42,264
Exports 250 314 2,180 1,975
Other income 1,546 1,300 1,399 1,221
Total Expenditure 39,727 32,224 41,084 33,158
Profit before Interest, Depreciation and Tax (PBIDT) 11,548 11,754 12,022 12,302
Depreciation 2,457 2,434 2,715 2,700
Profit before Interest and Tax (PBIT) 9,091 9,319 9,307 9,602
Interest 798 1,259 945 1,486
Profit before Impairment and Tax Expenses/share in profit of Associates 8,293 8,060 8,363 8,116
Rates and Taxes - (164) - (164)
Impairment on Advances Given - - - (97)
Share in Profit/(Loss) of Associates and Joint Venture (net of tax) - - 2 2
Profit before Tax Expenses 8,293 7,896 8,364 7,858
NormaNsed Tax Expenses 2,744 2,554 2,708 2,539
Reversal of Tax Provision of Earlier Years (1,518) - (1,518) -
Profit after Tax 7,067 5,342 7,174 5,319
Profit Attributable to Non-controlling interest - - (10) (1)
Profit Attributable to Owner of the Parent - - 7,184 5,320

 

Note: In this Report, the figures for the previous year have been regrouped/rearranged wherever necessary to confirm to the current period's classification to comply with the requirements of the amended Schedule Ill to the Companies Act, 2013.

Net Turnover

Your Company's Net Turnover at Rs.49,729 crores was 17% higher than the previous year.

Other Income

Other income rose marginaiiy, mainly on account of greater government grants as compared to the previous year.

Operating Profit (PBIDT) and Margin

PBIDT at Rs.11,548 crores was 1.7% lower than the previous year. Lower operating margin was attributable to higher input costs, partly offset by volume growth and better sales realisations.

Cost Highlights

(i) Energy Cost

Overall energy cost increased by 31% from Rs.950/t to Rs.1,240/t mainly due to higher fuel prices.

(ii) Input Material Cost

Raw material cost rose from Rs.504/t to Rs.531/t as a result of increase in additive and fly ash prices. increase in diesel prices impacted inbound transportation, resulting in higher raw material cost. Your Company is continuously working on improving the share of blended and premium products in its product mix, which is expected to result in an improvement in overall profitability.

(iii) Freight and Forwarding Expenses

Logistics cost increased marginaNy from Rs.1,158/t to Rs.1,214/t, due to increase in diesel cost. Reduction in lead distance mainly on account of a change in the market mix and synergies arising out of the integration of acquired assets aided in lowering the impact of rising diesel costs.

Employee Costs

Employee cost increased to Rs.2,359 crores as compared to Rs.2,182 crores in the previous year, primarNy due to the annual increments.

Depreciation

At Rs.2,457 crores, depreciation was higher by Rs.23 crores, on account of fewer assets being capitalised during the year.

Finance Cost

Repayment of borrowings led a decrease in finance cost from Rs.1,259 crores to Rs.798 crores.

Credit Rating

Your Company has adequate liquidity and a strong balance sheet. CRiSiL and India Ratings and Research reaffirmed their credit rating as CRiSiL AAA/Stable and iND AAA/Stable for Long Term and CRiSiL A1+ and iND A1+ for Short Term, respectively. This is a testament of your Company's sound financial management as well as its ability to service financial obligations in a timely manner.

Your Company has also obtained its credit rating for its foreign currency bond issuances from Fitch and Moody's and has been rated by them as BBB- and Baa3, respectively.

Income Tax

Normalised income tax expenses increased in line with increase in taxable income.

Net Profit

Normalised Profit after Tax increased by 3.9% from Rs.5,342 crores to Rs.5,549 crores.

Significant changes in key financial ratios, along with detailed explanations:

Particulars FY22I FY21 % Change
Debtors Turnover (Days) 18 18 -
Inventory Turnover (Days) 33 32 (1)
Interest Coverage Ratio 12.72 7.20 77
Current Ratio 1.30 1.77 27
Debt Equity Ratio (Gross) 0.20 0.40 50
Debt Equity Ratio (Net) 0.07 0.08 12
Operating Profit Margin (%) 22 26 (14)
Net Profit Margin (%) 11.2 12.5 (11)
Return on Net Worth (%) 11.3 12.3 (9)
Return on Capital Employed (ROCE) (%) 14.4 14.4 -
Earnings per Share (EPS) 192 185 4

Detailed explanation of ratios

(i) Debtors Turnover (Days) is used to quantify a company's effectiveness in collecting its receivables or money owed by customers. The ratio shows how well a company uses and manages the credit it extends to customers. The ratio is calculated by dividing average trade receivables by average per day turnover.

(ii) Inventory Turnover (Days) represents the average number of days a company holds its inventory before selling it. it is calculated by dividing average inventory by average per day turnover.

(iii) Interest Coverage Ratio measures how many times a company can cover its current interest payment with its available earnings. it is calculated by dividing PBIT by finance cost. Your Company's interest Coverage Ratio improved by 77% over the previous year mainly on account of lower interest outgo as loans were repaid during the years.

(iv) Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year. it is calculated by dividing the current assets by current NabNities (excluding current borrowings).

CRISIL and India Ratings and Research reaffirmed their credit rating as CRISIL AAA/Stable and IND AAA/Stable for Long Term and CRISIL A1+ and IND A1+ for Short Term, respectively.

(v) Debt Equity Ratio is used to evaluate a company's financial leverage. It is a measure of the degree to which a company is financing its operations through debt versus wholly-owned funds. It is calculated by dividing a company's total liabilities by its shareholder's equity. Your Company's Debt Equity Ratio (Net) has improved by 50% mainly on account of reduction in Net Debt during the year.

(vi) Operating Profit Margin (%) is a profitability or performance ratio used to calculate the percentage of profit a company generates from its operations. It is calculated by dividing the PBIDT (excluding Other Income) by turnover. Your Company's Operating Profit Margin decreased by 3.7% mainly on account of higher costs and partly set-off by higher volume and higher realisations during the year.

(vii) Net Profit Margin (%) is equal to how much net income or profit is generated as a percentage of revenue. It is calculated by dividing the profit for the year by turnover. Your Company's Net Profit Margin decreased by 1.4% mainly on account of higher costs, and partly set-off by higher volume, lower interest outgo and higher realisations during the year.

(viii) Return on Net Worth ("RONW") is a measure of profitability of a company expressed in percentage.

It is calculated by dividing Net Profit from continuing operations for the year by average Net Worth during the year.

(ix) Return on Capital Employed ("ROCE") is a financial ratio that measures a company's profitability and the efficiency with which its capital is used. In other words, the ratio measures how well a company is generating profits from its capital. It is calculated by dividing profit before interest, exceptional items and tax by average capital employed during the year.

(x) Earnings Per Share ("EPS") is the portion of a company's profit allocated to each share. It serves as an indicator of a company's profitability. It is calculated by dividing profit for the year by weighted average number of shares outstanding during the year. For your Company, the EPS improved on account of increase in Net Profit by 3.9% over that of the previous year.

Cash Flow Statement

(Rs. in crores)
FY221 FY21
SOURCES OF CASH
Cash from Operations 9,237 9,569
Non-operating Cash Flow 286 172
Proceeds from Issue of Share Capital 4 7
(Increase)/Decrease in Working Capital (567) 1,979
Total 8,960 11,728
USES OF CASH
Net Capital Expenditure 5,422 1,724
(Redemption)/Increase in Investments (5,925) 7,433
Repayment of Borrowings (net) 7,360 891
Repayment of Lease Liability including 160 121
Interest thereof
(Issue)/Sale of Treasury Shares (net) 83 (7)
Interest 838 1,213
Dividend 1,065 375
Total 9,002 11,749
Increase/(Decrease) in Cash & Cash Equivalents (42) (21)

Sources of Cash

Cash from Operations

Cash from operations was lower compared to the previous year due to rise in costs, which was partly set-off by higher volume and sales realisation.

Non-Operating Cash Flow

Cash from other activities was higher due to increased interest income on bank deposits and intercorporate deposits.

Increase in Working Capital

Increase in working capital is attributed to increase in inventories and trade receivables on account of inflationary impact on fuel inventory and higher sales respectively.

Uses of Cash

Net Capital Expenditure

Your Company spent Rs.5,422 crores on various capex during the year, primarily towards growth and maintenance capex as well as Waste Heat Recovery Systems.

Decrease in Investments

Your Company's liquid investment was used for the repayment of borrowings.

Repayment of Borrowing

In line with its endeavour to maintain optimal capital structure, your Company repaid high-cost, long-term debt amounting to Rs.7,531 crores.

The loan repayments have been done out of free cash flows that your Company has generated during the year. The aforesaid steps have resulted in improved Net Debt/Equity ratio and Net Debt/EBITDA ratio.

Transfer to General Reserves

Your Company proposes to transfer an amount of Rs.5,000 crores to the General Reserves.

DIVIDEND

Your Directors recommended a dividend of Rs.38 per equity share (as compared to Rs.37 per equity share in the previous year) of Rs.10 each for the year ended 31st March, 2022. The recommended dividend is in line with your Company's dividend policy, which is given in Annexure I of this Report and is also available on your Company's website.

In terms of the provisions of the Finance Act, 2020, dividend shall be taxed in the hands of shareholders at applicable rates of tax and your Company shall withhold tax at source appropriately.

Unclaimed dividend for the year ended 31st March, 2014, aggregating to Rs.1.40 crores has been transferred to the Investor Education and Protection Fund ("IEPF"). Your Company has also credited to the IEPF set up by the Government of India, equity shares in respect of which dividend had remained unpaid/unclaimed for a period of seven consecutive years within the timelines laid down by the Ministry of Corporate Affairs, Government of India. Unpaid/unclaimed dividend for seven years or more has also been transferred to the IEPF, pursuant to the requirements under the Companies Act, 2013 (the "Act").

DIRECTORS' RESPONSIBILITY STATEMENT

The audited accounts for the year under review are in conformity with the requirements of the Act and the Indian 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.

Your Directors confirm that:

• In the preparation of the Annual Accounts, applicable accounting standards have been followed along with proper explanations relating to material departures, if any.

• The accounting policies selected have been applied consistently, and judgments and estimates are made that are reasonable and prudent to give a true and fair view of the state of affairs of your Company as on 31st March, 2022, and of the profit of your Company for the year ended on that date.

• 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 frauds and other irregularities.

• The Annual Accounts of your Company have been prepared on a going concern basis.

• Your Company had laid down internal financial controls and that such internal financial controls are adequate and were operating effectively.

• 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.

CAPITAL EXPENDITURE PLAN

Your Company's current expansion programme is on track and estimated to reach completion by the end of FY23.

During the year, your Company commissioned cement capacity of 3.2 MTPA at the following locations, which is the first phase of the 19.5 MTPA capacity expansion announced in December 2020:

• Patliputra Cement Works, Bihar - Additional cement capacity of 0.6 MTPA commissioned, taking the Unit's capacity to 2.5 MTPA.

• Dankuni Cement Works, West Bengal - Additional cement capacity of 0.6 MTPA commissioned, taking the Unit's capacity to 2.2 MTPA.

• Line II of the Bara Grinding Unit, Uttar Pradesh — it's cement capacity stands at 4 MTPA. Line I was earlier commissioned in January 2020.

This additional capacity will help your Company service the increasing demand for cement in the Eastern and Central regions of India.

Your Company commenced operations from its 7th bulk terminal at Kalamboli, Navi Mumbai. The other 6 are located at Cochin in Kerala; Mangalore and Doddaballapur in Karnataka; Uran and Pune in Maharashtra and Shankarpalli in Telangana. With a capacity to handle ~1.2 MTPA cement and considering the large infrastructure development projects in and around Mumbai, the bulk terminal will strengthen your Company to further increase its sales and distribution of cement in bulk. This will effectively help in reducing freight cost, with increase in the usage of rail transportation. For your Company, this is one more step towards reducing carbon emissions and driving sustainable growth.

The Board, further approved capex of Rs.12,886 crores towards increasing capacity by 22.6 MTPA with a mix of brownfield and greenfield expansion. This would be achieved by setting-up integrated and grinding units as well as bulk terminals. The additional capacity will be created across the country. Commercial production from these new capacities is expected to go on stream in a phased manner by FY25.

With these expansions, your Company's total grey cement manufacturing capacity will stand augmented to 159.25 MTPA, globally.

CORPORATE GOVERNANCE

Your Directors reaffirm their commitment to good corporate governance practices. During the year under review, your Company was compliant with the provisions relating to corporate governance. The compliance report is provided in the Corporate Governance section of this Integrated Annual Report. The Auditor's Certificate on compliance with the conditions of corporate governance forming part of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") is provided in Annexure II of this Report.

EMPLOYEE STOCK OPTION SCHEMES

ESOS-2013

The Nomination, Remuneration and Compensation Committee ("the NRC Committee") allotted 17,449 equity shares of Rs.10 each of your Company upon exercise of stock options and Restricted Stock Units ("RSUs") by the grantees.

ESOS-2018

During the year, the NRC Committee:

• Granted 63,684 stock options at an exercise price of Rs.7,424.70 per stock option, exercisable into the same number of equity shares of Rs.10 each, and 18,869 RSUs at an exercise price of Rs.10 each on 22nd July, 2021.

• Granted 33,525 stock options at an exercise price of Rs.7,269.10 per stock option, exercisable into the same number of equity shares of Rs.10 each, and 8,538 RSUs at an exercise price of Rs.10 each on 27th October, 2021.

• Vested 38,855 stock options and 37,537 RSUs to eligible employees, subject to the provisions of ESOS - 2018, statutory provisions as may be applicable from time to time and the rules and procedures set out by your Company in this regard.

Your Company transferred 35,988 equity shares during the year upon receipt of applications from some option grantees for the transfer of equity shares of your Company in their account, from the Trust account, which also include 1,043 equity shares pending for transfer for the year ended 31st March, 2022.

Your Company's current expansion programme is on track and estimated to reach completion by the end of FY23.

In terms of the provisions of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SEBI SBEB & SE Regulations") the details of the stock options and RSUs granted under the aforementioned schemes are available on your Company's website https://www.ultratechcement.com/ investors/financials.

A certificate from the Secretarial Auditors on the implementation of your Company's Employee Stock Option Schemes will be available at the ensuing Annual General Meeting ("AGM") for inspection by the Members.

ESOS-2022

The Board of your Company, based on the recommendation of the NRC Committee, approved formulation of a new Scheme viz. ‘UltraTech Cement Limited Employee Stock Option and Restricted Stock Unit Scheme 2022' ("ESOS-2022") in terms of the SEBI SBEB & SE Regulations. ESOS-2022 will be adminstered by the NRC Committee through a Trust, viz. the ‘UltraTech Employees Welfare Trust'.

Resolutions seeking your approval for approving ESOS-2022 and related matters form part of the Notice of the AGM.

SHARE CAPITAL

During the year, your Company allotted 17,449 equity shares of Rs.10 each to option grantees upon exercise of stock options and RSUs in terms of ESOS-2013. As a result, the paid-up equity share capital of your Company stood at Rs.2,88,67,08,470, comprising of 28,86,70,847 equity shares of Rs.10 each.

Transfer of unclaimed dividend and shares: The details relating to unclaimed dividend and shares are given in the Corporate Governance section that forms part of this Integrated Annual Report.

AWARDS

Your Company's constant endeavour to optimise operational procedures and build greater efficiencies continue to win recognition and prestigious awards. Here is a glimpse of some awards received during the year.

• International Safety Awards 2022 by British Safety Council - Balaji Cement Works;

• Indian Chamber of Commerce Social Impact Award 2022 - Birla White;

• National Award for Excellence in Energy Management 2021, Excellent Energy Efficient Unit - Power Sector - Kotputli Cement Works;

• National Awards for Excellence in Corporate Social Responsibility - Siddhi Cement Works;

• 15 of your Company's limestone mines have been awarded a five-star rating for sustainable mine management, by the Ministry of Mines and Indian Bureau of Mines. This was awarded for last three years (2017-18, 2018-19 and 2019-20). With a total of 30 such 5-star rating awards, this is the highest number awarded to any company in India for all major minerals such as bauxite, copper, iron ore, manganese, lead & zinc and limestone. The ratings are based on the adoption of best practices for exhaustive and universal implementation of Sustainable Development Framework in mining.

• Leaders Award - Mega Large Business, Process Sector - This is the highest award in that category by Frost & Sullivan and the Energy and Resources Institute ("TERI") for the year 2021.

The award is in recognition of your Company's efforts to build a sustainable business. This award recognises the Sustainability Excellence on People, Purpose, Partnership, and Planet pillars, along with Sustainability Analytics and the Renewable Energy Consumption initiatives of organisations in India.

• One Gold and two Silver trophies for the ‘Chance Na Lo' campaign at Exchange4Media's Prime Time Awards. The Gold trophy was conferred under the ‘Best use of influencers' category. The two Silver trophies were conferred in ‘Best Integrated TV Campaign' and ‘Best use of TV' to create brand awareness categories.

RESEARCH AND DEVELOPMENT

Your Company's Research and Development (R&D) efforts focus on creating advance application value for customers by continuously exploring and incorporating innovative features and functionalities in newer cement and concrete variants. Enhancing customer satisfaction while increasing sustainability is the guiding principle for your Company's R&D activities.

Devising solutions around themes of reducing water consumption for cement, improved durability of concrete, enhanced environmental performance in terms of reduced green-house emissions and natural resource intensiveness, increasing use of alternative raw materials in cement making have resulted in significant progress in development of new types of cement.

Your Company's R&D centre is engaged in closely monitoring and incorporating latest developments, digital interventions, and advance techniques in the field of cement-concrete technology in your Company's product offerings. With this objective, your Company's R&D is committed to provide comprehensive technological support to your Company's policy of promoting sustainable construction and development.

Customers, Quality and Cost are the governing attributes of all R&D projects for achieving process optimisation and debottlenecking, raw material conservation and use of alternative fuels and raw material. Towards this objective, your Company is actively developing alternatives for minimising usage of mineral gypsum and development of cost economic grinding additives and new generation chemicals while maintaining targeted product attributes and functionality.

Your Company's R&D efforts in the ready mix concrete and building products division have resulted in development of new products, viz.

(i) Ultrahigh performance concrete ("UHPC"): For ductile, thin precast concrete panels and repair overlays;

(ii) Concrete for 3D Printing: For emerging use of 3D printers in building construction;

(iii) Antiwashout concrete: For enabling high quality construction during rainy season and in waterlogged situations;

(iv) Corrosion resistant concrete: For longer life of structure by resisting reinforcement corrosion;

(v) High strength Grout: For precision filling of Sonic Pipe;

(vi) Low and high Gun Grade Grout: For easier filling of tie rod holes;

(vii) Machine applied Spray Ready-mix Plaster: For faster completion of plastering work that enables cost and time saving.

As a member of the Global Cement and Concrete Association ("GCCA"), your Company is also part of the Global Cement and Concrete Research Network, formed by the GCCA to accelerate global collaboration on cement and concrete innovation, an important step in taking climate action. The efforts are directed at adopting key trends driving the low-carbon emission initiatives for the Indian cement sector by actively participating in the mission with other partners to keep abreast on innovation trends, latest scientific developments in carbon footprint reduction and identifying potential routes for adopting newer ideas in its sustainability objective with following key areas of interest:

• carbon capture and usage technologies

• alternative calcination technologies in cement manufacturing process

• carbon use in the construction supply chain

• improved recycling of concrete utilisation

• developing alternative SCMs

Your Company is also closely engaged with the Aditya Birla Science and Technology Company Private Limited, the corporate research and development centre for the Aditya Birla Group, for developing technological solutions to model cement process equipment, devising predictive cement quality modelling, CFD Modelling enhancing equipment productivity, using engineering simulations and devising special concrete products.

SUSTAINABILITY

Your Company is steering from the traditional sustainability models to an innovative approach that is consistent with its vision to build a sustainable business. It is also aligned to global goals such as the Paris agreement, and UN's Sustainable Development Goals ("SDGs"). Your Company is committed to contributing to the protection of the environmental and upliftment of society while also balancing various stakeholder expectations and maintaining its lead ahead of the curve.

Responsible Stewardship: This key pillar facilitates the transition from current legal standards to international standards like International Finance Corporation ("IFC"), the Organisation for Economic Cooperation and Development ("OECD"), the International Standards Organisation ("ISO"), Occupational Health and Safety Advisory Services ("OHSAS"), the Global Reporting Initiative ("GRI"), the Forestry Stewardship Council and others. The Aditya Birla Group's Sustainable Business Framework of Policies, Technical Standards, and Guidance Notes help us reach higher standards of performance.

The Group Sustainable Business Framework is currently certified to 14 international standards. The framework has given success with respect to reduction in carbon footprint, energy use, water use, and implementing nature- based solution projects.

Your Company's commitment to the pledge of ‘World Business Council for Sustainable Development's Water and Sanitation and Hygiene' ("WASH") to provide safe drinking water, sanitation and hygiene across all its operations has resulted in the construction of over 600 new bathrooms, many of these for women and the differently abled. This is a significant initiative towards the wellbeing of people and communities.

Through stakeholder engagement, your Company gains further insights into the potential opportunities and business risks. These are leveraged for enhancing business models, strategies and risk profiles in order to future-proof them and the value chains in the medium to long term, which is beneficial to the stakeholders.

Disclosures and ESG: Your Company has adopted the recommendation of Task Force for Climate related Financial Disclosure ("TCFD") and has integrated its findings into risk management, business planning and strategy. This year your Company continued consideration of carbon US$ 10 per tCO2 which has enabled it to consider the impact on environment of project/capex in its evaluation and decision making.

Your Company's performance in S&P's Dow Jones Sustainability Index ("DJSI") improved by 11 points to 79 as per DJSI results released this year. This is a 16% increase from the previous year, and your Company now is ranked 7th globally in the Construction Material category. This disclosure has helped your Company to benchmark itself against world best companies in sustainability performance and will be using this to identify opportunities to excel in sustainability performance.

Green Initiatives: Your Company has been consistently adopting new technologies that are cleaner and greener. There is constant effort across all plants and processes to become more energy efficient, given your Company's goal to become better stewards of natural resources.

Climate Change: Your Company has committed to deliver Net Zero Concrete by 2050 or earlier and will work together with value chain partners to accelerate decarbonisation. Further, your Company has joined the Science-Based Targets Initiative and got its targets successfully validated.

Under the SBTi target, your Company aims to achieve 27% reduction in its Scope 1 carbon intensity by 31st March, 2032 against the carbon emission from March 2017. Your Company has achieved 9.1% of Scope 1 carbon intensity reduction till FY22 from the base year of 2017. In energy efficiency, your Company has overachieved the target set by the Government of India for the first Perform, Achieve and Trade ("PAT") cycle.

Green Energy: As part of RE100 commitment led by the Climate Group in partnership with CDP, your Company aims to meet 100% of its electricity requirement through renewable sources by 2050. Your Company also continues to increase the use of renewable energy as part of its energy mix and has increased the consumption of RE by more than 30% as compared to previous year.

Circularity: With its thrust on the use of alternative fuels, your Company has been relentlessly striving to reduce consumption of fossil fuels by substituting these with wastes from other industries. These efforts have resulted in around 4.6% of your Company's fuel requirements being met using alternative fuels. Your Company continues to scale its contribution to the circular economy by utilising 23.6 million tonnes of Alternative Raw Material ("ARM") as part of its operations. Your Company has reinforced its commitments and has taken further strides towards being a more sustainable business.

Water Positive: Your Company aims to be 5x water positive by 2024, which means that it will replenish five times the amount of water it consumes. The volume of water replenished is ~168% over five-years (from 27.4 million m3 in FY17 to 73.6 million m3 in FY22) as compared to the total volume of water consumed.

Sustainable Products: As part of its continuing initiatives in sustainable growth, your Company has completed Life Cycle Assessment ("LCA") studies for four products. Your Company is amongst few companies to conduct the LCA study and has used this as input to identify hotspots over the value chain to reduce environmental impact. Your Company has 73 products with GreenPro Certification. This is one of the largest green product portfolios in the building material industry in India. Your Company has also conducted Environment Product Declaration ("EPD") studies as part of its product stewardship pillar and published its EPD documents for the four major categories of cement.

Other Initiatives: Your Company has embarked on digital transformation during the year that has the potential to decouple emissions and resource use from economic growth as well as making its operations safer and more reliable. Your Company launched its Sustainability

Culture building program-Project Jagruti and under the program on sustainability awareness sessions, an extensive e-module was launched, reaching more than 5,000 employees.

DIGITALISATION

Your Company's digital solutions keep customers at the core of innovation to achieve a connected and smart ecosystem. With deep understanding of customers, the teams learn fast, pivot rapidly, leveraging the best possible technologies to design state-of-the-art digital solutions. These solutions provide enhanced customer experience by empowering internal stakeholders and partners, improving efficiencies and driving collaborations amongst teams.

Your Company further enhanced existing solutions and launched new digital solutions for customers, partners and employees.

Customer First: We put customers at the centre of our conversations and continuously innovate to meet their current and evolving needs. Last year, your Company launched UltraTech Trade Connect, an app that provides unparalleled convenience to its channel partners. The app has been well received with a high-level adoption and has become an integral part of daily business operations.

During the year, UltraTech Trade Connect was extended to its Construction Chemicals and Ready-Mix Concrete division, making it a single interface for channel partners. By introducing the app, your Company replaced several paper-based processes, helping save time and improving the speed of operations for customers, partners and internal teams in a sustainable manner

Our Institutional Customers are engines of India's infrastructure growth. Keeping them in mind, your Company launched an industry-first digital solution - UltraTech Customer Connect. This solution helps customers plan their site operations better, through visibility of supplies and test certificates. The sites can provide electronic proof of delivery (ePOD), and access to finance documents enabling a seamless payment process.

Empowering Partners: Our driver and transport partners are a crucial link for superior delivery experience to customers. The digital solution empower transporters for bidding, bill submission, and faster payments.

To bring driver partners on to the digital ecosystem, your Company launched a future-ready mobile application, Eye-to-track. This multilingual app is convenient for drivers and connects them with customers and transporters. The delivery ratings received from our customers are visible to the drivers and transporters, which helps them to further improve delivery experience.

Empowering Internal Stakeholders: Our integrated information hub, Logistics Control Tower ("LCT"), which provides a single version of the truth and end-to-end visibility to logistics, is also extended on mobile phones ("LCT Lite") to our front-end sales teams, for driving collaboration to improve logistics efficiencies.

Smart Manufacturing: Your Company has accelerated adoption of digital and industry 4.0 technologies in its operations, encouraged by incremental value delivered through various initiatives. Your Company is investing in setting up of cloud infrastructure as a key foundation for smart and connected factories.

Energy Optimisation and Enhanced Productivity:

During the year, your Company focused on scaling up and adopting algorithmic advisory solutions to improve process stability and efficiency across all energy metrics, mainly focusing on increasing alternative fuel consumption and improving WHRS power generation among others. These initiatives were helped and complemented by investments in expert control systems over the last few years.

Other initiatives around digital mining management and optimisation are also underway to realise gains through better operational efficiencies.

Reliable Operations and Process stability: Reliability teams are being empowered by complementing existing preventive procedures with predictive and early alerts generated, using AI platforms.

Your Company has instituted mechanisms to monitor and sustain process stability using combination of software and AI solutions. Through combination of domain knowledge and digital tools, it continues to improve long term process reliability.

Safer Operations: Each employee in your Company is a safety officer. Use of digital tools allow improving effectiveness and collaboration of efforts on safety. Computer vision, AR, VR and other sensors are being adopted or scaled to support safety objectives at the Units.

Empowering Teams: Use of digital solutions for dynamic planning and sourcing of packaging materials is improving central synergies and efficiency. In addition, your Company is working on end-to-end fuel sourcing planning and control platform. The procurement team has adopted ‘procure to pay' digital platform and is exploring spend analytics solutions to drive efficiency over and above current capabilities.

Your Company's Shared Services Centre viz. UltraTech Knowledge Service Centre ("UKSC"), has a strength of 675 people processing payments, performing accounting transactions, ensuring controls and managing tax compliance for all of your Company's operations. UKSC is a digitally-enabled "Centre of Excellence" which will also serve as a platform to create future finance leaders and a best-in-class knowledge hub.

UKSC currently processes ~1.7 million vendor invoices annually, and maintains 1.25 million customer/vendor master records. This model helps your Company seamlessly absorb accounting work for any new cement capacity expansion.

Collaborating with the information technology and other related functions and leveraging state of the art technology applications, UKSC is currently executing various digital initiatives for people, process, and compliance which will not only make it more efficient but also create business value by creating an Analytics CoE for the future. This digital journey is expected to further accelerate in the coming months, yielding significant benefits for your Company and its stakeholders.

HUMAN RESOURCES

In FY22, your Company continued to witness pandemic- led challenges which included mobility restrictions and consequent attendance at work. Units had controlled entry, regulated movement and assembly to minimise contact and ensure employee safety without adversely impacting operations. Offices allowed minimal entry with most of the employees operating from home.

Your Company continued to focus on employee core connect, engagement, learning and development to build a workplace that is safe engaging and productive. It undertook digitalisation of the entire talent management processes for regular communication. All employees were presented with various learning opportunities to enhance career growth. Learning and Development teams ensured learning of employees and leveraged virtual medium to organise learning sessions for the employees. Wellness sessions dealing with topics related to safety, and health helped create awareness among employees and their families about key areas related to their well-being. Throughout the year, employees remained connected through planned events such as seminars, learning programs and self-learning modules.

Your Company's employee strength stood at 21,921 as on 31st March, 2022 (compared to 21,909 in 2021).

SAFETY

To ensure that the organisational objective of "zero harm" gains momentum, your Company undertook the following initiatives under six major elements: Assurance; Contractor safety; Safety inspection; Capability building; Digital intervention and Project safety. This resulted in more than 90% of the manufacturing sites remaining Lost Time Injury ("LTI") free during the year.

Assurance:

Safety Assurance by using gadget - Virtual third- party safety assessment:

Assurance is one of the key elements of safety management system that helps in identifying discrepancies within the system and addressing them. While on-site safety audits were not possible on account of the pandemic, independent virtual safety assessments were conducted by third-party expert agencies across the manufacturing locations to assess the degree of implementation vis-a-vis requirements of the various safety standards. Prior to assessment, a calibration workshop was organised for the auditors to ensure uniformity and consistency in their approach and to express the expectation out of the exercise. Post assessment, reports were shared with the Units to enable them take corrective measures. Unit-wise compliance of audit findings was reviewed by the OHS Board.

Contractor Safety:

Contractor Connect Initiative (i^ ^^^t #):

To correct "at risk" behaviour of a huge size of continuously changing contract workforce, the Unit Head and Functional Head (Technical) of one of the integrated Units established fortnightly virtual connect with contract workmen from other Units, as per rosters prepared and shared in advance. The agenda was to discover any gaps in safety processes through regular conversations with contract workers. Weekly observations were circulated across Units through mailers to encourage safe behaviour at work.

Safety Inspection:

Walk Through Inspection ("WTI"):

To make your Company's workplaces free from unsafe conditions, WTI has been institutionalised through development of standard inspection checklists for 41 sections (including RMC) and integrating those with the organisational safety management system portal for ease of reporting and analysis.

Pratibimb ("Leaders Connect with employees") to review Walk Through Inspection:

To review and improve effectiveness of Walk-Through Inspections, each Cluster Head virtually connected with any four employees on a weekly basis. Through this, 16 employees of 4 Units learned about the focus areas and methods for improvement towards workplace safety.

Capability building:

Safety Standard Champions Training:

To build a pool of competent in-house resource, employees across Units were trained on 18 safety standards through virtual "Standard Champions training" programme. This enabled them to further impart training to employees and ensure compliance. 515 employees qualified as standard champions through this program.

Digital intervention:

a. Addressing high-risk operations through augmented process knowledge:

To enhance technical knowledge of employees associated with specific high-risk operations, e-learning modules have been developed and uploaded in the learning management platform.

Employees were mandatorily required to complete the e-learning course which helped them to become fully aware of the processes to prevent any incident.

b. Data analytics:

By integrating mySetu (your Company's safety portal) with Tableau, your Company's online reporting platform, in-depth analysis of various leading indicators was carried out and focused action was taken for improvement of identified areas. This resulted in reducing high-risk unsafe conditions related to machine guarding and acts related to procedure violation across Units.

c. "Speech to text" for Walk Through Inspection:

To facilitate line team members in making walk through inspection reports, speech to text feature was added in the process, thereby bringing more ease and comfort. This resulted in substantial reduction of time required for doing the exercise. While the manual method took around one hour, with this intervention, WTI takes only 25 minutes.

d. Virtual inspection using gadget ("Realwear"):

Cluster Heads conducted virtual safety inspection of respective Units by using gadgets (Realwear), identified discrepancies and monitored compliance. This led to reduction in high-risk unsafe conditions relating to housekeeping, electrical safety, work at height.

Project Safety:

To give greater thrust to safe execution of multiple projects going on simultaneously, multilayer monitoring was introduced over and above existing safety management systems. Virtual training on Vishwakarma (project safety guidelines) was imparted to all employees deployed at various project sites. Safety Experts were deployed at Pali, Dhar and Hirmi and rigging and scaffolding experts were deployed at project sites to support safe execution.

CORPORATE SOCIAL RESPONSIBILITY

In terms of the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors of your Company has constituted a Corporate Social Responsibility ("CSR") Committee chaired by Mrs. Rajashree Birla. Other Members of the Committee are Mrs. Sukanya Kripalu, Independent Director and Mr. K. C. Jhanwar, Managing Director. Dr. (Mrs.) Pragnya Ram, Group Executive President, CSR, Legacy, Documentation & Archives is a permanent invitee to the Committee. Your Company has in place a CSR Policy which is available at-https://www.ultratechcement.com/ investors/corporate-governance#policies.

Your Company's CSR activities are focused on Social Empowerment and Welfare, Infrastructure Development, Sustainable Livelihood, Healthcare and Education. Various activities across these segments have been initiated during the year around its plant locations and adjacent villages. During the year, your Company spent Rs.96.40 crores on CSR activities and set-off Rs.6.60 crores from the excess spent during FY21, aggregating to Rs.103 crores, resulting in 2% of the average net profits of your Company during the last three financial years. A report on CSR activities is provided in Annexure III which forms part of this Report.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

The audited financial statements of your Company's subsidiaries and joint ventures viz. Harish Cement Limited, Gotan Lime Stone Khanij Udyog Private Limited, Bhagwati Lime Stone Company Private Limited, UltraTech Nathdwara Cement Limited ("UNCL"), UltraTech Cement Middle East Investments Limited ("UCMEIL"), UltraTech Cement Lanka (Private) Limited, PT UltraTech Mining Indonesia and PT UltraTech Investments Indonesia and their related information are available for inspection on your Company's website. Any Member who is interested in obtaining a copy of the audited financial statements of your Company's subsidiaries may write to the Company Secretary.

During the year ended 31st March, 2022, UNCL entered into an agreement with Galata Chemicals Holding Gmbh, Germany ("Galata") for restructuring of 3B Binani Glassfibre SARL ("3B") as per which Galata along with its affiliates has made necessary payments to UNCL for the purposes of refinancing the loans given to 3B and acquisition of entire shareholding of UNCL in 3B.

UNCL has, inter alia, transferred its entire shareholding in 3B to Galata as on 31st March, 2022. Consequent to the transaction, 3B has ceased to be a wholly owned subsidiary of UNCL.

UCMEIL acquired 29.79% equity share capital of ‘RAK Cement Co. for White Cement and Construction Materials PSC', ("RAKWCT') a company listed on the Abu Dhabi and Kuwait stock exchanges for a consideration of US$ 101.10 million. RAKWCT is engaged in the manufacture and sale of white cement clinker, white cement and construction materials.

This strategic acquisition strengthens your Company's position in the white cement business in India while also providing access into the GCC and African markets. The white cement market in India is witnessing robust growth, propelled by demand in white cement-based putty as well as other emerging new applications in coatings and construction secters. The acquisition provides opportunity to tap operational synergies between your Company and RAKWCT, to improve shareholder value apart from exploring cost efficiencies and expansion of markets.

In accordance with the provisions of Section 129(3) of the Act read with the Companies (Accounts) Rules, 2014, a report on the performance and financial position of each of the subsidiaries, joint venture and associate companies is provided in Annexure IV to this Report.

PARTICULARS OF LOAN, GUARANTEE AND INVESTMENT

Details of Loan, Guarantee and Investment covered under the provisions of Section 186 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014 are given in Notes forming part of the standalone financial statements.

ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

Information on conservation of energy, technology absorption and foreign exchange earnings and outgo, required to be disclosed pursuant to Section 134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014, is given in Annexure V to this Report.

PARTICULARS OF EMPLOYEES

Disclosures relating to remuneration and other details as required under Section 197(12), read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are given in Annexure VI. In accordance with the provisions of the aforementioned section, the names and other particulars of employees drawing remuneration in excess of the limits set out in the aforesaid rules form part of this Report. However, in line with the provisions of Section 136(1) of the Act, the Report and Accounts as set out therein, are being sent to all Members of your Company, excluding the aforesaid information. Any Member, who is interested in obtaining these particulars, may write to the Company Secretary.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

The Securities and Exchange Board of India ("SEBI"), in its circular dated 10th May, 2021, introduced new sustainability related reporting requirements to be reported in the specific format of Business Responsibility and Sustainability Report ("BRSR"). SEBI, vide the aforesaid circular, has made BRSR mandatory for the top 1,000 listed companies (by market capitalisation) from fiscal 2023, while disclosure is voluntary for fiscal 2022. Your Company has adopted the BRSR voluntarily for FY22 and also publishes a comprehensive Sustainability Report annually, based on GRI standards. The Sustainability Report is available at https://www.ultratechcement.com/ about-us/sustainability/sustainability.

The BRSR forms part of this Integrated Annual Report.

CONTRACT AND ARRANGEMENT WITH RELATED PARTIES

Related party transactions entered into by your Company during the financial year were completely on an arm's length basis and in the ordinary course of business. There were no material transactions with any related party, as defined under Section 188 of the Act 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 and reviewed by it on a periodic basis.

The policy on Related Party Transactions, as approved by the Audit Committee and the Board, is available at https://www.ultratechcement.com/ investors/corporate-governance#policies.

The details of contracts and arrangements with related parties of your Company for the financial year ended 31st March, 2022 is provided in Note No. 38 to the standalone financial statements of your Company.

RISK MANAGEMENT

Risk is an integral and unavoidable component of business. Given the challenging and dynamic environment of your Company's operations, it is committed to proactively managing risk in accomplishing its ambitious goals. Though risks cannot be eliminated, an effective risk management program ensures that risks are reduced, avoided, mitigated, or shared.

To maintain oversight of your Company's risks, the Risk Management and Sustainability Committee ("RMS Committee") of your Company is mandated to review its Enterprise Risk Management Framework (including plan/process), analyse the risks more deeply and define risk mitigation actions, where necessary. Through the Annual Risk Report processes, which are based upon the business environment, operational controls and compliance procedures, your Company aims to assess and prioritise risks, according to their significance and likelihood.

The key risks identified by your Company include economic environment and market demand; inflation and cost of production; legal and compliance with local laws; financial and accounting; environment, climate and sustainability; information technology and talent management. Needless to mention, with the challenges presented by the COVID-19 outbreak, pandemic and epidemic-related business risks have been identified by your Company. Further, the Ukraine war has resulted in geopolitical tension, thereby impacting fuel prices, which would have an adverse impact on the operations of your Company.

The risk horizon considered includes long-term strategic risks, short to medium-term risks as well as single events. The risks are analysed considering likelihood and impact as a basis to determine their management.

Key Business Risks identified by your Company:

Economic Environment and Market Demand

The demand for construction material is fundamentally driven by the economic growth in the country. Economic slowdown and subdued infrastructural development might lead to a slowdown in construction projects, thus leading to a reduction in cement consumption in the country. The growth in construction activity in the country has been slow over the last few years, impacting the cement consumption. In a scenario where incremental capacity addition exceeds incremental cement demand, the government's push for infrastructure and housing will aid the growth in cement consumption and reduce the overcapacity gap.

The cement industry in India is an aggregation of small and large companies. In such an environment, the risk of protecting market share is optimal. With the expanding capacities of existing players and the emergence of new entrants, competition is a sustained risk. To mitigate this, continuous endeavours to enhance brand equity through innovative marketing activities, enhancement in the product portfolio and value-add services have been the thrust areas for your Company. The engineering expertise of your Company and its emphasis on quality also minimise its risk against market fluctuations considerably.

Inflation and Cost of Production

Your Company faces the risk of inflation and price fluctuations in the cost of coal, pet coke, power, and other fuels since these are market driven. The cement industry is extremely energy intensive, changes in fuel prices can significantly impact production cost. To derisk, your Company has established specific policies of long deliveries and it continuously optimises its fuel mix and energy efficiency, while exploring the use of alternative fuels.

The procurement of raw materials at an economical cost or of suitable quality faces a high degree of inflationary certainty. Your Company mitigates this risk through the establishment of exhaustive policies for procurement of specific raw materials and stores and those amenable to just in time inventories.

Limestone being the primary raw material required to produce cement, its continuous and long-term availability is critical, particularly under the dynamic regulatory environment. Your Company currently possesses sufficient limestone reserves. Securing additional reserves is critical to address your Company's expansion plans. Apart from the preservation and extension of existing reserves, a range of measures including strategic sourcing and changing input mix are adopted by your Company to mitigate the risk of unavailability of limestone.

Legal and Compliance

This risk relates to any inadvertently violated laws covering business conduct.

The country's regulatory framework is ever-evolving and the risk of non-compliance and penalties may increase for your Company, leading to reputational risks.

A comprehensive risk-based compliance programme, involving inclusive training and adherence to the Code of Conduct, is thus institutionalised by your Company.

As a step to mitigate the legal and compliance risk, your Company's management encourages its employees to place their reliance on professional guidance and opinion to discuss the impact of any changes in laws and regulations to ensure total compliance. Periodic and ad- hoc reporting to various internal committees for oversight ensures the effectiveness of such a programme.

Financial

This comprises the risk of exposure to interest rates, foreign exchange rates and commodity price fluctuations. The risk management strategy is to identify the risk exposure, measure and evaluate the financial impact, and decide on steps to mitigate the risks together with ensuring regular monitoring and reporting.

With the objective of minimising risks arising from uncertainty and volatility of foreign exchange fluctuations, an elaborate financial risk management policy is followed for every transaction undertaken in foreign currency. Your Company's policies to counter such risks are reviewed periodically and constantly aligned with the financial market practices and regulations.

Changing laws, rules, regulations and standards relating to accounting, corporate governance, public disclosure and listing regulations are generating newer and unforeseen risks for companies. The new or changed laws, regulations and standards may lack precedence and are subject to varying interpretations. Their application in practice may evolve as new guidance is provided by regulatory and governing bodies. Thus, your Company maintains a high standard of corporate governance and public disclosure to de-risk itself from such dynamic regulatory changes.

Environment

This comprises risks associated with environmental pollution through the discharge of waste and GHG emissions, which may cause damage to the local ecology and environment.

Various initiatives such as sewage treatment plants, recycling of industrial wastewater, bag-house, WHRS and extensive plantation and creation of green belts have been undertaken by your Company to de-risk and protect the environment.

Apart from a targeted reduction of CO2 emissions (Scope 1 by 27% and Scope 2 by 69% by 2032), your Company's risk mitigation strategy includes a change in product mix, energy efficiency, use of alternative fuels and raw materials, WHRS and the increased use of renewable energy. Your Company has also adopted measures such as rainwater harvesting and water recharge that help it overcome challenges related to water availability.

Climate and Sustainability

Sustainability-related climate change risks and opportunities are assessed in line with your Company's risk management policy and have been integrated in its multi-disciplinary Risk Management Framework. Classified as ESG risks, these relate to energy, emissions and water, among other issues. Sectoral review and relevant stakeholder interactions are conducted regularly to develop a list of climate-related risks specific to business and location. Identified risks are then mapped to your Company's risk matrix, which classifies the risk according to its impact and likelihood.

Prioritised climate risks are managed through Unit-level committees. Unit and Functional Heads are responsible for identifying risks, developing mitigation plans, updating and reviewing their respective risk registers as per the defined process. The consolidated risk report is submitted to the Board-level committee.

Scenario based analysis has been conducted for physical as well as transition risks. For physical risks, four scenarios have been considered that are linked to Representative Concentration Pathway ("RCP"), which is a GHG concentration trajectory adopted by the Intergovernmental Panel on Climate Change ("IPCC"). These include RCP 8.5, RCP 6, RCP 4.5 and RCP 2.6 scenarios. The pathways describe four possible climate futures on the basis of the volume of GHG emitted in the coming years. All four scenarios have been considered to assess the impact of temperature and precipitation changes in areas where your Company operates. Maximum possible impact has been considered based on projections up to the year 2100.

Your Company has conducted risk assessment exercise to identify climate-related physical and transition risks. Risks are assessed based on the defined time horizons over short term (0-3 years), medium term (3-10 years) and long term (10-30 years). The categorisation of risks into physical and transition risks has been done in alignment with TCFD guidelines.

In case of assessing the impact of transition risks on your Company, scenario analysis has been conducted in alignment with ETP B2DS and IPCC 1.5-degree scenarios. The potential impact of the evolution of climate policies has been considered under both scenarios to assess the resilience of your Company, as well as the potential pathways for decarbonisation so that it can comply with policy mechanisms such as emission trading schemes.

Product mix is an important variable in managing climate- related risks. Your Company is not only focused on developing sustainable products but also aims to embed sustainability in the entire construction value chain. As many as 73 UltraTech products are certified by GreenPro, the largest Ecolabel in India, which enables end users in the built environment sector to choose sustainable materials for reducing the environmental impact during construction, operation as well as use phase of buildings.

Your Company's approach is highlighted below:

• Enhancing resilience of the building sector: Extreme weather events due to climate change, such as floods, cyclones and heat waves, may impact the building sector considerably. To mitigate the impact of physical risks on the building sector and society at large, your Company is working with the built environment sector to make buildings more resilient to climate change effects.

• Your Company is committed to developing products and solutions that reduce carbon emissions throughout the lifecycle of the built environment sector. It offers building products and solutions that lead to optimisation of concrete mixing, improving overall quality and strength of construction, and thus alleviating the impact of physical risks.

• Your Company has introduced many new products that are designed to make buildings more resilient to dampness.

This also leads to reduced wear and tear of buildings, increasing longevity, thereby reducing the use of input materials and natural resources during their entire lifetime.

Physical risks

Acute physical risks: Such risks can potentially impact sales volumes because of disruption of business operations due to interruption in supply chain, rise in logistics costs, power outage, infrastructure damages and manpower shortage among other aspects.

Few sites of your Company have been exposed to extreme weather events during the last few years, such as floods and cyclones. In the last three years, sites located in Bhubaneswar, Chennai and Gujarat have been impacted due to extreme weather events. Some of your Company's sites are in geographies that are susceptible to periodic heat waves.

However, your Company has implemented several measures to mitigate the impact of physical risks.

Given its pan-India presence, your Company's sites are highly diversified geographically. If a manufacturing plant faces business disruption or shutdown due to extreme weather events, alternative plants in other locations can serve the market need. Also, its wide logistics network, with warehouses across different parts of the country, enable flexibility in your Company's operations.

Annual weather forecasts are considered in supply chain decisions in order to mitigate the risk of delays in sourcing of fuels. Your Company has developed strategic partnerships with geographically diverse global vendors for fuels. Regular monitoring of environmental, political and regulatory developments, coupled with flexible contracts mitigate risks of supply chain disruptions. Inventory norms for fuels are periodically reviewed considering probability and expected impact of likely supply chain disruptions due to above developments. Insurance coverage is in place to protect against damages to business assets or loss of material in warehouses due to extreme weather events.

Your Company has not witnessed any impact of heat waves on its facilities. Nevertheless, it ensures that its employees are protected during peak summer days. It is committed to the WASH Pledge, ensuring adequate availability of safe drinking water to workers. Warehouses are also secured with early morning and late evening operational hours.

Disaster management plans, health and safety protocols and adequate communication protocols during extreme weather events ensure safety at sites and minimise the impact on the workforce.

The financial impact of physical risks is estimated to be less than 1% of EBITDA. Risk mitigation measures have largely insulated your Company from the impact of extreme weather events.

Chronic physical risks

Your Company's vast geographical presence makes it vulnerable to long-term chronic physical risks, such as variation in temperature, precipitation and water scarcity. Potential impact of variation in temperature and precipitation patterns has been assessed through scenario analysis across all four scenarios. Less than a quarter of your Company's cement plants are in sites with extremely high water-stress, combined with a projected long-term decrease in precipitation patterns.

Your Company has implemented several measures which protect the business from the identified chronic risks. Rainwater harvesting systems have also been installed across sites. Harvested rainwater is either used within the sites or recharged into the ground for raising groundwater levels. In addition, your Company's manufacturing sites are Zero Liquid Discharge ("ZLD") and they reuse 100% of treated water within the sites. As a result, nearly 43 out of 58 sites are water positive. The endeavour is to make all sites water positive, enabling your Company to be future- ready for mitigating risks of water stress.

Transitional risks

Emerging climate-related regulations and carbon pricing mechanisms may financially impact business in the long run. For example, Emission Trading Scheme ("ETS") and Carbon Tax have been adopted in several geographies around the world. India has committed to reducing its emission intensity by 33-35% by 2030 and is on track to achieve this target five years in advance (2025). National level commitments may, in the future, cascade down to various industry sectors through the introduction of new climate change policies. The estimated impact of a policy such as ETS on your Company is estimated to be less than 1% of EBITDA, considering commitments already made to decarbonise the business.

Your Company is prepared to mitigate emerging risks pertaining to climate change policy changes through its existing voluntary GHG reduction targets which are SBTi validated, sustainability-linked bonds, its commitment to the GCCA announced ‘2050 Climate Ambition' and so on.

Delay in adopting low-carbon technologies may lead to increased indirect operating costs. This could be through early retirement of existing assets. Your Company has strategically reduced its dependence on coal-based power generation and is focused on increasing the share of WHRS and renewable energy. Further, initiatives to utilise waste or by-products from other industries, and reducing clinker ratio are driving down emissions intensity. There are also efforts to track the technology and cost trends in emerging areas such as carbon capture, utilisation and storage ("CCUS"), and hydrogen and kiln electrification. Also, your Company is committed to aligning with the Paris Agreement Goals and is judiciously monitoring climate change performance at the Board-level, Unit-level and across all relevant functions.

Information Technology Risks

This comprises risks related to Information Technology ("IT") systems; data integrity and physical assets. Your Company deploys IT systems, including ERP, SCM, Data Historian, and Mobile Solutions to support its business processes, communications, sales, logistics, and production. Risks could primarily arise from the unavailability of systems and/or loss or manipulation of information. To mitigate these risks, your Company uses backup procedures and stores information at two different locations. Systems are upgraded regularly with the latest security standards. For critical applications, security policies and procedures are updated periodically, and users are educated on adherence to the policies to eliminate data leakages.

Talent Management

Your Company's growth has been driven by its ability to attract and retain top-quality talent while effectively engaging them in the right jobs. The risks in talent management are mitigated by following a policy of being an employer of choice and inculcating a sense of belonging. Specialised training courses are adopted to enhance and reskill employees to prepare them for future roles and create a talent pipeline.

Pandemic-linked Disruptions in Global Markets

The COVID-19 outbreak caused a huge impact on people's lives, families and communities. Your Company continues to update and expand its crisis management and business continuity plans with an emphasis on employees, customers, supply chain, contacts, other stakeholders and business assets.

Geopolitical tension

The rising fuel prices in the wake of geopolitical tensions have had an adverse impact on the cost of manufacturing cement owing to increased raw material, fuel and energy costs. For your Company's business, raw material, fuel and logistics account for a major share of the manufacturing cost. The anticipated rise in the procurement of raw materials and high consumption of energy is likely to lead to the need for prioritising local dependence for raw material and energy fulfilment in order to mitigate the disruption caused due to such global geopolitical tension.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Your Company has put in place adequate internal control systems that are commensurate with the size of its operations. Internal control systems comprising policies and procedures are designed to ensure sound management of your Company's operations, safekeeping of its assets, optimal utilisation of resources, reliability of its financial information, and compliance. Clearly defined roles and responsibilities have been institutionalised, and systems and procedures are periodically reviewed to keep pace with the growing size and complexity of your Company's operations.

DIRECTORS

Retiring by rotation and continuing as Director

In accordance with the provisions of the Act and Articles of Association of your Company, Mr. Krishna Kishore Maheshwari (DIN: 00017572) retires by rotation, and being eligible, offers himself for re-appointment.

Re-appointment of Managing Director

The existing term of Mr. Kailash Chandra Jhanwar (DIN:01743559), Managing Director is upto 31st December, 2022. The Board at its meeting held on 22nd July, 2022, based on the recommendation of the NRC Committee and considering the contributions made by Mr. Jhanwar during his term of appointment, re-appointed Mr. Jhanwar for a further period of two years with effect from 1st January, 2023.

Resolutions seeking their re-appointment along with a brief profile forms part of the Notice convening the AGM.

Meetings of the Board

Your Company's Board of Directors met five times during the year to deliberate on various matters. The meetings were held on 7th May, 2021; 22nd July, 2021; 18th October, 2021; 27th October, 2021 and 17th January, 2022. Additional details relating to the meetings of the Board of Directors are provided in the Report on Corporate Governance, which forms part of this Integrated Annual Report.

Your Company has the following six Board-level Committees, established in compliance with the requirements of the business and relevant provisions of applicable laws and statutes:

• Audit Committee

• Nomination, Remuneration and Compensation Committee

• Stakeholders Relationship Committee

• Corporate Social Responsibility Committee

• Risk Management and Sustainability Committee

• Finance Committee

Details with respect to the composition, terms of reference, number of meetings held, etc. of the above Committees are included in the Report on Corporate Governance, which forms part of this Integrated Annual Report.

Independent Directors

Your Company's Independent Directors have submitted requisite declarations confirming that they continue to meet the criteria of independence as prescribed under Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations. The Independent Directors have also confirmed that they have complied with the provisions of Schedule IV of the Act and your Company's Code of Conduct.

Your Company's Board is of the opinion that the Independent Directors possess requisite qualifications, experience, and expertise in industry knowledge; innovation; financial expertise; information technology; corporate governance; strategic expertise; marketing; legal and compliance; sustainability; risk management; human resource development and general management, and they hold highest standards of integrity. All Independent Directors of your Company have registered their name in the data bank maintained with the Indian Institute of Corporate Affairs, Manesar in terms of the provisions of the Companies (Appointment and Qualification of Directors) Rules, 2014.

Formal Annual Evaluation

The evaluation framework for assessing the performance of your Company's Directors comprises of contributions at meetings and strategic perspective or inputs regarding the growth and performance of your Company, among others. The NRC Committee and the Board have laid down the manner in which formal annual evaluation of the performance of the Board, its Committees and individual Directors are to be made. Separate evaluation forms are circulated to individual directors for evaluation of the Board; its Committees, Independent Directors/Non- Executive Directors/Executive Directors and the Chairman of your Company. The process broadly comprises:

Board and Committee Evaluation

Evaluation of the Board as a whole and the Committees is done by individual Directors. These are collated for submission to the NRC Committee and feedback to the Board.

Independent/Non-Executive Directors Evaluation

Evaluation done by Board members, excluding the Director who is being evaluated, is submitted to the Chairman of your Company and individual feedback provided to each Director. The evaluation of the Chairman/Executive Director as done by the individual Directors is submitted to the Chairman of the NRC Committee and subsequently to the Board. The evaluation framework focuses on various aspects of the Board and Committees such as review, timely information from management and others. Performance of individual Directors are categorised into Executive, Non-Executive and Independent Directors and based on parameters such as contribution, attendance, decision-making, action-oriented, external knowledge etc.

A brief summary of the evaluation exercise is as follows

The Board as a whole functions cohesively. The Committees function well in their respective areas and the recommendations of the Committees are considered and have been accepted by the Board. The Directors bring to the table their knowledge and experience. Independent Directors are rated high in understanding your Company's business and expressing their views freely during deliberations. The Non-Executive Directors score well in all aspects. Executive Directors are action oriented and good in implementing Board decisions. The Chairman leads the Board effectively and encourages active participation and contribution by all Board members.

The details of the familiarisation programme for Independent Directors are available at https://www. ultratechcement.com/about-us/board-of-directors.

Policy on Appointment and Remuneration of Directors and Key Managerial Personnel and Remuneration Policy

Your Company's Directors are appointed/re-appointed by the Board on the recommendations of the NRC Committee and approval of the shareholders.

In accordance with the Articles of Association of your Company, provisions of the Act and the Listing Regulations, all Directors, except the Executive Directors and Independent Directors, are liable to retire by rotation and, if eligible, offer themselves for re-appointment.

The Executive Directors are appointed for a fixed tenure and are not liable to retire by rotation. The Independent Directors can serve a maximum of two terms of five years each and their appointment and tenure are governed by provisions of the Act and the Listing Regulations.

The NRC Committee has formulated the remuneration policy of your Company, which is provided in Annexure VII to this Report.

KEY MANAGERIAL PERSONNEL

In terms of the provisions of Section 203 of the Act, Mr. K.C. Jhanwar, Managing Director; Mr. Atul Daga, Whole- time Director and Chief Financial Officer and Mr. Sanjeeb Kumar Chatterjee, Company Secretary are the Key Managerial Personnel of your Company.

AUDIT COMMITTEE

The Audit Committee comprises Mr. S.B. Mathur, Mr. Arun Adhikari, Mrs. Alka Bharucha and Mr. K.K. Maheshwari, majority of whom are Independent Directors, with Mr. Mathur being the Chairman. Mr. K.C. Jhanwar, Managing Director and Mr. Atul Daga, Whole-time Director and CFO, are permanent invitees. Further details relating to the Audit Committee are provided in the Report on Corporate Governance, which forms part of this Integrated Annual Report. During the year under review, all recommendations made by the Audit Committee were accepted by the Board.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

Your Company has in place a vigil mechanism for Directors and employees to report instances and concerns about unethical behaviour, actual or suspected fraud, or violation of your Company's Code of Conduct. Adequate safeguards are provided against victimisation of those who avail of the mechanism and direct access to the Chairman of the Audit Committee, in exceptional cases, is provided to them.

The vigil mechanism/whistle blower policy is available at https:// www.ultratechcement.com /investors/corporate- governance#policies.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

Your Company had filed appeals against the orders of the Competition Commission of India ("CCI") dated 31st August, 2016 (Penalty of Rs.1,449.51 crores) and 19th January, 2017 (Penalty of Rs.68.30 crores). Upon the National Company Law Appellate Tribunal ("NCLAT") disallowing its appeal against the CCI order dated 31st August, 2016, your Company filed an appeal before Hon'ble Supreme Court which has, by its order dated 5th October, 2018, granted a stay against the NCLAT order. Consequently, your Company has deposited an amount of Rs.144.95 crores equivalent to 10% of the penalty of Rs.1,449.51 crores. Your Company, backed by legal opinions, believes that it has a good case in both the matters and accordingly no provision has been made in the accounts.

AUDITORS

Statutory Auditors

Pursuant to the provisions of Section 139 of the Act and the Companies (Audit and Auditors) Rules, 2014, M/s. BSR & Co. LLP, Chartered Accountants, Mumbai (Registration No: 101248W/W-100022) and M/s. KKC & Associates LLP, Chartered Accountants (formerly Khimji Kunverji & Co.), Mumbai (Registration No: 105146W/W100621) have been appointed as Joint Statutory Auditors of your Company for a second term of five years until the conclusion of the 25th and 26th AGMs, respectively. In accordance with the provisions of the Act, the appointment of Statutory Auditors is not required to be ratified at every AGM.

The Joint Statutory Auditors have however confirmed that they are not disqualified to continue as Auditors and are eligible to hold office as Auditors of your Company.

The observations made in the Auditor's Report are selfexplanatory and therefore, do not call for any further comments under Section 134(3)(f) of the Act.

Cost Auditors

The Cost Accounts and records as required to be maintained under Section 148(1) of the Act are duly made and maintained by your Company.

In terms of the provisions of Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, the Board of Directors of your Company have, on the recommendation of the Audit Committee, appointed M/s. D.C. Dave & Co., Cost Accountants, Mumbai and M/s. N.D. Birla & Co., Cost Accountants, Ahmedabad, to conduct the Cost Audit of your Company for the financial year ending 31st March, 2023, at a remuneration as mentioned in the Notice convening the AGM.

As required under the Act, the remuneration payable to the Cost Auditors has to be placed before the Members at a general meeting for ratification. Hence, a resolution relating to the same forms part of the Notice convening the AGM.

Secretarial Auditors

In terms of the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed M/s. Makarand M Joshi & Co. LLP, Company Secretaries as Secretarial Auditors for conducting Secretarial Audit of your Company for the financial year ended 31st March, 2022.

The report of the Secretarial Auditor is provided in Annexure VIII, which does not contain any qualification, reservation or adverse remark.

Compliance with Secretarial Standards

Your Company is compliant with the Secretarial Standards specified by the Institute of Company Secretaries of India. Your Company has complied with all applicable provisions of Secretarial Standard - 1 and Secretarial Standard - 2 relating to ‘Meetings of the Board of Directors' and ‘General Meetings' respectively, issued by the Institute of Company Secretaries of India.

ANNUAL RETURN

In terms of the provisions of Section 92 and Section 134 of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return is available at - https://www.ultratechcement.com/investors/ financials.

OTHER DISCLOSURES

• No material changes and commitments affected the financial position of your Company between the end of the financial year and the date of this Report.

• Your Company has not issued any shares with differential voting rights.

• There was no revision in the financial statements.

• There has been no change in the nature of business of your Company.

• Your Company has not issued any sweat equity shares.

Disclosures as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("POSH Act"):

Your Company has adopted zero tolerance for sexual harassment at workplace and has formulated a policy on prevention, prohibition and redressal of sexual harassment at workplace, in line with the provisions of the POSH Act and the rules framed thereunder, for prevention and redressal of complaints of sexual harassment at workplace. Your Company has complied with provisions relating to the constitution of the Internal Committee under the POSH Act. During the year under review, your Company received three complaints of sexual harassment, of which for one complaint, there was no evidence of harassment, and two complaints have been resolved.

CAUTIONARY STATEMENT

Statements in the Directors' Report and the Management Discussion and Analysis describing your Company's objectives, projections, estimates, expectations or predictions and plans for navigating the COVID-19 impact on your Company's performance, its employees, customers and other stakeholders may be ‘forwardlooking statements' within the meaning of applicable securities laws and regulations.

Actual results could differ materially from those expressed or implied. Important factors that could make a difference to your Company's operations include global and Indian demand- supply conditions, finished goods prices, feed stock availability and prices, cyclical demand and pricing in your Company's principal markets, changes in government regulations, tax regimes, economic developments within India and the countries within which your Company conducts business, geopolitical tensions, risks related to an economic downturn or recession in India, the efforts of the government and other measures seeking to contain the spread of COVID-19 and other factors such as litigation and labour negotiations. Your Company is not obliged to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent development, information or events, or otherwise.

ACKNOWLEDGEMENT

Your Directors express their deep sense of gratitude to the banks, financial institutions, stakeholders, business associates, central and state governments for their support, and look forward to their continued assistance in the future. We thank 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,
22nd July, 2022