For many years, we have been talking about increasing volatility and unpredictability. The events of the last 24 months have heralded a new era of uncertainty where both the amplitude and frequency of shifts have vastly exceeded anything we have seen in recent decades. The unprecedented pandemic was followed by supply chain whiplash, and further disruption was brought on by the Russia-Ukraine war. We are now staring at the spectre of a high-interest rate and high-inflation regime globally.
Over the years, corporations have tried to find a balance between efficiency and resilience, with successive decades of growth having swung the pendulum in the direction of efficiency. The events of the last two years have once again taught us all the virtues of reserves and resilience.
This era of disruption also presents a unique opportunity for renewal. The exigencies of this disruption have pushed the boundaries of innovation. A world that freed thinking from its conventional shackles. And we are clearly staring at a new age, with new paradigms and new ideas.
GLOBAL ECONOMY: THE STORM BEFORE THE CALM?
The global economy recovered from the pandemic shock in 2022 on the back of supportive fiscal and monetary policies and mass vaccination programmes. However, at the end of FY22, the war in Ukraine and the subsequent economic sanctions on Russia posed several challenges. It disrupted energy markets and supply chains and added to the already evolving inflationary pressures and concerns over consumer demand. Consequently, growth forecasts have been slashed.
The International Monetary Fund (IMF) now expects the world economy to grow by 3.6% in CY22, which is 0.8 percentage points lower than its pre-war projections. Many economies have experienced a sharp surge in inflation, particularly in food and fuel prices, taking their inflation rates to multi-decade highs. Central banks have been forced to respond to surging prices with aggressive rate hikes.
The pace of monetary tightening is turning out to be quite swift as central bankers attempt to catch up with the rising inflation from their ultra-accommodative stance during the pandemic.
As the stance of monetary policy shifts, there is greater turbulence in currency markets. The dollar has strengthened, while emerging economies have witnessed downward pressure on their currencies. At the same time, energy and commodity markets have witnessed heightened volatility.
Global supply chain disruptions due to pandemic-induced lockdowns have been replaced by new disruptions caused by the war in Ukraine and the economic sanctions. While the global economic backdrop remains challenging, there are reasons to remain optimistic. First, despite the slowdown, IMF’s projection of world GDP growth in CY22 is still tracking the pre-pandemic average. Second, fiscal support in developed economies remains above the pre-pandemic trend, although diluted, versus past years. Third, mega-trends around sustainability, green investments, digitisation, and disintermediation remain well-entrenched and will support growth and productivity enhancement in the medium-term.
Thus, while businesses will need to remain on guard regarding financial market volatility and cost pressures this year, one could expect the medium-term growth recovery to remain on track.
INDIA: AN ENGINE OF GLOBAL GROWTH
The Indian economy has not remained unscathed by these global developments. Partly on account of the elevated commodity prices in global markets, India’s inflation has pushed higher than the target of the Reserve Bank of India (RBI). To control inflationary risks and reduce the pressure on the rupee, the RBI has been selling reserves and unwinding the extraordinary liquidity support provided by it during the pandemic.
On the positive side, economic activity in India has witnessed a sharp recovery to pre-pandemic levels on the back of a rapid and widespread rollout of the vaccination programme. A strong digital ecosystem, fiscal and monetary policy and various government schemes helped small and medium enterprises and the worst affected sections of the population to survive while reviving demand and bringing the economy back on track.
Even as the global headwinds are being felt, India’s growth recovery is progressing well, and most estimates peg economic growth during FY23 around the 7% range. India, therefore, is poised to be the fastest-growing major economy in the world and an engine of global growth.
India’s exports are exhibiting a strong buoyancy, and economic sentiment has been supported by a robust pipeline of infrastructure projects as well as the government’s pragmatic policies, such as the production-linked incentives schemes. Many industries have witnessed fresh project investment announcements. Foreign direct investment flows have remained strong. The burden of non-performing assets in the banking sector seems to have peaked out and is easing. Dynamism in India’s digital ecosystem, diversification of global supply chains away from China and the greater emphasis of investors on sustainable finance offer new opportunities for India.
The above trends lend confidence to a robust economic narrative for India in the medium-term, which augurs well for the corporate sector as well.
ADITYA BIRLA GROUP: DYNAMISM AND RESILIENCE AT PLAY
The Aditya Birla Group’s pace of activity, range of businesses, and depth of global presence provide a useful compass to navigate this age of disruption. Against the backdrop of our long history as a group, dynamism leaps out as a common theme. Over the years, we have witnessed multiple business cycles. Across businesses and markets, our evolution is a story of continuous renewal and regeneration, as we aggressively invested in growth and created long-term value for all stakeholders.
This institutional dynamism and resilience helped us navigate an unprecedented business environment in FY22.The pandemic inordinately impacted the future of work, workforce, and workplace. We have moved with the new work ethic by focusing on a holistic employee experience that puts equal emphasis on growth, engagement, and well-being.
Our employees value and appreciate the One ABG culture, which is profoundly embedded across the organization. This culture lends the ultimate competitive edge in a world where business models are easily upended.
It has been a matter of great pride for us that our employee engagement has continued to be strong despite the stresses of the pandemic. 87% of our employees stated in a survey that they have a colleague/friend at work to lean on during difficult times. 96% of our employees experienced considerate behaviour from their managers during this period.
WE ARE ONLY AS STRONG AS OUR PEOPLE
The Group’s continued focus and investment in its People Processes in good times have helped us build and sustain a robust and agile workforce that is able to be nimble and responsive at all times. When corporates across the world are facing a rather unusual phenomenon – The Great Resignation, our employee survey score for Intent to stay remained strong. It is higher than the global high-performing organizations and almost similar to pre-covid levels. This strong affinity is a testimony to our relentless commitment to delivering a world of opportunities with care to our employees.
Internal employee movements of over 5,000 (within the businesses) were up 18% from the average of the last two fiscals. We also focused on bringing in young talent, with 73% of new hires being under 35 years of age. Last year, over 9,000 new employees joined the Group refreshing our competence base.
Building an aspirational workplace for a diverse workforce was identified as one of the important aspects of our new HR strategy. Enhancing the diversity of our Group is a journey, and it is getting strengthened with targeted efforts over time. Our commitment to gender diversity is evident through the appointment of 7 women to senior leadership roles.
21% of all new hires were women, and we had 102 women engineering graduates join us at plant locations. We have always looked for opportunities to showcase the power of our women leadership. This year, our cement business, UltraTech launched India’s first ‘all-women’ operated Ready-Mix Concrete (RMC) manufacturing plant at Bhugaon, Pune. Our list of firsts includes Aditya Birla AMC’s all-women Mutual Fund branch in Bhilai, Chhattisgarh and Aditya Birla Fashion and Retail’s Madura manufacturing plants in the south zone, which have 85% women employees.
Our learning strategy evolved continually to adapt in response to the dynamic external environment. This was achieved by re-designing innovative learning properties and methodologies focusing on building contemporary and contextual skills. We shifted gears across digital, blended, and now hybrid learning, making it easier to navigate the various modes of learning for different sets of learners. We strategically increased the adoption and penetration of our digital learning platform (Gyanodaya Virtual Campus) to cover 94% of our employees in the management cadre. Leveraging the power of internal and external networks, 500+ high-quality digital content modules were created on various themes and topics across the Aditya Birla Group (ABG).
The spirit of ABG’s resilience and dynamism was displayed at an individual, team, and business level. This has been reflected in the business results for FY22. This year also saw the launch of new businesses, units, capacity, products, and brands. This happened seamlessly, presenting a unique human story of innovation and grit, and bringing alive our Group values of commitment and passion. We have together navigated an unprecedented period of disruption and emerged stronger and sharper— demonstrating that care, empathy, and results are mutually compatible. And especially so in periods of turmoil.
The ‘Next 25 years’ of the Company’s journey would be filled with new challenges and opportunities. The company is well place to navigate these challenges given the solid fundamentals and futuristic approach. Climate Change is one such risk which we are trying to address through ongoing business transformation and technology led innovation.
The forces of change engulfing the world are creating a whole new set of exciting possibilities and unbelievable opportunities. Many that didn’t even exist yesterday. We are uniquely privileged in that we are not passive recipients of changing circumstances but can actively shape our destiny. And this tomorrow is for us to discover and build.
Across businesses, we are at the cusp of a transformational growth cycle. As a business house, we have always made investment decisions based on long-term fundamental drivers like market opportunity, demography, technology etc. Our strong leadership position across key businesses has come on the back of bold but calibrated long-term bets.
Given our inherent strengths we are again at a moment where we are uniquely positioned to invest for long-term growth and explorenew paradigms. An exciting journey beckons.