PGHH_AR_2020

MANAGEMENT DISCUSSION AND ANALYSIS Annual Report 2019-20 49 Company Overview Board's Report MD&A Corporate Governance Financial Statements Procter & Gamble Hygiene and Health Care Limited Economy and markets The International Monetary Fund (IMF) projects the Indian economy to degrow at 10.3% in 2020. Prior to the pandemic, India was already witnessing a market slowdown and weak demand. The outbreak of COVID-19, the subsequent lockdown and restrictions imposed to contain the spread of the COVID-19 pandemic resulted in disruptions which further decelerated growth. The government has introduced reforms and a slew of measures focused on driving economic recovery, which are aimed to address challenges like subdued consumption, investment and income levels. The reduction in corporate tax rate and interest rates is also a welcome move for the industry. Opportunities, risk and outlook While there are short to medium-term challenges this year, the long-term outlook for the FMCG sector remains positive. The government introduced several initiatives to revive and boost the economy and increase demand. As per the IMF, the Indian economy is expected to bounce back and grow by 6% in 2021-22. Good monsoon and government initiatives focused on rural economy will provide an impetus to the growth and demand from the rural sector. The emergence of new distribution channels coupled with increasing digital penetration will create new opportunities for the FMCG industry to reach consumers. However, amidst the economic uncertainty, it will be imperative for companies to focus on superior propositions and adapt quickly to meet the evolving consumer needs. Your company is well-positioned to sustain its performance with resilience, leverage opportunities with agility and address challenges. Performance Overview The discussion on financial performance of the Company and its various businesses is elaborated in the Directors’ Report. Risk Management Your Company has set up a Risk Management Committee. The Company has also adopted a Risk Management Policy. The Company‘s Risk Management Policy is in line with the parent Company’s global guidelines and as such adequate measures have been adopted by the Company to anticipate, plan and mitigate the spectrum of risks it faces. Business, Finance & Operational risks On business risks (competition, consumer preferences and technology changes) the Company undertakes a Competition Response Model program. For fin ancing risks it has a strong balance sheet support and contingency plan. It also undertakes Business Contingency Plan for key vendors and natural disasters. The Company also has adequate Insurance coverage to protect the value of its assets. This coverage duly covers any risks relating to business interruption resulting from property damage and legal liability resulting from property damage or personal injury. The Company has in place a very stringent and responsive system under which all its distributors and vendors are assessed before being selected. Regulatory and Compliance risks Your Company operates within the letter and spirit of all applicable laws. General compliance with legal requirements is an important component of P&G’s Worldwide Business Conduct Manual and the same demands the following action from every employee: ● To obey all legal requirements at all times; ● To understand exactly what legal requirements apply to the work function; ● To consult the legal personnel if there are conflicting legal requirements in different jurisdictions; ● To strictly follow the directions from the legal personnel; ● To address and resolve, in a timely manner, any legal compliance issues that have been identified; ● Absolutely no violation of any law; and ● To immediately report any instance of violations to the Legal Department. Your Company has set in place the requisite mechanism for meeting with the compliance requirements, periodic monitoring of compliance to avoid any deviations, and regular updates to keep pace with the regulatory changes. Security Risks Your Company has implemented comprehensive security programs supported by latest technology and trained manpower to protect employees and assets, at all its offices and plants. During the Financial Year under review, no major security breaches or incidents occurred at any of the Company’s plants. A comprehensive security risk assessment is carried out regularly and adequate security measures are implemented to cater to changing security scenario. Your Company has installed the best of the security

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