united spirits report

7/28/2019 United Spirits Report

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Report of the Directors

Corporate Governance Report

Management Discussion &

Analysis Report

Auditors Report

Balance Sheet

Cash Flow Statement

Notes to the Financial Statements

Consolidated Financial Statements

C O N T E N T

Dr. Vijay MallyaChairman

United Spirits Limited is one of the only two companies in the world with a dozen brands among

the top 100 spirits brands worldwide

USL has also been in the forefront of innovation and has successfully experimented with alternativepackaging which has resulted not only in greater consumer satisfaction, but also in reducing costs.

Our Company is now universally acknowledged as one of

the fastest growing scotch players in the world. Iconic brands

like Dalmore and Jura consistently find their place among

luxury brands in the world.

United Spirits shall focus on profitability and Return on

Capital Employed in the coming years and leverage its size

and reach to achieve improved financial parameters in

preference to volume growth goals. A combination of highly

recognized brands and a high reputation for quality

encourages me to view the future of USL with optimism.

Statement of Profit and Loss


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The Team

Ravi NedungadiPresident & Group CFO

Ashok CapoorPresident & MD

P.A. MuraliJt. President & CFO

Amrit ThomasDeputy PresidentGlobal Marketing

Sanjay Raina

Dr. B.K. Maitin

Anant Iyer

P.S. GillDeputy President

All India Operations

Vineet Chhabra

N.R. Rajsekher

Abhay Kewadkar

Vivek Prakash

I.P. SureshMenon

Kedar UlmanAjay Baliga

G.S. Nagappa

V.S. VenkataramanExecutive Vice President

& Co. Secretary

Mathew Xavier


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2

NOTICE (Co

5. In respect o f shares held in electronic form, the dividend w ill be pa yable o n t he b asis of b eneficial o w nership adetails furnished by National Securities Depository Limited and Central Depository Services (India) Limited forpurpose.

6. Members holding shares in electronic form may please note that their bank details as furnished by the respeDepositories to the Company will be printed on their Dividend Warrants as per the applicable regulat ions oDepository. The Compa ny w ill not a ct on a ny direct reque st from such membe rs fo r cha ng e/de letion in such ba nk de

Further, instructions if any, already given by them in respect of shares held in physical form will not be automatiapplicab le to the dividend paid on sha res held in electronic form. Membe rs may, therefo re, give instructions rega rbank accounts in which they wish to receive dividend, to their Depository Participants immediately.

7. Members holding shares in the sam e na me or sam e order of na mes under different ledg er folios are requested to afo r consolida tion o f such fo lios, to the Com pa nys Reg istra rs a nd Transfe r Ag ent s, a t th e a dd ress a s stat ed in Not e above.

8. Memb ers ma y plea se a dd ress a ll the ir do cuments/correspon den ce relat ing to t he eq uity sha res of t he Compa ny dirto t he Compa nys Reg istra rs a nd Transfer Agent s, a t th e a dd ress a s stat ed in Note No.4 a bo ve.

9. Nominat ion fa cility fo r shares is ava ilab le for memb ers. The prescribed forma t in this rega rd can b e ob ta ined fromCompa nys Reg istra rs a nd Tran sfer Ag ent s a t th e a dd ress as sta ted in Not e No.4 a bo ve.

10. The Compa nys eq uity sha res a re under com pulsory dema terializa tion. According ly, trad ing of t hese sha res thro ugStock Exchan ge s wo uld be fa cilita ted if the share cert if icat es are d ema terialized. Mem bers having the physical s

cert if icat es are ad vised t o consider opening of a Demat Account w ith an a uthorised Depo sitory Part icipant and arrfor d ema terializing t heir shareho ldings in the Compa ny.

11. a ) All Uncla imed/Unpa id Dividen d up to t he fina ncia l yea r ended Ma rch 31, 1994, ha ve been tra nsferred to the G eRevenue Account of the Centra l Governme nt in t erms of Section 205A of the Compa nies Act, 1956. Tho se w ho not encashed the Dividend Warrant s for the said period ma y claim t heir dividends from t he Registrar o f Comp- Ka rna ta ka, II Floor, E-Wing, Kend riya Sada n, Koram a ng a la, Ba ng a lore - 560 034.

b) All Uncla imed /Unpaid Divide nd f or th e fina ncia l years 1994-95 to 2003-04, req uired to be tra nsferred t o t he InvEduca tion a nd Prot ection Fund (Fund ) in terms of Section 205C of t he Compa nies Act, 1956, have be en t ran sfeto t he Fund.

c) In term s of Section 205A an d 205C of t he Compa nies Act, 1956, the a mou nt o f dividend d ecla red fo r the finayear 2004-05 an d th ereaft er remaining unclaimed /unpaid for a period o f seven years from the d ue da te o f pa ysha ll hereaf ter be transferred to the Investor Educat ion an d Protection Fund.

12. Memb ers may kindly no te t ha t o nce the Un cla imed/Unpa id Dividend is tra nsferred t o t he Fund , no cla im shaag ainst the Fund o r the Company in respect of th e individual amo unts which were unclaimed a nd unpa id for a peof seven years from the d at es tha t they first became d ue for payment and no pa yment shall be ma de in respect osuch cla im.

13. Members a t t ending the Annual General Meet ing are requested to b ring w ith them the fo l low ing:

a) Memb ers holding shares in de ma terialised fo rm, the ir DP &Client ID Numb ers.b) Memb ers holding sha res in physical fo rm, the ir Folio Numb ers.c) Copy of the Annua l Report and Notice, as no copies thereof w ould be distributed at th e Meeting.d) The Atten da nce Slip duly completed a nd signe d in terms of specimen signa ture lod ged w ith the Compa ny.

The Compan y w ould a ccept o nly the Attenda nce Slip from a membe r actually at tend ing the Meet ing; or fromperson a t ten ding a s a proxy under a valid proxy form reg istered w ith the Compa ny not less than 48 hours prior toMeet ing. Attend an ce Slips of Memb ers/valid proxies not pe rsona lly present a t th e Meet ing, or relat ing t o Proxies ware invalid, w ill not be accepted from any othe r membe r/person.

The Me eting is fo r mem bers or t heir proxies only. Please a void b eing a ccomp a nied b y non -mem be rs/children.

14. The Comp a ny ha s desig na ted a n exclusive ema il id viz. , uslinvestor@ubma il.com to ena ble th e investo rs to post grievances and monitor its redressal.

15. Corporat e memb ers are req uired t o send to the Compa ny a cert if ied copy of the Boa rd Resolution pursuan t to Se187 of t he Compa nies Act 1956, authorizing their representat ive to at tend an d vote at the Annual Genera l Meeti

16. The d eta ils req uired to b e g iven in pursua nce of Cla use 49 of the Listing Agree ment in ca se of directors be ing a ppoin

reappointed are g iven in the Corporate G overnance Section o f the Annua l Report .


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NOTICE (Contd.)

EXPLANATORY STATEMENT AS REQUIRED BY SECTION 173 OF THE COMPANIES ACT, 1956.

Item no.6 - Appointment of Mr. Ghyanendra Nath Bajpai as a Director:

Mr. Ghyan endra Nat h Ba jpai (Mr. Bajpai) w as a ppointed as Add it iona l Director o f t he Compa ny on Janua ry 20, 2012

w ould be ho lding o ffice as Director up to t he da te of this Annua l General Meeting.

Mr. Bajpai, ag ed 69 years, holds a Ma sters Deg ree in Com merce from t he University of Agra a nd a de gree in La w (LLB)

the University of Indo re.

Mr. Bajpai, a distinguished lead er in India n Business commun ity, w a s the Chairman of Securities and Excha ng e Boa rd of

(SEBI) and Life Insura nce Corpora tion of India (LIC). Mr.Bajpai ha s been the Chairma n o f Corporat e G overna nce Ta sk For

Interna tiona l Organiza t ion o f Securit ies Commissions and the Chairperson of the Insurance Inst itute of India, a counte

of Charte red Insuran ce Institute, UK. He w a s the Non-Executive Chairman of Nationa l Sto ck Excha ng e of India Limited, S

Holding Corpora tion of Ind ia Limited , LIC Housing Finan ce Limited a nd LIC Inte rna tiona l EC Bahra in a nd LIC Nepa l Lim

and w as also on th e Governing Boa rd of Indian Inst itute of Ma na gem ent, Lucknow.

Mr.Bajpai is on t he Boa rd of Advisors of Ind ian Army Group Insuran ce Fund a nd o n the G overning Bo a rd of Nat iona l Insur

Academy. He is also Non-Executive Chairman and Non-Executive Director in several corporates in India.

Notice under Section 257 of the Companies Act, 1956 has been received from a member signifying his intention to pro

the a ppointment of Mr. Bajpai as a Director of th e Company a t th is Annua l General Meeting.

Mr. Bajpai does not hold a ny shares in t he Compa ny.

The Bo ard recommen ds the Ordina ry Resolution f or a pproval by th e me mbers.

None of t he Directo rs ot her tha n Mr. Bajpai is interested o r concerned in the Resolution .

By Order of the B

Place : Mumb a i V.S. Venka ta ra

Dat e : May 29, 2012 Compa ny Secr


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Board of Directors Vija y Ma llya ,Chairman

S. R. Gup te ,

Vice Chairman

Ashok Cap oo r,

Managing Director

M. R. Doraisw a my Iyeng a r

B. M. Labroo

Sreedhara Meno n

Sudhind a r Krisha n Khann a

G.N. Bajpa i

President & CFO - The UB Group Ravi Nedungadi

Joint President & CFO P. A. Mura li

Company Secretary V. S. Venka ta ram a n

Auditors Wa lker, Cha nd iok &Co.

Chartered Accountants,

Bangalore

Registered & Corporate Office UB Tow er, # 24, Vitta l Mallya Roa d,

Ba ng a lore - 560 001

Registrars & Transfer Agents Int eg rat ed Ent erprises (Ind ia) Limited

30, Ram a na Reside ncy, 4th Cross,

Sam pige Road , Mallesw ara m,

Ba ng a lore - 560 003

Tel : 080 2346 0815 To 818

Fa x : 080 2346 0819


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Report of the Directors

Your Directors have pleasure in presenting the Annual

Report of your Company and the audited accounts for the

yea r end ed Ma rch 31, 2012.

FINANCIAL RESULTS

Rupees in Million s

2011-12 2010-11

The w orking of your Compa ny forthe year und er review resulted in

Profit from opera t ions 5,755.508 5,925.148

Exceptiona l and oth er

non -recurring items

(108.163) 368.399

5,647.345 6,293.547

Less:

Depreciation 608.453 477.470

Ta xa tio n(including deferred tax)

1,610.951 1,961.365

Prof i t a f t er t ax 3,427.941 3,854.712

Prof it B/F fro m pre vious yea r 15,357.972 12,380.525

Profi t t ra nsferred on Amalgama tion - 4.030

Profit availab le for appropriat ion 18,785.912 16,239.267

Your Directo rs ha ve mad e the

follow ing Appropriat ions :

Gen eral Reserve 500.000 500.000

Proposed Dividen d 326.987 326.987

Corporat e Tax o n Propo sed

Dividend 53.046 54.309

Balance carried to the Ba lance Sheet 17,905.879 15,357.971

EPS - Basic &Diluted (Rupees) 26.91 29.47

Your Directors propose a Dividend on the equity shares of

the Compa ny at the ra te o f Rs. 2.50 per sha re.

CAPITAL

The Authorised Capita l of your Compa ny rema ined

uncha ng ed a t Rs.5,542,000,000/- divided into 395,000,000

Eq uity Share s of Rs.10/- ea ch and 159,200,000 Pref ere nce

Sha res o f Rs. 10/- ea ch.

The issued, subscribe d a nd pa id-up Equity Share

Capi ta l o f your Company a l so remained unchanged a t

Rs.1,307,949,680/- d ivided int o 130,794,968 eq uit y sha res of

Rs.10/- ea ch .

GLOBAL DEPOSITORY SHARES

Your Company had issued 17,502,762 Global Depos

Shares (GDSs) represent ing 8,751,381 Eq uity Sha res ra n

pari-pa ssu in a l l respects w ith th e exist ing pa id up eq

shares, 2 GDSs representing 1 equity share of par valu

Rs.10/- ea ch a t US$7.4274 per GDSs ag g reg a ting to

130 mn. These GD Ss a re listed o n th e Luxemb ourg S

Exchange.

As on Ma y 25, 2012, there w as a n o utsta nding of 1,28

GDSs represent ing 642,277 equ ity sha res.

PERFORMANCE OF THE COMPANY

During the year und er review, your Company h as a ch

a sales volume of over 120 million cases (Previous

112 Million cases), representing a g row th o f 7% ove

previous yea r, thus cont inuing to m a inta in its position alargest distilled spirits marketeer in the world in term

volume. Prof it fro m o pera tions stoo d a t Rs.5,755.508 m

(previous year Rs.5,925.148 million) registering a mar

decrease over the previous year mainly on accoun

increa se in input costs.

SUBSIDIARIES

During the year under review, Chennai Brew

Privat e Limited (CBPL), a w holly ow ned subsi

ceased to be the subsidiary of the Company conseq

to its amalgamation with United Breweries Limited (Ua UB group Company in terms of Scheme

Amalga mat ion. Consequent t o the a foresaid ama lga m

of CBPL w ith UBL, your Com pa ny received 8,50

eq uity shares of Rs. 1/- ea ch of UBL fo r the shares held b

Company in CBPL.

Whyt e a nd Ma ckay (America s) Limited , LLC, a w

owned subsidiary of Whyte and Mackay Lim

became an utlimate wholly owned subsidiary of

Company.

Sovereig n Distilleries Limited (SDL) w hich be cam

subsidiary during the year under review became a w

ow ned subsidia ry of you r Com pa ny on April 19,

consequent to the acquisit ion of the balance 38.

equity shares in terms of Share Purchase Agreem

(SPA) executed w ith the e rstw hile prom ot ers

Sovereign Distilleries Limited (SDL).


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2

Your Company is considering various steps including

infusion of share capital to make the net worth of its

subsidiaries viz. Pioneer Distilleries Limited, Sovereign

Distilleries Limited a nd Tern Distilleries Priva te Limited ,

positive.

During the year und er review, yo ur Compa ny subscribed t o

15,612,245 12% Non Cumula tive Red ee ma ble Option a lly

Convert ible Prefe rence sha res of Rs.10/- ea ch at pa r in Fou r

Seaso ns Wines Limited (FSWL), a subsidiary o f t he Comp a ny.

Your Company also subscribed during the current year

8,000,000 12% Cumulative Redeemable Preference shares

o f Rs.10/- ea ch a t pa r in FSWL.

In t erm s of Circular No.2/2011 da te d Feb rua ry 8, 2011 issued

by th e Ministry of Corporat e Affairs, Government of India,

a g eneral exemption ha s been g rante d from the complian ceof Section 212 of t he Comp a nies Act, 1956, req uiring ho lding

companies to a t ta ch with their balance sheet , a copy of the

ba lance sheet , profit and loss account a nd ot her documents

of each of its subsidiaries provided the Board of Directors

of such companies give consent , by w ay of a resolution, for

not a t ta ching t he ba lance sheet o f the subsidiary compa nies

concerned w ith the balance sheet of the Company and

certain conditions prescribed by the Ministry in this regard

are complied w ith.

The Boa rd of Directors of your Company, at their meeting held

on Ma y 29, 2012 have g iven th eir consent fo r not at ta ching,

inter alia, th e ba lance sheet , profit a nd loss account etc. of

its subsidiary companies since your Company has complied

with all the conditions prescribed by the Ministry vide its

circular d a ted Feb ruary 8, 2011, in this rega rd.

In view of t he a bove, the b alance sheet , profit a nd loss account

an d ot her do cuments/det a ils of t he subsidia ry comp a nies,

which are required to be a t t ached with the balance sheet

of the Company, are not at ta ched. The Annual Accounts of

the Subsidiaries an d the relat ed d eta iled informa tion w ill be

mad e available to a ny sha reholder of the Compan y seeking

such informa tion a t a ny point in time. The Annua l Accoun ts

of t he Subsidia ry Comp a nies w ill also b e kept fo r inspection

by a ny shareho lder of t he Compan y at its Reg istered Off ice

and tha t of the Subsidiary Compa nies concerned, during the

business hours on a ny w orking da y.

The Accou nt ing Yea r of Un ited Spirits Nepa l Privat e Lim

(USNPL), your Companys subsidiary in Nepal is

mid-July to mid-July every year. Accordingly, Accou

Year of 2010-11 of USNPL ended on July 16, 2011

th e Accou nt ing Yea r 2011-12 w ill en d o n July 16,

i .e. , after the end of the close of the financial year oCompa ny, w hich end ed o n Ma rch 31, 2012. For th e pur

of compliance under Accounting Stand ard 21, relat in

Consolida ted Financial Stat ement , the Account s of U

has been draw n up to March 31, 2012.

For the purpose of compliance under Accoun

Sta nda rd - 21, Consolida ted Financial State ment prese

by the Company includes the financial information o

subsidiaries.

PROSPECTS

Your Company achieved a sales volume of 10.75 mi

cases during the first month of the current f inancial

and judging by the continuing growth in the current

the Company is set to maintain its current posit ion a

w orlds larg est distilled spirits ma rketeer b y volume.

With the f ixat ion of a more than comfortable

price for ethanol supplies for oil blending by the

Marketing Companies coupled with the uncontr

grant of permissions to export of molasses and spirit

potential availability of Extra Neutral Alcohol (ENA

primary raw material required in the manufactur

Compa nys prod ucts, ha s been a dversely af fecte d

counte r this ha rdship, a s a pa rt of its business strate g y,

Company is continuing with its initiatives of buil

up supply side security by inte g rat ing ba ckw ard s

dist illat ion by way of acquiring substantial interes

Pioneer Distilleries Limited in Maharashtra and Sove

Distilleries Limited in North Central Karnataka, both s

rich in suga rca ne cultivat ion. These w ill go a long w a

reduce the Companys dependence on external suppli

ENA.

In order to mit iga te t he increase in the cost o f g lass bo

which is another key ingredient , as a part of its bus

strategy init iat ives, your Company has envisaged se

up a glass container manufacturing facility in south I

for captive consumption, besides developing alter

packaging materials in some of the southern states o

Report of the Directors(Con


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Country to reduce the impact of the increased cost of g lass

bott les.

With all these measures, your Directors are hopeful that

your Company would achieve a structural improvement in

its profitability in the years to come.

DEPOSITORY SYSTEM

The t rading in the eq uity shares of your Compa ny is under

compulsory dematerialisation mode. As on May 25, 2012,

equity shares representing 97.64 % of the equity share

capita l are in dema terialised f orm. As the d epo sito ry system

offers numerous advantages, members are requested to

take advantage of the same and avai l o f the fac i l i ty of

dema terialisat ion of the Companys shares.

DIRECTORS

Mr. Sreedhara Menon and Dr. Vijay Mallya retire by

rotat ion and being eligible, offer themselves for

re-appointment.

Mr. G.N.Bajpai was appointed as Additional Director on

Jan ua ry 20, 2012 and w ill hold o ffice in terms of Section 260

of the Compa nies Act , 1956 up to t he d at e of the e nsuing

Annua l General Meeting.

A notice in writ ing has been received by your Company

from a member signifying his intention to propose the

appointment of Mr. G.N. Bajpai as Director at the Annual

General Meeting.

AUDITORS

M/s. Wa lker, Cha nd iok & Co., you r Compa nys Aud ito rs, are

eligible for re-appo intment a t th e Annual General Meeting

an d it is necessa ry to fix the ir remune rat ion.

TAX AUDITORS

Your Directors ha ve a ppoint ed M/s. Lod ha &Co., Chart ered

Accoun ta nts a s the Tax Auditors of th e Compa ny to carryout the tax audit o f the Company for the year ended

March 31, 2012.

LISTING OF SHARES OF THE COMPANY

The Equity Shares of your Compa ny continue t o rema in

listed with Bangalore Stock Exchange Limited, Bombay

Stock Exchange Limited and National Stock Exchang

India Limited . The listing f ees fo r th e yea r 2012-13

been paid t o t hese Stock Excha nge s.

CORPORATE GOVERNANCE

A report on the Corporate Governance is ann

separately as part of this report along with a cert if ica

compliance fro m a Compa ny Secreta ry in pra ctice. Nece

req uirement s of o bt a ining certificat ions/declara tion

terms of Clause 49 have be en complied w ith.

MANAGEMENT DISCUSSION AND ANALYSIS

Pursua nt t o Clause 49 of t he List ing Agreem ent w ith

Stock Exchanges, Management Discussion and Ana

Report i s anne xed a nd fo rms an in teg ra l par t o f the An

Report .

FIXED DEPOSITS

Fixed Deposits from the public and shareholders, sto

Rs. 6,387.556 Million as at March 31, 2012. Mat

depo sits for w hich d isposal instructions had not

received from the depositors concerned stood

Rs. 105.338 Million as at March 31, 2012. Of this, a su

Rs. 55.354 Million has since been paid as per instruc

received af ter the year-end.

TRANSFER TO INVESTOR EDUCATION AND

PROTECTION FUND

Pursuant to the provisions of Section 205A(5) and 2

of the Companies Act, 1956, the Unclaimed Dividend

Deposits, remaining unclaimed and unpaid for a perio

more than 7 years, have been transferred to the Inv

Education and Protection Fund.

HUMAN RESOURCES

Employee relat ions remained cordial at all Comp

locations.

Part iculars of employees drawing an aggre

remune rat ion o f Rs. 60,00,000/- or a bo ve per a nnum

Rs. 5,00,000/- or a bo ve per mo nt h, a s req uired u

Section 217(2A) of the Companies Act, 1956, as amen

is annexed.

Report of the Directors(Contd.)


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4

EMPLOYEE STOCK OPTION SCHEME

The Company ha s not o ffered a ny stock option to th e

Employees during the year 2011-12.

CONSERVATION OF ENERGY & TECHNOLOGY

ABSORPTION, ETC.

In a ccorda nce w ith t he p rovisions of Section 217(1)(e) of t he

Compa nies Act, 1956, rea d w ith Comp a nies (Disclosure o f

Particulars in the Report of the Board of Directors) Rules,

1988, the required information relat ing to Conservation

of Energ y, Technolog y Absorption an d Foreign Exchang e

earnings and outgo is annexed.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956,

in relation to financial statements for the year 2011-12, the

Boa rd of Directors reports tha t :

in the preparat ion of the a nnual accounts, the

applicable accounting standards have been followed

along with proper explanat ion rela t ing to materia l

departures;

account ing policies have been selected a nd applied

consistently and that the judgements and est imates

made are reasonable and prudent so as to give a

and fa ir view of the s ta te o f a f fa irs of the Compan

at t he end of the f inancia l year and of the prof it o

Compa ny fo r the year end ed March 31, 2012;

proper and sufficient care ha ve been ta ken for

maintenance of adequate account ing records

accordance with the provisions of the Companies

1956, for saf eg uarding t he assets of the Compan y an

preventing a nd de tecting fraud an d ot her irregular

The annua l accounts have been prepared on a g

concern b a sis.

THANK YOU

Your Directors place on record their sincere appreci

for the continued support from shareholders, custom

suppliers, banks and financial institutions and business associates. A particular note of thanks t

employees of your Company, without whose contribu

your Company could not have achieved the y

performance.

By Authority of the B

Mumbai

Ma y 29, 2012

Dr. VIJAY MAChair



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ANNEXURE TO DIRECTORS REPORT[Add itiona l info rma tion g iven pursuan t t o req uirement of Section 217(1)(e) of t he Com pa nies Act, 1956]

CONSERVATION OF ENERGY

With reference to ene rgy conservat ion an d cost reduction, steps taken by th e Compan y at its various manuf acturing

w ere as under:

1. Auto ma tic Pow er Fa ctor Correction Pane ls insta lled to increase Pow er Fa ctor and h ence reduction in electrical en

consumption.

2. Va ria ble Freq uency Drives insta lled o n Boiler a nd Coo ling Tow er Fa ns to opt imize electrica l energy consumption .

3. Units requiring o nly hot w at er and not stea m w ere gradua lly shifted to Solar energy.

4. Reg ular lig hting w a s increa sing ly switched t o CFLs. LED usa ge is being evalua ted .

5. Moved tow ards natura l ligh ting by fixing transparent sheets on roof t op an d ha ving North light type roof construct

6. Provided Turbo Vent ila to rs fo r bett er vent ila tion replacing electricity based.

RESEARCH & DEVELOPMENT (R & D)Expend iture on R &D: (Rs. in Millions)

(a) Ca pit a l - 8.159

(b) Recurring - 61.813

Total - 69.972

Tot al R &D expenditure a s a percenta g e o f t ot a l turnover - 0.093%.

TECHNOLOGY ABSORPTION

1. Mult i-Fuel Boiler w ith Spent Gra in , a by-product in the production o f Ma lt Spirit , as a supplement ary fuel, wa s b

eff ectively resulting in reduction o f f uel cost.2. Bio-Ga s Engine utilizing Meth ane G as, produced in Ana erobic Digester and g enerat ing pow er wa s operat ed in

distillery and supplied to t he g rid.

3. Econom ica lly via ble techno logy fo r trea ting d istillery effluent to a chieve Zero Discharg e, as per sta tut ory norms

successfully implement ed a t 2 Gro up units.

4. Insta lled a nd comm ission ed sta te-of the-art Grap e Spirit Plant a t Bara ma ti. The ent ire de sig n w a s carried o ut in-hou

FOREIGN EXCHANGE EARNINGS/OUTGO

(Rupees in Millions)

2011-12 2010-

1. Ea rning s in Fo reig n Currency 33.858 46.52. Impo rt s /Expendit ure in Foreig n Currency 3,131.423 3,253.0

By Authority of t he B

Mumbai

Ma y 29, 2012Dr. VIJAY MA

Chai



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6

ANNEXURE TO DIRECTORS REPORT

Stat ement of Particulars of Employees as req uired under Section 217(2A) of the Compan ies Act, 1956 an d t he Compa nies

(Particulars of Employees) Rules, 1975

SL.

No

NAME AGE DESIG NATION/NATURE OF DUTIES

REMUNERA-

TION

(Rs.)

QUALIFICATION

EXPERI-

ENCE IN

YEARS

DATE OF

COMMENCE-

MENTOFEMPLOYMENT

PARTICULARS OF PREVIOUS EMPLOYME

1 A.HARISH BHAT 58 DEPUTY PRESIDENT&GROUP TREASURER 13085738 CA 34 22-No v-90 MANAG ER TREASURY - DIGITAL EQUIPMEN

LTD

2 AJAY B BALIG A 53 EXECUTIVE VICE P RESID ENT -

MANUFACTURING, PROJECTS &QUALITY

CONTROL

13263386 B.TECH (CHEM

ENGG)

31 3-Nov-08 SENIOR VICE PRESIDENT- BU SINESS DEVELO

&MANUFACTURING, ALLIED BLENDERS &

DISTILLERS PRIVATE LIMITED

3 AKSHAY KUMAR 50 CHIEF OPERATING OFFICER 12741826 B.TECH, PG DM 27 30-Dec-10 CEO &REGIONAL HEAD - RELIANCE

COM MUNICATIONS LIMITED

4 AM RITTHOM AS (b) 45 EXECU TIVE VICE P RESID ENT - M ARKETING 1979 2733 B .TECH, P GD M 2 0 12-J un -07 CATEG ORY H EAD - B EVERAG ES, HIND USTAN

UNILEVER LIMITED

5 ANANTIYER 52 CHIEF OPERATING OFFICER 10244442 M.SC., M.M.S. 28 15-Jun-92 CONTROLLER MARKETING, CONSOLIDATED

DISTILLERIES LIMITED

6 AN IL KU M AR KU SH 56 CHIEF EXECUTIVE - VITTAL M ALLYASCIENTIFIC RESEARCH FOUNDATION 13925212 PHD, MBA 28 13-Ma y-05 SCIENTIFIC DIRECTOR - G ENESIS MANAG EMCONSULTANTS

7 ARVIND JAIN 49 DIVISIONAL VICE PRESIDENT- SALES 6569453 PG DM 28 12-Apr-91 AREA MANAGER - TITAN WATCHES LIMITED

8 ASHOK CAPOOR 59 PRESIDENT&MANAG ING DIRECTOR 34071636 B.A. (ECO), MBA 37 12-Ma y-92 CHIEF OPERATING OFFICER - ERSTWHILE

HERBERTSONS LIMITED

9 BHARATH RAGHAVAN 48 SENIOR VICE PRESIDENT LEGAL &

SECRETARIAL

6947 370 B .CO M, ACS, BG L 17 1 3-Fe b -98 SENIO R M ANAG ER FIXED INCO ME, PEREG

CAPITAL INDIA PVTLTD

10 DALIP KUMAR GARG (a) 58 DIVISIONAL VICE PRESIDENT- SALES 6415491 BA 31 4-Oct -01 VICE PRESIDENT SALES, MILLENIUM BREW

LIMITED

11 DEBASHISH SHYAM 44 DIVISIONAL VICE PRESID ENT - MARKETING 7025431 BSC, PG DBM 21 20-Se p-04 HEAD - MARKETING & ALLIANCES (INTERNE

SERVICES), BHARTI INFOTEL LIMITED, NEW D

12 DEBASISH DAS 54 SENIOR VICE PRESID ENT - MANUFACTURING 7031874 B.SC, B.TECH,

PGDBM

29 20-Aug-84 CHEMIST, EASTERN DISTILLERIES PVTLTD,

KOLKATA

13 D HARM ARAJ AN S 54 D IVISIO NAL VICE P RESID ENT FINANCE HEAD 6374041 B .CO M, ACA, LLB 28 7-No v-86 CO NSULTANT N M RAIJI & COM PANY

14 DR. B INOD K M AITIN 63 SENIOR VICE PRESIDENT- QU ALITY

ASSURANCE & TECHNICAL

8034858 M .SC., PH.D ., 41 14-D ec-88 SENIOR RESEARCH OFFICER &HEAD , ANALY

RESEARCH G ROUP, SHRIRAM INSTITUTE FOR

INDUSTRIAL RESEARCH

15 I. P. SURESH MENON 55 EXECUTIVE VICE PRESIDENT- PLANN ING &

CONTROL

11966 130 M MS, B .A. (HO NS. ) 34 1-Ap r-85 SECRETARY & FINANCE M ANAG ER , UB

ELECTRONIC INSTRUMENTS LIMITED

16 KAUSHIK CHATTERJEE (a) 51 CHIEF OPERATING OFFICER 12285158 B.COM 28 27-Apr-06 CEO - INDIAN OPERATIONS, MASON AND

SUMMERS ALCOBEV PRIVATE LIMITED

1 7 KED AR V U LM AN 3 8 EXEC UTIVE VICE P RESID ENT - SO URC ING &

BUSINESS DEVELOPMENT

11596342 B E, IIM B 16 24-Ap r-09 SENIO R M ANAG ER, ACCENTURE SERVICES P

LIMITED

18 LALITKUMAR GUPTA 52 SENIOR VICE PRESIDENT LEG AL 7037516 BSC, LLB, DLL 29 1-Ja n-98 JOINTMANAGER-LEG AL, SHRIRAM FOODS A

FERTILIZERS

19 LAXMI NARASIMHAN (a) 42 CHIEF OPERATING OFFICER 5356297 BE, PG DM, IIM - C 18 8-Dec-03 REGIONAL MANAGER, COCA COLA INDIA

20 MATHEW XAVIER 48 CHIEF OPERATING OFFICER 9306671 PG DM, B.COM 23 10-No v-03 VICE PRESIDENTMARKETING, ERSTWHILE SH

WALLACE D ISTILLERIES LIM ITED

21 N R RAJSEKHER 56 CHIEF OPERATING OFFICER 15179945 B.SC, PG CPM (IIM)

- KOZHIKODE

33 8-Apr-82 SEN IOR VICE PRESIDEN TSALES , ERSTWHILE

WALLACE D ISTILLERIES LIM ITED

22 NAGAPPA G S (C) 57 SENIOR VICE PRESIDENT SALES 6721329 B. SC 37 1-Aug -75 EXECUTIVE ERSTWHILE HERBERTSONS LTD

2 3 NAND INI VERM A 5 8 EXEC UTIVE VICE PRESID ENT - C ORP ORATE

AFFAIRS, U B GROUP

10753848 B. A. (HONS.) , IFDAF 40 13-Apr-07 VICE PRESIDEN T- CORPORATE AFFAIRS &PR

AIRWAYS

24 P A MURALI 54 JOINT PRESIDENT& CHIEF FINANCIAL

OFFICER

31298903 B.COM, ACA 31 5-Jul-93 EXECUTIVE VICE PRESIDENT &CHIEF FINANC

OFFICER, UNITED BREWERIES LIMITED



22/125


SL.

NoNAME AGE DESIG NATION/NATURE OF DUTIES

REMUNERA-

TION

(Rs.)

QUALIFICATION

EXPERI-

ENCE IN

YEARS

DATE OF

COMMENCE-

MENTOF

EMPLOYMENT

PARTICULARS OF PREVIOUS EMPLOYME

25 P.N. PODDAR 59 SENIOR VICE PRESIDENT- MANUFACTURING 9412952 M.TECH, DMS 36 1-Ja n-88 PRODUCTION MANAGER, UNION CARBIDE (

26 PARAMJITSINGH GILL (b) 50 CHIEF OPERATING OFFICER 16571279 B.SC, M.PHIL,

DIP IN LABOUR

LAW, CHARTERED

MARKETER

29 1-Ju l-92 EXECUTIVE VICE PRESIDEN T, UN ITED NATIO

BREWERIES (SA) (PTY) LIMITED, CENTURION

27 PHILIP SARGUNAR A B (a) 63 CHIEF OPERATING OFFICER 20232068 BA, MA 42 20-No v-02 EXECUTIVE DIRECTOR &CHIEF REPUTATION

OFFICER, THE EMPEE DISTILLERIES LIMITED

28 R SATSANGI 55 DIVISIONAL VICE PRESIDENT

MANUFACTURING

7105255 B .TECH(M ECH) 33 19-Fe b-96 P LANT MANAG ER, PEP SICO IND IA HO LD ING

BANGALORE

29 RAGHUNATHAN A 60 EXECUTIVE VICE PRESIDENT- FINAN CE &

ACCOUNTS

11788619 B .CO M, ACA 37 24-Se p-79 EXECUTIVE VICE P RESID ENT- FINANCE &

ACCOUNTS ERSTWHILE HERBERTSONS LIMIT

30 RAVI NEDUNGADI A K 54 PRESIDENT&CHIEF FINANCIAL OFFICER - UB

GROUP

32443505 B.COM (HONS),

AICWA, CA

3 3 1 -J a n -9 0 G RO UP FINANCE D IRECTO R, U B INTERNATIO

LTD., U.K.

31 S.R.AINAP UR 54 ASSISTANT VICE P RESID ENT FINANCE &

ACCOUNTS

6110850 B .CO M, ACA 29 1-D ec-87 ACCO UNTS ASSISTANT, KESARVAL B EVERAG

LTD, GOA

32 S.D.LALLA (a) 68 JOINTPRESIDENT 2328394 LC &SE, AMIE 50 5-Apr-94 MANAG ING DIRECTOR -

ERSTWHILE HERBERTSONS LIMITED

33 S.K. RASTO GI 58 D IVISIO NAL VICE P RESID ENT - Q UALITYCONTROL

7729944 M.SC. 40 14-No v-82 QUALITY CONTROL OFFICER -JAGATJITINDUSTRIES LIMITED

34 S.N. PRASAD 54 SENIOR VICE PRESID ENT FINANCE &

ACCOUNTS

7149926 B .CO M, ACA, ACS 28 7-M ar-91 D EP UTY MANAG ER, UB HO PP EKE ENERG Y

PRODUCTLIMITED

35 SANJ AY RAINA 47 EXECUTIVE VICE P RESID ENT - HU MAN

RESOURCES

13665035 MSW - PERSONNEL

MGMT

25 19-Nov-08 HEAD HU M AN RESOU RCE - NETWORK, SUP

CHAIN - INDIA &ER - SE ASIA, MOTOROLA I

PVTLTD,

36 SHARM A V K 69 EXECUTIVE D IRECTO R - CHAIRM ANS O FFICE 10538753 B .A (ND A), D IP IN

BMIA &PM

3 8 5 -O ct -8 4 EXEC UTIVE D IREC TO R - CH AIRM AN S O FFICE

ERSTWHILE HERBERTSONS LIMITED

37 TV SUBRAMANIAN 57 ASSISTANTVICE PRESIDEN T BU SIN ESS

DEVELOPMENTS

6586123 M.COM., ICWA 34 16-Ju n-86 MANAG ER BRANCH SERVICES, DECOM

MARKETING LTD.

38 V K REKHI(a) 66 MANAGING DIRECTOR (d) 1664390 MA (HONS.),

PGDBA

41 03-Jan-72 REG IONAL DIRECTOR U B IN TERNATIONAL L

U.K.

39 V S VENKATARAMAN 58 COMPANY SECRETARY &EXECUTIVE VICE

PRESIDENT

11713969 B.COM (HONS.),

ACS

4 0 2 0-Au g -8 2 D EP UTY CO MP ANY SEC RETARY,

UNITED BREWERIES LTD

40 VINEETCHHABRA (a) 47 CHIEF OPERATING OFFICER 10180277 B.COM, ACA 19 15-Jun-11 CHIEF EXECUTIVE OFFICER GLOBAL G REEN

41 VIVEK P RAKASH 52 EXECUTIVE VICE P RESID ENT - CSD SALES 12450166 B CO M, LLB, M BA 30 15-Ju n-98 D EP UTY G ENERAL M ANAG ER - ERSTWHILE

WALLACE &C OM PANY LIMITED

(a) Employed for part of t he year .

(b) Promot ed a s Deputy President w .e.f. April 01, 2012.

(c) Acting as Chief Operating Officer w.e.f. April 09, 2012.

(d) Ceased to be Ma na ging Directo r w.e.f. April 19, 2011.

Notes:

1. No Employee is on Cont ract Employmen t. Other Terms and Cond itions are as per Service Rules of t he Compa ny from t ime to time

2. None o f the ab ove mentioned e mployees is rela ted to any Director of the Company.

3. Remune ration as show n ab ove includes Sala ry, House Rent Allow an ce, Compa nys cont ribution to Provident Fund a nd Super Annu

Fund, Value o f Resident ial Accommod at ion, Bonus, Medical and ot her fa cilities.

By Autho rity of the Bo

Mumbai

Ma y 29, 2012

Dr. VIJAY MAChair


23/125

8

1. COMPANYS PHILOSOPHY ON CODE OF CORPORATE

GOVERNANCE

Your Company, recognizing that good Corporate

Governance is a systemic and continuous process for

at taining economic efficiency and growth, follows

the basic tenets of good Corporate Governance ofintegrity, accountability, fairness and transparency in

lette r a nd spirit , in all its ope rat ions. Your Compa ny

pursues growth by adopting best corporate pract ices

an d d isclosures in order to enha nce the long term value

an d a spirat ions of a ll sta keholders.

Good Corporate Governance, apart from enhancing

the image of the Company, also helps in retaining

stakeholders confidence on a susta inable b asis.

2. BOARD OF DIRECTORS

The Bo a rd o f Directo rs comp rises of a Non-Exec

Chairman, a Managing Director and Six o

Non- Executive Directo rs.

During the financial year under review, Six B

Mee ting s w ere h eld, i.e., on April 29, 2

August 03, 2011, September 29, 2011, November

2011, Decemb er 21, 2011 a nd Ja nua ry 20, 2012.

Attendance of each Director at the Board Mee

and the last Annual General Meeting and de

of number of outside Directorship and Comm

posit ion held by each of the Directors as on date

given below :

Na m e o f Dire ct o r Ca t e g o ry o f D ire ct o rsh ip

No. ofBoard

Meetingsa t t ended

Attenda nce a tlast AGM held

on 29.09.2011

No. of o therCompa nies in

which Director

No of Committe(other tha n the

Compa ny) in w hChairma n/Memb

Dr. Vija y Ma llya Non Execut ive Cha irma n 6 Yes 19 -NIL-

Mr. S.R. Gupt e Non Execut ive ViceChairman

6 Yes 9 4(Chairman o f 2

Mr. V.K. Rekhi* Execut ive /Managing Director

1 N.A. N.A. N.A.

Mr. Asho k Ca po o r** Execut ive /Managing Director

5 Yes 2 1(Chairman of 1

Mr. M.R. Dora isw a myIyengar

IndependentNon Executive Director


Mr. B.M. La broo IndependentNon Executive Director


Mr. Sreed ha ra Meno n IndependentNon Executive Director

3 No 2 -NIL-

Mr. Sudhindar KrishanKhanna

IndependentNon Executive Director

3 Yes 7 -NIL-

Mr. G .N. Ba jpa i*** IndependentNon Executive Director

1 N.A. 21 -NIL-

* Ceased to be the Ma nag ing Director w ith effect from April 19, 2011 conseq uent upon the expiry of the term of his oa s Mana g ing Director an d resigned a s Director w ith eff ect fro m close of business ho urs on April 29, 2011

** Appoint ed a s Add itiona l Director w ith effe ct from April 29, 2011 a nd a s Ma na ging Director w ith effe ct from May 2, Appointment a s Director and as Mana ging Director w ere approved b y the shareholders at the Annual General Meheld on Septemb er 29, 2011.

*** Appoint ed a s Add itiona l Director w ith eff ect from Ja nua ry 20, 2012

NOTE:The a bo ve det a ils are in respect o f t heir Directorship only in Indian Compa nies.

a ) Out o f 19 othe r Com pa nies in w hich Dr. Vija y Mallya is a D irecto r, 7 a re Privat e Limited Com pa nies of w hich on esubsidiary o f a Public Compa ny a nd 2 are Section 25 Compa nies.b) Out o f 9 oth er Compa nies in wh ich Mr. S. R. Gupte is a Directo r, 2 a re Privat e Limited Com pa nies a nd 2 a re Sectio

Companies.c) Out o f 3 oth er Com pa nies in wh ich Mr. M.R. Dora isw a my Iyeng a r is a Director, 1 is a Privat e Limited Comp a ny.d) Out o f 7 oth er Com pa nies in wh ich Mr. B.M. La bro o is a Director, 3 are Priva te Limited Comp a nies.e) Out o f 7 othe r Com pa nies in which Mr. Sudh inda r Krisha n Kha nna is a Director, 2 a re Privat e Limited Compa nies.f) Out o f 21 ot her Compa nies in wh ich Mr. G.N. Bajpai is a Director, 5 a re Privat e Limited Comp a nies a nd 2 are Sectio

Companies.

h) None o f th e Directors is relat ed t o a ny othe r Director.

Corporate Governance Re


24/125

DISCLOSURES REGARDING APPOINTMENT AND

REAPPOINTMENT OF DIRECTORS

Directors retiring by rotation and being reappointed

Mr. Sreedhara Menon

Mr. Sreedhara Menon (Mr. Menon), aged 75 years, is the

Chairman of the Boa rd a nd Strate g ic Advisor o f VITEOS

Capital Market Services Limited, a Business Process

Outsourcing Compa ny in India w ith a Sister Compa ny locat ed

at Piscata w a y, New Jersey, U.S.A. Mr. Meno n ha s previously

held senior posit ions as Deputy President and Member of

the Board of Directors of American Express Bank Limited,

Chairman of the Board of Directors of American Express

Bank International, Managing Director, Emerging Markets

Group at Lehman Brothers Inc. , New York and General

Partner and Vice Chairman of RRE Ventures. Mr. Menon

has served as a Member of the Board of Directors of U.S.-

Ind ia Busine ss Cou ncil, Asia n-U.S. Business Council, Presiden tof the Ind ia-America Chamb er of Comme rce in New York,

etc. Mr. Menon holds a Master's Degree in Economics from

Mah a rajas Colleg e o f t he University of Kera la. He reside s in

Sho rt Hills, New Jerse y, U.S.A.

Details of Mr. Menons directorships in other Indian

Compa nies an d Committee Memberships are as under:

Other Directorships Position held

1. Vit eos Cap it a l Marke t Services Limit ed Direct or

2. Vit eos Fund Services Limit ed Direct o r

Mr. Menon is a Member of the Audit Committee of the

Company.

Mr. Menon do es not hold a ny share in the Compa ny and is

not relate d to an y other Director.

Dr. Vijay Mallya

Dr. Vija y Ma llya (Dr. Ma llya), a g ed 56 years, is a w ell-know n

Industrialist and a Member of the Parliament (Council of

Sta tes). He too k over the reins of the United Brew eries Group

in 1983 at the age of 28, which today is a mult i-nat ional

conglomerate. Dr. Mallya is the Chairman of several public

compa nies, bo th in Ind ia a s w ell a s overseas.

Dr. Mallya has won wide recognit ion from dist inguished

inst itut ions throughout the span of his career, which

includes:

Edmund Hillary Fellow ship by the government o f New

Zea land 2011

Entrep reneur of t he Yea r Aw a rd The Asia n Aw a rds,

Lon do n - 2010

Officer of the Legion of Honour confe rred by

President of French Repub lic 2008

Asia s Lea ding Airline Person a lity World Tra vel Aw

2007

Details of Dr. Mallyas directorships in other In

Compa nies an d Committee Memberships are as under:

Other Directorships Position he

1. King f isher Airlines Lt d . Cha irma nMD

2. Sa no f i Ind ia Lt d . Cha irma n

3. Ba yer Cro pScience Lt d . Cha irma n

4. Fo ur Sea so ns Wines Lt d . Cha irma n

5. M an ga l o re Ch emica l s an d Fert iliz e rs Lt d . Ch a i rman

6. McDo w ell Ho ld ing s Lt d . Cha irma n

7. Sha w Wa lla ce Brew eries Lt d . Cha irma n

8. Unit ed Brew eries Lt d . Cha irma n

9. Unit ed Brew eries (Ho ld ing s) Lt d . Cha irma n10. United Rac ing and B lood stock

Breede rs Ltd .Chairman

11. Ka msco Ind ust ries Pvt . Lt d . Cha irma n

12. Ma llya Pvt . Lt d . Cha irma n

13. Pha rm a Tra ding Co mpa ny Pvt . Lt d. Cha irm an

14. Ro ya l Cha lleng ers Spo rt s Pvt . Lt d. Cha irm an

15. The Ge m Investme nt & Tra dingCompany Pvt . Ltd.

Chairman

16. United East Benga l Footb al lTea m P vt. Ltd.

Chairman

17. VJM Invest ment s Pvt . Lt d . Cha irma n18. Mo to r Spo rt s Asso cia t io n o f Ind ia Ma na g ing

CommitteMember

19. SWEW Benef it Co mpa ny Pa t ro n(Chairman

Dr. Mallya ho lds 12,510 Eq uity Shares in the Com pa ny a

not relate d to an y other Director.

New Director

Mr. G.N. Bajpai

Mr. Ghyanen dra Nat h Bajpai (Mr. Ba jpa i), ag ed 69, ho

Masters Degree in Commerce from the Universi ty of

an d a Deg ree in La w (LLB) from the Universi ty of Indo re

Mr. Bajpai, a distinguished leader in Indian Bus

community, w as the Cha irma n of Securit ies an d Exch

Board of India (SEBI) and Life Insurance Corporatio

India (LIC). Mr.Bajpai has been the Chairman of Corp

Governa nce Ta sk Force of Interna tiona l Orga nizat io

Corporate Governance Report (Contd.)


25/125

10

Securities Commissions and the Chairperson of the Insurance

Insti tute of India, a counterpart of Chartered Insurance

Institut e, UK. He w a s th e Non-Executive Cha irman o f

National Stock Exchange of India Limited, Stock Holding

Corporation of India Limited, LIC Housing Finance Limited

and LIC International EC Bahrain and LIC Nepal Limited

and w as a l so o n the G overn ing Boa rd o f Indian Inst i tu te o fMana gem ent , Lucknow.

Mr. Bajpai is on the Boa rd o f Advisors of Indian Army Group

Insurance Fund and on the Govern ing Board o f Nat ional

Insurance Academy. He is also Non-Executive Chairman and

Non -Executive Directo r in several corpo ra te s in India .

Mr. Bajpa i w as appo inted a s Add it iona l Director of t he

Compa ny on Janua ry 20, 2012 and w ill hold off ice a s Director

up to t his Annua l Gene ral Meeting.

Deta i ls of Mr. Bajpai 's directorships in o the r Indian Com pa nies

and Commit tee Memberships are a s under :

Other Directorships Position held

1. Fu t u re G en era l i In d ia Life In su ran c e

Company Ltd

Director

2. Fu t ure G e n era li In d ia I nsu ra n ce

Company Ltd

Director

3. Dha nla xmi Ba nk Lt d Direct o r

4. Fut ure Ca pit a l Ho ld ing s Lt d Direct o r

5. Ma ndha na Ind ust ries Lt d Direct o r

6. Fut ure Vent ures Ind ia Lt d Direct o r

7. Nit esh Est a t es Lt d Direct o r

8. New Ho rizo ns Ind ia Lt d Direct o r9. PNB Ho using Fina nce Lt d Direct o r

10. Usha Ma rt in Lt d Direct o r

11. Micro ma x In fo rma t ics Lt d Direct o r

12. Wa lcha ndna g a r Ind ust ries Lt d Direct o r

13. Da lmia Cement (Bha ra t ) Lt d Direct o r

14. In t uit Co nsult ing Pvt Lt d Direct o r

15. Invent Asset Securit i sa t ion &Reconstruction Com pa ny Pvt Ltd

Director

16. In f om e rics Va lu a t io n & Ra t in g P vt Lt d D ire ct o r

17. Apna pa isa Pvt Lt d Direct o r

18. Invent ARC Pvt Lt d Direct o r

19. IDE Ind ia Direct o r

20. Institute of Insurance a nd RiskManagement

Director

21. NPS Trust Cha irperso n

Mr. Bajpai does not hold a ny shares in the Compa ny and is

not relat ed to an y other Director.

3. AUDIT COMMITTEE

The Audit Co mm itt ee con stitut ed o n April 19,

to meet the requirements under both the Li

Agreement and Section 292A of the Companies

1956, comp rises at present of the fo llow ing Directo

Mr. M.R. Doraisw a my Iyeng ar(Chairman)

Non ExecutiveIndepend ent Direct

Mr. B.M. La bro o No n Execut ive

Independ ent Direct

Mr. S.R. Gupt e No n Execut ive Dire

Mr. Sreedha ra Meno n No n Execut ive

Independ ent Direct

The te rms of ref erence of t he Audit Com mitte e c

all matters specified under the Listing Agreeme

w ell as the provisions of Section 292A of the Com p

Act, 1956 an d inter a lia , includes the fo llow ing:

a ) Oversight of th e Comp a nys fina ncial repo

process a nd t he disclosure of its financial info rma

to ensure that the financial statement is cor

sufficient and credible.

b) Recommending the appointment and rem

of external auditor, f ixat ion of audit fee and

approval fo r payment for a ny oth er services.

c) Review ing w ith man ag ement the ann ual f ina

statem ents befo re submission to the Board, f ocu

primarily on: Any chang es in accounting policies and prac

Major accounting entries ba sed on exerci

judgment by manag ement

Qualificat ions in draf t aud it report

Significant ad justment s arising out of aud it

Compliance w ith Stock Exchan ge a nd

requirements concerning financial stat emen

Disclosure of any relat ed party transactions

d) Review ing w ith the ma nag ement , external

internal auditors, the adequacy of internal co

systems.

e) Review ing the adeq uacy of interna l aud it fun

including the structure of the internal

department, staffing and seniority of the of

heading the department, report ing struc

coverage and frequency of internal audit .

f) Discussion w ith inte rna l au dito rs a ny sign if

f indings and fo l low up thereon.

Corporate Governance Report (Con


26/125

g) Review ing the findings of any interna l investiga t ions

by the internal auditors into matters where there

is suspected fraud or irregularity or a failure of

internal control systems of a material nature and

report ing the mat t er to the Board.

h) Discussion with sta tuto ry aud itors bef ore the auditcommences, nature and scope of audit as well as

have post-audit discussions to ascertain any area of

concern.

i) Review ing th e Compa nys fina ncia l a nd risk

ma nag ement po licies.

j) To loo k into the reasons fo r substant ial de fa ults in

the payment to the depositors, debenture holders,

shareholders (in case of non payment of declared

divide nds) a nd cred itors.

The Committ ee, inter a lia , has reviewed the financial

statements including Auditors' Report for the yearended March 31, 2012 and has recommended its

ad option. In ad dit ion, the Committee ha s also review ed

Unaudited (Provisional) quarterly results for June 30,

2011, qua rterly and ha lf yearly results for Sept emb er 30,

2011 and q ua rterly results for Decemb er 31, 2011 which

were subjected to a Limited Review by the Statutory

Auditors of the Compa ny and aud ited finan cial results

fo r the yea r ende d Ma rch 31, 2012.

During the financial year, four mee tings w ere held i .e.,

on April 29, 2011, August 03, 2011, November 07, 2011

an d Ja nuary 19, 2012. The d eta ils of a t te nda nce bymembers of the Commit tee a re as below :

Name of the DirectorNo. of

Meetings

Meetings

attended

Mr. M.R. Dora isw a my

Iyengar (Chairman)

4 4

Mr. S.R. Gupt e 4 4

Mr. B.M. La b ro o 4 4

Mr. Sreed ha ra Meno n 4 3

4. COMPENSATION COMMITTEEThe Compensation Committee constituted b y the

Company comprises at present of the following

Directors:-

Mr. B.M. La bro o Chairman

Mr. S.R. Gupte

Mr. M. R. Doraisw a my Iyeng a r

The Committ ee is a utho rised, inter a lia , to deal

the ma t ters rela ted to compensat ion b y w ay of sa

perq uisites, be nef its etc. to t he Ma na g ing/W

Time Directors of t he Compa ny, a nd set g uideline

salary, performan ce pay a nd perquisites to ot her s

employees from the level of Executive Vice Presand a bove.

The Committee is also empow ered to formulate

implement the Scheme for grant of Stock Optio

employees.

During the financial year, one meeting was hel

April 29, 2011, w hich w a s a tt end ed b y all the m em

of the Commit tee.

Remuneration of Directors:

The de ta ils of Remune rat ion pa id/pa yab le to

Directors during the Financial Year April 1, 201

Ma rch 31, 2012 a re given be low :

a) Executive Directors

Managing Director: Mr. Ashok Capoor

Salary &

Allow ances

Performance

Linked

incentive

Perquisi tes Ret irem

Bene

Rs. Rs. Rs. Rs

15,357,597 9,595,253 5,703,286 3,415,

Notes:

1. Mr. Ashok Capoor was appointed as

Mana ging Director of the Company for a pe

of three years with effect from May 02, 2

The t erms and condit ions of a ppointm

and remunerat ion of Mr. Ashok Capoor

as set out in the resolution approved by

shareholders at the Annual General Mee

held o n Septemb er 29, 2011 and a s per the

of t he Company a s applicab le.

2. The em ploym en t o f Mr. Ashok Cap oo

terminable o n either side by g iving six mo

notice as per the rules of t he Compa ny.

3. The re is no severa nce fee.

4. No stock option ha s been g ranted during

year.



27/125

12

Managing Director: Mr. V.K. Rekhi (Mr. Rekhi)*

Salary &

Allow ances

Performance

Linked

incentive

P erqu isit es Ret irement

Benefits

Rs. Rs. Rs. Rs.

1,387,613 - - 276,777

*1. Mr. Rekhi ceased to be the Mana ging Director

of the Com pa ny w ith eff ect from April 19, 2011

an d a lso resigne d a s a Director of the Compa ny

w ith eff ect from close of business ho urs on April

29, 2011. Accord ingly his remun era tion w a s for

th e p eriod fro m April 01, 2011 to April 19, 2011.

2. The emp loyment o f Mr. Rekhi w a s term inab le

on e ither side b y giving six month s no tice as per

the rules of the Compa ny.

3. There w a s no severan ce fee .

4. No stock option w as granted t o him during the

year.

b) Non - Executive Directors

Sitting Fees are paid to Non-Executive Directors

for at tend ing Board/ Committee Meetings. They

are also entit led to reimbursement of actual travel

expenses, boarding and lodging, conveyance and

incidental expenses incurred for attending such

meetings:

Name of the Director Sitting fees

Dr. Vija y Ma llya 1,20,000

Mr. S.R. Gupt e 3,10,000

Mr. V.K.Rekhi* 20,000

Mr. Asho k Ca po o r N.A.

Mr. M.R.Dora isw a my Iyeng a r 4,20,000

Mr. B.M. La bro o 3,60,000

Mr. Sreedha ra Menon Nil

Mr. Sudhinda r Krisha n Khann a 60,000

Mr. G.N. Ba jpa i** 20,000

* Ceased to be the Manag ing Director with

eff ect fro m April 19, 2011 and a s Director w ith

effect from the close of the business hours

April 29, 2011.

** Appointed a s Addit iona l Director w ith effect

from Jan ua ry 20, 2012.

Non-Executive Directors are also eligible

Commission every year not exceeding one per

of the net prof it s o f the Company a s approve

the shareholders at the Annual General Mee

held on September 29, 2010 to remain in f

for a period of five years from April 1, 2011. Commission may be apportioned amongst

Directors in a ny ma nner they d eem f it .

The Com mission o f Rs. 55,647,000/- o n p ro fit

the year end ed Ma rch 31, 2012 w ill be pa id

adoption of Accounts by Shareholders at

Annual General Meeting to be held on Septem

25, 2012 and appo rtioned amo ng st t he Directo

any ma nner they deem f i t .

c) Particulars of Equity Shares of the Com

currently held by the Directors, are furnibelow:

Name of the Director No. of Shares

Dr. Vija y Ma llya 12

Mr. S.R. Gupt e

Mr. V. K. Rekhi*

Mr. Asho k Ca po o r

Mr. M. R. Dora isw a my Iyeng a r

Mr. B.M. La bro o 1,36

Mr. Sreedha ra Menon

Mr. S. K. Kha nna 2

Mr. G. N. Ba jpa i**

* Ceased to be Mana ging Director with e

from April 19, 2011 and as Directo r w ith e

from the close of business hours on Apri

2011.

** Appointed as Addit ional Director with e

from Jan ua ry 20, 2012.

+ held jointly.

5. SHAREHOLDERS / INVESTORS GRIEVANCE COMMIT

A Sha reholde rs/Investors Grievance Com mitte e

constituted on April 19, 2001, to operate in term

the pro vision s relate d th ereto in the Listing Agree m

w ith th e Stock Excha ng es and /or t he pro vision

prescribed or as may be prescribed in this regard b

Comp a nies Act, 1956.



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The Comm ittee com prises at present t he fo llow ing

Directors:

Mr. M. R. Dora isw a my Iyeng a r, Cha irma n

Mr. B. M. La bro o

Mr. V.S. Venka ta ram a n, Compa ny Secreta ry is t heCompliance Officer.

During the f inancial year fo ur meetings were held

on April 29, 2011, August 03, 2011, November 07,

2011 and January 20, 2012 attended by both Mr. M.R.

Doraisw am y Iyenga r and Mr. B. M. Lab roo, memb ers of

the Committee.

The Compa ny/ Companys Registrars received 78

complaints during the financial year, all of which

were resolved to the sat isfact ion of shareholders/

investors.

There a re no complaint s or Tran sfer of Sha res pending

a s on Ma rch 31, 2012.

The Compa ny also ha s a Comm ittee o f Directo rs w ith

authority delegated by the Board of Directors, inter

a lia , to approve transfer and transmission of shares,

issue o f n ew sha re cert if icat es on a ccount of cert if icat es

lost , defa ced, etc. , dealing w ith mat ters relat ing to po st

amalgamat ion of companies , delegated by the Board

of Directors from time to t ime and for other routine

opera t ions such as issue of pow er of a t to rney, operat ion

of b an k accounts etc.

The Committ ee comprises a t present, of t he fo llow ing

Directors:

Mr. S.R. Gupte

Mr. M.R. Doraisw a my Iyeng ar

Mr. Ashok Capoo r an d

Mr. B.M. La bro o

6. GENERAL BODY MEETINGS

The d eta ils of t he last three Annua l General Meetings

held a re furnished as under:

FinancialYear ended

Date Time Venue

March 31,2011

September29, 2011

11.30a .m.

Goo d ShepherdAuditorium,Opposite St.JosephsPre-University College ,Residency Road,Ban g alo re - 560 025

FinancialYear ended

Date Time Venue

March31, 2010

September29, 2010

11.00a .m.

Goo d ShepherdAudito rium, OppositSt. Josephs Pre-UnivCollege, Residency RBan g alo re - 560 025.

March31,2009

September30, 2009

2.00p.m.

Goo d ShepherdAudito rium, OppositSt. Josephs Pre-UnivCollege, Residency RBan g alo re - 560 025.

The f ollow ing Specia l Resolutions w ere pa ssed b y

Sha reholders at the pa st three Annual Genera l Mee

(AGMs):

AGM held on Subject matter of the Special Resolut

September

29, 2011:

Ap po in t me n t o f / Re m un e r

w payab le to Mr. Ashok Capoor as Mana

Director.

September

29, 2010:

Approval for payment of commissio

Non-Executive Directors

September

30, 2009:

(i) Issue of Securities to ra ise ad dit

funds

(ii) Investment by Foreign Institu

Investors

All the resolutions set out in the Notices inclu

special resolutions as above were passed by

Shareholders.

POSTAL BALLOT

The Comp a ny ha s not pa ssed a ny special resoluat the last Annual General Meeting held which

required to be passed through Postal Ballot as pe

provisions of the Companies Act, 1956 and the

framed thereunder.

No special resolution w as pa ssed throug h Posta l B

during 2011-12.

At this meeting also, there is no special resolu

requiring passing by w ay o f Postal Ballot .

No special resolution is proposed to be passed thr

Posta l Ballot at present .

7. DISCLOSURES

During the financial year ended March 31, 2012

relat ed pa rty transactions w ith its promot ers,

Directors or the management, their subsidiarie

relatives, etc. , have been disclosed in the Note

Accounts.



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14

The Compa ny ha s complied w ith all the stat utory

requirements comprised in the Listing Agreements/

Regu lat ions/Guid elines/Rules of th e Sto ck Excha ng es/

SEBI/ot her sta tu to ry a ut ho rities.

There w ere no insta nces of non -compliance by th e

Company nor have any penalt ies, strictures been

imposed by Stock Exchanges or SEBI or any other

statut ory autho rity since incorporat ion of t he Compan y

on a ny mat t er rela ted to capita l markets.

Code of Conduct

In compliance w ith Cla use 49 of t he Listing Ag reeme nt

w ith the Stock Excha nge s, the Company ha s ad opte d

a Code of Business Conduct and Ethics for its Board

Members and Senior Management Personnel, a

copy of which is available at the Companys website,

w w w.unitedspirits.in. All the membe rs of th e Boa rdand the senior management personnel had a f f irmed

compliance with the Code for the year ended March

31, 2012 an d a declara t ion to this effect sign ed b y the

Mana ging Director is forming pa rt of t his report .

Pursuant to the requirements of SEBI (Prohibition of

Inside r Trad ing) Reg ulat ions, 1992, th e Com pa ny ha s

ad opted a Code of Conduct for Prevent ion of Insider

Trad ing . This Cod e is applica ble t o a ll the Directors a nd

designa ted em ployees of th e Compa ny.

8. MEANS OF COMMUNICATION

The una udite d q ua rterly a nd ha lf-yea rly results are

sent to all the Stock Exchan ge s where t he shares of th e

Compa ny a re listed. The results are n orma lly published

in Business Sta nda rd (English Da ily) and Kann ad a

Prab ha (Ka nna da Daily). The results a re displayed

on the Companys website www.unitedspirits. in. Press

Relea ses are a lso issued, w hich a re also displayed o n the

Companys web site.

The req uired disclosures to t he e xtent a pplicable

including results w ere a lso po sted in the porta lw w w.corpfiling.co. in, w hich is jointly ow ned, ma nag ed

an d ma intained by Bomb ay Stock Exchan ge Limited a nd

Nation al Stock Excha ng e of India Limited.

The Compa ny ha s designa ted an exclusive E-ma il Id viz.

[email protected] to enable the investors to post

the ir g rievan ces a nd m onito r its redressa l.

9. MANAGEMENT DISCUSSION AND ANALYSIS REPOR

Management Discussion and Analysis Repor

appended and forms an integral part o f th is An

Report.

10. GENERAL SHAREHOLDER INFORMATION

a) AGM Date, Time andVenue

Tuesd a y, Sept emb er 25, 2011.30 a.m. at Good ShepAuditorium, Opposite St. JosPre-University College, ResiRoa d, Ba ng alo re - 560 025.

b) Fina ncia l Yea r April 1 to Ma rch 31

First Qu arterly Resu lt s By Au gust 14

Second Quarterly Results By November 14

Third Quarterly Results By February 14

Audited Financial Results By May 30

c) Da t e o f Bo o k clo su re We d ne sd a y, Se pt e mb e r 19, 20to Tuesd a y, Sept emb er 25, 20(bo th da ys inclusive)

d) Dividen d paymen t da te Af ter Septem ber 25, 2012

e) List ing on StockExchanges:

The shares of t he Compa nylisted on the following Exchanges:1. Bang alore Stock Exchang

Limite d (BgSE)2. Bomb ay Stock Excha ng e

Limited, (BSE)3. Nation al Stock Excha ng e

India Limite d (NSE)

The listing fe es fo r th e ye ars 2011-12 and 2012-13 have b eento all the Stock Exchanges.

f ) St o ck Co de

BSE Dema t 532432 Physica l 32432

NSE SYMBOL - McDOWELL-N

Bg SE McDow ellg ) ISIN No. INE854D01016

h) Ma rket price da ta (As per Annexure A)

i) Stock performance incompa rison to BSE Sensex

(As per Anne xure B)

j) Registrar and TransferAgents

Integ rat ed Ente rprises (India) Lim30, Rama na Residency,4th Cross, Sampige Road,Malleswaram, Bangalore-560 Tel. No s. (080) 2346 0815-818Fax No . (080) 2346 0819Email: alf [email protected]

k) Sh are Transfer System Th e p ower to con sider approve share transfertransmission / transpositio

consolidation /subdivision etbeen delegated t o a CommittDirectors as indicated undehead ing Shareholders' / InveGrievance Commit te e. Committee meets generally in a fo rtnight. The req uiremunder the Listing AgreemStatutory regulations in regard are being follow ed.



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l) Dist r ibu t ion o f

Shareholding

As per Anne xure C

m) Dematerialisation of

shares

(as on Ma rch 31, 2012)

Depo sit o ries Sha res %NSDL 120070676 91.80CDSL 7627837 5.83Tota l 127698513 97.63

n) Outstand ing GDRs/ADRs/Warrant s or any oth er

Convertible instruments

1,356,936 Globa l Deposito ry Shares(GDSs) repre sent ing 678,468 Equit y

Share s of Rs.10/- ea ch a s on Ma rch31, 2012 (Tw o GDSs repre sent ing

One e q uity sha re o f Rs.10/- ea ch).

o ) P lan t Loca t ion s 11. Cherthala (Kerala)12. Chenn a i (Ta mil Nadu )13 Hyderaba d I (Andhra Prad esh)14. Hyderabad II (Andhra Pradesh)15. Ponda (Goa )16. Hathidah (Bihar)17. Kumba lgod u (Karnata ka)18. Rosa (Uttar Pradesh)19. Udaipur (Rajasthan)10. Serampo re (West Ben ga l)

11. Bhopa l - I (Mad hya Pra de sh)12. Bhopa l - II (Mad hya Prad esh)13. Asansol (West Bengal)14. Nasik-I (Maharashtra)15. Nasik-II (Maharashtra)16. Pud ucherry (Pondicherry)17. Alw ar (Rajast ha n)18. Aurangabad (Maharashtra)19. Meerut (Utta r Prade sh)20. Hospet (Karnataka)21. Pat hankot (Punjab )22. Palw al (Haryana )23. Gopalpur - on - sea (Orissa)24. Palakkad (Kerala)25. Baddi (Himachal Pradesh)26. Bhad raka li (West Beng al)27. Barama ti (Maha rashtra)28. Zua ri Nag ar (Goa )

p ) Address fo r

correspondence

Shareholder corresponden ceshould be a ddressed to theCompa nys Reg istra rs and Tran sferAgents:Integrated Enterprises (India)Limited,30, Rama na Residency, 4th Cross,Sampige Roa d, Malleswa ram,Ban ga lore-560 003.Tel. Nos. (080) 2346 0815-818Fax No.(080) 2346 0819Ema il: a [email protected]

Investors may also w rite or

conta ct the Compa ny Secretary,Mr. V.S. Venka ta ra ma n o r Mr. B. L.Akshara, Sr. ManagerSecretarialat the Registered Office of theCompa ny a t UB Tow er, No.24,Vitta l Mallya Roa d,Ban ga lore 560 001.

Tel. Nos. (080) 3985 6500,2221 0705.

Fax No. (080) 3985 6862.

In compliance with the provi

of Clause 47(f) of the Li

Agreement with the S

Exchanges, an exclusive ema

viz. [email protected]

been designated for registe

complaint by the Investor its redressal, which has

displayed on the website o

Company w w w.unitedspirits.i

Pursuant to Clause 5A of the Listing Agreement,

Compa nys Registrars & Transfer Age nts have a lr

sent t hree reminders to all the shareholders who se s

cert if icates were returned undelivered and rema

unclaimed. Necessary action is being taken to tran

the unclaimed shares, in respect of the sharehol

who have not yet responded, to a fo l io in the nam

Uncla imed Suspense Account . The vot ing righ ts on

shares shall remain frozen till rightful owners claimshares.

NON MANDATORY REQUIREMENTS

(1) Chairman of the Board

The Compa ny ma inta ins the Chairma ns Offic

Companys expenses and also reimburses the expe

incurred in performa nce of his duties.

(2) Remuneration Committee

The Compa ny has formed a Compensat ion Commit

(3) Shareholder Rights

The Compa nys ha lf yea rly results a re pub lisheEnglish a nd Kan nad a New spapers. Hence, the same

not sent to the shareholders.

(4) Audit qualifications

The Audito rs have issued unq ua lified Re

on the Financial Statements for the year ended M

31, 2012.

(5) Training of Board Members

Having regard to the seniority and expert ise in t

respective areas of specialization, their training is

considered necessary f or th e t ime being.

(6) Mechanism for evaluating non-executive Board MemThe Boa rd of Directors ma y consider a do pting

requirement in future.

(7) Whistle Blower Policy

Thoug h briefly covered in the Code of Cond uct ad o

by the Company, the Board may consider adop

a sepa rat e mecha nism fo r Whistle Blow er Polic

future.



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16

ANNEXURE A: MARKET PRICE DATAUnited Spirits Limited - Monthly BSE United Spirits Limited - Monthly NSE

Month High (Rs.) Low (Rs.) Close (Rs.) Volume Month High (Rs.) Low (Rs.) Close (Rs.) Volum

Apr-11 1,120.55 991.15 1,034.85 517,551 April-11 1,119.70 991.00 1,035.70 6,079,

Ma y-11 1,081.00 1,008.00 1,062.35 442,926 Ma y-11 1,162.20 1,006.00 1,060.70 6,460,

Jun-11 1,069.80 895.65 979.30 344,895 June-11 1,069.60 871.55 980.15 6,941,

Jul-11 1,123.40 973.10 1,020.50 357,692 July-11 1,124.50 974.70 1024.70 5,129,

Aug -11 1,035.95 855.00 895.45 275,521 Aug -11 1,039.00 854.60 897.40 3,655,

Sep-11 936.30 740.00 797.25 727,999 Sep-11 938.00 741.60 795.75 5,846,

Oct -11 931.70 740.00 876.90 1,226,696 Oct -11 934.95 740.00 877.95 6,248,

No v-11 925.70 678.45 699.70 2,759,919 No v-11 928.00 678.50 699.65 14,373,

Dec-11 763.40 480.20 491.15 1,457,642 Dec-11 762.65 479.10 491.90 10,476,

Ja n-12 694.90 450.00 667.60 8,564,764 Ja n-12 6,94.95 477.70 668.15 37,907,

Feb -12 766.25 519.10 572.05 8,943,572 Feb -12 769.80 518.55 572.60 41,645,

Ma r-12 613.00 478.55 606.05 6,659,321 Ma r-12 613.20 478.40 606.05 35,764,

ANNEXURE B: UNITED SPIRITS LIMITED, SHARE PRICES COMPARED TO BSE SENSEX

ANNEXURE C: DISTRIBUTION OF HOLDINGS (as on March 31, 2012)

VALUEWISE CATEGORYWISE

Shareholding

of no minal valueSha reholders Sha re Amount Ca teg ory

No. of

Shares

% of Eq

Capi

Rs. Number % to Tota l in Rs. % to Tota l Promoter Group 36,336,232

(1) (2) (3) (4) (5) Resident Body Corporat e(including clearing members) 2,547,784Upto - 5,000 99,242 97.31 69,881,000 5.34

5,001 - 10,000 1,364 1.34 10,145,780 0.78 Ba nks /FI /FII /MF /UTI /Tru st /Central/Sta te Go vernment &

Insurance Companies 71,757,155

10,001 - 20,000 569 0.56 8,179,620 0.63

20,001 - 30,000 167 0.16 4,217,830 0.32

30,001 - 40,000 93 0.09 3,268,120 0.25 NRI /OCB /FCB /

Foreign Nat ionals 6,369,20640,001 - 50,000 70 0.07 3,242,800 0.25

50,001 - 100,000 130 0.13 9,442,260 0.72 G D S 678,468

100,001 a nd a bove 348 0.34 1,199,572,270 91.71 Resident Ind ividua ls 13,106,123

Total 101,983 100.00 1,307,949,680 100.00 Total 130,794,968 1



32/125

CERTIFICATE ON CORPORATE GOVERNANCE

The Memb ers of,

Unite d Spirits Limited

We ha ve examined the compliance of cond it ions of Corporat e Go verna nce by United Spirits Limited , for th e yea r ende

March 31, 2012 as stipulat ed in Cla use 49 of th e Listing Ag reeme nt, a s a mend ed , of t he said Compa ny w ith Stock Excha

in Ind ia.

The complian ce of cond it ions of Corporat e Go vernan ce is the responsibility of t he ma na gem ent. Our examination

limited to procedures and implement at ion thereof, a do pted b y the Company fo r ensuring t he compliance of t he condi

of Corporat e Governance. It is neither an a udit nor a n expression of o pinion o n the f inancial statem ents of t he Compan

In our opinion a nd to the be st of our info rmation a nd a ccording to the explana tions given to us, we cert ify tha t the Com

has complied w ith the cond it ions of Corporat e Go verna nce as st ipulat ed in the ab ove ment ioned List ing Agreement.

We stat e tha t in respect of investo r grievances received d uring th e yea r ende d o n Ma rch 31, 2012, no g rieva nces a re pen

ag ainst the Compa ny a s per the records maintained by th e Compa ny a nd presented to the Shareho lders/Investors Griev

Committee.

We f urther state tha t such complian ce is neither a n a ssurance a s to f uture viab ility of the Company no r the efficien

effect iveness w ith wh ich the ma na gem ent ha s conducted the a ffa irs of t he Compa ny.

Ba ng a lore M.R. GO PINATH

Ma y 29, 2012 Comp a ny Secreta ry (in pra ctice)

FCS 3812 CP 1030

CEO/CFO CERTIFICATE

In t erms of the req uirement of Clau se 49 of the Listing Ag reeme nt w ith t he Sto ck Excha ng es, the certificate s from CEO

have been obta ined.

Mumba i Ashok Capoor

May 29, 2012 Ma na ging Director

DECLARATION REGARDING AFFIRMATION OF CODE OF CONDUCT

In terms of t he req uirement of Clause 49 of the List ing Agreement, Code of Conduct as approved b y the Boa rd of Directo

the Compa ny on Decembe r 30, 2005 ha d b een d isplayed a t t he Compa nys web site w w w.unitedspirits.in. All the memb e

the Boa rd and the senior man ag ement pe rsonnel had af firmed compliance w ith the Code for the yea r ended Ma rch 31,

Mumba i Ashok Capoor

May 29, 2012 Man a g ing Director


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18

Annexure to Report of the Directors (Con

A. INDUSTRY OVERVIEW:

India is currently the 3rd largest market for branded

alcoholic beverages in the world by volume, and theIndian Spirits Industry accounted for an estimated

13% of the global spirits volumes in calendar year

2011 a ccording to Euromo nitor Interna tiona l. The

India n Alcobev Industry has grow n rap idly in recent

years primarily due to favorable demographic trends,

substantial economic growth, increased per capita

consumption a nd a ma rked shift in societa l accepta nce

of alcohol consumption.

In our estimates, for fiscal 2011-12, the Indian

branded spirits industry was around 295 million cases

(1 case = 9 Bulk Litres). Contra ry to interna tiona l trends,

India continues to remain a browns market with

Whisky, Rum a nd Brandy b eing a dom inant 95% of th e

market .

In 2010, your Company had become the largest

distilled spirits marketeer in the world by volume with

w orldw ide sales of over 114 million ca ses. While la test

figures for other key players for calendar year 2011 are

st ill unavailable, it is our belief that having added on

over 8 million cases in fiscal 2012, w e w ould rema in

a t t h e numero uno position. The w orldw ide sales of

the Compa ny during fisca l 2012 w ere o ver 122 million

cases, of this 119 million cases have b een sold in a sing le

ge og raphy, viz. India.

The India n Spirits market g rew a pproximat ely 8% in

FY12 w hich tran sla te s to a bo ut 22.5 million ca ses. The

sales of the Company grew by 7% during the same

period and added on 8 million cases. In contrast , the

w orlds to p 100 spirits bra nds grew und er 3%*. In2011, 16 of the top 25 global premium brands either

lost g round o r grew under 3%*. Viewed in this ligh t ,

the performance of the Company is even more

remarkable.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

The Indian Spirits ma rket ha s grow n a t a CAGR of

over the last 5 yea rs your Company w hich ha s g

at 13% during the same pe riod , thereby outperfo

the industry.

B. REGULATORY ENVIRONMENT:

The Indian a lcoh olic be verag e ma rket is high ly reg u

resulting in significant ba rriers to ent ry, w hich in

fo sters a stab le compet itive environm ent . As dire

by the Indian Constitution, the regulation, licen

and taxat ion of the alcoholic beverages industry i

prerog at ive of ea ch of t he Indian stat es, not o f the U

Go vernment . This structure crea tes a complex ta x

licensing environmen t w hich limits the com pet itive

of new ma nufa cturers an d new products. Introdu

of new products and new brands must be appr

by each of the Sta tes where they are proposed t

ma nuf a ctured/sold, w hich is a hig hly time a nd ca

intensive process. Production of alcoh olic be ver

requires licenses from respective State Governm

who also control production and movement of key

ma teria ls. Add itiona lly, levies on inter-stat e movem

of spirits and costs associated with logistics often

manufacturers to develop production and distribu

capabilit ies in each of the Indian states in which

ope rat e, req uiring exte nsive capita l investme nts.

result, only few Spirits ma nufa cturers ope rat ing in

have b een a ble to find the ir w ay successfully around

labyrinth.

A Go od s an d Services Ta x (GST) reg ime w ou ld

played a part in smoothening inter-state

and commerce for the alcoholic beverages indu

but with states reluctant to give up their fautonomy and control over this industry, and ov

few ot hers like Electricity, Coa l an d Rea l Estat e,

improba ble tha t G ST w ill cover alcoholic beverag

the near term.

* Source Impact Dat aba nk


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C. BUSINESS ANALYSIS:

India n GDP has grow n from a pproximat ely Rs.34.5

trillion in 2005 to a ppro ximat ely Rs.51.9 trillion in 2010.

Along w ith th is, India is a lso experiencing a rise in the

averag e level of disposable income per household as a

result of which they are increasingly trading up from

country liquor and low-end branded alcoholic spirits.

With an increasing number of young Indians entering

the consumer ba se for a lcoho lic spirits, the India n Spirits

ma rket ha s a certain deg ree of insulat ion from econom ic

cycles this is evidenced by the 14.8% increase in the

value of to ta l spirits sold during the years of the g loba l

econo mic slow do w n in 2007-08.

How ever, com mod ity cycles con tinue to a ffe ct the spirits

industry. With the f ixat ion of a more-tha n-comforta bleflo or price of Rs.27/litre fo r eth a no l supplies fo r oil

blending b y the Oil Marketing Companies, the po tent ial

a vailability o f Extra Neut ral Alcohol (ENA) to the pot a ble

a lcoh olic industry could be hamp ered . Apa rt from this,

the increased floor price takes the price of ENA for the

pota ble sector to a highe r level. Add it iona lly, sta te-

specific imbrog lios like th e o ne in U.P., an d uncont rolled

grant of permissions to export molasses and spirit as

in Maharashtra, are serious cost dampeners for the

domestic spirits industry.

Your Company, as part of its business strategy, has

initiated the build up of supply side security by

integra t ing ba ckw ards into dist illat ion. In a move that

w as sta rted to w ards the end of f iscal 2011, your Compa ny

continued w ith this init iat ive and acquired substa ntial

interest in Pioneer Distilleries Limited in Maharashtra

and Sovereign Distilleries Limited in North Central

Karnataka both states rich in sugarcane cult ivat ion.

These tw o un its along w ith the earlier a cquisit ion,

Tern Distilleries Privat e Limited , nea r Visha kap a tn a m(Andhra Pradesh) have a combined distillation capacity

of 378 Kilo Litres per d a y (KLPD) w hich w ou ld repre sent

20% of o ur current ENA req uirement s. Bala ncing

investments are currently being made to utilize these

capacit ies to the hilt and reduce our dependence on

external suppliers, and in the process capture the Make

vs. Buy arbitrag e currently lying in the ha nds of ext

agencies.

The prices of an ot her key input viz. Glass Bott les

affected by the increase in the price of crude an

gen eral inflat ionary condit ions. As a conseq uenc

increase of approximately 8% on Glass Bottles ha

be g ran ted to suppliers during Q4 of f iscal 2012.

Company, as part of its business strategy initiative

envisaged sett ing up a glass manufacturing facili

South India for captive consumption.

Your Company's leadership position in the In

Branded Distilled Spirits Market coupled with

widespread geographical footprint o f owned, le

and contracted manufacturing facilit ies across I

provides us significan t operat ional advant ag es. than 10% of the products sold in a state, cross i

sta te bo rders.

As of Ma rch 31, 2012 your Compa ny ow ned

manufacturing facilit ies in India and one in N

operated 10 leased facilities in India from 3rd pa

and contracted with 50 t ie-up manufacturing faci

that are capable of dist illing molasses or grai

prod uce ENA. This ge og raph ica lly d iverse ma nuf a ctu

footprint helps your Company reduce the other

high cost associated with inter-state commercminimizing inter-state taxes and duties as also the

of t ransporta t ion.

Sales of the Companys brands grew 7% to over

million ca ses (Previous Yea r 112 million); to g et her

the sales of internationa l subsidiaries, volumes w e

over 122 million cases (Previous Year 114 million).

As part of the Companys continued focus

premiumizat ion, sales volumes in th e " Prest ige

Abo ve" segme nts grew 15% to 26.8 million case

a result , favorab ly impa cting the g row th in sales v

a nd EBIDTA.

Tw o ma rkets tha t a dversely affected t he performa n

your Compa ny during t he fisca l yea r, are West Beng

Ta mil Na du. West Beng a l hiked the d uties on alco

spirits sha rply in Aug -Sept11 w hich resulted in

Annexure to Report of the Directors (Contd.)


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20

de-grow th during the 3 month s immediately follow ing

the hike. While the d e-g row th in Q4 of FY12 has come

down to 19% both for the Company and the industry,

the sharp drop in volumes in a very profitab le market

a ffe cted the Com pa ny's overa ll business g row th. The

de-growth in volumes in West Bengal is on the decline

signifying an acceptance, albeit slow, of the increased

consumer prices. Your Company has taken remedial

mea sures to soft en the impact on its portfo lio w hich are

yielding t he d esired results. The Compa ny expects tha t

over the next couple of quarters the situat ion would

correct itself.

In Tam il Nad u, ano ther large ma rket b oth for t he

industry and for your Company, there was a sustained

attempt at favoring new, local players at the cost of

established national players like your Company. Your

Company had the largest market share in this market

and this at tempt at favorit ism with reference to

consumer dema nd a ffected your Compa ny substant ially.

While the situa tion is g rad ua lly correcting itself an d o ur

ma rket shares in the sta te a re climbing, th ey are yet t o

reach the levels that existed before this at tempt was

m a d e .

D. MARKETING:

As per the data for 2011 calendar year compiled by

Impact Da ta ba nk and pub lished b y Impa ct Interna tiona l,

a leading alcoholic beverage magazine, your Company

is one of only two players with 12 brands among the

Top 100 spirits bran ds w orldw ide.

McDow ells No.1 Whisky is India s larg est selling spirits

bra nd w ith sales of 16.9 million cases during f iscal 2012.

The McDow ells No.1 fra nchise w hich h a s a presence

across the Whisky, Brandy and Rum flavours sold over

44.5 million cases, an increa se of 9% over t he 40 millioncases it sold in the previous fiscal.

As per Impa ct Inte rna tiona l, McDow ells No.1 Brand y

continues to remain the worlds largest selling brandy

w ith sales in excess of 11.5 million cases. For th e rea sons

explained ea rlier in this no te t he b ran d, fo r w hich Ta mil

Nadu is a key market , was impacted by environm

condit ions thereby a ffect ing its overall grow th.

McDow ells No.1 Celebra tion Rum w ith sales in exce

16 million cases g rew a t 11% to becom e the w orld

larg est Rum a nd b y fa r, India s larg est.

Your Com pa ny en de d f iscal 2012 with 22 Million

brands brands that sell over a million cases in a f

year.

McDow ells VSOP Brand y, lau nched in fisca l

became a Millionaire brand during th e current ye

Your Company has always been on the lookou

w hite spaces in the price lad der and at tempt ed to

them with new of fer ings so that i t is able to r

consumers w ithin its portfolio even w hen t hey movor dow n the price ladd er on any occasion. As part o

continuing strat eg y, your Compa ny launched Signa

Premier, a prem ium w hisky blended w ith 8 Yea r

Scotch which has received a very good response

the tra de a nd from the consumers. Sales of th is br

in the few markets where it has been launched du

the fiscal year, have exceeded all internal expectati

Vladivar Vodka, a brand from the Whyte and Ma

stab le wa s launched both as a s tanda lone Vodka b

an d w ith tw in flavored variants. Flavours like LemMint, Green Apple &Mint and Orange &Pepper a

first in the industry.

To allow the nume rous consumers of McDow ells

Celebrat ion Rum, a quality option to upgrade

your Compa ny launched McDow ells No.1 Ca riba

blended w ith imported Ja ma ican Rum spirit . Alth

as yet launched only in a couple o f m arkets, the resp

from consumers has been overwhe lming.

Last f iscal, your Company had experimented

a repositioning of Royal Challenge Whisky in s

markets as part of a strategy to facilitate consume

conveniently step-up from one price band to an o

w ithout ha ving t o lea p acr

united spirits report

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