Dear Shareholder, The global scenario

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4 THE CHAIRMAN S LETTER TO SHAREHOLDERS Aditya Birla Nuvo Limited - Annual Report Dear Shareholder, The global scenario The year continued to be a challenging year. The global economy growth was 3.4%, unchanged over the previous year. The world s largest economy, the US saw better growth, while the countries in the Euro zone registered marginal growth. There was a marked slowdown in China, and Japan witnessed near stagnation. The key factors that affected the global economy included a steep decline in oil and commodity prices, and monetary easing by central banks in the US, EU and Japan. The global financial markets experienced heightened volatility, largely due to expectations of a tightening of monetary policy by the US Federal Reserve. The impasse on resolving the debt crisis in Greece added to the uncertainty. Geopolitical risks compounded the situation. The IMF has projected economic growth at 3.3% in 2015, marginally lower than the growth recorded in The domestic scenario Among all the developing economies, India was a notable exception, with growth increasing to 7.3% in Agriculture recorded a growth of only 0.2%, given the subnormal monsoon. This was ii

5 Aditya Birla Nuvo Limited - Annual Report THE CHAIRMAN S LETTER TO SHAREHOLDERS compensated by a more vigorous manufacturing sector, which grew at 7.1% in FY , compared to 5.3% in FY Headline inflation fell sharply to 5%. On the external front, India s vulnerability has reduced with the current account deficit contained at below 2% of GDP and a relatively stable currency. The monetary policy through the year was largely accommodative. A slew of initiatives reinforced the positive macro factors. One must particularly mention the deregulation of diesel prices, reforms in the coal and mineral sectors, measures to boost FDI, and faster environmental clearances. The buoyant investor sentiment was manifest in capital inflows of $73 billion. As infrastructure projects get off the ground, the prospects for a revival of the capital investment cycle seem very strong. Your Company s performance Your Company attained a consolidated turnover of $ 4.4 billion (` 26,516 Crore) and an EBITDA of $ 966 million (` 5,798 Crore) a surge of 18%. I am pleased to inform you that your Company enjoys the edge in practically all of its businesses. Financial Services Today, with a diversified portfolio of 10 businesses, our Aditya Birla Financial Services Group (ABFSG) is truly a significant non-bank financial services player. It is among the top 5 fund managers in India (excluding LIC) and one of the largest participants in the debt market. Financial Services have delivered solid results across businesses. Its Assets Under Management grew to $ 27.5 billion (` 165,000 Crore), representing a year-on-year growth of 35%. Its lending book extended year-on-year by 52% and closed at $ 3 billion approximately (` 17,550 Crore). Its revenues stand at $ 1.3 billion (` 7,926 Crore), representing a year-on-year growth of 19%, while EBIDTA recorded a growth of 17%, to reach USD 141 million (` 849 Crore). Today, with a diversified portfolio of 10 businesses, our Aditya Birla Financial Services Group (ABFSG) is truly a significant nonbank financial services player. iii

6 THE CHAIRMAN S LETTER TO SHAREHOLDERS Aditya Birla Nuvo Limited - Annual Report A major development was our corporate restructuring plan merging Madura with Pantaloons. This has spawned India s single largest pure play fashion apparel entity Aditya Birla Fashion and Retail Limited. A slew of initiatives launched focus on Commencing the housing finance business Entering the Health insurance and Wellness business towards which the business has signed a definitive Joint Venture agreement with MMI Holdings Ltd., a leading South African insurance based financial services group Obtaining PFRDA approval for managing pension assets under the NPS scheme Roping in IFC, Washington as its strategic investment partner in MyUniverse Completing the acquisition of the mutual fund schemes and portfolio accounts of ING investment management. Fashion & Lifestyle Our Company s apparel retail businesses Madura Fashion & Lifestyle (MFL), and Pantaloons Fashion & Retail Ltd. (PFRL) together have catapulted your Company to the number one branded apparel retail player in the country. A major development was our corporate restructuring plan merging Madura with Pantaloons. This has spawned India s single largest pure play fashion apparel entity Aditya Birla Fashion and Retail Limited. Moving on to the business performance, MFL stayed well ahead of the industry in terms of revenue growth of 16% to USD 622 million (` 3,735 Crore) with EBITDA up by 19% to USD 77 million (` 463 Crore). MFL s largest brand, Louis Philippe crossed the ` 10 billion revenue mark, the first apparel brand in the country to reach this level. The business transformation begun at Pantaloons, after it came into our fold, has been completed. Pantaloons attained revenues of USD 308 million (` 1,851 Crore), up by 11% and its EBITDA soared by 96% on a year-on-year basis. The launch of six new brands bolstered Pantaloons portfolio of own brands. Collectively these account for 52% of the overall revenue and helped drive margin improvement. The settingup of 25 new stores accelerated its customer access, with the store count now at 104. iv

7 Aditya Birla Nuvo Limited - Annual Report THE CHAIRMAN S LETTER TO SHAREHOLDERS Telecom In the telecom sector, Idea continues to make waves. It has maintained its enviable track record as the fastest growing Indian mobile operator. Its performance has been splendid. It delivered a 19% revenue growth at $ 5.3 billion (` 31,527 Crore) with a 32% rise in EBIDTA at $ 1.9 billion (` 11,281 Crore). As many of you know, India is on the cusp of a digital revolution. Internet is expected to pervade the lives of a billion Indians in the next decade from a current low penetration of 20% online. From commerce to banking to entertainment to health everything will go online. I believe, the mobile industry has the onerous task to build the Indian Internet infrastructure backbone. Idea is well poised to take advantage of this megatrend to further accelerate its profitable growth. During the last two spectrum auctions, Idea committed $ 6.8 billion (` 41,000 Crore) increasing its spectrum portfolio to MHz. Today, Idea has the ability to offer 3G services to 80% of its own subscribers and 4G services to 60% of its 161 million subscribers base, besides offering Pan India 2G services. Divisions: Agri, Rayon, Linen and Insulators The divisions of your Company, comprising of the Agri, Rayon, Linen and Insulators businesses, have done well. These clocked a collective revenue of $ 901 million (` 5,405 Crore) and an EBIDTA at $ 102 million (` 615 Crore), a year-on-year growth of 9% and 11% respectively. In a year when the country was highly rain deficient in most regions, your Company s Agri business registered a healthy growth of 90% over the last financial year, which is indeed applaudable. The business is now a Total Agri Solutions Provider, offering a bouquet of products from fertilisers to seeds to agrochemicals to specialities that fulfil every need of the farmer, from sowing to harvesting. The VFY business performed in the face of poor demand from the textile sector, reaping the benefits from incremental revenue through the ENKA acquisition. It is today the largest player in the premium superfine denier market in India. Idea is well poised to take advantage of this megatrend to further accelerate its profitable growth. v

8 THE CHAIRMAN S LETTER TO SHAREHOLDERS Aditya Birla Nuvo Limited - Annual Report We have had a good year at the Group level. Our Group s consolidated revenue crossed the ` 2.5 trillion mark, setting a new milestone. In the Textiles sector, the linen business continues to be on top of the league. It has created its own line of linen apparel and launched these under the brand name of Linen Club. In the four Southern states where it has set-up flagship stores, the response has been overwhelmingly positive. We will soon be doubling its linen yarn capacity to reach 6,200 tpa from current 3,400 tpa. On the Insulator business radar is an unrelenting focus on yield improvement and increasing its export sales. Outlook All of your Company s businesses are poised for higher growth, given the upturn in the economy. Your Company s balance sheet is strong. It will continue to play the role of a business incubator, nurture new businesses in sectors that offer promise, and alongside leverage opportunities across its current portfolio. To our teams I would like to acknowledge the contribution of our teams in India and across the world. I believe, it is our people, who underpin everything else. They are the ultimate reason why we meet with success, in the face of all odds, year after year. Their commitment and dedication is beyond words. The Aditya Birla Group: In perspective We have had a good year at the Group level. Our Group s consolidated revenue crossed the ` 2.5 trillion mark, setting a new milestone. We are up 9% over the last year. In dollar terms as well, regardless of the ups and downs in foreign currency, we reported revenues of $ 41 billion, an 8% rise. Over 50% of our Group s revenues flow in from our global operations. I believe, that the bottom line and the cash in the till is a greater parameter to gauge performance rather than simply revenues. On this score too, we have done well. Our EBIDTA in Rupee terms is an impressive ` 322 billion, again over 9% vis-à-vis FY14. In dollar terms, we achieved an EBIDTA of $ 5.25 billion, reflecting an 8% rise over that of the last year. vi

9 Aditya Birla Nuvo Limited - Annual Report THE CHAIRMAN S LETTER TO SHAREHOLDERS I deeply believe that building our future can only be possible by building more leaders and through people development processes. Towards this, our endeavours continue to deliver results. Two of our programmes deserve a special mention. Cutting Edge our leadership programme targeted at developing P&L leaders and Turning Point aimed at building cost centre leaders and unit heads, have proved very promising. Over 70 talented managers have graduated from these programmes and have taken on leadership roles at senior levels. At the same time our senior leaders are being actively encouraged to take on cross business roles to gain multisectoral experience. We have a bench strength of over 250 youngsters who joined us 5 years ago as Group Management Trainees, and Leadership Associate Programme (Lead) and Leadership Programme for Experienced (Leap) members have demonstrated great potential and grown significantly. Some of them are already in key positions. I hope to see many of them occupy positions of critical importance in our businesses in the near future. As part of our globalisation agenda, we have also been recruiting both interns and Lead and Leap participants from renowned International Business Schools. Similarly, our GMLP Global Manufacturing Leadership Programme, aimed at reinforcing our technical and manufacturing strength, is paying a rich dividend. The Aditya Birla Group is being increasingly viewed as the most aspirational place for manufacturing professionals in India. Our focus on gender diversity and creating enabling policies and programmes to ensure that we provide a conducive, encouraging and an equitable place for women to thrive and excel is gaining momentum. We have launched Spring Board, the accelerated women s leadership development programme, designed for high calibre women managers. Currently, we have more than 150 women positioned at middle management and senior management levels. Gyanodaya, our in-house world-class university, has aligned with the best-in-class global business schools, professors and consultants among others. Many of our best talent is Our focus on gender diversity and creating enabling policies and programmes to ensure that we provide a conducive, encouraging and an equitable place for women to thrive and excel is gaining momentum. vii

10 THE CHAIRMAN S LETTER TO SHAREHOLDERS Aditya Birla Nuvo Limited - Annual Report We are humbled that for the third year running, our Group has been ranked No.1 in the Nielsen Corporate Image Monitor We have emerged as Best in Class across most of the pillars. also enlisted for short-term courses at these institutions. Such a cross pollination and stoking of the intellect enables us move with the times and are continuously learning. Ranked No. 1 in the Nielsen Corporate Image Monitor We are humbled that for the third year running, our Group has been ranked No.1 in the Nielsen Corporate Image Monitor We have emerged as Best in Class across most of the pillars. This is a remarkable vote of confidence by the stakeholder constituency in our leadership teams. It is a testament to our Group brand, governance standards, transparency, customer primacy and CSR engagement. The six pillars of Corporate Image, on which organisations are engaged, comprise of Vision and Leadership, Product & Service quality, Workplace Management, Financial Performance, Operating style and Social responsibility. Nielsen s Corporate Image Monitor measures the reputation of the 42 leading companies in India across sectors (based on the Bombay Stock Exchange list and the Economic Times Ranked Top 50 Companies) and the findings serve as an important indicator of the strength of the corporate brand. In sum We are gearing to ensure that we have the right talent at the right time and at the right place for each of our businesses. Additionally, enhancing customer centricity and excellence capability by developing customer value propositions that are unmatched, stepping up the focus on R&D to increase the share of value-added products across businesses are our focus areas. The thrust on digitisation across our business processes and using analytics and big data continue. These are our steps towards accelerating top-line and bottom-line growth and enhancing stakeholder value. Yours sincerely, Kumar Mangalam Birla viii

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18 BOARD OF DIRECTORS Aditya Birla Nuvo Limited - Annual Report xvi

19 Aditya Birla Nuvo Limited - Annual Report CORPORATE INFORMATION KEY MANAGERIAL PERSONNEL/ SENIOR MANAGEMENT TEAM MANAGING DIRECTOR Mr. Lalit Naik WHOLE-TIME DIRECTOR & CHIEF FINANCIAL OFFICER Mr. Sushil Agarwal [upto 30 th June, 2015] TELECOM Mr. Himanshu Kapania Business Head MANUFACTURING: AGRI & INSULATORS Mr. Lalit Naik Business Director Mr. Raj Narayanan Chief Executive Officer CHIEF FINANCIAL OFFICER Mrs. Pinky Mehta [w.e.f 1 st July, 2015] RAYON Mr. Lalit Naik Dr. Bir Kapoor Business Director President COMPANY SECRETARY Mr. Ashok Malu [w.e.f. 1 st March, 2015] ADITYA BIRLA FINANCIAL SERVICES Mr. Ajay Srinivasan Chief Executive Officer Mr. Pankaj Razdan Dy. Chief Executive Officer MD & CEO, Birla Sun Life Insurance Co. Ltd. FASHION & LIFESTYLE Mr. Pranab Barua Business Head (Branded Apparels) Mr. Thomas Varghese Business Head (Textiles) Mr. Ashish Dikshit Business Head (Madura Fashion & Lifestyle) Mr. Shital Mehta Chief Executive Officer (Pantaloons Fashion) Mr. S. Krishnamoorthy President - Jaya Shree Textiles CORPORATE FINANCE DIVISION Mr. Shriram Jagetiya President AUDITORS Khimji Kunverji & Co. S R B C & Co. LLP SOLICITORS Cyril Amarchand Mangaldas, Advocates & Solicitors Mulla & Mulla and Craigie, Blunt & Caroe OTHER BRANCH AUDITORS K. S. Aiyar & Co. Deloitte Haskins & Sells Contents Aditya Birla Nuvo : A Snapshot... 2 Financial Highlights... 8 Management Discussion and Analysis Directors Report Business Responsibility Report Corporate Governance Report Shareholders Information Social Report Towards Inclusive Growth Environment Report Sustainable Development Standalone Financial Statements Consolidated Financial Statements Registered Office: Indian Rayon Compound, Veraval , Gujarat, India Telephone , / abnlsecretarial@adityabirla.com CIN: L17199GJ1956PLC

20 A SNAPSHOT Aditya Birla Nuvo Limited - Annual Report A SNAPSHOT VISION & MISSION Vision To be a premium conglomerate building leadership in businesses and creating value for all the stakeholders Mission Investing in the promising sectors Building leadership in businesses A platform to drive synergy of resources Delivering best value to all the stakeholders To be a responsible corporate citizen A USD 4.4 BILLION PREMIUM CONGLOMERATE Financial services Telecom $# (23.28%) Fashion & Lifestyle Divisions Life Insurance^ (74%)@ Asset Management^ (51%)@ NBFC (100%)^ Housing Finance (100%)^ Private Equity (100%)^ Broking (75%)^ # Wealth Management (100%)^ General Insurance Advisory (50.01%)^ Online Money Management (100%)^ Madura* Pantaloons^ # (72.62%) Jaya Shree* Agri* Rayon* Insulators* Leadership position in India Leader Top 3 Top 6 *Represent Divisions ^Represent Subsidiaries $ Represent Joint JV with Sun Life Financial, Canada # Listed Note 1 : Percentage figures indicated above represent ABNL s shareholding in its Subsidiaries / JV s Note 2 : Madura Fashion (A division of ABNL) and Madura Lifestyle (A branded apparel retailing division of Madura Garments Lifestyle Retail Co. Ltd., a subsidiary of ABNL) are being demerged into Pantaloons Fashion & Retail Ltd., a listed subsidiary of ABNL, w.e.f. 1 st April 2015, subject to statutory approvals. Refer page 30 for transaction details. 2

21 Aditya Birla Nuvo Limited - Annual Report A SNAPSHOT 14,331 15,523 CONSOLIDATED FINANCIAL SNAPSHOT Revenue EBITDA (` Crore) (` Crore) CAGR 11% 25,490 25,892 26,516 21,840 18,188 CAGR 37% 4,137 3,247 2,687 4,927 5,798 A SNAPSHOT 867 1, Net Profit (` Crore) CAGR 56% (FY10-FY15) 890 1,059 1,143 1, CONSOLIDATED EARNINGS MIX Segment Revenue 1 Segment EBIT 1 Fashion & Lifestyle 2 21% Divisions 21% Financial Services 30% Telecom 28% Fashion & Lifestyle 2 9% Divisions 17% Financial Services 28% Telecom 46% Note 1 : Revenue and EBIT Mix are excluding IT-ITeS business which was divested w.e.f. 9 th May 2014 Note 2 : Madura Fashion (A division of ABNL) and Madura Lifestyle (A branded apparel retailing division of Madura Garments Lifestyle Retail Co. Ltd., a subsidiary of ABNL) are being demerged into Pantaloons Fashion & Retail Ltd., a listed subsidiary of ABNL, w.e.f. 1 st April 2015, subject to statutory approvals. Refer page 30 for transaction details. 3

22 A SNAPSHOT Aditya Birla Nuvo Limited - Annual Report A SNAPSHOT Entered Fashion business through acquisition of Madura Forayed in Life Insurance business through JV with Sun Life, Canada Entry into IT-ITeS business INVESTING IN THE PROMISING SECTORS Enhanced strategic stake in Telecom through Idea Expanded Financial Services portfolio by merger of Asset Management & NBFC businesses and entry in broking & private equity. Augmented Fashion offerings through acquisition of Pantaloons, a top 3 big box apparel retailer / Created India s largest online money management portal MyUniverse Added New Superfine Yarn capacity in Rayon Expanded Linen Yarn and Fabric Capacities Commenced Housing Finance business Applied for Payments Bank license in a 51:49 Joint Venture with Idea Signed MOU with MMI Holdings Ltd. to enter health insurance sector Invested about USD 2 billion over past 15 years BUILDING LEADERSHIP POSITION ACROSS ITS BUSINESSES Financial Services Telecom Fashion & Lifestyle Divisions Among the top 5 fund managers in India Diversified portfolio with 10 lines of businesses Managing assets worth USD 27.5 billion Lending book of USD 3 billion Trusted by over 6 million customers 6 th largest cellular operator in the world in terms of subscriber base in a single country 3 rd largest telecom service provider in India in terms of revenue market share Customer base of million subscribers Madura Fashion & Lifestyle is the # 1 branded menswear player in India Pantaloons is the # 1 branded womenswear retailer in India A large 10.8 million loyalty customers base Widest retail network in the fashion space India s largest linen yarn & fabric player. 8 th largest Urea manufacturer in India Among the top 2 VFY manufacturers in India India s largest & world s 4 th largest manufacturer of insulators 4

23 Aditya Birla Nuvo Limited - Annual Report A SNAPSHOT A PLATFORM TO DRIVE SYNERGY OF RESOURCES Standalone Net Debt Standalone Ratios (` Crore) Net Debt/Equity Net Debt/EBITDA 5.8 3,854 3,591 3,460 3,630 3,584 3,142 3, A SNAPSHOT Standalone balance sheet has been the growth engine for ABNL & a platform to drive synergy of capital resources Invested USD 1 billion to fund the growth capital requirements of its businesses over past six years Driving strong growth across businesses while sustaining debt levels Healthy financial position : Net Debt to EBITDA at 3.0x & Net Debt to Equity at 0.42x as on 31 st March 2015 Contributed by strong cash flow from operations, dividend income, release of capital from divestment of sub-scale businesses and funding support from the promoters. DELIVERING BEST VALUE TO ALL THE STAKEHOLDERS Exit from sub scale businesses to achieve greater focus on other businesses Business Divested Carbon Black IT-ITeS Effective Date 1 st April th May 2014 Enterprise Value USD 240 million USD 260 million Outcome Strengthening of ABNL s balance sheet & greater focus on core businesses Consolidation of Branded Apparels Businesses to unlock value for the shareholders #1 Menswear player #1 Womenswear retailer Aditya Birla Fashion & Retail Creating India s largest pure-play fashion & lifestyle company Presence across entire spectrum of fashion through India s leading fashion brands Unlocking value for shareholders by giving them direct holding in a best-in-class fashion powerhouse Largest retail network in fashion space in India Sound Balance sheet to act as a strong enabler for growth Refer page 30 for transaction details 5

24 A SNAPSHOT Aditya Birla Nuvo Limited - Annual Report A SNAPSHOT ROBUST REVENUE GROWTH ACROSS THE BUSINESSES Financial Services 1 Revenue (` Crore) Telecom 2 31,527 7,926 26,432 6,304 6,542 6,378 6,637 19,489 22,407 15, Fashion & Lifestyle 3 Divisions 4 5,450 3,802 4,759 4,301 5,300 4,979 5,405 2,243 3,101 1, Note 1 : Including full figures of Asset Management business. As per AS-27, Asset Management business has been proportionately consolidated at 50% in ABNL's financials, being a 50:50 Joint Venture till 9 th October Thereafter, it is consolidated as a subsidiary since Aditya Birla Financial Services holds 51% w.e.f. 10 th October Note 2 : Full financial numbers of Idea Cellular. Being a Joint Venture, Idea Cellular has been consolidated at 27.02% from 12 th August 2008 upto 1 st March 2010, at ~ 25.3% till 10 th June 2014, at 23.63% till 23 rd July 2014 and at ~ 23.3% thereafter, as per AS-27. Note 3 : Represents Branded Apparels & Accessories (Madura Fashion & Lifestyle and Pantaloons Fashion & Retail Ltd.). In , nine months financials of Pantaloons are included pursuant to its acquisition, w.e.f. the appointed date 1 st July Note 4 : Represents Jaya Shree, Agri, Rayon and Insulators businesses. 6

25 Aditya Birla Nuvo Limited - Annual Report A SNAPSHOT SOUND GROWTH IN PROFITABILITY ACROSS THE BUSINESSES Financial Services 1 EBITDA (` Crore) Telecom 2 11,281 A SNAPSHOT 8, ,910 5,085 6, Fashion & Lifestyle 3 Divisions Note 1 : Including full figures of Asset Management business. As per AS27, Asset Management business has been proportionately consolidated at 50% in ABNL's financials, being a 50:50 Joint Venture till 9 th October Thereafter, it is consolidated as a subsidiary since Aditya Birla Financial Services holds 51% w.e.f. 10 th October Interest cost of NBFC business, being an operating expense as per AS17, is deducted from EBITDA. Note 2 : Full financial numbers of Idea Cellular. Being a Joint Venture, Idea Cellular has been consolidated at 27.02% from 12 th August 2008 upto 1 st March 2010, at ~ 25.3% till 10 th June 2014, at 23.63% till 23 rd July 2014 and at ~ 23.3% thereafter, as per AS-27. Note 3 : Represents Branded Apparels & Accessories (Madura Fashion & Lifestyle and Pantaloons Fashion & Retail Ltd.). In , nine months financials of Pantaloons are included pursuant to its acquisition, w.e.f. the appointed date 1 st July Note 4 : Represents Jaya Shree, Agri, Rayon and Insulators businesses. Note 5 : Excluding one time investment income. 7

26 FINANCIAL HIGHLIGHTS - CONSOLIDATED Aditya Birla Nuvo Limited - Annual Report FINANCIAL HIGHLIGHTS PROFIT AND LOSS ACCOUNT USD Million 14 ` Crore ` Crore ` Crore ` Crore ` Crore Financial Services 1 1,321 7,926 6,637 6,283 6,384 6,121 Fashion & Lifestyle ,450 4,759 3,802 2,243 1,811 Telecom 3 1,245 7,467 6,669 5,662 4,933 3,918 IT-ITeS ,898 2,466 2,082 1,692 Divisions ,405 4,979 5,300 4,301 3,101 Carbon Black 5 2,036 1,943 1,588 Inter-segment elimination (3) (16) (50) (58) (46) (43) Revenue 4,419 26,516 25,892 25,490 21,840 18,188 EBITDA 966 5,798 4,927 4,137 3,247 2,687 Less : Depreciation & Amortisation 284 1,703 1,609 1,295 1, EBIT 683 4,095 3,318 2,842 2,154 1,746 Less: Finance Costs related to NBFC 184 1, Less : Other Finance Costs Earnings before Tax & Exceptional Items 390 2,338 1,767 1,526 1,330 1,195 Add: Exceptional Gain / (Loss) 6 (2) (13) 5 (104) (104) Less : Tax Expenses Net Profit / (Loss) before Minority Interest 249 1,491 1,222 1,184 1, Less : Minority Interest & share in (Profit) / Loss of associates Net Profit / (Loss) 236 1,416 1,143 1, BALANCE SHEET USD Million 14 ` Crore ` Crore ` Crore ` Crore ` Crore Net Fixed Assets (Including Capital Advances and CWIP) 2,057 12,342 13,045 10,677 9,354 8,840 Goodwill 662 3,973 4,982 4,825 3,177 3,042 Life Insurance Investments 5,025 30,147 24,764 22,929 21,110 19,760 Long term Investments NBFC Lending Book (including Housing Finance) 2,950 17,700 11,550 8,000 3,425 1,850 Cash Surplus & Current Investments ,246 1,089 2,415 1,518 1,261 Net Working Capital ,773 1, Total Funds Utilised 11,497 68,981 56,569 50,974 40,399 35,493 Net Worth 2,145 12,871 11,189 9,384 7,517 6,678 Life Insurance Policyholders Fund 8 4,806 28,839 23,557 21,576 19,964 18,977 Total Debt 1,883 11,299 10,893 11,778 9,328 7,763 NBFC borrowings (including Housing Finance) 2,448 14,686 9,647 6,867 2,973 1,538 Minority Interest Deferred Tax Liabilities (Net) Total Funds Employed 11,497 68,981 56,569 50,974 40,399 35,493 RATIOS AND STATISTICS Unit Interest Cover (EBITDA 9 / Finance Costs 10 ) x Net Debt to Equity (Net Debt 11 / Net Worth) x Net Debt to EBITDA (Net Debt 11 / EBITDA 9 ) x ROACE (EBIT 12 / Average Capital Employed 13 ) % ROAE (Net Profit / Average Net Worth) % Basic Earnings Per Share (Weighted Average) ` (USD 1.8) Book Value per Equity share ` 989 (USD 16.5) No. of Equity Shareholders Numbers 132, , , , ,896 Closing Price as on 31st March (NSE) ` 1,664 (USD 27.7) 1, Market Capitalisation (NSE) ` Crore 21,654 (USD 3.6 billion) 14,196 11,727 10,723 9,244 Note 1 : Financial Services include NBFC, Life Insurance, Asset Management, Housing Finance, Private Equity, Broking, Wealth Management, Online Money Management & General Insurance Broking businesses. Asset Management business has been proportionately consolidated at 50% till 9 th October 2012, being a 50:50 Joint Venture and thereafter consolidated as subsidiary since Aditya Birla Financial Services holds 51% w.e.f. 10 th October Note 2 : Represents Branded Apparels & Accessories business (Madura Fashion & Lifestyle and Pantaloons Fashion & Retail Limited). Note 3 : Represents ABNL s share. Being a joint venture, Idea has been consolidated at 27.02% from 12 th August 2008 upto 1 st March 2010, at ~ 25.3% till 10 th June 2014, at 23.63% till 23 rd July 2014 and at ~ 23.3% thereafter as per AS 27. Note 4 : ABNL IT & ITES Ltd., a wholly owned subsidiary of ABNL, divested Aditya Birla Minacs w.e.f. 9 th May 2014 Note 5 : Divisions include Jaya Shree, Agri, Rayon and Insulators. The Carbon Black division has been divested through slump sale w.e.f. 1 st April 2013 Note 6 : Exceptional Gain / (Loss) in represents loss of ` 13 Crore pertaining to the divestment of Minacs Note 7 : Cash Surplus & Current Investments include cash & bank balances and fertilisers bonds Note 8 : Including Fund for Future Appropriations Note 9 : EBITDA less finance costs related to NBFC Note 10 : Excluding finance costs related to NBFC Note 11 : Total Debt (excluding NBFC borrowings) less Cash Surplus & Current Investments Note 12 : EBIT less finance costs related to NBFC Note 13 : Capital Employed excluding Life Insurance Policyholders Fund and NBFC borrowings Note 14 : 1 USD = ` 60; 10 Million = 1 Crore 8

27 Aditya Birla Nuvo Limited - Annual Report FINANCIAL HIGHLIGHTS - STANDALONE PROFIT AND LOSS ACCOUNT USD Million 6 ` Crore ` Crore ` Crore ` Crore ` Crore Revenue 1,490 8,938 8,021 9,754 8,433 6,447 EBITDA 198 1,186 1,246 1,116 1, Less : Finance Costs Earnings before Depreciation and Tax Less : Depreciation and Amortisation Earnings before Tax and Exceptional Items Add: Exceptional Gain/ (Loss) 1 24 (104) Earnings before Tax Less : Tax Expenses Net Profit Less : Dividend (Including Corporate Tax on Dividend) Retained Profit FINANCIAL HIGHLIGHTS BALANCE SHEET USD Million 6 ` Crore ` Crore ` Crore ` Crore ` Crore Net Fixed Assets (Including Capital Advances and CWIP) 313 1,879 1,866 2,226 1,976 1,858 Long term Investments 1,449 8,695 7,952 5,857 5,598 5,424 Cash Surplus & Current Investments Net Working Capital 272 1,635 1,574 2,556 2,117 1,433 Capital Employed 2,052 12,314 11,949 10,992 10,398 8,862 Share Capital Share Warrants 224 Reserves and Surplus 1,398 8,389 7,978 6,510 5,565 5,287 Net Worth 1,420 8,519 8,108 6,854 5,679 5,401 Total Debt 615 3,688 3,753 3,983 4,561 3,287 Deferred Tax Liabilities (Net) Capital Employed 2,052 12,314 11,949 10,992 10,398 8,862 RATIOS AND STATISTICS Unit Interest Cover (EBITDA / Finance Costs) x ROACE (EBIT/ Average Capital Employed) % ROACE 4 (Excluding Long Term Investments) % ROAE (Net Profit/ Average Net Worth) % Net Debt to Equity (Net Debt 5 / Net Worth) x Net Debt to EBITDA (Net Debt 5 / EBITDA) x Dividend per Equity Share ` 7.0 (12 Cents) Dividend Payout Including Tax (as % to Net Profit) % Basic Earnings Per Share (EPS) (Weighted Average) ` 40.6 (68 Cents) Cash EPS (Weighted Average) ` 57.0 (USD 1.0) Book Value per Equity share ` 655 (USD 10.9) Capital Expenditure (Net) ` Crore 223 (USD 37 million) Note 1 : Book gain of ` 24 Crore has been recognized in w.r.t. the slump sale of the Carbon Black business w.e.f. 1 st April 2013 Note 2 : Net Profit in is higher by ` 209 Crore on account of one-off items being (a) book gain of ` 24 Crore and net tax credit of ` 41 Crore on divestment of the Carbon Black business and (b) gain of ` 144 Crore on buyback of equity shares by Life Insurance subsidiary. Note 3 : Cash Surplus & Current Investments include cash & bank balances, fertilisers bonds and short term ICDs Note 4 : (EBIT excluding Dividend Income) / (Average Capital Employed less Long Term Investments) Note 5 : Total Debt less Cash Surplus & Current Investments Note 6 : 1 USD = ` 60; 10 Million = 1 Crore 9

28 MANAGEMENT DISCUSSION AND ANALYSIS Aditya Birla Nuvo Limited - Annual Report MANAGEMENT DISCUSSION AND ANALYSIS Indian Economy: Promising Outlook India s GDP is estimated to grow at 7.4% in fiscal vis-à-vis 6.9% recorded in the previous year. There was a noteworthy improvement across various parameters. Control on price rise continued and remarkable downfall in inflation was noted led by benign global commodity prices. WPI inflation, at -2.33% in March 2015, touched its lowest level since past nine years. CPI inflation eased to 5.17% in March 2015 after starting the year with 8.6% in April Year-on-year growth in Index of Industrial Production (IIP) was encouraging at 2.8% compared to negative growth in the previous year. The moderation in inflation prompted the RBI to cut interest rates to spur economic growth. The Consumer confidence index reported by Nielson touched its 4-year high level. It rose from 121 in the fourth quarter of to 129 in the third quarter of Structural reforms to boost investments remained high on the Government s agenda. It started with increasing FDI cap to 49% in defence production, to 100% in railway infrastructure and then raising FDI cap in insurance sector from 26% to 49%. The Government is expected to beat its fiscal deficit target of 4.1% of GDP, supported by the coal and spectrum auctions. The Indian Rupee remained relatively stable and the Current Account Deficit (CAD) contracted. With all the above positive indicators, the Indian economy is becoming a favourable destination for investment. Though the capex cycle and consumer spend on the ground is yet to pick up, the prospects of a stable macro-economic environment has boosted foreign equity inflows in the Country. Net equity inflows from Foreign Institutional Investors (FIIs) grew by 33% to USD 18 billion. Net equity inflows from mutual funds were USD 6.9 billion as compared to net outflow of USD 3.5 billion in the previous year. The World Bank and the International Monetary Fund forecast India s GDP to grow at 7.5% in 2015 to become the world s fastest growing economy, ahead of China. A stable government, RBI s inflation focus and benign global commodity prices are expected to be the key contributing factors. Furthermore, new initiatives viz. Make in India, Digital India along with a host of financial inclusion measures are expected to help accelerate India s economic development. Aditya Birla Nuvo Limited: Progressing in line with its vision and mission Aditya Birla Nuvo Limited ( ABNL or the Company ), is a USD 4.4 billion conglomerate having a leadership position across its Financial Services, Fashion & Lifestyle, Telecom, Linen and Manufacturing businesses. Guided by its vision To be a premium conglomerate building leadership in businesses and creating value for all the stakeholders, ABNL has transformed itself from a small manufacturing company in 2000 to become one of the largest conglomerates in India today. During this transformational journey, ABNL identified growth opportunities in the promising sectors and invested close to USD 2 billion to build and sustain its leadership position in these sectors. Well recognised for its market leadership and cost management in the industrial businesses till late nineties, the Aditya Birla Group today has a successful and marked presence in the consumer centric service sector space through ABNL. Having promoted and created more than 20 marquee brands, ABNL, touches the lives of more than 160 million Indians and meets their needs for life assurance, investment, financing, fashion, digital communication and agri products. During fiscal , the Company continued to progress in line with its mission: Investing in the promising sectors Building leadership position in businesses A platform to drive synergy of resources Delivering best value to all the stakeholders To be a responsible corporate citizen Investing in the promising sectors ABNL augmented its bouquet of offerings in the Financial Services business with commencement of Housing Finance business operations in October 2014 under Aditya Birla Housing Finance Limited. It has also signed an MoU in October 2014 with MMI Holdings Ltd., a leading South African Insurance based Financial Services Group, to enter the Health Insurance sector in India. ABNL has also made an application to the RBI for obtaining license for setting-up a Payments Bank, Note: USD 1 = ` 60; 1 billion = 100 Crore Note: The financials in the Management Discussion and Analysis have been rounded off to the nearest ` 1 Crore 10

29 Aditya Birla Nuvo Limited - Annual Report MANAGEMENT DISCUSSION AND ANALYSIS in accordance with the Guidelines for Licensing of Payments Bank issued by RBI on November 27, As per the proposed structure, ABNL will be the Promoter of the Payments Bank, holding 51% of its equity capital. Idea Cellular Limited ( Idea ), an Aditya Birla Group Company, where ABNL is the largest promoter shareholder, will be holding the balance 49% of equity capital in the proposed Payments Bank. The equity participation of Idea in the proposed Payments Bank may be increased up to 60%, subject to regulatory approvals, as applicable. Building leadership position in businesses The Company continued to invest in its businesses to fortify its leadership position. The business-wise highlights are as follows: Aditya Birla Financial Services ( ABFS ) A significant non-bank financial services player having a diversified portfolio with 10 lines of businesses, including planned foray in the health insurance sector. Ranks among the top 5 fund managers in India, excluding LIC. Funds under management at USD 27.5 billion 1 (` 164,940 Crore), grew year-onyear by 35%. Lending book in the NBFC business reached USD 3 billion (` 17,550 Crore) mark registering a 52% year-on-year growth. Revenue at USD 1.3 billion (` 7,926 Crore) rose year-on-year by 19% and Earnings before Tax at USD 141 million (` 849 Crore) surged by 17%. Trusted by over 6 million customers and anchored by 11,000 committed employees, ABFS has a strong nationwide presence through more than 1,350 branches / touch points and over 140,000 agents / channel partners. Fashion & Lifestyle (Madura and Pantaloons) ABNL s Fashion & Lifestyle business is the largest branded apparel player in India selling two branded apparels every second. Madura is the # 1 branded menswear player in India and Pantaloons is the # 1 branded womenswear retailer in India. Trusted by a large 10.8 million loyalty customer base. Revenue at USD 910 million (` 5,450 Crore) grew year-on-year by 15% and EBITDA at USD 89 million (` 532 Crore) soared by 32%. Largest retail network in the fashion space with 1,869 exclusive brand outlets / stores spanning 4.8 million square feet and 6,000+ additional points of sale. Expanding market presence with addition of retail stores as well as scaling its own online presence through Trendin.com. Telecom (Idea Cellular) Idea is the 6 th largest mobile telecommunications company in the world (based on operations in a single country) in terms of the number of subscribers (Source : GSMA, December 2014) It ranks 3 rd in India in terms of revenue market share which grew from 16.1% to 17.5% 2 in the previous year. Largest revenue market share gainer in India between 2009 and 2014 A large customer base of million subscribers as on 31 st March Idea is a USD 11 billion company by market cap (` 66,200 Crore as on 31 st March 2015) Its consolidated revenue at USD 5.3 billion (` 31,527 Crore) grew year-on-year by 19% and EBITDA at USD 1.9 billion (` 11,281 Crore) surged by 32%. Strong cash profit generation 3 at USD 1.4 billion (` 8,482 Crore), 32% up year-on-year. Idea has a strong balance sheet to support its growth plans, with standalone 3 Net Debt to EBITDA at 1.31 times as on 31 st March Note 1 : Includes AUM of Life Insurance, Private Equity and quarterly average AUM of Asset Management business Note 2: Based on gross revenue for UAS & Mobile licenses only, for October December 2014 as released by Telecom Regulatory Authority of India ( TRAI ). Note 3: Standalone Idea = Idea and its 100% subsidiaries MANAGEMENT DISCUSSION AND ANALYSIS 11

30 MANAGEMENT DISCUSSION AND ANALYSIS Aditya Birla Nuvo Limited - Annual Report MANAGEMENT DISCUSSION AND ANALYSIS Divisions (Jaya Shree, Agri, Rayon and Insulators): Combined revenue at USD 901 million (` 5,405 Crore) grew year-on-year by 9% and EBITDA at USD 102 million (` 615 Crore) increased by 11%. Jaya Shree is a leading Linen Yarn and Fabric player in India. To tap sector growth opportunities, Jaya Shree is targeting to double its linen yarn capacity. Indo-Gulf is the 8 th largest and one of the most energy efficient urea plants in India. Indian Rayon is among the top two manufacturers and the largest exporter of VFY. Aditya Birla Insulators is India s largest and world s 4 th largest manufacturer of insulators. A platform to drive synergy of resources The standalone balance sheet has been the growth engine for ABNL and a platform to drive synergy of capital resources. ABNL has invested about USD 1 billion to fund the growth capital requirements of its businesses over the past six years. Long term strategic investments account for more than 70% of ABNL s standalone capital employed as on 31 st March Despite this, ABNL continues to command a healthy financial position, with standalone Net Debt to EBITDA at 3 times and Net Debt to Equity at 0.42 times as on 31 st March 2015, led by steady cash flow from operations, dividend income and release of capital from divestment of sub-scale businesses. For fiscal , the standalone balance sheet will support investments to the tune of ` 600 Crore in the Financial Services businesses, largely to fund the growth capital requirements of the NBFC and Housing Finance businesses. The capital expenditure guidance for the standalone businesses stands at around ` 300 Crore. While fulfilling these capital requirements, the Company is committed to keeping this growth engine healthy and future-ready. Delivering best value to all the stakeholders As a conglomerate, ABNL constantly evaluates its capital allocation strategy and reviews its business portfolio, with the objective of delivering the best value to all the stakeholders over the long run. Exit from sub-scale businesses to ensure greater focus on other businesses Given the multiple growth opportunities and ensuing capital commitment of ABNL towards other businesses, your Company divested the IT-ITeS business with effect from 9 th May 2014 at an Enterprise Value of USD 260 million subject to working capital adjustments. Earlier in the previous year , the Company had divested the Carbon Black business with effect from 1 st April 2013 at an enterprise value of ` 1,451 Crore subject to working capital adjustments. The divestment proceeds have supported the growth plans of the Company, strengthened its balance sheet and enabled greater focus on the core businesses. Consolidation of branded apparels businesses to unlock value for the shareholders To capitalise on its large market presence in the branded fashion space in India, your Company has announced consolidation of its branded apparels businesses under its listed subsidiary Pantaloons Fashion & Retail Ltd. ( PFRL ), through a composite scheme of arrangement ( Scheme ). As part of the Scheme, Madura Fashion, the branded apparel retailing division of ABNL and Madura Lifestyle, the luxury branded apparel retailing division of Madura Garments Lifestyle Retail Company Limited ( MGLRCL ) a subsidiary of ABNL, will be demerged from respective companies into PFRL. Pursuant to demerger, new shares will be issued by PFRL to the respective shareholders of the transferor companies directly. 12

31 Aditya Birla Nuvo Limited - Annual Report MANAGEMENT DISCUSSION AND ANALYSIS This consolidation will create India s largest pure play branded apparels Company by bringing Madura India s #1 branded menswear player and Pantaloons India s #1 branded womenswear retailer, together. The move will unlock value for the shareholders by giving them an opportunity to participate in the promising fashion space directly. The transaction is subject to the necessary statutory and regulatory approvals including approvals of the respective High Courts, the Stock Exchanges, SEBI, the respective Shareholders and lenders / creditors of each of the companies. The appointed date of the Scheme will be 1 st April The combined entity will have the largest retail network in fashion space in the Country. The consolidation will also enable tapping of operational synergies on various fronts such as sourcing, real estate and technology platforms. The sound Balance Sheet of the combined entity will act as a strong enabler for future growth. Refer page 30 for transaction details. To be a responsible corporate citizen As a responsible corporate citizen, the vision of the Company is to contribute actively to the social and economic development of the communities, to build a better and sustainable way of life for the weaker sections of the society and to adopt best business practices for sustainable development; thereby balancing its economic growth with environmental and societal interests. The initiatives taken by the Company in these areas are spelt out in detail in the Social and Environment Report Section of the Annual Report. Our values provide us with our roots and they provide us with our wings Chairman, Kumar Mangalam Birla Driven by Power of Five Values Integrity Acting and taking decisions in a manner that is fair and honest. Following the highest standards of professionalism and being recognised for doing so. Integrity for us means not only financial and intellectual integrity, but encompasses all other forms as are generally understood. Commitment On the foundation of Integrity, doing all that is needed to deliver value to all the stakeholders. In the process, being accountable for our own actions and decisions, those of our team and those in the part of the organisation for which we are responsible. Passion An energetic, intuitive zeal that arises from emotional engagement with the organisation that makes work joyful and inspires each one to give his or her best. A voluntary, spontaneous and relentless pursuit of goals and objectives with the highest level of energy and enthusiasm. Seamlessness Thinking and working together across functional groups, hierarchies, businesses and geographies. Leveraging diverse competencies and perspectives to garner the benefits of synergy while promoting organisational unity through sharing and collaborative efforts. Speed Responding to internal and external customers with a sense of urgency. Continuously striving to finish before deadlines and choosing the best rhythm to optimise organisational efficiencies. MANAGEMENT DISCUSSION AND ANALYSIS 13

32 MANAGEMENT DISCUSSION AND ANALYSIS Aditya Birla Nuvo Limited - Annual Report Consolidated Earnings Revenue (USD 4.4 billion) (` Crore) EBITDA (USD 966 million) (` Crore) 5,798 MANAGEMENT DISCUSSION AND ANALYSIS 25,490 25, % 26,516 4, Net Profit (USD 236 million) (` Crore) 1,416 1,143 1,059 24% , % Sound earnings growth The Company posted a strong growth in earnings during Most of the businesses are competitively well placed and are contributing to the earnings growth. Posted consolidated revenue at ` 26,516 Crore (2% y-o-y) and consolidated EBITDA at ` 5,798 Crore (18% y-o-y). On a like-to- Consolidated Profit and Loss Account like basis, i.e., excluding IT-ITeS business which was divested w.e.f. 9 th May 2014, revenue and EBITDA growth was 14% and 25% respectively. Consolidated Net Profit surged year-on-year by 24% to ` 1,416 Crore. Excluding IT-ITeS business and before one-off items, like-to-like growth in net profit was 39%. (` Crore) Revenue 25,892 26,516 EBITDA 4,927 5,798 Less: Depreciation and Amortisation 1,609 1,703 Earnings Before Interest and Tax (EBIT) 3,318 4,095 Less: Finance Costs related to NBFC 742 1,105 Less: Other Finance Costs Earnings Before Tax and Exceptional Items 1,767 2,338 Add: Exceptional Gain/(Loss) 1 5 (13) Earnings Before Tax 1,772 2,325 Less: Tax Expenses Less: Minority Interest and Share of (Profit)/Loss of associates Consolidated Net Profit 1,143 1,416 Note 1 : In , Exceptional loss of ` 13 Crore pertains to the divestment of Minacs, the IT-ITeS business, w.e.f. 9 th May Exceptional items in include loss of ` 19 Crore on impairment of goodwill relating to investments in the broking & wealth management businesses and gain of ` 24 Crore on the divestment of the Carbon Black business 14