USL Annual Report 08 09

Report of the Directors 1

Corporate Governance Report 10

Management Discussion &

Analysis Report 19

Auditors’ Report 22

Balance Sheet 26

Profit and Loss Account 27

Cash Flow Statement 28

Schedules 30

Consolidated Financial Statements 75

C O N T E N T S

Dr. Vijay MallyaChairman

PB

DIRECTORS

VIJAY MALLYA,

Chairman

S.R.GUPTE,

Vice Chairman

V.K.REKHI,

Managing Director

M.R. DORAISWAMY IYENGAR

B.M. LABROO

SREEDHARA MENON

SUDHINDAR KRISHAN KHANNA

PRESIDENT & CFO – THE UB GROUPRAVI NEDUNGADI

DEPUTY PRESIDENT & CHIEF FINANCIAL OFFICERP.A.MURALI

COMPANY SECRETARYV.S.VENKATARAMAN

AUDITORSPRICE WATERHOUSE, CHARTERED ACCOUNTANTS, BANGALORE

REGISTERED & CORPORATE OFFICE‘UB TOWER’, # 24, VITTAL MALLYA ROAD,

BANGALORE – 560 001

32

32 1

Report of the Directors

Your Directors have pleasure in presenting the Annual Report of your Company and the audited accounts for the year ended March 31, 2009.

At the outset, your Directors are glad to report that the Scheme of Amalgamation of Shaw Wallace & Company Limited and Primo Distributors Private Limited with the Company (“the Scheme”) has been sanctioned by the Hon’ble High Courts of Karnataka, Bombay and Calcutta and the Scheme has become effective on July 6, 2009. The Amalgamation takes effect from April 1, 2007, being the Appointed Date.

Your Directors are also glad to report that the Scheme of Amalgamation of Zelinka Limited with the Company with the Appointed Date of April 1, 2007 has became operative from March 26, 2009 pursuant to a Scheme of Amalgamation sanctioned by the Hon’ble High Court of Karnataka at Bangalore and compliance of the procedure required to be followed by Zelinka Limited under the local laws of Cyprus.

Accordingly, the financial results for the year ended March 31, 2009 also include those relating to the amalgamating Companies.

FINANCIAL RESULTS

Rupees in Millions2008-09 2007-08

The working of your Company for the year under review resulted in

Profit from operations• 4,953.169 5,175.774Less:

Depreciation• 361.565 326.112Taxation •

(including deferred tax) 1,624.980 1,736.903Profit after tax• 2,966.624 3,112.759

Profit B/F from previous year Profit transferred on Amalgamation

7,018.342103.983

4,411.221-

Profit available for appropriation 10,088.949 7,523.980

Your Directors have made the following appropriations:

To General ReserveTo Capital Redemption Reserve

Proposed Dividend: Preference Shares Equity Shares

Corporate Tax on Proposed Dividend

350.000-

-215.825

36.679

250.00077.500

1.930150.331

25.877Balance carried to the Balance Sheet 9,486.445 7,018.342EPS – Basic – RupeesEPS – Diluted – Rupees

27.4927.49

31.8431.40

Your Directors propose a Dividend on the equity shares of the Company at the rate of Rs.2/- per share, including on 7,749,121 equity shares of Rs.10/- each fully paid-up allotted to the shareholders of Shaw Wallace & Company Limited pursuant to the Scheme of Amalgamation sanctioned by the Hon’ble High Courts of Karnataka, Bombay and Calcutta.

CAPITAL

In terms of the Scheme of Amalgamation (“the Scheme”) sanctioned by the Hon’ble High Courts of Karnataka, Bombay and Calcutta, the Authorised Capital of Shaw Wallace & Company Limited and Primo Distributors Private Limited, the Transferor Companies stood combined with that of your Company. Consequently, the Authorised Capital of the Company stands increased from Rs.1,200,000,000/- divided into 110,000,000 equity shares of Rs.10/- each and 10,000,000 Preference Shares of Rs.10/- each to Rs.3,292,000,000/- divided into 245,000,000 Equity Shares of Rs.10/- each and 84,200,000 Preference Shares of Rs.10/- each.

In terms of the Scheme, 7,749,121 Equity shares of Rs.10/- each, fully paid-up were issued and allotted on July 24, 2009 to the shareholders of Shaw Wallace & Company Limited in the ratio specified in the Scheme. Consequently, the Issued, Subscribed and Paid-up Equity Share Capital of the Company stood increased from Rs.1,001,632,560/- divided into 100,163,256 equity shares of Rs.10/- each to Rs.1,079,123,770/- divided into 107,912,377 equity shares of Rs.10/- each.

PERFORMANCE OF THE COMPANY

The Company has been able to record a 20% growth in volumes during the year with some key brands such as Signature Whisky recording a growth of 27% to enter the Millionaires Club. The umbrella McDowell’s brand continues its buoyant growth and has earned the distinction of being India’s largest consumer brand calculated by retail value of sales.

With over 50% of India’s 1.2 billion population not having yet achieved legal drinking age, the industry is currently witnessing a demographic window of opportunity with large number of first time consumers entering the market.

The year however, witnessed a steep rise in input costs. Reduced sugarcane output and a political stand off between state governments and sugarcane farmers in key producing states during the crushing season, resulted in unprecedented

spike in input costs. Despite an impact of over Rs.3.5 billion

542

on account of higher input prices during the year, the

Company managed to show only a marginal reduction in

profits for the year which stood at Rs.2.97 billion as against

Rs.3.11 billion in the previous year.

AMALGAMATION

Amalgamation of Shaw Wallace & Company Limited and Primo Distributors Private Limited with the Company:

In terms of the Scheme of Amalgamation of Shaw Wallace

& Company Limited (SWCL) and Primo Distributors Private

Limited (Primo) with the Company (“the Scheme”) sanctioned

by the Hon’ble High Courts of Karnataka, Bombay and

Calcutta, which became effective on July 6, 2009, with

Appointed Date as April 1, 2007:

• SWCL and Primo, both subsidiaries of the Company were

amalgamated with the Company and the entire business

and whole of the undertaking of the said transferor

companies stood transferred to and vested in the

Company;

• The shareholders of erstwhile SWCL were issued and

allotted in aggregate 7,749,121 Equity Shares of Rs.10/-

each fully paid-up in the Company in the ratio of 4 equity

shares of Rs.10/- each fully paid-up in the Company for

every 17 equity shares of Rs.10/- each fully paid-up in

SWCL;

• 15,072,311 equity shares of Rs.10/- each representing,

31.40% of the paid-up capital of SWCL held by the

Company stood cancelled upon the Scheme becoming

effective;

• The Equity Shares held by the Company in Primo

were cancelled without any exchange of shares in the

Company, as its entire paid-up share capital was held by

the Company.

• Consequent to the Scheme becoming effective, Primo

stood dissolved without winding up. SWCL will be

dissolved without winding up under a separate Order of

the Hon’ble High Court at Calcutta.

In terms of the Scheme, a Trust in the name of Primo Benefit

Trust and a Trust in the name of SWC Benefit Trust were

created for transfer of 1,306,431 Equity shares held by Primo

and 10,282,553 equity shares held by SWCL in the Company to

the aforesaid Trusts respectively. Upon the Scheme becoming

effective, the beneficial interest in SWC Benefit Trust and

Primo Benefit Trust stands transferred and vested in the USL

Benefit Trust, whose beneficiary is the Company. Subsequent

to the year end, SWCL has sold 10,282,553 Equity Shares held

by it in the Company in the open market, through the stock

exchanges and 1,306,431 equity shares held by Primo in the

Company has been transferred to Primo Benefit Trust. Upon

the Scheme becoming effective, the shares held by Primo

Benefit Trust stood transferred to and vest with USL Benefit

Trust.

Amalgamation of Zelinka Limited with the Company:

In terms of the Scheme of Amalgamation of Zelinka Limited

with United Spirits Limited as sanctioned by the Hon’ble High

Court of Karnataka at Bangalore and subsequent compliance

of the procedure required to be followed by Zelinka Limited

under the local laws of Cyprus, which became operative on

March 26, 2009, with Appointed Date as April 1, 2007:

• the entire undertaking of Zelinka Limited including all

assets and liabilities, stood transferred to and vested in

the Company;

• The Equity Shares held by the Company in Zelinka Limited

were cancelled without any exchange of shares in the

Company, as its entire paid-up share capital was held by

the Company.

Amalgamation of Balaji Distilleries Limited with the

Company:

Balaji Distilleries Limited (BDL), which has been a contract

manufacturing unit of the UB Group ever since its inception

in the year 1983, is proposed to be amalgamated with the

Company with effect from April 1, 2009, being the Appointed

Date. BDL has a large state of the art distillery and brewery

in Tamil Nadu. The distillery has a capacity to produce Ten

million cases per year while the brewery has a capacity of

Nine million dozens per annum expandable to about twelve

million dozens. BDL incurred huge losses resulting in the

erosion of its entire Net Worth and in consequence, BDL on

reference, has been declared as a sick industrial undertaking

under the Sick Industrial Companies (Special Provisions) Act,

1985 (SICA).

The draft Rehabilitation Scheme along with the Scheme of

Arrangement between Balaji Distilleries Limited, Chennai

Report of the Directors (Contd.)Report of the Directors (Contd.)

54 3


Breweries Private Limited and United Spirits Limited has

been submitted to the Board for Industrial and Financial

Reconstruction (BIFR). The Scheme of Arrangement will

become effective on receipt of necessary approval from

BIFR.

SUBSIDIARIES

During the year under review, United Spirits (Shangai)

Trading Company Limited became a wholly owned subsidiary

of your Company.

Consequent upon the amalgamation of Shaw Wallace &

Company Limited and Primo Distributors Private Limited

with the Company:

• Shaw Wallace & Company Limited and Primo Distributors

Private Limited ceased to be subsidiaries of the

Company;

• Shaw Wallace Breweries Limited became direct subsidiary

of the Company;

Consequent upon the amalgamation of Zelinka Limited with

the Company:

• Zelinka Limited ceased to be a wholly owned subsidiary

of the Company;

• Palmer Investment Group Limited and Montrose

International S.A. became direct wholly owned

subsidiaries of the Company;

• Liquidity Inc. became a direct subsidiary of the Company.

The Company has made application to the Government of

India pursuant to Section 212(8) of the Companies Act, 1956

seeking approval for exempting the Company from attaching

with the accounts of the Company, the Balance Sheet, Profit

& Loss Account, Directors’ Report, Auditors’ Report and

other particulars of the Subsidiary Companies as on March

31, 2009. The necessary approval in this regard is awaited.

Pending such approval, Balance Sheet, Profit & Loss Account,

Directors’ Report, Auditors’ Report and other particulars of

the subsidiary companies as on March 31, 2009 have not been

attached with the accounts of the Companies concerned.

The documents/details will be made available to any Member

of the Company and its subsidiaries upon request to the

Company. The annual accounts of the subsidiary Companies

as on March 31, 2009 will also be kept for inspection by any

member at the Registered Office of the Company and that of

the subsidiary Companies concerned.

The Accounting year of United Spirits Nepal Private Limited

(USNPL), your Company’s Subsidiary in Nepal is from mid-

July to mid-July every year. Accordingly, Accounting year of

2007-08 of USNPL ended on July 15, 2008 and the Accounting

year 2008-09 ended on July 14, 2009, i.e., after the end of

the close of the financial year of the Company, which ended

on March 31, 2009. For the purpose of compliance under

Accounting Standard – 21, relating to “Consolidated Financial

Statement,” the Accounts of USNPL has been drawn up to

March 31, 2009.

For the purpose of compliance under Accounting

Standard - 21, “Consolidated Financial Statement” presented

by the Company includes the financial information of its

subsidiaries.

PROSPECTS

The IMFL industry has been growing at a fast pace and the

rate of growth seems to be accelerating. This is due to a

combination of first time entrants to the market upon

attaining legal age and uptrading from country liquor. For

the year ended March 31, 2009, the total IMFL industry stood

at 214 million cases and it is anticipated that double digit

growth will continue in the industry for several years to

come.

Input costs have been on the rise for the last two years and

continue to be a cause of concern. However, supply side

constraints are somewhat mitigated by reduction in demand

for industrial use of alcohol and new grain distillation

facilities that have come up in various parts of the country.

Your Company, as the clear market leader would expect to

garner a major share of the growth prospects of the industry,

while being able to parley its critical size to ensure consistent

availability of inputs at competitive prices.

Efforts by the Company to generate resources to pre pay

loans were successfully initiated with the sale of 10,282,553

“Treasury Shares”, which raised about US$ 186 million. Plans

have been drawn up for raising additional sums to further

repay debt, which will have the beneficial impact of lower

interest costs in the coming years.

764

The demand for Scotch continues to grow, especially from

new markets in Asia and this has led to the continued

hardening of scotch prices, thus affirming the strategic

advantage of the Whyte and Mackay acquisition.

The consolidated accounts for the year include non cash

adjustments, reflecting changes in the relative exchange rates

of reporting currency, the US Dollar and the Great Britain

Pound. While Accounting Standards require the Company

to recognize these differences in a calibrated manner over

three years, the same is not viewed as a business constraint.

DEPOSITORY SYSTEM

The trading of the equity shares in your Company is under

compulsory dematerialisation mode. As of date, equity

shares representing 94.66% of the equity share capital

are in dematerialised form. As the depository system

offers numerous advantages, members are requested to

take advantage of the same and avail of the facility of

dematerialisation of the Company’s shares.

DIRECTORS

Mr. Sreedhara Menon and Dr.Vijay Mallya retire by rotation

and being eligible, offer themselves for re-appointment.

AUDITORS

M/s. Price Waterhouse, your Company's Auditors, are eligible

for re-appointment at the Annual General Meeting and it is

necessary to fix their remuneration.

TAX AUDITORS

Your Directors have appointed M/s. Lodha & Co., Chartered

Accountants as the Tax Auditors of the Company to carry out

the tax audit of the Company for the year ended March 31,

2009.

LISTING OF SHARES OF THE COMPANY

Your Company’s Equity Shares have been delisted from the

Stock Exchanges at Ahmedabad, Chennai, Delhi and Kolkata

in accordance with the shareholders’ approval at the Annual

General Meeting of the Company held on November 28,

2007.

The Equity Shares of your Company continue to remain

listed on Bangalore Stock Exchange Limited, Bombay Stock

Exchange Limited and National Stock Exchange of India

Limited. The listing fees for the year 2009-10 have been paid

to these Stock Exchanges.

7,749,121 equity shares issued and allotted to the

shareholders of erstwhile Shaw Wallace & Company Limited

in terms of the Scheme of Amalgamation will be listed on

the stock exchanges where the existing equity shares of the

Company are presently listed and necessary steps have been

taken by your company in this regard.

GLOBAL DEPOSITARY SHARES

Your Company had issued 17,502,762 Global Depositary

Shares (GDSs) representing 8,751,381 Equity Shares ranking

pari-passu in all respects with the existing paid-up equity

shares, 2 GDSs representing 1 equity share of par value of

Rs.10/- each at US$7.4274 per GDSs aggregating to US$

130 mn. These GDSs are listed on the Luxembourg Stock

Exchange.

As on July 24, 2009, there is an outstanding of 689,900 GDSs

representing 344,950 equity shares.

CREDIT RATING

ICRA Limited (ICRA) has assigned “LA-“ (pronounced

LA minus) rating on the long term scale to the Long Term

Debt Programme of the Company (Basel II) and also assigned

"A1” (pronounced A One) rating on the short term scale to

the Short Term Debt Programme of the Company.

CORPORATE GOVERNANCE

A report on the Corporate Governance is annexed separately as part of this report along with a certificate of compliance from a Company Secretary in practice. Necessary requirements of obtaining certifications/declarations in terms of Clause 49 have been complied with.

MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, Management Discussion and analysis Report is annexed and forms an integral part of the Annual Report.

FIXED DEPOSITS

Fixed Deposits from the public and shareholders, stood at Rs.654.01 million as at March 31, 2009. Matured deposits


76 5


for which disposal instructions had not been received from concerned depositors stood at Rs.28.07 million as at March 31, 2009. Of this, a sum of Rs. 7.51 million has been since paid as per instructions received after the year-end.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Section 205A(5) and 205C of the Companies Act, 1956, the Unclaimed Dividend, Debentures and Deposits, remaining unclaimed and unpaid for more than 7 years, have been transferred to the Investor Education and Protection Fund.

HUMAN RESOURCES

Employee relations remained cordial at all the Company’s locations.

Particulars of employees drawing an aggregate remuneration of Rs.2,400,000/- or above per annum or Rs.200,000/- or above per month, as required under Section 217(2A) of the Companies Act, 1956, are annexed.

EMPLOYEE STOCK OPTION SCHEME

The Company has not offered any stock option to the Employees during the year 2008-2009 either under the McD ESOP Scheme or McD-Employee Stock Option

Scheme – 2002.

CONSERVATION OF ENERGY & TECHNOLOGY

ABSORPTION, ETC.

In accordance with the provision of Section 217(1)(e) of the

Companies Act, 1956, read with the Companies (Disclosure

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

1988, the required information relating to Conservation

of Energy, Technology Absorption and Foreign Exchange

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 2008-09, the

Board of Directors reports that:

in the preparation of the annual accounts, the applicable •accounting standards have been followed along with

proper explanation relating to material departures;

accounting policies have been selected and applied •consistently and that the judgements and estimates made

are reasonable and prudent so as to give a true and fair

view of the state of affairs of the Company as at the end

of the financial year and of the profit of the Company for

the year ended March 31, 2009;

proper and sufficient care have been taken for the •maintenance of adequate accounting records in

accordance with the provisions of the Companies Act,

1956, for safeguarding the assets of the Company and for

preventing and detecting fraud and other irregularities;

the annual accounts have been prepared on a going •concern basis.

THANK YOU

Your Directors place on record their sincere appreciation for

the continued support from the shareholders, customers,

suppliers, banks and financial institutions and other business

associates. A particular note of thanks to all employees of

your Company, without whose contribution, your Company

could not have achieved the year’s performance.

By Authority of the Board

BangaloreJuly 29, 2009

Dr. VIJAY MALLYA Chairman

986


ANNEXURE TO DIRECTORS’ REPORT[Additional information given pursuant to requirement of Section 217(1)(e) of the Companies Act, 1956]

CONSERVATION OF ENERGYWith reference to energy conservation and cost reduction, steps taken by the company at its various manufacturing units were as follows:-

• Energy Audits were undertaken and devices such as ‘Power Bos’, ‘Variable Frequency Drive’ and ‘Automatic Power Factor Control unit’ were installed for conservation of electrical and thermal energies.

• Process plant revamp was done to reduce steam consumption.

• Plate Heat Exchangers were installed for Heat Recovery.

• Steam driven condensate recovery pumps were installed for reducing Electrical / Fuel consumption.

RESEARCH & DEVELOPMENT (R&D)As an ongoing process the Company carries out research in its State-of-the-art in-house Research and Development Centre for development of new-age products, new innovative packaging materials and analytical method for quality management.

Expenditure on R & D: (Rs. in Million)

(a) Capital - 0.214

(b) Recurring - 30.033

(c) Total - 30.247

(d) Total R & D expenditure as a percentage of total turnover – 0.08%

TECHNOLOGY ABSORPTIONTechnology imported during the last 5 years : Nil

• The Company is evaluating latest Technology for effluent Treatment of Distillery waste by a new process called evaporation / incineration.

• Imported labeling machines were installed for labeling of premium products to further enhance the quality of finished product.

• The Company perfected the art of sleeving technology by importing sleeving machine for full body sleeving of certain White Spirit Brands.

• The Company is also evaluating the use of Gas Turbines for utilizing Methane gas produced in Anaerobic Digester and generating captive power for running the Distilleries.

FOREIGN EXCHANGE EARNINGS/OUTGO (Rupees in Million)

2008-09 2007-08

1 Exports & Foreign Exchange earnings 42.142 19.597

2 Imports / Expenditure in Foreign Currency 1,944.014 792.318



Dr. VIJAY MALLYAChairman

98 7


STATEMENT OF PARTICULARS OF EMPLOYEES AS REQUIRED UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956 AND COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975.

SL.No NAME AGE DESIGNATION/ NATURE OF DUTIES

REMUNERA-TION(Rs.)

QUALIFICATION

EXPERI-ENCE

IN YEARS

DATE OF COMMENCE-

MENT OF EMPLOY-

MENT

PARTICULARS OF PREVIOUS EMPLOYMENT

1 A R BANERJEE 51 ASSISTANT VICE PRESIDENT - FINANCE & ACCOUNTS

4,375,118 B.COM (HONS)., AICWA 30 1-Oct-85 Cost Accountant, Bengal Waterproof Limited

2 A HARISHA BHAT 55 DEPUTY PRESIDENT & GROUP TREASURER 8,658,348 CA 31 22-Nov-90 Manager Treasury, Digital Equipment (I) Limited

3 ABHAY KEWADKAR 48 SENIOR VICE PRESIDENT - WINES 4,632,010 B.TECH (CHEM) 27 23-Aug-06 Vice President & Wine Maker, Grover Vineyards Limited

4 AJAY B BALIGA* 50 EXECUTIVE VICE PRESIDENT - PPMQC 2,296,350 B.TECH (CHEM ENGG) 27 3-Nov-08 Senior Vice President - Business Development & Mfg, Allied Blenders & Distillers Pvt Limited

5 ALOK GUPTA* 43 EXECUTIVE VICE PRESIDENT - MARKETING & BRAND INDIA

3,606,686 B.COM, PGDM 21 21-Feb-95 Deputy General Manager, Shaw Wallace & Company Limited

6 ALOK KUMAR SEN 54 SENIOR GENERAL MANAGER - MATERIALS 2,934,709 M.COM 30 19-Apr-82 Accounts Executive, Calcutta Industrial Supply Corporation

7 AMRIT THOMAS 42 EXECUTIVE VICE PRESIDENT - MARKETING 12,137,840 B.TECH, PGDM 17 12-Jun-07 Category Head - Beverages, Hindustan Lever Limited

8 ANANT IYER 49 DIVISIONAL VICE PRESIDENT - INSTITUTIONAL & TRADE MARKETING

6,185,605 M.SC., M.M.S. 25 15-Jun-92 Controller - Marketing, Consolidated Distilleries Limited

9 ANIL KUMAR KUSH 53 CHIEF EXECUTIVE - VITTAL MALLYA SCIENTIFIC RESEARCH FOUNDATION

9,488,777 PHD, MBA 25 13-May-05 Scientific Director, Genesis Management Consultants

10 ARUN BOPAIAH 57 DIVISIONAL VICE PRESIDENT - MANUFACTURING

4,570,305 B.SC, LLB 28 27-Oct-93 Manager - Personnel & Admin, Karnataka Jewels Limited

11 ARUN MOKAL 52 GENERAL MANAGER - ADMINISTRATION 2,537,532 B.COM 30 15-Apr-85 Mackinnon Mackensieco Limited

12 ARVIND JAIN 46 DIVISIONAL VICE PRESIDENT - SALES 4,746,485 PGDM 25 12-Apr-91 Area Manager, Titan Watches Limited.

13 ASHOK CAPOOR 56 DEPUTY PRESIDENT 18,974,061 B.A. (ECO), MBA 34 12-May-92 Chief Operating Officer, erstwhile Herbertsons Limited

14 ASHWIN MALIK* 51 CHIEF OPERATING OFFICER OF A SUBSIDIARY COMPANY

8,529,076 B.A. (ECO), MBA 29 1-Nov-88 Vice President Sales & Marketing, Carew Phipson Limited

15 B NARAYANA RAJU 55 ASSISTANT VICE PRESIDENT - DISTILLERY 2,677,490 M.SC 29 24-Jun-02 General Manager - Production & Admin,Balaji Group

16 BHARATH RAGHAVAN 45 DIVISIONAL VICE PRESIDENT - LEGAL & SECRETARIAL

3,860,638 B.COM, ACS 23 13-Feb-98 Senior Manager - Fixed Income, Peregrine Capital India Private Limited

17 DALIP KUMAR GARG 55 DIVISIONAL VICE PRESIDENT - SALES 4,877,446 B.A 30 4-Oct-01 Vice President - Sales, Millenium Breweries Limited

18 DEBABRATHA BANERJEE* 49 SENIOR VICE PRESIDENT - SALES 3,452,403 PGDBM 28 1-Nov-96 Chief Operating Officer, erstwhile Herbertsons Limited

19 DEBASHISH SHYAM 41 DIVISIONAL VICE PRESIDENT - MARKETING

4,670,002 BSC, PGDBM 18 20-Sep-04 Head - Marketing & Alliances (Internet Services), Bharti Infotel Limited, New Delhi

20 DEBASISH DAS 51 DIVISIONAL VICE PRESIDENT - MANUFACTURING (SOUTH)

4,895,189 BSC, B.TECH, PGDBM 26 20-Aug-84 Chemist, Eastern Distilleries Private Limited

21 DHARMARAJAN S 51 DIVISIONAL VICE PRESIDENT - FINANCE & ACCOUNTS

4,917,754 B.COM, ACA, LLB 25 7-Nov-86 Consultant, N M Raiji & Company

22 DR. BINOD K MAITIN 60 SENIOR VICE PRESIDENT - QUALITY ASSURANCE & TECHNICAL

6,041,753 M.SC., PH.D., 38 14-Dec-88 Senior Research Officer & Head, Analytical Research Group, Shriram Institute For Industrial Research

23 G DEVANATHAN 53 SENIOR GENERAL MANAGER - INFORMATION SYSTEMS

3,356,473 B.SC. 31 3-May-95 General Systems Manager, Amco Batteries Limited

24 I.P. SURESH MENON 52 SENIOR VICE PRESIDENT - PLANNING & CONTROL

7,713,678 B.A. (HONS.) MMS 31 1-Apr-85 Secretary & Finance Manager ,UB Electronic Instruments Limited

25 JOHN MATHEW ANTHRAPER

36 SENIOR GENERAL MANAGER - MARKETING

2,719,735 MSC, MBA 12 19-Jan-05 Britania Industries Limited

26 JOSEPH P C 56 GENERAL MANAGER - SALES (CSD) 2,613,243 B.A. 35 11-Oct-76 Packsell Combine, Office Assistant

27 K. KRISHNAMOORTHY 58 ASSISTANT VICE PRESIDENT & COMPANY SECRETARY - SHAW WALLACE & COMPANY LIMITED

3,666,185 B.Com (Hons), LLB, ACS., Inter ICWA

38 3-Sep-93 General Manager (Corp. Finance) & Company Secretary, Ceeta Industries Limited,.

28 K R SANKARANARAYANA 53 SENIOR GENERAL MANAGER - TECHNICAL 7,908,779 M.SC., DIFAT 30 2-Jul-79 Executive, Tunga Bhadra Sugar Works

29 K VIJAY KUMAR 44 SENIOR GENERAL MANAGER - DISTILLERY 2,437,580 B.SC, PDDBM, DIFAT 22 17-Feb-04 UDV India Limited

30 KAUSHIK CHATTERJEE 48 CHIEF OPERATING OFFICER - REGIONAL PROFIT CENTRE (EAST)

12,097,381 B.COM 25 27-Apr-06 Chief Operating Officer - Indian Operations, Mason And Summers Alcobev Private Limited.

ANNEXURE TO DIRECTORS’ REPORT

Contd...

11108


REMUNERA-TION(Rs.)

QUALIFICATION

EXPERI-ENCE

IN YEARS

DATE OF COMMENCE-

MENT OF EMPLOY-

MENT


31 KUSHAL BANERJEE 51 SENIOR GENERAL MANAGER - PERSONEEL & ADMINISTRATION

3,042,341 B.COM, PGDPM (IISWBM )

30 8-Jul-02 Chief - Industrial Relations, Exide Industries Limited

32 LAL RANGWANI 43 ASSISTANT VICE PRESIDENT - TRADE MARKETING & INSTITUTIONAL SALES (WEST)

3,161,037 M.COM. 22 7-Aug-87 Executive, erstwhile Herbertsons Limited

33 LALIT GUPTA 49 SENIOR VICE PRESIDENT - LEGAL 5,105,868 BSC., LLB., DLL 26 1-Jun-98 Joint Manager - Legal, Shriram Foods & Fertilizers 34 LAXMI NARASIMHAN 39 CHIEF OPERATING OFFICER - REGIONAL

PROFIT CENTRE (AP) 5,781,485 B.E, PGDM 15 8-Dec-03 Regional Manager, Coca Cola India

35 M A HAMEED 52 ASSISTANT VICE PRESIDENT - SALES 3,366,006 B.COM 25 1-Apr-03 Branch Sales Manager, Seagram Manufacturing Private Limited

36 MAHESH NEDUNGADI 49 SENIOR GENERAL MANAGER - LEGAL 2,802,274 B.COM (HONS), ACS 26 6-May-96 Company Secretary, Nova Granites (India) Limited37 MATHEW XAVIER 45 DIVISIONAL VICE PRESIDENT- MARKETING

& INNOVATIONS 5,954,224 PGDM / B.COM 20 10-Nov-03 Vice President – Marketing, Erstwhile Shaw Wallace

Distilleries Limited38 MOHAN P MEDEIRA 51 SENIOR GENERAL MANAGER - LOGISTCS,

MATERIALS & MARKETING SERVICES 3,246,935 B.SC (HONS), PGDSM,

DBMM31 17-Apr-84 Sales Assistant, Fibreglass Pilkington Limited

39 MOHANTY B K 55 SENIOR GENERAL MANAGER - SALES 2,534,637 BA 32 20-Jul-77 NA40 MONGIA S K 68 DIVISIONAL VICE PRESIDENT - BUSINESS

PROMOTION 3,611,808 M.SC, DEF SC. 51 2-Aug-93 Commodore-Indian Navy

41 N R RAJSEKHER 53 CHIEF OPERATING OFFICER - REGIONAL PROFIT CENTRE (WEST)

12,493,979 B.SC 30 8-Apr-82 Vice President - Sales, erstwhile Shaw Wallace Distilleries Limited

42 NAGAPPA G S 54 DIVISIONAL VICE PRESIDENT - SALES 4,835,691 B.SC 34 1-Aug-75 Executive, erstwhile Herbertsons Limited43 NANDINI VERMA 54 EXECUTIVE VICE PRESIDENT - CORPORATE

AFFAIRS 7,470,077 BA (HONS), IFDAF 37 13-Apr-07 Vice President - Corporate Affairs & Public Relation,

Jet Airways44 NAVRATAN DUGAR 65 DEPUTY PRESIDENT - PROCUREMENT,

PLANNING, MANUFACTURING & QUALITY CONTROL

15,198,254 B.COM, M.COM, MBA, MCIM

40 1-May-01 Adviser, Balaji Group of Companies

45 P A MURALI 51 DEPUTY PRESIDENT & CHIEF FINANCIAL OFFICER

18,680,713 B.COM, ACA 28 5-Jul-93 Executive Vice President & Chief Financial Officer, United Breweries Limited

46 P SRIRAM 49 ASSISTANT VICE PRESIDENT - MANUFACTURING

4,606,605 B.TECH, PGDPM 26 4-Jan-95 Assistant Vice President - Manufacturing, erstwhile Shaw Wallace Distilleries Limited

47 P.N. PODDAR 56 SENIOR VICE PRESIDENT - MANUFACTURING

6,523,806 M.TECH, DMS 33 1-Jan-88 Production Manager, Union Carbide (I) Limited

48 P.V. ACHAR 57 GENERAL MANAGER - MATERIALS 2,686,430 B.COM, MBA, DIP IN MM 38 11-Jan-88 Ideal Jawa (I) Pvt Limited, Senior Stores Officer49 PADMANABHAN N R 52 ASSISTANT VICE PRESIDENT - FINANCE &

ACCOUNTS 3,816,458 B.COM, CA 26 31-Aug-94 Accounts Superintendent, Schrader Duncan Limited

50 PARAMJIT SINGH GILL 47 CHIEF OPERATING OFFICER - REGIONAL PROFIT CENTRE (NORTH)

7,272,217 B.SC, D LL-CHARTERED MARKETER, M.PHIL

26 1-Dec-07 Executive Vice President, United National Breweries (SA) (Pty) Limited, Centurion

51 PHILIP SARGUNAR A B 60 CHIEF OPERATING OFFICER - REGIONAL PROFIT CENTRE (SOUTH)

15,730,324

BA, MA 39 20-Nov-02 Executive Director & Chief Reputation Officer, The Empee Distilleries Limited

52 PRAKASH MIRPURI 46 ASSISTANT VICE PRESIDENT - CORP MEDIA

2,811,797 PGD 26 9-Apr-07 Director - Client Services, Ipan

53 PRATIP SEN 57 ASSISTANT VICE PRESIDENT - MANUFACTURING

3,988,859 B.TECH (CHEM), PGDBM 35 24-Nov-03 Chief Executive Officer, Vivada Chemicals Private Limited

54 R SATSANGI 52 DIVISIONAL VICE PRESIDENT - REGIONAL MANUFACTURING HEAD (NORTH)

4,914,504 B.TECH (MECH) 30 19-Feb-96 Plant Manager, Pepsico India Holding Limited

55 R.N. PILLAI 53 DIVISIONAL VICE PRESIDENT - FINANCE 3,859,614 CA 33 1-Mar-86 Accountant, Royal Oman Police56 RAGHUNATHAN A 57 EXECUTIVE VICE PRESIDENT - FINANCE &

ACCOUNTS 8,180,984 B.COM, ACA 34 24-Sep-79 Executive Vice President - Finance & Accounts,

erstwhile Herbertsons Limited57 RAJA R PETER 50 SENIOR GENERAL MANAGER - BUSINESS

DEVELOPMENT 2,446,835 BE 20 16-Jul-07 General Manager and Head Marketing Alliances,

Tata Teleservices Limited58 RAJIV SURI 52 DIVISIONAL VICE PRESIDENT - FINANCE 5,047,917 B.COM (HONS), MBA,

ACA,31 16-May-94 Senior Manager - Marketing Finance,

Reliance Industries Limited59 RANAJOY SARKAR* 58 SENIOR GENERAL MANAGER - ACCOUNTS 3,237,286 B.COM (HONS), AICWA 33 1-Dec-86 Western India Industries60 RAVI NEDUNGADI.A.K. 51 PRESIDENT & CHIEF FINANCIAL OFFICER

- UB GROUP26,126,482 B.COM (HONS),

AICWA, ACA30 1-Jan-90 Group Finance Director, UB International Limited.,

U.K.61 ROBIN BASU* 50 SENIOR VICE PRESIDENT - HR 4,074,211 B.COM, MBA 24 20-Mar-07 Senior Vice President - HR, Berger Paints62 S ANANDA PRASAD 56 GENERAL MANAGER - TAXATION 2,784,284 B.COM.,LL.B., 35 1-Jul-84 Assistant Manager - Accounts,

Mysore Wine Products Limited

STATEMENT OF PARTICULARS OF EMPLOYEES AS REQUIRED UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956 AND COMPANIES(PARTICULARS OF EMPLOYEES) RULES, 1975

Contd...


1110 9




STATEMENT OF PARTICULARS OF EMPLOYEES AS REQUIRED UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956 AND COMPANIES(PARTICULARS OF EMPLOYEES) RULES, 1975


REMUNERA-TION(Rs.)

QUALIFICATION

EXPERI-ENCE

IN YEARS

DATE OF COMMENCE-

MENT OF EMPLOY-

MENT


63 S R AINAPUR 51 ASSISTANT VICE PRESIDENT - ACCOUNTS 4,544,664 CA 27 1-Dec-87 Accounts Assistant, Kesarval Beverages Limited64 S.A. BAGI 55 SENIOR GENERAL MANAGER - DISTILLERY 3,186,601 B.SC., DIFAT, DBM 34 13-Aug-75 NA65 S.C.SINGHAL 56 DIVISIONAL VICE PRESIDENT - MANUFAC-

TURING (EAST) 4,944,857 B.SC, DIFAT 32 1-Sep-89 Assistant Manager (Works), Shri Shadilal Enterprises

Limited66 S.D.LALLA 65 JOINT PRESIDENT - OVERALL OPERATIONS 36,046,105 LC & SE, AMIE (CIVIL) 47 5-Apr-94 Managing Director, erstwhile Herbertsons Limited67 S.K. RASTOGI 55 DIVISIONAL VICE PRESIDENT - Quality

Control 5,357,745 M.SC., 37 14-Nov-82 Quality Control Officer, Jagatjit Industries Limited

68 S.N. PRASAD 51 DIVISIONAL VICE PRESIDENT - FINANCE 4,956,553 B.COM, ACA, ACS, 25 7-Mar-91 Deputy Manager - Finance, UB Hoppecke Energy Products Limited

69 S.SATISH 49 ASSISTANT VICE PRESIDENT - PLANNING & CONTROL

4,234,769 B.COM. 29 21-Jul-89 Accounts Officer, BPL Sanyo Limited

70 S.SURYANARAYANAN 49 ASSISTANT VICE PRESIDENT - ENGINEER-ING

3,817,452 B.SC,B.TECH (MECH) 27 10-Feb-89 Purchase Officer, Sundaram - Clayton Limited

71 SANJAY RAINA* 44 EXECUTIVE VICE PRESIDENT - HUMAN RESOURCES

2,282,195 MSW - PERSONNEL MGMT

22 19-Nov-08 Head HR - Network, Supply Chain - India & Er - SE Asia, Motorola India Private Limited

72 SANJAY ROY 35 HEAD - MARKETING & SALES - WINES 2,833,566 B.COM, PGDM 12 18-Sep-00 Marketing Officer - Flash Lights, Eveready Industries India Limited

73 SATENDRA CHAUDHARY* 50 SENIOR GENERAL MANAGER - HR 1,318,669 BA, LLB, PGDPM & IR 29 18-Sep-08 Vice President, Aditya Birla Group, 74 SATISH NAIR 57 ASSISTANT VICE PRESIDENT - MATERIALS 3,854,268 B.SC, D-STRS MGMT,

MATS34 6-Jul-84 Stores And Purchase Officer, Kartnataka Oxygen

Limited75 SHARMA V K 66 EXECUTIVE DIRECTOR - CHAIRMANS

OFFICE 7,028,860 B.COM, MA, LLB 35 5-Oct-84 Executive Director - Chairman's Office,

erstwhile Herbertsons Limited76 SHIV KUMAR GUPTA 56 ASSISTANT VICE PRESIDENT - DISTILLERY 3,379,526 B.SC, DIFAT 36 13-Jan-06 General Manager - Distillery, A B Sugars Limited77 SUDARSHAN V ACHARYA 50 DIVISIONAL VICE PRESIDENT - RAW MA-

TERIALS & OVERSEAS SUPPLY CHAIN 4,266,689 B.COM., DO-MAT, DIP-

LABOUR LAW28 20-Jan-89 Assistant Manager - Purchase, Astra Idl Limited,

Bangalore78 SUKHVINDER SINGH 58 SENIOR GENERAL MANAGER - DISTILLERY 2,695,602 BA 32 1-Jul-82 NA79 T K SUBRAMANIAN 58 DIVISIONAL VICE PRESIDENT - SYSTEMS 6,496,668 B.SC., DMS 38 16-Mar-83 Controller - Systems, UBICS Limited80 T SAMBANDASAMY 50 DIVISIONAL VICE PRESIDENT - SALES 3,443,486 B.B.A, M.B.A 27 12-Apr-83 General Manager - Sales, erstwhile Shaw Wallace

Distilleries Limited81 T.V. SUBRAMANIAN 54 ASSISTANT VICE PRESIDENT - BUSINESS

DEVELOPMENTS 4,659,799 M.COM. ICWA 31 16-Jun-86 Manager-Branch Services, Deccon Marketing Limited

82 V K REKHI 63 MANAGING DIRECTOR 42,361,828 MA (HONS)., PGDBA., 38 3-Jan-72 Regional Director, UB International Limited., U.K.83 V S VENKATARAMAN 55 COMPANY SECRETARY & SENIOR VICE

PRESIDENT 7,193,171 B.COM (HONS), ACS 37 20-Aug-82 Deputy Company Secretary, United Breweries

Limited84 V.MURALI 47 SENIOR GENERAL MANAGER - DISTILLERY 2,813,692 ME (CHEM),DBA 23 4-Oct-90 Manager - Technical Service, Associated Drug

Company Private Limited85 VIVEK PRAKASH 48 SENIOR VICE PRESIDENT - CSD SALES 7,521,889 B.COM, LLB, 27 15-Jun-98 Deputy General Manager,

Shaw Wallace & Company Limited86 WILLIAM DEVADASS 41 SENIOR GENERAL MANAGER - INST SALES

& TRADE MKTG 2,792,350 B.COM 18 25-Oct-06 Seagram Manufacturing Private Limited

87 ZEYN MIRZA 46 SENIOR GENERAL MANAGER - BUSINESS DEVELOPMENT

2,728,074 B.COM, DIP IN COMP, F&A, HRSE BREED

24 19-Aug-03 Managing Director, Adroit Tech Solutions Limited

* Employed for part of the year

Notes:1. No Employee is on Contract Employment. Other Terms and Conditions are as per Service Rules of the Company from time to time.2. None of the above mentioned employees is related to any Director of the Company.3. Remuneration as shown above includes Salary, House Rent Allowance, Company's contribution to Provident Fund and Super Annuation Fund,

Value of Residential Accomodation, Bonus, Medical and other facilities.


131210

1. COMPANY’S PHILOSOPHY ON CODE OF CORPORATE

GOVERNANCE

Your Company is committed to good Corporate

Governance on a continuous basis by laying emphasis on

ethical corporate citizenship and establishment of good

corporate culture.

Your Company adheres to the highest level of integrity,

fairness and transparency in all its operations and believes

that its operations and action must result in sustained

growth and long term benefits to all its stakeholders.

2. BOARD OF DIRECTORS

The Board of Directors comprises a Non - Executive

Corporate Governance Report

Chairman, a Managing Director and five other Non

Executive Directors.

During the financial year under review, Seven

Board Meetings were held, i.e., on April 21, 2008,

July 21, 2008, September 22, 2008, October 21, 2008,

November 29, 2008, December 26, 2008 and January 21,

2009.

Attendance of each Director at the Board Meetings

and the last Annual General Meeting and details of

number of outside Directorship and Committee position

held by each of the Directors as on date are given

below:

Name of DirectorCategory of Directorship

No. of BoardMeetings attended

Attendance at last AGM held on December

26, 2008

No. of other Companies in which Director

No. of committees (other than the

company) in which Chairman/ Member

Dr. Vijay Mallya Non Executive Chairman 5 Yes 24 1(Chairman of 1)

Mr. S.R. Gupte Non Executive Vice Chairman

7 Yes 11 8(Chairman of 4)

Mr. V.K. Rekhi Executive /Managing Director

6 Yes 3 Nil

Mr. M.R. Doraiswamy Iyengar

IndependentNon Executive Director


Mr. B.M. Labroo IndependentNon Executive Director


Mr. Sreedhara Menon IndependentNon Executive Director

3 Yes 2 Nil

Mr. Sudhindar Krishan Khanna

IndependentNon Executive Director

4 Yes 1 Nil

NOTE:

The above details are in respect of their Directorship only in Indian Companies.

a) Out of 24 other Companies in which Dr. Vijay Mallya is a Director, 9 are Private Limited Companies and 2, Section 25 Companies.

b) Out of 11 other Companies in which Mr. S.R. Gupte is a Director, 2 are Private Limited Companies and 1, Section 25 Company.

c) Out of 5 other Companies in which Mr. M.R. Doraiswamy Iyengar is a Director, 4 are Private Limited Companies. d) Out of 8 other Companies in which Mr. B.M. Labroo is a Director, 4 are Private Limited Companies. e) Out of 4 other Companies in which Mr. V.K. Rekhi is a Director, 1 is Private Limited Company and 1, Section 25

Company. f) The other Company in which Mr. Sudhindar Krishan Khanna is a Director is a Private Limited Company. g) None of the Directors is related to any other Director.

1312 11

Corporate Governance Report (Contd.)

DISCLOSURES REGARDING APPOINTMENT AND RE-APPOINTMENT OF DIRECTORS

Directors retiring by rotation and being reappointed :

Mr. Sreedhara Menon

Mr. Sreedhara Menon (Mr. Menon), aged 72 years, is the Chairman of the Board and Strategic Advisor of VITEOS Capital Market Services Limited, a business Process Outsourcing Company in India with a Sister Company located at Piscataway, New Jersey, U.S.A. Mr. Menon has previously held senior positions 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, LLC. Mr. Menon has served as a Member of the Board of Directors of U.S.-India Business Council, Asean-U.S. Business Council, President of the India-America Chamber of Commerce in New York, etc. Mr. Menon holds Masters Degree in Economics from Maharaja’s College of the University of Kerala, India. He resides in Short Hills, New Jersey, U.S.A.

Details of Mr. Menon’s directorships in other Indian Companies and Committee Memberships are as under:-

Other Directorships Position held

1. Viteos Capital Markets Services Limited Director2. Viteos Fund Services Limited Director

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

Mr. Menon does not hold any share in the Company and is not related to any other Director.

Dr. Vijay Mallya

Dr. Vijay Mallya (Dr. Mallya), aged 53 years, who holds a Ph.D.in Business Administration, is a well-known Industrialist and is the Chairman of the Board of Directors of the Company. He took over the reins of the United Breweries Group in 1983 at the young age of 28, which today is a multi-national conglomerate. Dr. Mallya is the Chairman of several public Companies both in India as well as overseas.

Dr. Mallya has won wide recognition from distinguished institutions throughout the span of his career, which

includes:

• The Fellowship Award 2003 – the Institute of Directors, New Delhi

• Global Leader for Tomorrow – World Economic Forum, Davos, Switzerland

• Sir M. Visvesvaraya Memorial Award instituted by the Federation of Karnataka Chambers of Commerce.

• The prestigious Légion d’Honneur award by the Government of France in 2008.

Dr.Mallya was a Member of the Rajya Sabha from 2002 to 2008.

Details of Dr. Mallya’s directorships in other Indian Companies

and committee memberships are as under:-

Other Directorships Position held1. Aventis Pharma Limited Chairman2. Bayer CropScience Limited Chairman3. Kingfisher Airlines Limited Chairman & CEO4. Mangalore Chemicals and Fertilizers

LimitedChairman

5. McDowell Holdings Limited Chairman6. Shaw Wallace & Company Limited Chairman7. United Breweries Limited Chairman8. United Breweries (Holdings) Limited Chairman9. Deccan Charters Limited Vice-Chairman10. Four Seasons Wines Limited Chairman11. Shaw Wallace Breweries Limited Chairman12. United Racing and Bloodstock Breeders

LimitedChairman

13. Royal Challengers Sports Private Limited Chairman14. Kamsco Industries Private Limited Chairman15. Mallya Private Limited Chairman16. Millennium Alcobev Private Limited Chairman17. Pharma Trading Company Private

LimitedChairman

18. The Gem Investment & Trading Co Private Limited

Chairman

19. United East Bengal Football Team Private Limited

Chairman

20. United Mohun Bagan Football Team Private Limited

Chairman

21. VJM Investments Private Limited Chairman

22. DCL Holdings Private Limited Vice Chairman23. Motorsports Association of India Management

Committee Member

24. SWEW Benefit Company Management Committee

Member

He is the Chairman of the Remuneration Committee of Millennium Alcobev Private Limited.

Dr. Mallya holds 10 equity shares in the Company and is not

related to any other Director.

151412

3. AUDIT COMMITTEE

Mr. Sreedhara Menon, a Non Executive Independent Director was inducted to the Audit Committee of Directors on March 20, 2009. Mr. Sreedhara Menon, who presently resides in U.S.A. has held various senior positions in Indian and Overseas Banking Institutions as well as Capital Market Intermediaries.

The Audit Committee constituted on April 19, 2001 to meet the requirements under both the Listing Agreement and Section 292A of the Companies Act, 1956, comprises at present the following Directors:

Mr. M.R. Doraiswamy Iyengar (Chairman)

Non ExecutiveIndependent Director

Mr. S.R. Gupte Non Executive DirectorMr. B.M. Labroo Non Executive

Independent DirectorMr. Sreedhara Menon Non Executive

Independent Director

The terms of reference of the Audit Committee covers all matters specified under the Listing Agreement as well as the provisions of Section 292A of the Companies Act, 1956 and inter alia, includes the following:

a) Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.

b) Recommending the appointment and removal of external auditor, fixation of audit fee and also approval of payment for any other services.

c) Reviewing with management the annual financial statements before submission to the Board, focusing primarily on:

• Any changes in accounting policies and practices• Major accounting entries based on exercise of

judgment by management• Qualifications in draft audit report• Significant adjustments arising out of audit• Compliance with Stock Exchange and legal

requirements concerning financial statements• Disclosure of any related party transactions.

d) Reviewing with the management, external and internal auditors, the adequacy of internal control

systems.

e) Reviewing the adequacy of internal audit function

including the structure of the internal audit

department, staffing and seniority of the official

heading the department, reporting structure

coverage and frequency of internal audit.

f) Discussion with internal auditors any significant

findings and follow up thereon.

g) Reviewing the findings of any internal investigations

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 reporting

the matter to the Board.

h) Discussion with statutory auditors before the audit

commences nature and scope of audit as well as

have post-audit discussions to ascertain any area of

concern.

i) Reviewing the Company’s financial and risk

management policies.

j) To look into the reasons for substantial defaults in

the payment to the depositors, debenture holders,

shareholders (in case of non payment of declared

dividends) and creditors.

The Committee, inter alia, has reviewed the financial

statements including Auditors' Report for the year ended

March 31, 2009 and has recommended its adoption. In

addition, the Committee has also reviewed quarterly

results for June 30, 2008, quarterly and half yearly results

for September 30, 2008, quarterly results for December

31, 2008 and quarterly results for March 31, 2009, which

were subjected to a Limited Review by the Statutory

Auditors of the Company.

During the financial year, five meetings were held

i.e., on April 21, 2008, July 21, 2008, October 21, 2008,

November 29, 2008, and January 21, 2009. The details of

attendance by members of the Committee are as below:

Name of the DirectorNo. of

Meetings Meetings attended

Mr. M.R. Doraiswamy Iyengar (Chairman) 5 5Mr. S.R. Gupte 5 5Mr. B.M. Labroo 5 5Mr. Sreedhara Menon* - -

* Appointed as Member of the Committee w.e.f. March

20, 2009.

Corporate Governance Report (Contd.)Corporate Governance Report (Contd.)

1514


13

4. COMPENSATION COMMITTEE

The Compensation Committee constituted by the

Company comprises at present the following Directors:-

Mr. B.M. Labroo, ChairmanMr. S.R. GupteMr. M. R. Doraiswamy Iyengar

The Committee is authorised, inter alia, to deal with

the matters related to compensation by way of salary,

perquisites, benefits etc. to the Managing/Whole

Time Directors of the Company and set guidelines for

salary, performance pay and perquisites to other senior

employees from the level of Executive Vice President and

above.

The Committee is also empowered to formulate and

implement the Scheme for grant of Stock Option to

employees.

During the financial year, three meetings were held

i.e., on April 18, 2008, August 29, 2008 and November

29, 2008, which were attended by all the members of

the Committee.

Remuneration of Directors:

The details of Remuneration paid/payable to the Directors

during the Financial Year April 1, 2008 to March 31, 2009

are given below:

a) Executive Directors

Managing Director : Mr. V.K.Rekhi

Salary & Allowances

Performance Linked

incentive

Perquisites Retirement Benefits

Rs. Rs. Rs. Rs.

18,062,406 17,084,564 3,275,101 3,939,757

Notes:

1. Mr. V.K.Rekhi (Mr.Rekhi) was appointed as the

Managing Director of the Company for a period

of five years with effect from April 19, 2001.

The re-appointment for a further period of five

years with effect from April 19, 2006 and the

remuneration payable have been approved by

the Members at the Annual General Meeting

held on December 28, 2006 with a revision

thereon approved by the Members at the Annual

General meeting held on December 26, 2008.

The terms and conditions of appointment and

remuneration of Mr. Rekhi are as set out in the

resolution and as per the rules of the Company,

as applicable.

2. The employment of Mr. Rekhi is terminable on

either side by giving six months notice as per the

rules of the Company.

3. There is no severance fee.

4. No stock option was granted during the year.

b) Non – Executive Directors

Sitting Fees are paid to Non-Executive Directors for

attending Board/ Committee Meetings. They are also

entitled 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 Vijay Mallya Nil

Mr. S.R. Gupte 290,000

Mr. V.K.Rekhi Nil

Mr. M.R.Doraiswamy Iyengar 490,000

Mr. B.M. Labroo 320,000

Mr. Sreedhara Menon Nil

Mr. Sudhindar Krishan Khanna 80,000

Non Executive Directors are also eligible for

Commission every year not exceeding one per cent

of the net profits of the Company as approved by the

shareholders at the Annual General Meeting held on

September 23, 2005 to remain in force for a period

of five years from April 1, 2006. Such Commission

may be apportioned amongst the Directors in any

manner they deem fit.

The Commission of Rs.48,726,790/- on profits for

the year ended March 31, 2009 will be paid after

adoption of Accounts by Shareholders at the Annual

General Meeting to be held on September 30, 2009

and apportioned amongst the Directors in any

manner they deem fit.

171614

c) Particulars of Equity Shares in the Company currently

held by the Directors, are furnished below:

Name of the Director No. of Shares held

Dr Vijay Mallya 10

Mr. S.R. Gupte Nil

Mr. V.K.Rekhi* 8,452

Mr. M.R.Doraiswamy Iyengar 21

Mr. B.M. Labroo 136,200

Mr. Sreedhara Menon Nil

Mr.S.K.Khanna 4,489

* held jointly

5. SHAREHOLDERS / INVESTORS GRIEVANCE COMMITTEE

A Shareholders / Investors Grievance Committee was

constituted on April 19, 2001, to operate in terms of the

provisions related thereto in the Listing Agreements with

the Stock Exchanges and /or the provisions as prescribed

or as may be prescribed in this regard by the Companies

Act, 1956.

The Committee comprises at present the following

Directors:

Mr. M.R. Doraiswamy Iyengar, Chairman

Mr. B.M. Labroo

Mr. V.S. Venkataraman, Company Secretary is the

Compliance Officer.

During the financial year four meetings were held i.e.,

on April 21, 2008, August 2, 2008, October 21, 2008

and January 21, 2009 and attended by both Mr. M.R.

Doraiswamy Iyengar and Mr. B. M. Labroo, Members of

the Committee.

The Company / Company’s Registrars received 151

complaints during the financial year, all of which

were resolved to the satisfaction of the shareholders/

investors.

There are no complaints or Transfer of Shares pending as

on March 31, 2009.

The Company also has a Committee of Directors with

authority delegated by the Board of Directors, inter alia,

to approve transfer and transmission of shares, issue of

new share certificates on account of certificates lost,

defaced, etc., and for other routine operations such as

issue of powers of attorney, operation of bank accounts,

etc.

The Committee comprises at present the following

Directors:

Mr. S.R. Gupte

Mr. M.R. Doraiswamy Iyengar

Mr. V.K. Rekhi and

Mr. B.M. Labroo

6. GENERAL BODY MEETINGS

The details of the last three Annual General Meetings

held are furnished as under:

Financial Year ended

Date Time Venue

March 31, 2006

December, 28, 2006

11.00 a.m.

Dr. B.R. Ambedkar Bhavana, Miller’s Road, Vasanthanagar, Bangalore - 560 052.

March 31,2007

November, 28, 2007

3.30 p.m.

Good Shepherd Auditorium, Opposite St. Joseph’s Pre-University College,Residency Road,Bangalore – 560 025

March 31, 2008

December 26, 2008

10.15 a.m.

Dr. B.R. Ambedkar Bhavana, Miller’s Road, Vasanthanagar, Bangalore - 560 052.

All the resolutions set out in the Notices, including Special

Resolutions were passed by the Shareholders.

POSTAL BALLOT

The Company has not passed any resolution at the above

Annual General Meetings held which was required to

be passed through postal ballot as per the provisions

of the Companies Act, 1956 and the rules framed

thereunder.

No resolution was passed through Postal Ballot during

2008-09.

At this meeting also there is no Ordinary or Special

Resolution requiring passing by way of Postal Ballot.


1716


15

7. DISCLOSURES

During the financial year ended March 31, 2009, there were no materially significant related party transactions with its promoters, the Directors or the management, their subsidiaries or relatives, etc. that may have potential conflict with the interests of the Company at large. Details of related party transactions forms part of Notes on Accounts.

The Company has complied with all the statutory requirements comprised in the Listing Agreements/Regulations/Guidelines/Rules of the Stock Exchanges/SEBI/other statutory authorities.

There were no instances of non-compliance by the Company nor have any penalties, strictures been imposed by Stock Exchanges or SEBI or any other statutory authority since incorporation of the Company on any matter related to capital markets.

Code of Conduct

In compliance with Clause 49 of the Listing Agreement with the Stock Exchanges, the Company has adopted a Code of Business Conduct and Ethics for its Board Members and Senior Management Personnel, a copy of which is available at the Company’s website, www.unitedspirits.in. All the members of the Board and the senior management personnel had affirmed compliance with the Code for the year ended March 31, 2009 and a declaration to this effect signed by the CEO is forming part of this report.

Pursuant to the requirements of SEBI (Prohibition of Insider Trading) Regulations, 1992, the Company has adopted a “Code of Conduct for prevention of Insider Trading”. This Code is applicable to all the Directors and designated employees of the Company.

8. MEANS OF COMMUNICATION

The unaudited quarterly and half-yearly results are sent to all the Stock Exchanges where the shares of the Company are listed. The results are normally published in “Business Standard” (English Daily) and “Kannada Prabha” (Kannada Daily). The results are displayed on the Company’s Website www.unitedspirits.in.

The required disclosures to the extent applicable including results were also posted in the portal

www.corpfiling.co.in, which is jointly owned, managed and maintained by Bombay Stock Exchange Limited and National Stock Exchange of India Limited

The Company has designated an exclusive Email id viz. [email protected] to enable the investor to post their grievances and monitor its redressal.

9. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion & Analysis Report is appended and forms an integral part of this Annual Report.

10. GENERAL SHAREHOLDER INFORMATION

a) AGM Date, Time and Venue

Wednesday, September 30, 2009 at 2.00 p.m. at Good Shepherd Auditorium, Opposite St. Joseph’s Pre-University College,Residency Road,Bangalore – 560 025.

b) Financial Year April 1 to March 31First Quarterly Results By July 31Second Quarterly Results By October 31Third Quarterly Results By January 31Fourth quarterly Results By April 30

c) Date of Book Closure Thursday, September 24, 2009 to Wednesday, September 30, 2009(both days inclusive)

d) Dividend payment date After September 30, 2009e) Listing on Stock

Exchanges:The shares of the Company are listed on the following Stock Exchanges:

Bangalore Stock Exchange 1. Limited (BgSE)

Bombay Stock Exchange 2. Limited, (BSE)

National Stock Exchange of 3. India Limited (NSE)

The listing fees for the years 2008-09 and 2009-10 have been paid to all the Stock Exchanges.

Company’s Equity Shares were delisted from Delhi Stock Exchange Limited during the year 2008-09. The Equity Shares of your Company continue to remain listed on Bangalore Stock Exchange Limited, Bombay Stock Exchange Limited and National Stock Exchange of India Limited.

f) Stock CodeBSE Demat 532432 Physical 32432NSE SYMBOL - McDOWELL-NBgSE McDowell

g) ISIN No. INE854D01016h) Market price data As per Annexure A

191816

i) Stock performance in comparison to BSE sensex

As per Annexure B

j) Registrar and Transfer Agents

Alpha Systems Private Limited Registered Office: 30, Ramana Residency, 4th Cross, Sampige Road, Malleswaram, Bangalore 560 003Tel. Nos. (080) 2346 0815-818Fax No. (080) 2346 0819Email: [email protected]

k) Share Transfer System The power to consider and approve share transfers / transmission / transposition / consolidation / subdivision etc. has been delegated to a Committee of Directors as indicated under the heading Shareholders / Investors Grievance Committee. The Committee meets generally once in a fortnight. The requirements under the Listing Agreement / Statutory regulations in this regard are being followed.

l) Distribution of Shareholding

As per Annexure – C

m) Dematerialisation of shares

94.57% of paid-up share capital is held in dematerialised form.

n) Outstanding GDRs/ ADRs/ Warrants or any other Convertible instruments

5514 Global Depository Shares (GDSs) representing 2757 Equity Shares of Rs.10/- each as on March 31, 2009 (2 GDSs representing one equity share of Rs.10/- each)

o) Plant Locations 1. Cherthala (Kerala)2. Hyderabad I (Andhra Pradesh)3. Hyderabad II (Andhra Pradesh)4. Ponda (Goa)5. Hathidah (Bihar)6. Kumbalgodu (Karnataka)7. Rosa (Uttar Pradesh)8. Udaipur (Rajasthan)9. Serampore (West Bengal)10. Bhopal - I(Madhya Pradesh)11. Bhopal - II (Madhya Pradesh)12. Asansol (West Bengal)13. Nasik-I (Maharashtra)14. Nasik-II (Maharashtra)15. Pondicherry (Pondicherry)16. Alwar (Rajasthan)17. Aurangabad (Maharashtra)18. Meerut (Uttar Pradesh)19. Hospet (Karnataka)20. Pathankot (Punjab)21. Palwal (Hariyana)22. Gopalpur - on - sea (Orissa)23. Palakkad (Kerala)24. Baddi (Himachal Pradesh)25. Badrakali (West Bengal)26. Baramati (Maharashtra)27. Zuari Nagar (Goa)

p) Address for correspondence

Shareholder correspondence should be addressed to the Company’s Registrars and Transfer Agents:

Alpha Systems Private LimitedRegistered Office:30, Ramana Residency, 4th Cross,Sampige Road,Malleswaram, Bangalore 560 003.Tel. Nos. (080) 2346 0815-818Fax No.080 2346 0819Email: [email protected]

Investors may also write or contact the Company Secretary, Mr. V.S. Venkataraman or Mr. Maloy Kumar Gupta, Sr. Manager–Secretarial at the Registered Office of the Company at ‘UB Tower’, No.24, Vittal Mallya Road, Bangalore – 560 001. Tel. Nos. (080) 3985 6500, 22210705. Fax No. (080) 3985 6862, 3985 6959.

In compliance with the provisions of Clause 47(f) of the Listing Agreement with the Stock Exchanges, an exclusive email Id, viz. [email protected] has been designated for registering complaint and its redressal by the Investor, which has been displayed on the website of the Company, www.unitedspirits.in.

NON MANDATORY REQUIREMENTS

a) Chairman of the Board Dr. Vijay Mallya

Whether Chairman of the Board is entitled to maintain a Chairman’s Office at the Company’s expenses and also allowed reimbursement of expenses incurred in performance of his duties.

The Company maintains the Chairman’s Office at Company’s expenses and also reimburses the expenses incurred in performance of his duties.

b) Remuneration Committee

The Company has formed a Compensation Committee.

c) Shareholders Rights:

The half - yearly declaration of financial performance including summary of the significant events in the last 6 months should be sent to each household of shareholders.

The Company’s half-yearly results are published in English and Kannada Newspapers. Hence, the same are not sent to the shareholders.

The Company has not adopted Whistle Blower Policy being non-mandatory.


1918 17

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

Month High Low Volume Month High Low Volume Apr-08 1,873.00 1,482.00 802,029 Apr-08 1,873.70 1,480.00 3,746,793May-08 1,709.90 1,501.25 766,135 May-08 1,727.00 1,500.00 5,515,773Jun-08 1,699.00 1,210.00 585,163 Jun-08 1,692.90 1,215.00 3,745,889Jul-08 1,323.40 1,006.55 1,075,394 Jul-08 1,328.00 1,006.00 5,003,178

Aug-08 1,415.50 1,215.00 358,514 Aug-08 1,417.00 1,248.00 2,466,541Sep-08 1,408.50 1,162.00 3,042,941 Sep-08 1,471.00 1,140.00 4,984,128Oct-08 1,297.00 606.00 3,573,868 Oct-08 1,299.50 606.00 8,943,412Nov-08 974.80 676.00 2,053,035 Nov-08 984.70 677.50 6,252,973Dec-08 981.90 775.00 865,758 Dec-08 1,000.05 765.15 3,614,850Jan-09 1,016.90 425.65 26,512,374 Jan-09 1,015.00 426.05 50,709,696Feb-09 744.90 529.80 43,727,942 Feb-09 744.80 530.00 88,137,465Mar-09 718.00 546.20 19,757,155 Mar-09 716.95 532.00 50,955,864

ANNEXURE B: UNITED SPIRITS LIMITED - STOCK PERFORMANCE COMPARED TO BSE SENSEX

ANNEXURE C: DISTRIBUTION OF SHARE HOLDINGS AS ON MARCH 31, 2009VALUEWISE

ShareholdingShareholders Share Amount

of nominal value

Rs. Number% to Total

Rs.% to Total

Upto - 5,000 79,573 97.50 63,466,510 6.345,001 - 10,000 1,009 1.24 7,646,190 0.7610,001 - 20,000 403 0.49 5,757,050 0.5720,001 - 30,000 151 0.19 3,810,740 0.3830,001 - 40,000 78 0.10 2,725,840 0.2740,001 - 50,000 59 0.07 2,763,850 0.2850,001 - 100,000 91 0.11 6,422,970 0.64100,001 and above 252 0.31 9,090,39,410 90.76 Total 81,616 100.00 1,001,632,560 100.00


CATEGORYWISE

CategoryNo. ofShares

% of Equity Capital

Promoter Group 36,628,260 36.57

Resident Body Corporate

15,938,471 15.91

Banks/FI/FII/MF/Trust 38,120,824 38.06

NRI/OCB/FCB 1,418,478 1.42

G D S 2,757 0.00

Resident Individuals 8,054,466 8.04

Total 100,163,256 100.00

212018

CERTIFICATE ON CORPORATE GOVERNANCE

The Members of

United Spirits Limited

We have examined the compliance of conditions of Corporate Governance by United Spirits Limited, for the year ended on

March 31, 2009 as stipulated in Clause 49 of the Listing Agreement, as amended, of the said Company with Stock Exchanges

in India.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited

to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of

Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company

has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.

We state that in respect of investor grievances received during the year ended on March 31, 2009, no grievances are pending

against the Company as per the records maintained by the Company and presented to the Shareholders’/Investors’ Grievance

Committee.

We further state that such compliance is neither an assurance as to future viability of the Company nor the efficiency of

effectiveness with which the management has conducted the affairs of the Company.

Bangalore M.R. GOPINATH

July 29, 2009 Company Secretary (in practice)

FCS 3812 CP 1030

CEO/CFO CERTIFICATE

In terms of the requirement of the amended Clause 49 of the listing agreement with the Stock Exchanges, the certificates

from CEO/CFO have been obtained.

Bangalore V.K. REKHI

July 29, 2009 Managing Director

DECLARATION REGARDING AFFIRMATION OF CODE OF CONDUCT

In terms of the requirement of the amended Clause 49 of the Listing Agreement, Code of Conduct as approved by the Board

of Directors of the Company on December 30, 2005 had been displayed at the Company’s website www.unitedspirits.in.

All the members of the Board and the senior management personnel had affirmed compliance with the Code for the year

March 31, 2009.

Bangalore V.K. REKHI

July 29, 2009 Managing Director


2120 19

A. INDUSTRY OVERVIEW:

The Indian Alcoholic Beverages industry is a combination of branded liquors and the low-priced commodity segment that is referred to as Country Liquor. The branded beverage space is further classified into Spirits, Beer and Wine. The Spirits space consists of Indian Made Foreign Liquor (IMFL), Bottled In Origin (BIO) beverages and the Bottled In India (BII) spirits.

The IMFL industry has been growing at a fast pace of 13% and for the year ended March 31, 2009 stood at 214 mio cases. Aspiration and higher disposable income propels growth at the top end, while new consumers and uptrading from country liquor spurt growth at lower end. Karnataka, where Country liquor was banned in July 2007 has particularly seen a spurt in volumes of the low-end brands.

The outlook for the industry continues to be buoyant fuelled by the large and growing number of youth coming into the legal drinking age category. While countries like the USA and China are well past the ‘demographic’ window, India is comparatively a ‘young’ country with over half the 1.2 billion population under 25 years of the age. This offers considerable potential for the future. The progressive prohibition of country liquor will only boost the growth in other sectors, notably IMFL.

B. REGULATORY ENVIRONMENT:

Regulation and Taxation of the alcoholic beverages industry is a part of List II of the Seventh Schedule of the Constitution of India which places it in the jurisdiction of the State Governments and not of the Federal Government. While the Federal Government is authorized to license greenfield manufacturing units and levy customs duties on imports, every other activity including those relating to production and sale as also taxation are controlled by the State Governments. With over 28 different markets that a national organization like your Company operates in, it is a highly challenging and complex network of regulations and procedures that it has to contend with; compounding the problem is the fact that these undergo frequent changes.

In July 2009, the Union Govt. again specifically targeted the alcoholic beverage sector by amending the law to tax manufacturing at contract units. The constitutional validity of this law is being questioned by the industry.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

C. BUSINESS ANALYSIS:

During the fiscal year under review, input costs saw an unprecedented rise over the previous year, in excess of Rs. 3500 million, particularly in the price of key ingredients like alcoholic spirit Extra Neutral Alcohol (ENA) and glass. The increase in prices of ENA stemmed from a number of factors including reduced sugarcane output, increased fuel price, unremunerative sugar support prices leading to delay in crushing and a political stand off with the farmers. In earlier reports the Company had indicated that the price of spirit had increased significantly. In the current year this moved up even further and the sharp rise in fuel prices pushed it to an unprecedented level of Rs.160/case and that too in prime crushing season when prices are traditionally the lowest. Glass prices which were also impacted by the rise in fuel costs also saw an increase. The subsequent reduction in the prices of fuel has seen a nominal roll- back of the increase granted earlier.

The Company’s main-line brands grew by 19%, while overall growth was 20%, despite the selective defocus of low-end brands in an era of high input costs.

D. MARKETING:

The Company’s top brands have contributed significantly to the 20% sales volume growth recorded in fiscal 2009. Signature Whisky, the premium whisky offering entered the coveted ‘Millionaires Club’, having recorded a 27% growth to sell over a million cases this fiscal. Blue Riband – for long the touchstone for Gin in India – also entered the Millionaires Club this year.

At the end of the fiscal year, 19 brands in your Company’s portfolio are members of the spirits Millionaires Club – a hallowed group of brands that sell over a million cases of 9 liters each annually.

McDowell’s No.1, the largest umbrella spirits brand in the world, sold over 31.5 million cases in the fiscal year just ended which represents a 15% growth over the previous year. McDowell’s No.1 Celebration Rum at over 10 million cases is now the world’s 3rd largest Rum growing in excess of 24% at a time when other Rum brands in the top 100 have either degrown or at best registered only marginal single-digit growth. The third flavor under the McDowell’s No.1 umbrella – the Brandy - continues at its perch of the world’s largest selling brandy. Sales of the

Annexure to Report of the Directors (Contd.)

232220

brandy flavor were hampered by the lack of adequate capacity in Tamil Nadu, one of the largest markets for the flavor.

Your Company has had a long history of investment in its brands through a continuous process of refurbishing and upgrading its offerings to the consumers – apart from modifications in blends to adapt to changing palates, it also regularly upgrades the packaging to make the ‘look & feel’ of the products more contemporary. As part of this concerted strategy, two key brands – Royal Challenge and No.1 McDowell’s – were revamped during fiscal 2009 and rolled out across the country in phases.

As part of its well planned premiumisation strategy, the Company introduced a Vodka offering in the prestige segment called Romanov Red - this got off to a rousing launch capturing 8% market share in the very year of launch.

Sales of the Company’s other premium brands – Black Dog Scotch Whisky, Antiquity Blue Whisky, White Mischief Vodka, DSP Black Whisky etc. continued to maintain double digit growths.

During fiscal 2008 the Company had introduced the products from its overseas subsidiaries, Whyte & Mackay, Bouvet Ladubay and Liquidity Inc. to the Indian market. This process continued in 2009 with a national roll-out of these products which have all been well received in the Indian market.

In the last quarter of the fiscal year, your Company introduced Whyte & Mackay Special, a blended whisky, through the BII route. Positioned in the regular scotch category, the product has received acclaim from consumers.

During fiscal 2008 your Company had capitalized on a unique opportunity through investment in the the Royal Challengers Bangalore Team in the Indian Premier League of Twenty/20 Cricket Tournament. In the second year of the tournament, the response to the concept and to the team has been stronger than earlier – the team ended up as the Runners-Up in the Tournament. While the franchise has been acquired in perpetuity through your Company’s wholly owned subsidiary M/s.Royal Challengers Sports Private Limited, your Company will use the association as an effective platform to fuel the growth of its premium offerings through well thought-out strategies.

E. RISKS & CONCERNS, OPPORTUNITIES & THREATS:

Favourable demographies, increasing prosperity and disposable income coupled with attitudinal changes towards consumption indicate strong and sustained demand for many years ahead. The ‘feel good’ factor among the young Indians translates into steady up-trading. The Company has witnessed double digits growth in the 1st line range of products. This trend is expected to continue. There is a clearly visible, though slow process of deregulation taking place and over time it is expected that these will result in increased retail penetration as also elimination of several infructuous regulations that add to the costs of doing business.

The Alcoholic Beverages industry is the favourite target of the Governments, both Central & State, when they need to balance their budgets. As a result, the industry suffers from the twin impact of over-regulation and excessive taxation. Nearly 60% of the price of a bottle of alcohol goes to the State and local Governments towards taxes and duties. The unreasonable levels of taxation show no sign of abatement and continue to impede profitability despite continuing growth in market demand.

The Government of India, in keeping with its commitment to the WTO, has been consistently reducing the import tariff on Bottled in Origin (BIO) spirits. During the fiscal year 2008 additional Customs Duty on BIO products was removed by the Central Government. The State Governments however, offer some measure of protection to the domestic industry through the levy of countervailing duties on BIO products.

During fiscal 2009, shareholder communication has consistently referred to the sharp rise in the prices of the Company’s key inputs viz., Molasses/Spirit as a result of reduced acreage, unreasonable support prices fixed by local Governments and increase in fuel costs. The runaway inflation in the rupee-dollar parity as also in the price of oil impacted both spirit and glass prices. An oligopolistic situation in the glass industry ensured that when international prices of oil came down, the price increase that was granted to the suppliers of glass containers was not fully rolled back. However, excise duty concessions by the Federal Govt. in two tranches in December 2008 and February 2009 helped mitigate the situation somewhat.

The spurt prices of spirit in Q3 impacted margins sharply. While the situation has since corrected itself somewhat, prices continue to be high. The spectre of a failing monsoon in the current fiscal is not expected to help the


2322 21

situation both in terms of supply and price. However, the situation is partially offset by reduced demand for alchol from industrial users.

In order to capitalize on an emerging segment in the alcoholic beverages space viz. wines, your Company had, in 2006, acquired M/s. Bouvet Ladubay SA, France and in fiscal 2007 invested in a subsidiary M/s. Four Seasons Wines Limited. The latter company has set up a state-of-the-art winery near Baramati in Maharashtra with a capacity to produce 1 mio cases per annum. Two brands, Zinzi (Red & White) and Four Seasons (which will be progressively available in 6 varietals) are being produced at this winery.

Increased awareness through exposure gained from the media as also from global travel coupled with increased consumer spending has pushed up the sales at the premium end of the market. Through a well-balanced portfolio, both domestic and international, your Company is poised to drive significant advantages from sales of products from the Whyte & Mackay stable using the Bottled In Origin (BIO) and Bottled In India (BII) routes.

The hardening of prices owing to reduced worldwide availability of matured malt of the required vintage has boosted business prospects at Whyte & Mackay. The Company is also focusing its branded spirits activity on select geographies including travel retail as against an earlier strategy that attempted a presence in every market.

F. OUTLOOK:

Nearly 70% of the Company’s sales are made to Government buying agencies who are reluctant to grant price increases whatever the provocation. Andhra Pradesh, the largest Indian market for IMFL, continues to deny the industry even inflation-linked price increases. Notwithstanding this, the Company’s efforts to convince states and these buying agencies to adapt a more pragmatic approach continue. While the lack of such increases affects the profitability of your Company, particularly at a time of rising input costs, your Company consistently endeavours to work around the problem through a mix of strategy, higher volume throughput and cost control measures.

G. INTERNAL CONTROL SYSTEM:

The company has a robust system of internal control which has been incorporated in the enterprise-wise SAP system.

Additional checks of the Company’s systems are carried out by the independent auditors as also by the Company’s own Operations Review team and by the UB Group’s Internal Audit Department.

H. INTERNATIONAL OPERATIONS:

Subsequent to the acquisition of Whyte & Mackay, Glasgow in fiscal 2008 your Company has reinforced the management and reorganized the selling operations. Products from Whyte & Mackay, as mentioned earlier, are available in India on both BIO & BII basis.

The expansion of the winery at Bouvet Ladubay to a capacity of over 8 million bottles, has been completed during the fiscal year at a cost of 12 million Euros. The Company’s sales which were around 4.5 million bottles during the fiscal year continue to grow in the traditional markets as also in India where they have been introduced on a BIO basis. The technical expertise of the French wine-maker has also been used in setting up the FSWL winery near Baramati. However, sales of the BIO wines in India have been marginally hampered through the unreasonable inter-state policies of certain State Governments.

I. HUMAN RESOURCES:

The Company’s human capital is now in excess of 7,000 employees, including factory workmen. There has been no loss of production at any of the manufacturing facilities due to industrial unrest. The HR Department is geared to lend its support to the effort to make the Company a ‘employer of choice’ in the Indian market place.

J. FORWARD LOOKING STATEMENTS:

This Report contains forward-looking statements that involve risks and uncertainties. Your Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Actual results, performances or achievements could differ materially from these expressed or implied in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of their dates. This Report should be read in conjunction with the financial statements included herein and the notes thereto





22 2322 23

1. We have audited the attached Balance Sheet of

United Spirits Limited, as at March 31, 2009, and

the related Profit and Loss Account and Cash Flow

Statement for the year ended on that date annexed

thereto, which we have signed under reference to this

report. These financial statements are the responsibility

of the Company’s management. Our responsibility is

to express an opinion on these financial statements

based on our audit.

2. We conducted our audit in accordance with the

auditing standards generally accepted in India. Those

Standards require that we plan and perform the audit

to obtain reasonable assurance about whether the

financial statements are free of material misstatement.

An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial

statements. An audit also includes assessing the

accounting principles used and significant estimates

made by management, as well as evaluating the overall

financial statement presentation. We believe that our

audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order,

2003, as amended by the Companies (Auditor’s Report)

(Amendment) Order, 2004 (together ‘the Order’), issued

by the Central Government of India in terms of sub-

section (4A) of Section 227 of ‘The Companies Act, 1956’

of India (the ‘Act’) and on the basis of such checks of the

books and records of the Company as we considered

appropriate and according to the information and

explanations given to us, we give in the Annexure a

statement on the matters specified in paragraphs 4 and

5 of the said Order.

4. Further to our comments in the Annexure referred to in

paragraph 3 above, we report that:

4.1. We have obtained all the information and

explanations which, to the best of our knowledge

and belief, were necessary for the purpose of our

audit;

4.2. In our opinion, proper books of account as

required by law have been kept by the Company

so far as appears from our examination of those

books;

4.3. The Balance Sheet, Profit and Loss Account and

Cash Flow Statement dealt with by this report are

in agreement with the books of account;

4.4. In our opinion, the Balance Sheet, Profit and Loss

Account and Cash Flow Statement dealt with by

this report comply with the accounting standards

referred to in sub-section (3C) of section 211 of the

Act;

4.5. On the basis of written representations received

from the directors, as on March 31, 2009, and

taken on record by the Board of Directors of the

Company, none of the directors is disqualified

as on March 31, 2009 from being appointed as a

director in terms of clause (g) of sub-section (1) of

section 274 of the Act;

4.6. In our opinion and to the best of our information

and according to the explanations given to us,

the said financial statements, together with the

notes thereon and attached thereto, give, in the

prescribed manner, the information required by the

Act and also give a true and fair view in conformity

with the accounting principles generally accepted

in India:

i) in the case of the Balance Sheet, of the state of

affairs of the Company as at March 31, 2009;

ii) in the case of the Profit and Loss Account, of

the profit for the year ended on that date;

and

iii) in the case of the Cash Flow Statement, of the

cash flows for the year ended on that date.

J. Majumdar

Partner

Membership Number – F 51912

For and on behalf of

Price Waterhouse

Chartered Accountants

Place: Bangalore

Date : July 29, 2009

Auditors' Report to the Members of United Spirits Limited

22 2322 23

[Referred to in paragraph 3 of the Auditors’ Report of even date to the members of United Spirits Limited on the financial

statements for the year ended March 31, 2009]

Annexure to the Auditors' Report

1. (a) The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(b) The fixed assets are physically verified by the management according to a phased programme designed to cover all the items over a period of three years, which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the management during the year and no material discrepancies between the book records and the physical inventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

2. (a) The inventory (except those in transit at the year-end amounting to Rs.123.794 Million) has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

3. (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Act and, accordingly, sub clauses (b), (c) and (d) of clause (iii) of Paragraph 4 of the Order are not applicable.

(b) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Act and accordingly, sub clauses (f) and (g) of clause (iii) of Paragraph 4 of the Order are not applicable.

4. In our opinion and according to the information and explanations given to us, having regard to the

explanation that certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets, and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees Five Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time except for sale of goods aggregating to Rs.649.482 million and purchase of services aggregating to Rs.94.938 million as there are no market prices comparable to those sold/ purchased, which, however, are considered to be of special nature as explained by the management of the Company.

6. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. According to the information and explanations given to us, no Order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company in respect of the aforesaid deposits.

7. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

24 2524 25

Annexure to the Auditors' Report (Contd.)

8. The Central Government of India has not prescribed the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act for any of the products of the Company.

9. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing the undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, income-tax, wealth tax, service tax, customs duty, excise duty and cess, and other material statutory dues, as may be applicable, with the appropriate authorities except dues with respect to sales-tax. The extent of the arrears of statutory dues outstanding as at March 31, 2009 for a period of more than 6 months from the date they became payable in respect of sales – tax is as follows :

Name ofthe

statute

Natureof

dues

Amount(Rs. in

Million)

Period towhich theamountrelates

Duedate

Date ofPay-ment

MaharashtraValue Added

Tax, 2002

SalesTax

12.938 2005-06April 1,

2006

Notyet

paid

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income-tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cess as at March 31, 2009, which have not been deposited on account of a dispute, are given in Appendix-1.

10. The Company has neither accumulated losses as at March 31, 2009 nor has it incurred any cash loss either during the financial year ended on that date or in the immediately preceding financial year.

11. According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date.

12. In our opinion, the Company has maintained adequate documents and records in the cases where the Company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund/ societies are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

15. In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company, for loans taken by others from banks or financial institutions during the year, are not prejudicial to the interest of the Company.

16. In our opinion, and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purposes for which they were obtained.

17. On the basis of an overall examination of the balance sheet of the company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis which have been used for long-term investment.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year.

19. The Company has not issued any debenture during the year..

20. The Company has not raised any money by public issues during the year.

21. 21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

J. MajumdarPartner

Membership Number – F 51912

For and on behalf ofPrice Waterhouse

Chartered AccountantsPlace : BangaloreDate : July 29, 2009

24 2524 25

[Referred to in paragraph 9(b) of the Annexure to the Auditors’ report of even date to the members of United Spirits

Limited on the financial statements for the year ended March 31, 2009].

Name of the StatuteAmount*

(Rs. Million)Forum where dispute

is pendingYear To Which The Amount Relates

The Income-Tax Act, 1961 126.203 Commissioner of Income-Tax Appeals1993-94, 1994-95, 1999-00, 2000-01,2001-02, 2002-03 to 2005-06

3.620 Assessing Officer 2003-04

140.476 Income Tax Appelate Tribunal 2003-04, 2004-05, 2005-06

The Wealth-Tax Act, 1957 -Commissioner of Income Tax - Appeals

1992-93, 1994-95,1996-97

Central and Respective State Sales Tax Acts

199.471 Supreme Court 1996-06

56.825 High Court1982-83,1984-86,1992-93,1995-96,1996-97,1997-98,1997-00,1999-00, 2002-03, 2003-04, 2006-07

88.749 Appellate Tribunal

1986-90,1985-86,1986-87,1987-88, 1988-89,1989-96,1990-91,1991-92, 1991-93, 1994-95,1995-96,1996-97, 1997-98, 1997-01,1998-99,1999-00, 2000-01

15.756 Joint Commissioner 1984-85,1985-86,1987-88,1991-92, 1992-93, 2000-01, 2006-07, 2007-08

8.848 Deputy Commissioner 1984-85,1992-93, 2002-03

0.291 Commissioner of Sales Tax 1999-00, 2000-01

1.995 Assistant Commissioner 1974-76, 1995-96,1996-97, 2002-03, 2008-09

7.183 Assessing Officer 1993-94,1995-96, 1997-98, 2003-04, 2004-05

0.892 Appellate and Revisional board 1993-94, 2004-05, 2005-06

115.431 Additional Commissioner 2002-03, 2004-05, 2005-06

Respective State Excise Acts 4.785 Supreme Court1971-72,1972-73,1973-74,1977-78, 1978-79,1979-80, 1980-81, 1981- 82, 1981-09

265.885 High Court

1963-64,1972-74,1983-84,1984-85, 1985-86,1986-87, 1988-91, 1990-91, 1991-92,1992-93, 1993-94,1995-00, 1996-97,1997-98, 1998-99,1998-01, 1999-00, 2000-01,2001-09,2002-03,2003-04.

17.464 Appellate Tribunal 1995-96

193.185 Excise Commissioner

1974-81,1980-81,1981-82,1982-83, 1983-84,1983-85,1984-85,1984-85, 1985-86, 1986-87,1985-87,1987-88, 1987-89, 1988-89,1989-90,1991-92, 1991-96, 1995-96,1993-94,1995-98,1993-96,1998-99,1999-00, 2001-02, 2002- 03, 2004-05, 2005-06.

1.593 Excise Superintendent 1986-87,1992-93,1992-99,1997-98, 2001-02

1.701 District Magistrate and Collector 1994-95

12.170 Chinsurah Court, Hooghly 1981-84

8.311 Additional District Magistrate 1993-94

0.081 Collector 1994-95

The Central Excise Act, 1944 6.000 Supreme Court

25.635 High Court 1989-97,1996-97, 2004-05

2.363 Commissioner of Central excise 1995-96, 2003-04- Assistant Commissioner 1995-96

* Net of amounts paid under protest or otherwise

Annexure to the Auditors' Report

26 2726 27

Rs. Million

Schedule 2009 2008

SOURCES OF FUNDS

Shareholders' FundsShare Capital 1 1,001.633 1,001.633 Share Capital Suspense 1A 77.491 - Reserves and Surplus 2 29,708.037 19,091.596

Loan FundsSecured Loans 3 13,064.790 11,067.394 Unsecured Loans 4 6,163.730 553.385

Foreign Currency Monetary Items Translation Difference 311.347 - [Schedule 18 Note 12(d)]

50,327.028 31,714.008

APPLICATION OF FUNDSFixed Assets 5

Gross Block 7,876.187 6,530.725 Less: Depreciation 1,949.852 1,602.381 Net Block 5,926.335 4,928.344 Capital Work in Progress 282.632 361.223

6,208.967 5,289.567

Investments 6 20,514.765 6,571.557

Deferred Tax Asset (Net) [Schedule 18 Note 17(b)] 216.403 5.162

Current Assets, Loans and AdvancesInventories 7 6,539.691 3,843.829 Sundry Debtors 8 6,650.397 4,134.998 Cash and Bank Balances 9 848.628 280.013 Other Current Assets 10 2,103.003 1,187.662 Loans and Advances 11 16,709.818 18,158.071

32,851.537 27,604.573 Less: Current Liabilities and Provisions 12

Liabilities 8,781.513 7,298.083 Provisions 683.131 458.768

9,464.644 7,756.851 Net Current Assets 23,386.893 19,847.722

50,327.028 31,714.008Statement on Significant Accounting Policies 17 Notes on Accounts 18

The Schedules referred to above and the notes thereon form an integral part of the Accounts.

This is the Balance Sheet referredto in our report of even date J. MAJUMDAR M.R.DORAISWAMY IYENGAR V.K.REKHI Partner Director Managing DirectorFor and on behalf of Price Waterhouse V.S.VENKATARAMAN P.A.MURALIChartered Accountants Company Secretary Chief Financial Officer

Bangalore Bangalore July 29, 2009 July 29, 2009

Balance Sheet as at March 31, 2009

26 2726 27

Profit and Loss Account for the year ended March 31, 2009

Rs. Million

Schedule 2009 2008INCOME

Sales (Gross) 71,130.831 51,784.918 Less: Excise Duty 33,654.208 23,343.103

37,476.623 28,441.815 Income arising from Sale by Manufacturers under 'Tie-up'agreements (Tie-up units) 2,958.308 2,916.525 Income from Brand Franchise 460.493 372.903 Other Income 13 543.446 369.138 Exchange Gain 90.901 117.879

41,529.771 32,218.260 EXPENDITURE

Materials 14 23,118.263 15,843.843 Manufacturing and Other Expenses 15 11,500.545 9,913.530 Interest and Finance charges (Net) 16 1,957.794 1,285.113

36,576.602 27,042.486

Profit before Depreciation and Taxation 4,953.169 5,175.774 Depreciation 361.565 326.112

Profit before Taxation 4,591.604 4,849.662 Provision for Taxation:

Current Tax 1,760.925 1,710.000 Deferred Tax (Credit) (186.008) (13.097)Fringe Benefit Tax 50.063 40.000

Profit after Taxation 2,966.624 3,112.759 Profit brought forward from previous year 7,018.342 4,411.221 Profit transferred on Amalgamation [Schedule 18 Note 2(D)] 103.983 -

10,088.949 7,523.980 Appropriations:Proposed Dividend

Preference Shares - 1.930 Equity Shares 215.825 150.331

Corporate Tax on Proposed Dividend 36.679 25.877 Transfer to Capital Redemption Reserve - 77.500 Transfer to General Reserve 350.000 250.000 Profit carried to Balance Sheet 9,486.445 7,018.342

Basic Earnings Per Share (Face Value of Rs.10 each) 27.49 31.84 Diluted Earnings Per Share (Face Value of Rs.10 each) 27.49 31.40

Statement on Significant Accounting Policies 17 Notes on Accounts 18


This is the Profit and Loss Account referredto in our report of even date

J. MAJUMDAR M.R. DORAISWAMY IYENGAR V.K. REKHI Partner Director Managing DirectorFor and on behalf of Price Waterhouse V.S.VENKATARAMAN P.A. MURALI Chartered Accountants Company Secretary Chief Financial Officer

Bangalore BangaloreJuly 29, 2009 July 29, 2009

28 2928 29

Cash Flow Statement for the year ended March 31, 2009

Rs. Million

2009 2008

A. CASH FLOW FROM OPERATING ACTIVITIES

Profit before Taxation 4,591.604 4,849.662

Adjustments for:

Depreciation 361.565 326.112

Unrealised Foreign Exchange Loss / (Gain) (168.432) (126.572)

Bad Debts/ Advances written off 6.005 94.538

Loss/(Gain) on Fixed Assets Sold/Written Off (Net) (44.955) 20.354

Loss/(Gain) on Sale of Investments (Net) (3.355) -

Liabilities no longer required written back (136.599) (97.745)

Provision for Doubtful Debts/ Advances/ Deposits 210.345 171.171

Provision for diminution in value of Investments (Net) 0.030 0.051

Provision - Others 96.372 74.961

Interest Expense and Finance Charges 2,008.538 1,339.205

Income from investments (42.017) (61.705)

Interest Income (50.744) 2,236.753 (54.092) 1,686.278

Operating profit before working capital changes 6,828.357 6,535.940

(Increase)/decrease in Trade and other receivables (5,417.056) (1,168.960)

(Increase)/decrease in Inventories (2,578.433) (907.333)

Increase/(decrease) in Trade payables 1,915.761 (6,079.728) 2,010.196 (66.097)

Cash generated from operations 748.629 6,469.843

Direct taxes paid (2,047.839) (2,099.154)

Fringe Benefit taxes paid (43.569) (39.950)

Cash generated / (used in) from operations (1,342.779) 4,330.739

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed assets (106.662) (982.991)

Sale of fixed assets 62.875 15.883

Finance Lease Payments (17.259) (15.159)

Purchase of long term investments - (5.884)

Purchase of current Investments (50.000) (1,256.094)

Disposal of investment in Associate 10.700 -

Sale of long term investments 38.162 1.539

Sale of current investments 45.000 1,256.094

Investments in Subsidiaries (26.635) (18.506)

Reduction in investment cost - 87.000

Loan given to Subsidiaries (2,694.980) (7,271.191)

Realisation of Loan from Subsidiaries 133.895 417.254

Interest received 34.713 93.482

Dividend received 55.386 50.566

Net cash used in investing activities (2,514.805) (7,628.007)

28 2928 29

Rs. Million

2009 2008

C. CASH FLOW FROM FINANCING ACTIVITIESRedemption of Preference Shares - (77.500)Proceeds/(Repayment) of long term loans:

Proceeds 3,686.681 291.402 Repayment (2,619.985) (489.661)

Proceeds/(Repayment) of fixed deposits 95.169 (117.669)Proceeds/(Repayment) of short term loans 2,150.000 (100.000)Working Capital Loan / Cash Credit from Banks (net) 2,347.704 1,868.588 Interest and Finance Charges paid [including on Finance lease Rs 2.981 Million (2008: Rs 3.003 Million)] (1,641.688) (1,324.793)Dividends paid (208.446) (190.831)Corporate Tax on distributed profit (25.862) (18.005)

Net cash used in financing activities 3,783.573 (158.469)

Net (Decrease)/ Increase in cash and cash equivalents (74.011) (3,455.737)Cash and cash equivalents as at March 31, 2008 280.013 3,735.750 Cash and Cash equivalents of Transferor Companies as at April 1, 2008

642.626 -

Cash and cash equivalents as at March 31, 2009 848.628 280.013 (74.011) (3,455.737)

Notes:

1. The above Cash Flow Statement has been compiled from and is based on the Balance Sheet as at March 31, 2009 and the related Profit and Loss Account for the year ended on that date.

2. The above cash flow statement has been prepared under the indirect method as set out in the Accounting Standard - 3 on Cash Flow Statements as notified under Section 211(3C) of the Companies Act, 1956 and reallocation required for this purpose are as made by the Company.

3. In view of the amalgamation described in Note 2 on Schedule 18, the figures of the current year are not comparable with those of previous year.

4. Previous year's figures have been regrouped wherever necessary in order to conform to this year's presentation.

This is the Cash Flow Statementreferred to in our report of even date

Cash Flow Statement for the year ended March 31, 2009 (Contd.)

J. MAJUMDAR M.R. DORAISWAMY IYENGAR V.K. REKHI Partner Director Managing DirectorFor and on behalf of Price Waterhouse V.S.VENKATARAMAN P.A. MURALI Chartered Accountants Company Secretary Chief Financial Officer

Bangalore BangaloreJuly 29, 2009 July 29, 2009

30 3130 31

Schedules forming part of Balance Sheet as at March 31, 2009

Rs. Million

2009 2008

1. SHARE CAPITAL

Authorised

245,000,000 (2008: 110,000,000) Equity Shares of Rs.10/- each 2,450.000 1,100.000

84,200,000 (2008: 10,000,000) Preference Shares of Rs.10/- each[Schedule 18 Note 2(A) (IV)]

842.000 100.000

3,292.000 1,200.000

Issued, Subscribed and Paid-up

100,163,256 (2008: 100,163,256) Equity Shares of Rs.10/- each fully paid up 1,001.633 1,001.633

1,001.633 1,001.633

Notes :

Of the above,

1. 51,719,968 (2008: 51,719,968) Equity Shares were allotted as fully paid up on July 9, 2001 to the shareholders of the erstwhile McDowell & Company Limited, pursuant to a scheme of Amalgamation for consideration other than cash

2. 34,010,521 (2008: 34,010,521) Equity Shares were alloted as fully paid on November 6, 2006 to Equity Shareholders of erstwhile Herbertsons Limited, Triumph Distillers & Vintners Private Limited, Baramati Grape Industries Limited, United Distillers India Limited and Shaw Wallace Distilleries Limited pursuant to a Scheme of Amalgamation for consideration other than cash.

3. 8,751,381 (2008: 8,751,381) Equity shares of Rs.10/- each fully paid up represent 17,502,762 (2008: 17,502,762) Global Depository Shares issued by the Company on March 29, 2006.

4. 5,681,326 (2008: 5,681,326) Equity shares of Rs.10/- each fully paid up were alloted consequent to conversion of 100,000, 2% Convertible Bonds in Foreign Currency during 2008.

1A SHARE CAPITAL SUSPENSE

Equity Share Suspense

7,749,121 (2008: Nil) Equity Shares of Rs.10/- each to be issued as fully paid up to the equity shareholders of Transferor Companies pursuant to the Scheme of Amalgamation for consideration other than cash [Schedule 18 Note 2(A)(I)] 77.491 -

77.491 -

30 3130 31

Schedules forming part of Balance Sheet as at March 31, 2009 (Contd.)

Rs. Million

2009 20082. RESERVES AND SURPLUS

Central SubsidyAs per last Balance Sheet 1.500 1.500

Capital Redemption Reserve As per last Balance Sheet 541.946 464.446 Add: Transferred from Profit and Loss Account - 77.500 Add: Adjustment on Amalgamation [Schedule 18 Note 2(D)]

37.000 -

578.946 541.946 Securities Premium Account

As per last Balance Sheet 9,893.917 5,457.811 Addition during the year:(a) Conversion of 100,000, 2% Convertible Bonds in Foreign Currency

- 4,386.163

(b) Premium payable on redemption of 2% Convertible Bonds in Foreign Currency reversed during the year

- 49.943

9,893.917 9,893.917Foreign Currency Translation Reserve[Schedule 18 Note 5(d)]

As per last Balance Sheet (821.948) (144.912)Addition during the year (357.000) (677.036)Transfer to General Reserve on Amalgamation[Schedule 18 Note 2(B)(II)(d)] 144.912 - Reversed during the year due to Amalgamation[Schedule 18 Note 2(B)(II)(d)] 570.131 -

(463.905) (821.948)Contingency Reserve As per last Balance Sheet 110.000 110.000

General ReserveAs per last Balance sheet 2,347.839 2,097.839 Add:Addition during the year:(a) Reserve arising on amalgamation [Schedule 18 Note 2(A)(V)(d) and 2(B)(II)(c)] 7,849.035 - (b) Transfer from Foreign Currency Translation Reserve on amalgamation [Schedule 18 Note 2(B)(II)(d)] (144.912) - (c) Adjustment on Amalgamation [Schedule 18 Note 2(D)] 20.000 - (d) Transfer from Profit and Loss Account 350.000 250.000

10,421.962 2,347.839 Less:(a) Expenses relating to Amalgamation

[Schedule 18 Note 2(C)] (146.879) - (b) Diminution in value of certain fixed assets of the

Company [Schedule 18 Note 2(A)(V)(e)] (80.704) -(c) Adjustment on adoption of notification under

Companies (Accounting Standards) Rules, 2009 relating to AS11 - "The Effects of Changes in Foreign Exchange Rates" [Schedule 18 Note 12(d)] (93.245) -

10,101.134 2,347.839 Surplus in Profit and Loss account 9,486.445 7,018.342

29,708.037 19,091.596

32 3332 33


Rs. Million

2009 2008

3. SECURED LOANS

Term Loans

From Banks [Note (i)] 5,327.059 5,929.343

[Repayable within one year: Rs.1,296.805 Million (2008: Rs.1,349.236 Million)]

Working Capital Loan / Cash Credit from Banks [Notes (ii) and (iii)] 7,711.007 5,096.500

Finance Lease [Note (iv)] 26.724 41.551

13,064.790 11,067.394

Notes:

(i) Out of the above loans:

(a) Secured by charge on certain fixed assets of the Company including Land and Building.

1,426.205 488.222

(b) Secured by charge on fixed assets of the Company including Land and Buildings, pledge of certain shares held by the Company and also by pledge of certain investments of other companies.

2,062.499 3,907.294

(c) Secured by a second charge on certain fixed assets of the Company including Land and Building.

62.500 125.000

(d) Foreign Currency External Commercial Borrowings secured by charge on certain fixed assets of the Company including Land and Building, a Trademark and a fixed deposit with bank (charge created subsequent to the year end).

1,775.550 1,404.200

(e) Secured by hypothecation of specific fixed assets acquired under respective agreements.

0.305 4.627

(ii) Secured by hypothecation of inventories (except those held outside India), book debts and other current assets.

(iii) Includes Foreign Currency Non-Resident [FCNR(B)] Loans. - 893.069

(iv) Secured against assets acquired under lease agreements.

4. UNSECURED LOANS

Fixed Deposits 631.505 553.385

[Repayable within one year Rs. 148.294 Million (2008 : Rs.367.072 Million)]

Long term loan from a bank (Note below) 750.000 -

[Repayable within one year Rs Nil (2008: Rs.Nil )]

Short term loan from banks 2,150.000 -

[Repayable within one year Rs 2,150 Million (2008: Rs.Nil )]

From Subsidiary Company 2,556.633 -

[Repayable within one year Rs. Nil (2008: Rs.Nil )]

From Others 35.000 -

Interest accrued and due [Schedule 18 Note 9] 40.592 -

6,163.730 553.385

Note: Out of the above loans, Rs 750 Million is guaranteed by a director of the Company.

32 3332 33

Rs.

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34 3534 35


Rs. Million

6. INVESTMENTS

ParticularsFace Value

(Rs)Nos. 2009 Nos. 2008

CURRENTUnquoted InvestmentsUnits (Fully Paid)SBI SHF Liquid Plus 10 1,405,232 14.059 782,761 7.832 HSBC Mutual Fund 10 148,341 1.491 139,249 1.394 ICICI Prudential Liquid Fund 10 583,580 5.836 545,695 5.457 Total Current Investments 21.386 14.683

LONG TERMQuoted Investments

A. TradeFully Paid Equity SharesMangalore Chemicals & Fertilizers Limited (Note 2) 10 6,150 0.032 6,150 0.032 McDowell Holdings Limited 10 50,000 0.500 50,000 0.500 In Subsidiary CompanyShaw Wallace & Company Limited 10 - - 15,072,311 4,801.877

0.532 4,802.409 B. Non-Trade

Fully Paid Equity SharesHousing Development Finance Corporation Limited 10 240 0.002 - - ICICI Bank Limited 10 8,916 0.382 - - HDFC Bank Limited 10 200 0.002 - - Vijaya Bank (Note 2) 10 42,100 0.466 42,100 0.466 Premier Fertilizers Limited 100 - - 300 0.001 Radico Khaitan Limited 2 537,850 2.043 537,850 2.043 Khaitan Chemicals & Fertilizers Limited 10 13,880 0.725 13,880 0.725 Rampur Fertilizers Limited (Note 3) 10 27,760 0.527 27,760 0.527 IndusInd Bank Limited 10 - - 10,400 0.468 Indo Lowenbraw Breweries Limited 10 - - 18 - Hero Honda Motors Limited 2 - - 175 0.035 Rampur Engineering Company Limited 10 - - 1,001 0.010 Shree Synthetics Limited (Rs.350) 10 - - 35 0.000 Gammon India Limited (Note 2) 10 - - 1,000 - Ashok Leyland Limited (Rs. 117) 1 - - 10 0.000 Crompton Greaves Limited 2 - - 280 0.005 Daewoo Motors Limited 10 - - 50 0.001 Exide Industries Limited (Rs.132) 1 - - 20 0.000 Areva TND (India) Limited (Rs.387) 10 - - 6 0.000 Harrisons Malayalam Limited 10 - - 20 0.002 Hindustan Motors Limited (Rs.51) 10 - - 2 - Indian Rayon and Industries Limited 10 - - 10 0.003 MRF Limited 10 - - 5 0.004 Nirlon Limited (Rs.254) 10 - - 12 - Rallis India Limited 10 - - 28 0.003 Siemens (India) Limited 2 - - 150 0.008

Units (Fully Paid)Unit Trust of India (Note 1) - 6.75% Tax Free US 64 Bonds 100 - - 312,246 31.224 - UTI Balance Fund -Income - Retail (formerly known as US 2002)

10 328,547 3.838 328,547 3.838

7.985 39.363 Total Quoted Investments (A+B) 8.517 4,841.772

34 3534 35

6. INVESTMENTS (Contd.)Rs. Million


(Rs)Nos. 2009 Nos. 2008

Unquoted InvestmentsC. Trade

Fully paid Equity Shares Yankay Associates Private Limited 100 1 0.004 - - Goa Fruit Distilleries Private Limited 100 350 0.035 350 0.035 North West Distilleries Private Limited 10 - - 1,000 0.010 Phipson and Company (Pakistan) Limited (Re.1) 100 - - 3,942 0.000

Utkal Distilleries Limited 100 - - 10,700 7.448 Baramati Teluka Fruits Growers Fed Limited 100 5,000 0.500 5,000 0.500 Shaw Scott Distilleries Private Limited 100 - - 1 0.001 In Subsidiary CompaniesShaw Wallace Breweries Limited 10 78,512,509 3,240.191 - - Asian Opportunities & Investments Limited US$1 4,998,706 301.000 4,998,706 301.000 United Spirits Nepal Limited NRS 100 67,716 65.626 67,716 65.626 Primo Distributors Private Limited 10 - - 3,920,010 1,030.000 Zelinka Limited CYP 1 - - 1,000 0.101 Palmer Investment Group Limited US$ 1 15,000,000 6,917.801 - - Montrose International S.A US$ 1000 500 133.932 - - Liquidity Inc. US$0.0001 4,000,000 119.313 - - Four Seasons Wines Limited 10 50,000 0.500 50,000 0.500 McDowell Scotland Limited £ 1 1,575,000 125.505 1,575,000 125.505 Daffodils Flavours & Fragrances Private Limited 10 10,000 0.100 10,000 0.100 United Vintners Limited 10 50,000 0.500 50,000 0.500 USL Holdings Limited US$ 1 500,000 22.183 500,000 22.183 McDowell Beverages Limited 10 50,000 0.500 50,000 0.500 United Alcobev Limited 10 50,000 0.500 50,000 0.500 Herbertsons Limited 10 60,000 0.600 60,000 0.600 United Spirits (Shanghai) Trading Company Limited RMB 10 500,000 26.635 - - McDowell & Company Limited 10 50,000 0.500 50,000 0.500 Jasmine Flavours & Fragrances Private Limited 10 10,000 0.100 10,000 0.100 Royal Challengers Sports Private Limited 10 10,000 0.100 10,000 0.100

Fully paid Preference Shares 11% Redeemable Preference Shares ofGanges Soap Works Private Limited

100 - - 2,000 -

9.3% Cumulative Redeemable Preference Shares ofRampur Engineering Company Limited 10 - - 25,000 0.250 In Subsidiary Company7% Non Cumulative redeemable preference shares ofShaw Wallace Breweries limited 100 1,197,000 119.700 - -

11,075.825 1,556.059


36 3736 37

6. INVESTMENTS (Contd.)Rs. Million


(Rs)Nos. 2009 Nos. 2008

D. Non-Trade In Government SecuritiesIndira Vikas Patra 0.003 0.003 National Savings/Plan/Def. Certificates 0.193 6.486(Deposited with Govt.Authorities)In Fully Paid DebenturesNon-Redeemable6.5% Bengal Chamber of Commerce & Industry 0.002 0.002 5% Woodland Hospital & Medical Centre Limited 0.007 0.007 0.5% Woodlands Medical Centre Limited 100 117 0.012 - - 5.0% Woodlands Medical Centre Limited 100 270 0.027 - - Fully paid Equity Shares

Madhav Co-operative Housing Society Limited (Rs.250) 50 5 0.000 5 0.000 Sangam Bhavan Cooperative Housing Society Limited 50 10 0.001 10 0.001 U.B. Electronics Instruments Limited 100 1,996 0.129 1,996 0.129 Stridewell Leather India Private Limited (Rs. 20) 10 - - 2 0.000 Ashoka Securities Private Limited 10 - - 25 0.003 McDowell & HRB Emp. Co-op Society Limited 200 - - 10 0.002 Koel Manufacturing and Investment (P) Limited 10 - - 1 0.002 Maltings Limited 10 - - 695 - Central Investment (P) Limited 10 - - 305 - Consolidated Breweries Limited. 10 - - 750 - Goa Urban Co-Operative Bank Limited 50 - - 199 0.010 Mapusa Urban Co-Operative Bank Limited (Rs.130) 25 - - 5 0.000 Baramati Sahakari Bank Limited 100 - - 9 0.000 Thane Janta Sahakari Bank Limited 50 - - 10 0.001 Rupee Co- op Bank Limited 25 - - 40 0.001

0.374 6.647 E. Others

Interest as Sole Beneficiary in USL Benefit Trust [Refer Schedule 18 Note 6(b)] 9,409,542 153.536

Total Unquoted Investments (C+D+E) 20,485.741 1,716.242 Total Long Term Investments (A+B+C+D+E) 20,494.258 6,558.014 Total Current and Long Term Investments 20,515.644 6,572.697 Less: Provision for diminution in the value of investments (Note 5) 0.879 1.140 Total 20,514.765 6,571.557 Aggregate value of Quoted Investments:- Book value 7.638 4,840.632 - Market value 47.361 4,824.355 Aggregate Book value of Unquoted Investments 20,507.127 1,730.925

Notes:1. Investments in units of Unit Trust of India amounting to Rs 3.175 Million (2008 : Rs 34.400 Million) represent those made under Rule 3A

of the Companies (Acceptance of Deposit) Rules, 1975.2. An application has been made for duplicate certificate.3. Market Quotations are not available.4. Also Refer Schedule 18 Note 6.5. Investments written off during the year Rs 0.291 Million (2008: Rs Nil) and adjusted to provision for diminution in the value of investments.


36 3736 37

Rs. Million2009 2008

7. INVENTORIES Raw Materials including materials in transit 964.531 607.711 Packing Materials, Stores and Spares 897.769 611.236 Finished goods including goods in transit 2,052.475 1,526.985 Work-in-Progress [including held outside India 2,624.916 1,097.897 Rs 955.030 Million (2008: Rs Nil)]

6,539.691 3,843.829

8. SUNDRY DEBTORS (Unsecured)Exceeding six months Considered Good 14.434 28.448 Considered Doubtful 66.947 63.911

81.381 92.359 Others: Considered Good 6,635.963 4,106.550

6,717.344 4,198.909 Less: Provision for Doubtful Debts 66.947 63.911

6,650.397 4,134.998

9. CASH AND BANK BALANCESCash on Hand 4.475 5.176 Remittances-in-Transit/ Cheques on Hand 73.624 23.907 Balances with Scheduled Banks:

On Current Accounts [Note (i)] 304.061 198.069 On Unpaid Dividend Account 17.878 19.730 On Deposit Account [Notes (ii) and (iii)] 448.590 33.131

848.628 280.013

Notes:(i) includes Rs.32.097 Million (2008: Rs.25.385 Million) in Exchange Earners Foreign Currency (EEFC) Account and Rs.8.703 Million (2008: Rs.1.155 Million) in Foreign Currency.(ii) a) includes Rs.0.587 Million (2008: Rs.8.403 Million) pledged with Government Departments.. b) includes Rs.1.300 Million (2008: Rs. 2.673 Million) as margin.(iii) includes Rs 133.926 Million (2008: Rs Nil) pledged as security against loan from a bank.

10. OTHER CURRENT ASSETS(Unsecured, considered good except where otherwise stated)Income accrued on Investments and Deposits 18.111 2.080 Other Deposits - Considered Good 2,080.019 1,180.964 - Considered Doubtful 9.940 6.809 Fixed assets held for sale 4.873 4.618

2,112.943 1,194.471 Less: Provision for Doubtful Deposits 9.940 6.809

2,103.003 1,187.662


38 3938 39



11. LOANS AND ADVANCES(Unsecured, considered good except where otherwise stated)

Loans and Advances to Subsidiaries 11,093.202 15,068.198 Advances recoverable in cash or in kind or for value to be received:Advances to Tie-up units - Considered Good 2,449.150 855.340

- Considered Doubtful 20.314 21.519 Advance Income Tax (Net of Provisions) 424.718 440.513 Taxes and Duties Paid in Advance 917.938 1,002.739 Other Advances - Considered Good 1,824.810 791.281

- Considered Doubtful 500.947 295.564 17,231.079 18,475.154

Less: Provision for Doubtful Advances 521.261 317.083 16,709.818 18,158.071

12. CURRENT LIABILITIES AND PROVISIONS

A. LiabilitiesAcceptances * 1,126.924 698.359 Sundry Creditors

Micro and Small Enterprises [Schedule 18 Note 7] 34.443 10.242 Others 5,785.664 4,366.329

Dues to Subsidiaries 309.838 1,234.395 Dues to Directors 49.169 51.486 Investor Education and Protection Fund [Schedule 18 Note 8]

Unclaimed Debentures 0.001 0.001 Unclaimed Dividends 19.588 19.694 Unclaimed Fixed Deposits 28.074 11.025

Security Deposit ** 128.109 125.551 Advances Received from Customers 220.326 184.078 Interest accrued but not due 514.062 86.656 Other Liabilities 565.315 510.267

8,781.513 7,298.083 * Includes bills drawn against inland letters of credit of Rs.876.924

Million (2008: Rs.215.149 Million)and secured by a charge on debtors, inventories and other current assets.

** Includes due to a subsidiary Rs Nil (2008: Rs.11 Million)

B. ProvisionsProposed Dividend Preference Shares - 1.930 Equity Shares 215.825 150.245 Corporate Tax on Proposed Dividend 36.694 25.877 Fringe Benefit Tax (Net of Payments) 8.527 0.591 Employee Benefits 422.085 280.125

683.131 458.768

38 3938 39

Schedules forming part of Profit & Loss Account as at March 31, 2009

Rs. Million

2009 2008

13. OTHER INCOME

Income from Investments:

Dividend income from Subsidiary (Gross) 40.107 41.654

[Tax deducted at source Rs.2.645 Million (2008 : Rs.1.905 Million)]

Dividend income from other investments (Gross) 1.910 20.051

Profit on Sale of Fixed Assets (Net) 44.965 -

Profit on Sale of Investments 3.355 -

Liabilities no longer required written back 136.599 97.745

Provision for diminution in value of investment written back 0.291 -

Bad debts / Advances recovered 0.072 3.172

Scrap Sales 157.577 114.996

Insurance Claims 2.814 2.657

Miscellaneous 155.756 88.863

543.446 369.138

14. MATERIALS

Raw Materials Consumed 10,207.958 5,424.371

Purchase of Finished Goods 5,186.702 4,072.316

Packing Materials Consumed 9,477.688 6,562.563

Movement in Stocks

Opening Stock:

Work-in-Progress 1,097.897 1,055.278

Finished Goods 1,526.985 996.638

2,624.882 2,051.916

Add : Stocks of the Transferor Companies as on April 1, 2008

[Schedule 18 Note 2(D)]

Work-in-Progress 3.696 -

Finished Goods 56.647 -

60.343 -

Closing Stock:

Work-in-Progress 2,624.916 1,097.897

Finished Goods 2,052.475 1,526.985

4,677.391 2,624.882

(Increase)/ Decrease in Stocks (1,992.166) (572.966)

Excise Duty on Opening/Closing Stock of Finished Goods (net) 238.081 357.559

23,118.263 15,843.843

40 PB

Schedules forming part of Profit & Loss Account as at March 31, 2009 (Contd.)


15. MANUFACTURING AND OTHER EXPENSESEmployee Cost:

Salaries, Wages and Bonus 2,183.409 1,921.848 Contribution to Provident and Other Funds 272.379 236.884 Workmen and Staff Welfare 136.527 116.830 Voluntary Retirement Scheme Compensation - 4.053

Power and Fuel 196.797 160.397 Stores and Spares Consumed 47.940 41.572 Repairs and Maintenance:

Buildings 49.390 56.459 Plant and Machinery 70.646 54.031 Others 53.392 54.685

Rent 322.595 138.440 Rates and Taxes 311.443 236.126 Insurance 38.316 32.784 Travelling and Conveyance 460.965 401.404 Legal and Professional 459.907 284.423 Freight Outwards 836.505 605.481 Advertisement and Sales Promotion 3,467.676 3,030.129 Commission on Sales 311.980 267.257 Royalty/ Brand Fee/ Trade Mark Licence Fees 60.032 358.652 Cash Discount 362.937 195.655 Sales Tax 192.964 142.686 Fixed Assets Written Off 0.010 16.949 Loss on Sale of Fixed Assets (Net) - 3.405 Directors' Remuneration:

Sitting Fee 1.180 1.070 Commission [Schedule 18 Note 19] 48.727 51.044

Bad Debts and Advances Written Off 6.005 94.538 Investments Written Off 0.291 - Provision for Doubtful Debts/ Advances/ Deposits 210.345 171.171 Provision for Diminution in Value of Investments 0.030 0.051 Research and Development 30.033 27.681 Others:

Personnel and Administration 265.733 233.730 Selling and Distribution 828.115 785.498 Miscellaneous 274.276 188.597

11,500.545 9,913.530

16. INTEREST AND FINANCE CHARGESInterest on:

Fixed Loans 822.464 769.797 Other Loans 925.627 488.420 Finance Charges (Including Bill Discounting) 260.447 80.988

2,008.538 1,339.205 Less: Interest Income: On Investments 1.054 2.142 On Deposits and Other Accounts (Gross) 45.305 50.270 [Tax Deducted at Source Rs. 3.825 Million (2008: Rs.7.982 Million)] On Income Tax Refunds 4.385 1.680

1,957.794 1,285.113

PB 41

17. STATEMENT ON SIGNIFICANT ACCOUNTING POLICIES

1. Basis of preparation of Financial Statements

The Financial Statements of the Company are prepared under historical cost convention, except as otherwise stated, in accordance with the Generally Accepted Accounting Principles (GAAP) in India, the Accounting Standards as specified in the Companies (Accounting Standard) Rules 2006, and the relevant provisions of the Companies Act, 1956.

2. Fixed Assets

(a) Fixed assets are stated at their original cost of acquisition and subsequent improvements thereto including taxes, duties, freight and other incidental expenses related to acquisition and installation of the assets concerned, except amounts adjusted on revaluation and amalgamation. Interest on borrowings attributable to qualifying assets are capitalised and included in the cost of fixed assets as appropriate.

(b) The costs of Fixed Assets acquired in amalgamations are determined at their fair values, on the date of acquisition or nearer thereto, or as approved under the schemes of amalgamation.

(c) Assets held for disposal are stated at their net book value or estimated net realisable value, whichever is lower.

(d) Intangible assets are stated at the consideration paid for acquisition less accumulated amortisation.

3. Leases

Assets acquired under Leases, where the Company has substantially all the risks and rewards of ownership, are classified as finance leases. Such leases are capitalised at the inception of the lease at lower of the fair value or the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period.

Assets acquired as leases, where a significant portion of the risk and rewards of ownership are retained by the lessor, are classified as operating leases. Lease rentals are charged to the Profit and Loss Account on accrual basis.

4. Depreciation and Amortisation

a) Depreciation is provided on the Straight Line Method, including on assets revalued, at rates prescribed in Schedule XIV to the Companies Act, 1956 except for the following, which are based on management’s estimate of useful life of the assets concerned:

i) Computers, Vehicles and Aircrafts over a period of three, five and eleven years respectively;

ii) In respect of certain items of Plant and Machinery eligible for triple shift allowance, depreciation is provided for the full year on triple shift basis.

b) Fixed assets acquired on amalgamation over the remaining useful life computed based on rates prescribed

in Schedule XIV to the Companies Act, 1956, as below:

Buildings – Factory 1 to 30 years

– Non factory 1 to 54 years

Plant & Machinery 1 to 20 years

Vehicles 1 to 4 years

Computers 1 to 2 years

Schedules forming part of account for the year ended March 31, 2009

42 4342 43

c) Assets taken on finance lease are depreciated over their estimated useful lives or the lease term, whichever is lower.

d) Leasehold Land are not amortised.

e) Goodwill arising on amalgamation is charged to the Profit and Loss Account in the year of amalgamation.

f) Intangible assets are amortised, on a straight line basis, commencing from the date the assets are available for use, over their respective individual estimated useful lives as estimated by the management:

Trademark, Formulae and Licence 10 years

Depreciation charged as above is not less than the minimum specified as per Schedule XIV of the Companies Act, 1956.

5. Impairment

Impairment loss, if any, is provided to the extent the carrying amounts of assets exceed their recoverable amount.

Recoverable amount is higher of the net selling price of an asset and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

6. Investments

Long-term Investments are stated at cost to the Company. Provision for diminution in the value is made to recognise a decline, other than temporary, in the value of long-term investments.

Current investments are valued at cost or market value, whichever is less.

7. Inventories

Inventories are valued at lower of cost and net realisable value. The costs are, in general, ascertained under Weighted Average Method. Finished goods and Work-in-Progress include appropriate manufacturing overheads and borrowing costs, as applicable. Excise/ Customs duty payable on stocks in bond is added to the cost. Due allowance is made for obsolete and slow moving items.

8. Revenue Recognition

Sales are recognised when goods are despatched from distilleries/ warehouses of the Company in accordance with the terms of sale except where such terms provide otherwise, where sales are recognised based on such terms. Gross Sales are inclusive of excise duty but are net of trade discounts and sales tax, where applicable.

Income arising from sales by manufacturers under “Tie-up” agreements (Tie-up units) and income from brand franchise are recognised in terms of the respective contracts on sale of the products by the Tie-up unit/ Franchisees. Income from brand franchise is net of service tax, where applicable.

Dividend income on investments are recognised and accounted for when the right to receive the payment is established.

9. Foreign Currency Transactions

Transactions in foreign currency are recognised at the rates of exchange prevailing on the dates of the transactions.

Liabilities/ assets in foreign currencies are reckoned in the accounts as per the following principles:

Exchange differences arising on a monetary item that, in substance, forms part of an enterprise’s net investment in a non-integral foreign operation is accumulated in a foreign currency translation reserve in the enterprise’s financial statements until the disposal of the net investment.

Schedules forming part of account for the year ended March 31, 2009 (Contd.)

42 4342 43

Exchange differences arising on reporting of long term foreign currency monetary items, with the exception of exchange differences arising on a monetary item that, in substance, forms part of an enterprise’s net investment in a non-integral foreign operation, at rates different from those at which they were initially recorded during the period or reported in previous financial statements, are accounted as below:

(a) In so far as they relate to the acquisition of depreciable capital assets, are added to or deducted from the cost of the asset and are depreciated over the balance life of the asset; and

(b) In other cases, the said exchange differences are accumulated in a ‘Foreign Currency Monetary Items Translation Difference Account’ and amortised over the balance period of such long term asset/liability but not beyond March 31, 2011.

All other monetary assets and liabilities denominated in foreign currency are restated at the rates ruling at the year end and all exchange gains/ losses arising therefrom are adjusted to the Profit and Loss Account, except those covered by forward contracted rates where the premium or discount arising at the inception of such forward exchange contract is amortised as expense or income over the life of the contract.

Exchange differences on forward contracts are recognised in the Profit and Loss Account in the reporting period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such forward contracts is recognised as income or expense for the year.

For forward exchange contracts and other derivatives that are not covered by Accounting Standard (AS) -11 ‘The Effects of Changes in Foreign Exchange Rates’, the Company follows the guidance in the announcement of the Institute of Chartered Accountants of India (ICAI) dated March 29, 2008, whereby for each category of derivatives, the Company records any net mark-to-market losses. Net mark-to-market gains are not recorded for such derivatives.

Also refer Schedule 18 Note 12 below.

10. Employee Benefits

a) Defined-contribution plans

These are plans in which the Company pays pre-defined amounts to separate funds and does not have any legal or informal obligation to pay additional sums. These comprise of contributions to the employees’ provident fund with the government, superannuation fund and certain state plans like Employees’ State Insurance and Employees’ Pension Scheme. The Company’s payments to the defined contribution plans are recognised as expenses during the period in which the employees perform the services that the payment covers.

b) Defined-benefit plans

Gratuity:

The Company provides for gratuity, a defined benefit plan (the Gratuity Plan), to certain categories of employees. Liability with regard to gratuity plan is accrued based on actuarial valuation, based on Projected Unit Credit Method at the balance sheet date, carried out by an independent actuary. Actuarial Gains and Losses comprise experience adjustments and the effect of changes in the actuarial assumptions and are recognised immediately in the Profit and Loss Account as income or expense.

Provident Fund:

Company’s Provident Funds administered by trusts set up by the Company where the Company’s obligation is to provide the agreed benefit to the employees and the actuarial risk and investment risk fall, in substance,

on the Company are treated as a defined benefit plan. Liability with regard to such provident fund plans are


44 4544 45

accrued based on actuarial valuation, based on Projected Unit Credit Method, carried out by an independent

actuary at the balance sheet date. Actuarial Gains and Losses comprise experience adjustments and the

effect of changes in the actuarial assumptions and are recognised immediately in the Profit and Loss Account

as income or expense.

Death Benefit:

Death Benefit payable at the time of death is actuarially ascertained at the year-end and provided for in the

accounts.

c) Other long term employee benefits:

Compensated absences which are not expected to occur within twelve months after the end of the period

in which the employee renders the related services are recognised as a liability at the present value of the

defined benefit obligation at the balance sheet date based on actuarial valuation carried out at each balance

sheet date.

d) Short term employee benefits:

Undiscounted amount of short term employee benefits expected to be paid in exchange for the services

rendered by employees is recognised during the period when the employee renders the services. These

benefits include compensated absences such as paid annual leave and performance incentives.

11. Expenditure on account of Voluntary Retirement Scheme

Expenditure on account of Voluntary Retirement Scheme of employees is expensed in the period in which it is

incurred.

12. Research and Development

Revenue expenditure on research and development is charged to Profit and Loss Account in the period in which

it is incurred. Capital Expenditure is included as part of fixed assets and depreciated on the same basis as other

fixed assets.

13. Taxes on Income

Provision for income tax comprises current taxes and deferred taxes. Current tax is determined as the amount of

tax payable in respect of taxable income for the period.

Deferred tax is recognised on timing differences between the accounting income and the taxable income for the

year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets are recognised and carried forward to the extent that there is a reasonable/ virtual certainty

that sufficient future taxable income will be available against which such deferred tax asset can be realised.

Fringe Benefit Tax is determined at current applicable rates on expenses falling within the ambit of “Fringe

Benefit” as defined under the Income Tax Act, 1961.

14. Earnings per Share (EPS)

Basic EPS is arrived at based on Net Profit after Taxation available to equity shareholders to the weighted average

number of equity shares outstanding during the year. The Diluted EPS is calculated on the same basis as Basic EPS,

after adjusting for the effects of potential dilutive equity shares unless impact is anti-dilutive.


44 4544 45

15. Provisions

A provision is recognised when an enterprise has a present obligation as a result of a past event and it is probable

that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can

be made. Provisions, other than employee benefits, are not discounted to their present value and are determined

based on management estimate required to settle the obligation at the balance sheet date. These are reviewed

at each balance sheet date and adjusted to reflect the current management estimates.

16. Contingencies

Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty are

treated as contingent and, to the extent not provided for, are disclosed by way of notes on the accounts.

17. Share / Foreign Currency Convertible Bonds [FCCB] issue expenses and Premium on Redemption of FCCB

Share/ Foreign Currency Convertible Bonds issue expenses incurred are expensed in the same year and premium

payable on FCCBs is expensed over the currency of FCCBs. Both are adjusted to the Securities Premium Account as

permitted by Section 78(2) of the Companies Act, 1956.

18. Expenditure

Expenses are net of taxes recoverable, where applicable.


46 4746 47

18. NOTES ON ACCOUNTS

Rs. Million

2009 2008

1. Contingent Liabilities

a) (i) Guarantee given on behalf of other bodies corporate(including performance guarantees) 31,397.558 24,887.119

(ii) Guarantees given by the Company’s bankers for which Counter Guarantees have been given by the Company 172.217 125.151

b) Disputed claims against the Company not acknowledged as debts, currently under appeal/ sub judice:

(i) Excise demands for excess wastages and distillation losses 238.384 176.179

(ii) Other miscellaneous claims 244.274 215.178

(iii) Income Tax demand (including interest) under appeal 305.186 198.175

(iv) Sales Tax demands under appeal in various states 604.036 634.134

c) Co-accepted bills of Tie-up Units – since fully settled 15.016 216.740

d) Claims from suppliers not acknowledged as debts 45.449 50.967

The Management is hopeful of succeeding in the above appeals/ disputes based on legal opinions/ legal

precedents.

2. A. The Scheme of Amalgamation under Section 391 to 394 of the Companies Act, 1956 for the amalgamation

of Shaw Wallace & Company Limited (‘SWCL’), a subsidiary company, and Primo Distributors Private Limited

(‘Primo’), a wholly owned subsidiary company, (together ‘Transferor Companies’) with the Company (‘the

Scheme’) and their respective shareholders, with April 1, 2007 being the Appointed Date, has been sanctioned

by the Hon’ble High Court of Karnataka, the Hon’ble High Court of Judicature at Bombay and the Hon’ble

High Court at Calcutta.

Upon necessary filings with the respective Registrar of Companies, the Scheme has become effective on July

6, 2009 and the effect thereof have been given in these accounts. Consequently,

a. In terms of the Scheme the entire business and undertaking of Transferor Companies including all assets

and liabilities, as a going concern, stand transferred to and vested in the Company (hereinafter referred

to as ‘Amalgamation’) with effect from April 1, 2007 being the Merger Appointed Date.

b. Primo ceased to be subsidiary of the Company and Shaw Wallace Breweries Limited (SWBL) became a

direct subsidiary of the Company. Primo stands dissolved without being wound up. SWCL will be dissolved

without winding up by separate order by the Hon’ble High Court at Calcutta.

SWCL was engaged in manufacture and sale of potable alcohol and Primo was engaged in the business

of distribution of alcoholic beverages.

(I) In consideration of the amalgamation, the Company will issue :

a) 7,749,121 equity shares of Rs.10/- each aggregating to Rs.77.491 Million in the ratio of 4 (four) fully paid

up Equity Shares of the face value of Rs.10/- each of the Company for every 17 (Seventeen) fully paid up

equity shares of Rs.10/- each held in SWCL [also refer Note 2 (A)(II) below].


46 4746 47

Pending issue of these Equity Shares, a sum of Rs. 77.491 Million has been shown under Equity Share Capital Suspense. Subsequently, on July 24, 2009, the allotment of the Company’s shares to the eligible shareholders of SWCL has been completed. Steps have been taken to list the shares with the stock exchanges where the existing shares of the Company are currently listed.

b) As Primo was a wholly owned subsidiary of the Company, no consideration was payable pursuant to amalgamation of Primo with the Company.

(II) Pursuant to the Scheme, Equity Shares to be issued as above include 4,925,231 Equity Shares of Rs.10/- each fully paid up to Palmer Investment Group Limited(Palmer), R.G.Shaw & Company Limited (R G Shaw), JIHL Nominees Limited (JIHL Nominees), Shaw Scott & Company Limited (Shaw Scott), Shaw Darby & Company Limited (Shaw Darby) and Thames Rice Milling Company Limited (Thames Rice), subsidiaries of the Company, in exchange for the 20,932,244 Equity Shares of Rs.10/- each fully paid up held by them in the share capital of SWCL, in the proportion of Equity Shares held by them respectively.

(III) Pursuant to the Scheme, 10,282,553 Equity Shares of Rs.10/- each fully paid up held by SWCL and 1,306,431 Equity Shares of Rs.10/- each fully paid up held by Primo in the share capital of the Company, were to be transferred to the SWCL Benefit Trust and the Primo Benefit Trust established by virtue of trust deeds dated July 25, 2008 for the benefit of SWCL and Primo respectively. Upon the Scheme becoming effective, the beneficial interest in SWC Benefit Trust and Primo Benefit Trust stands transferred and vested in the USL Benefit Trust established by virtue of trust deed dated September 26, 2006 for the benefit of the Company. Subsequent to the year end, on June 30, 2009 SWCL has sold 10,282,553 Equity Shares held by it in the Company in the open market, through the stock exchanges and 1,306,431 Equity shares held by Primo in the Company has been transferred to Primo Benefit Trust on July 6, 2009 which stands vested with USL Benefit Trust in terms of the Scheme.

(IV) Pursuant to the scheme, the Authorised Share Capital of the Company stands increased and reclassified, without any further act or deed on the part of the Company, including payment of stamp duty and Registrar of Companies fees, by the authorised share capital of the transferor companies amounting to Rs 2,092 Million and the Memorandum of Association and Articles of Association of the Company stand amended accordingly without any further act or deed as the part of the Company.

(V) Accounting for Amalgamation

The amalgamation of the Transferor Companies with the Company is accounted for on the basis of the Purchase Method as envisaged in the Accounting Standard (AS) -14 on Accounting for Amalgamations specified in the Companies (Accounting Standard) Rules 2006 and in terms of the Scheme, as below:

a. All tangible assets [excluding investment in shares held by the Transferor Companies in the Company and the interest in the USL Benefit Trust in accordance with the terms of the Scheme as explained in Note 2(A)(III) above] and liabilities of the Transferor Companies at their respective fair values.

b. Interest in USL Benefit Trust, arising from the terms of the Scheme as explained in Note 2(A)(III) above, has been accounted as Investment, valued and recorded, in the manner prescribed in the Scheme, at the average of the weekly high and low of the closing price of the Company, on the stock exchange where the shares of the Company are more frequently traded in terms of turnover, for the period ended six months preceding the Appointed Date, i.e. April 1, 2007, aggregating to Rs. 9,256.006 Million.

c. The equity shares directly held by the Company in the Transferor Companies stand cancelled and debited to General Reserve of the Company [refer (d) below].


48 4948 49

d. Rs.7,860.187 Million, being the difference between the value of net assets of the Transferor Companies transferred to the Company (determined as stated above) and the face value of equity shares to be issued and after adjusting for the equity shares directly held by the Company in the Transferor Companies which are cancelled, is credited to General Reserve of the Company. This accounting treatment of the reserve has been prescribed in the Scheme. Had the Scheme not prescribed this treatment, this amount would have been credited to Capital Reserve.

e. The Company, based on the reports by an Independent valuer, has revalued, at their respective fair values, all fixed assets being Land, Buildings, Plant and Machinery, Furniture and Fixtures and Office Equipment and Vehicles, at one location, as at April 1, 2007 and an amount of Rs. 80.704 Million, being diminution in value of certain Plant and Machinery determined based on their respective disposal value as estimated by the independent valuer, has been debited to General Reserve. This accounting treatment has been prescribed in the Scheme. Had the scheme not prescribed this treatment, Rs.80.704 Million being diminution in value of certain fixed assets would have been debited to the Profit and Loss Account for the year instead of General Reserve, having corresponding impact on the net profit for the year.

B. The Scheme of Amalgamation under Section 391 to 394 of the Companies Act, 1956 for the amalgamation of Zelinka Limited (‘Zelinka’ or the ‘Transferor Company’), Cyprus, with the Company (‘the ZL Scheme’) and their respective shareholders, with April 1, 2007 being the Appointed Date, has been sanctioned by Hon’ble High Court of Karnataka and the certified copy of the Order of the Hon’ble High Court of Karnataka has been filed with the Registrar of Companies. Zelinka has complied with the procedure required to be followed under the local corporate laws of Cyprus to give effect to the ZL Scheme. Accordingly, the ZL scheme became operative from March 26, 2009. The Company has given effect to the ZL Scheme in these accounts with effect from April 1, 2007 being the Appointed Date. Consequently, in terms of the ZL Scheme:

a. The entire business and undertaking of Zelinka including all assets and liabilities, as a going concern, stand transferred to and vested in the Company with effect from April 1, 2007 being the Merger Appointed Date.

b. Zelinka ceased to be a subsidiary of the Company. Palmer Investment Group Ltd, British Virgin Islands and Montrose International SA, Panama have become direct wholly owned subsidiaries of the Company. Liquidity Inc has become direct subsidiary of the Company.

Zelinka was engaged in Investment related activities.

(I) As Zelinka was a wholly-owned subsidiary of the Company, no consideration was payable pursuant to the amalgamation of Zelinka with the Company.

(II) Accounting treatment

The amalgamation of Zelinka with the Company is accounted for on the basis of the Purchase Method as envisaged in the Accounting Standard (AS) -14 on Accounting for Amalgamations specified in the Companies (Accounting Standard) Rules 2006 and in terms of the Scheme, as below:

a) All assets and liabilities of the Transferor Company at their respective book values.

b) The investment held by the Company in the equity share capital of the Transferor Company stands cancelled and debited to General Reserve of the Company [refer (c) below].

c) Rs.11.152 Million being the difference between the value of net assets of the Transferor Company transferred to the Company (determined as stated above) after adjusting for investments cancelled is debited to General Reserve of the Company. This accounting treatment of the reserve has been prescribed in the ZL Scheme. Had the ZL Scheme not prescribed this treatment, this amount would have been debited to Goodwill, which would have been charged to the Profit and Loss Account for the year as per the accounting policy of the Company, with a corresponding impact on the net profit for the year.


48 4948 49

d) Interest free loans in foreign currency aggregating to Rs. 7,345.279 Million as on April 1, 2007, granted by the Company to Zelinka for acquisition of long term strategic investments, stand cancelled. Exchange difference on such loans aggregating to Rs.144.912 Million as on April 1, 2007, accumulated by the Company in Foreign Currency Translation Reserve, has been transferred to General Reserve. This accounting treatment of the reserve has been prescribed in the ZL Scheme. Had the ZL Scheme not prescribed this treatment, this amount would have been debited to the Profit and Loss Account for the year instead of General Reserve, having corresponding impact on the net profit for the year.

Exchange differences of Rs. 570.131 Million on loan to Zelinka arising during the year ended March 31, 2008 stands reversed on cancellation of such loans on amalgamation.

C. All costs and expenses (including those of the Transferor Companies) incidental with the finalisation of the schemes and to put these into operation, including expenses in connection with excise and label re-registrations, all advisory fees, stamp duty charges, meeting expenses, professional fees, consultant fees including expenses and other expenses or charges attributable to the implementation of the Scheme (expenses relating to amalgamation), aggregating to Rs.146.879 Million are debited to General Reserve in the books.

This accounting treatment of the costs and expenses has been prescribed in the Scheme. Had the Scheme not prescribed this treatment, this amount would have been debited to the Profit and Loss Account for the year instead of General Reserve, having corresponding impact on the net profit for the year.

D. From April 1, 2007, the Transferor Companies had carried out the business in trust on behalf of the Company. Accordingly, Profit for the year ended March 31, 2008 of the Transferor Companies after making the following adjustments have been added to the Profit and Loss Account:

Rs. Million

Profit after Taxation for the year ended March 31, 2008 as per audited accounts 673.956

Transfer to General Reserve (20.000)

Transfer to Capital Redemption Reserve (37.000)

Proposed Dividend (Net of dividend received by the Company) (32.940)

Corporate Tax on Proposed Dividend (8.159)

Adjustments on Amalgamation (471.874)

Amount Transferred to Profit and Loss Account on Amalgamation 103.983

E. The Board of Directors of the erstwhile Central Distilleries & Breweries Limited (CDBL) (amalgamated with erstwhile SWDL amalgamated with the Company in an earlier year) on April 29, 1986 decided to issue 134,700 Equity Shares of Rs.10 each, the allotment whereof was stayed by the Hon’ble High Court of Delhi on September 13,1988. The Hon’ble High Court of Delhi had vacated its order and has ordered to keep in abeyance the allotment on 72,556 shares and the matter is sub-judice. The holders, in exchange of these shares will be entitled to 17,776 equity shares of Rs.10 each of the Company pursuant to a Scheme of Arrangement. Necessary adjustments in this respect will be carried out on disposal of the matter pending before the aforesaid Court.

F. Pursuant to the Scheme of amalgamation, the bank accounts, agreements, licences and certain immovable properties are in the process of being transferred in the name of the Company.

3. The Board of Directors of the Company at their meeting held on November 29, 2008 have approved the proposal of merger of Balaji Distilleries Limited with the Company with effect from April 1, 2009 as per the Scheme of Arrangement between BDL, Chennai Breweries Private Limited and the Company, subject to the necessary

approvals.


50 5150 51

The Draft Rehabilitation Scheme along with the Scheme of Arrangement is pending with the Board for Industrial and Financial Reconstruction formed under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985, for approval.

4. Fixed Assets

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) – Rs.106.562 Million (2008: Rs.219.396 Million).

5. Current Assets, Loans and Advances

a) Loans and Advances include:

i) Rs. 11,093.202 Million (2008: Rs.14,987.889 Million) given as loan to the subsidiaries. The entire loan is non interest bearing.

ii) An amount of Rs. 736.429 Million (2008: Rs. 489.847 Million) due from a Tie-up unit secured by the assets of the Tie-up unit.

iii) An amount of Rs. 250 Million (2008: Rs. Nil) due from a proposed tie-up unit secured by the shares of the proposed tie-up unit.

iv) Rs.3 Million (2008: Rs.3 Million) being amount paid to BDA Limited (BDA) towards reassignment of certain Liquor Brands/ Trade Marks pursuant to a Memorandum of Understanding dated March 20, 1992. Pending execution of the deed for such assignments and judicial resolutions of various disputes with BDA pertaining to control of BDA and ownership of the ‘Officers Choice’ and other brands currently sub-judice at the various courts, the advance given to the party has been provided for as a matter of prudence. All consequential adjustments arising out of the above matters will be made as and when ascertained.

v) Due from an Officer of the Company Rs. 1.193 Million (2008: Rs.1.085 Million). Maximum amount outstanding at any time during the year Rs. 1.193 Million (2008: Rs.1.085 Million).

vi) Due from the Managing Director of the Company Rs. 3.140 Million (2008: Rs. 2.854 Million). Maximum amount outstanding at any time during the year Rs. 3.140 Million (2008: Rs. 2.854 Million).

b) Certain confirmation of balances from Sundry Debtors, Loans and Advances, Deposits and Sundry Creditors are awaited and the account reconciliations of some parties where confirmations have been received are in progress. Adjustment for differences, if any, arising out of such confirmations/reconciliations would be made in the accounts on receipt of such confirmations and reconciliation thereof. The Management is of the opinion that the impact of adjustments, if any, is not likely to be significant. In the opinion of the management, all current assets, loans and advances including advances on capital accounts would be realised at the values at which these are stated in the accounts, in the ordinary course of business.

c) Bank Balance with scheduled bank includes Rs. 154.000 Million (2008: Rs. 205.960 Million) out of the proceeds of the beer business of erstwhile SWCL, sold in an earlier year. The said sum is kept under escrow pending resolution of various taxation matters.

d) The Company has, granted interest free loans in foreign currency amounting to Rs.7,435.245 Million [2008: Rs. 6190.725 Million, excluding Rs. 6836.073 Million, relating to Zelinka cancelled on amalgamation as referred to in Note 2(B)(II)(d) above] to USL Holdings Limited, BVI (USL Holdings), a subsidiary of the Company, for acquisition of long term strategic investments. Management is of the view that out of these loans, Rs.3,630.300 Million (2008: Rs. 3,987.000 Million), from the inception of the grant of loans, in substance, form part of the Company’s net investment in the subsidiary, as the settlement of these loans is neither planned nor likely to occur in the foreseeable future and management intends to convert these loans into investment in share capital of the subsidiary in near future. Accordingly, in accordance with AS 11 - The Effects of Changes in Foreign Exchange Rates (AS 11), exchange difference aggregating to Rs.463.905 Million [2008: Rs. 106.905 Million excluding Rs.715.043 Million relating to loans to Zelinka referred in Note 2(B)(II)(d) above] arising on such loans has been accumulated in a foreign currency translation reserve, which at the time of

the disposal of the net investment in these subsidiaries would be recognised as income or as expenses.


50 5150 51


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[Not

e 2

(D) a

bove

]**

Writ

ten

off d

urin

g th

e ye

ar.

6.

Inve

stm

ent

(Co

ntd

.)

a)

54 5554 55


6. Investment (Contd.)

b) Investment in USL Benefit Trust represents beneficial interest in USL Benefit Trust which holds 13,741,643 (2008: 2,152,659) equity shares of Rs 10 each of the Company, with all additions or accretions thereto in trust for the benefit of the Company. The above includes 10,282,533 shares held by erstwhile SWCL, a transferor company, in the Company referred to in Note 2 (A) (III) above.

c) The carrying cost of investment in Palmer Investment Group Limited amounting to Rs. 6,917.801 Million, substantially exceeds the net worth and the market value of shares held directly and indirectly through subsidiary, by it. The management of the Company believes that this reflects intrinsic value far in excess of the carrying cost of investments and that such shortfall in net worth / decline in market value of such shares is purely temporary in nature and, hence, no provision is considered necessary for the same.

7. Disclosures of dues/payments to Micro and Small enterprises to the extent such enterprises are identified by the Company.


a) (i) The principal amount remaining unpaid as at March 31, 2009 32.359 10.242

(ii) Interest due thereon remaining unpaid on March 31, 2009 0.047 -

b) The amount of interest paid by the Company in terms of section 16 of the Micro, Small and Medium Enterprises Development Act, 2006, along with the amount of the payment made to the supplier beyond the appointed day during each accounting year:(i) Delayed payments of principal beyond the appointed date during the

entire accounting year 132.355 -(ii) Interest actually paid under Section 16 of the Micro, Small and Medium

'Enterprises Development Act, 2006 - -c) The amount of interest due and payable for the period of delay in making

payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under the Micro, Small and Medium 'Enterprises Development Act, 2006 - -

d) The amount of interest accrued and remaining unpaid on March 31, 2009 in respect of principal amount settled during the year 2.037 -

e) The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under Section 23 of the Micro, Small and Medium 'Enterprises Development Act, 2006. - -

The above information has been determined to the extent such parties have been identified on the basis of information provided by the Company, which has been relied upon by the auditors.

8. As required under Section 205C of the Companies Act, 1956, the Company has transferred Rs. 4.678 Million (2008 : Rs. 10.517 Million) to the Investor Education and Protection Fund (IEPF) during the year. On March 31, 2009, no amount was due for transfer to the IEPF.

9. Interest on inter corporate deposit included under Unsecured Loan – Other in Schedule 4 acquired on amalgamation, where negotiation/ settlement has not been finalised, has been provided in terms of the decree and / or otherwise considered adequate by the management. In the opinion of the management, interest so far provided is adequate and no further provision is necessary in this respect. Adjustments, if any, are carried out as and when the amounts are determined on final disposal / settlement of the matter.

54 5554 55


a) Defined Contribution Plans

The Company offers its employees defined contribution plans in the form of Provident Fund (PF) and Employees’ Pension Scheme (EPS) with the government, Superannuation Fund (SF) and certain state plans such as Employees’ State Insurance (ESI). PF and EPS cover substantially all regular employees while the SF covers certain executives and the ESI covers certain workers. Contribution to SF is made to trust managed by the Company, while other contributions are made to the Government’s funds. While both the employees and the Company pay predetermined contributions into the provident fund and the ESI Scheme, contributions into the pension fund and the superannuation fund are made only by the Company. The contributions are

normally based on a certain proportion of the employee’s salary.

During the year, the Company has recognised the following amounts in the Profit and Loss Account, which are included in Contribution to Provident and other funds in Schedule 15:

Rs. Million

2009 2008

Provident Fund and Employee’s Pension Scheme * 45.614 54.495

Superannuation Fund 33.380 29.018

Employees’ State Insurance 8.738 8.553

87.732 92.066

* Excluding contribution to PF made to trusts managed by the Company.

b) Defined Benefit Plans

Gratuity:

The Company provides for gratuity, a defined benefit plan, (the Gratuity Plan), to certain categories of employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement or termination of employment, an amount based on the respective employee’s last drawn salary and years of employment with the Company. The Company has employees’ gratuity funds managed by the Company as well as by Insurance Companies.

Provident Fund:

For certain executives and workers of the Company, contributions are made as per applicable Indian laws towards Provident Fund to certain Trusts set up and managed by the Company, where the Company’s obligation is to provide the agreed benefit to the employees and the actuarial risk and investment risk fall, in substance, on the Company. Having regard to the assets of the Fund and the return on the investments, shortfall in the assured rate of interest notified by the Government, which the Company is obliged to make good is determined actuarially.

Death Benefit:

The Company provides for Death Benefit, a defined benefit plan (the Death Benefit Plan) to certain categories of employees. The Death Benefit Plan provides a lump sum payment to vested employees on death, an amount based on the respective employee’s last drawn salary and remaining years of employment with the Company after adjustments for any compensation received from the insurance company and restricted to

limits set forth in the said plan. The Death Benefit Plan is Non-Funded.


56 5756 57


Rs M

illio

n20

0920

08

Fund

edN

on-F

unde

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tuit

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) R

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the

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506

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56.

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:Pl

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114

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35.8

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--

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Plan

ass

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the

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423.

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Liab

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11

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1

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6460

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[Incl

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s in

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(B)]

10.

b)

Def

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efit

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n (

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.)

56 5756 57


Rs M

illio

n20

0920

08

Fund

edN

on-F

unde

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nded

Non

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Gra

tuit

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56.3

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2009

2008

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0%38

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%

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1%0%

34%

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Priv

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0%0%

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ds0%

33%

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%

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epos

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chem

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17%

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%

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bal

ance

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h In

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nce

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pani

es86

%0%

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-

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ers

(incl

udin

g ba

nk b

alan

ces)

13%

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9%18

%10

0%10

0%

100%

100%

Base

d on

the

abo

ve a

lloca

tion

and

the

pre

vaili

ng y

ield

s on

the

se a

sset

s, t

he lo

ng t

erm

est

imat

e of

the

exp

ecte

d ra

te o

f re

turn

on

fund

ass

ets

has

been

arr

ived

at.

Ass

umed

rat

e of

ret

urn

on a

sset

s is

exp

ecte

d to

var

y fr

om y

ear

to y

ear

refl

ecti

ng t

he r

etur

ns o

n m

atch

ing

gove

rnm

ent

bond

s.

10.

b)

Def

ined

Ben

efit

Pla

n (

Co

ntd

.)

58 5958 59

10.

b)

Def

ined

Ben

efit

Pla

n (

Co

ntd

.)

Rs M

illio

n20

0920

08

Fund

edN

on-F

unde

dFu

nded

Non

-Fun

ded

Gra

tuit

yPF

Gra

tuit

yPe

nsio

nD

eath

-Be

nefi

tG

ratu

ity

PFPe

nsio

nD

eath

-Be

nefi

t

F)

Act

ual r

etur

n on

pla

n as

sets

7.6%

7.75

%-

--

8.55

%8.

25%

--

G)

Ass

umpt

ions

Dis

coun

t Ra

te (p

er a

nnum

) 7.

75%

8.00

%-

--

8%8%

--

Expe

cted

Rat

e of

Ret

urn

on P

lan

Ass

ets

8.00

%8.

19%

--

-8%

8.19

%-

-

Rate

of

incr

ease

in C

ompe

nsat

ion

leve

ls

5.00

%N

A-

--

5%N

A-

-

Ave

rage

pas

t se

rvic

e of

em

ploy

ees

(yea

rs)

14N

A-

--

14.7

6N

A-

-

Mor

talit

y ra

tes

LIC

1994

-96

ulti

mat

e ta

ble

LIC

1994

-96

ulti

mat

e ta

ble

--

-

LIC

1994

-96

ulti

mat

e ta

ble

LIC

1994

-96

ulti

mat

e ta

ble

--

The

esti

mat

es o

f fu

ture

incr

ease

in c

om

pen

sati

on

leve

ls, c

on

sid

ered

in t

he

actu

aria

l val

uat

ion

, hav

e b

een

tak

en o

n a

cco

un

t o

f in

flat

ion

, se

nio

rity

, pro

mo

tio

n a

nd

oth

er r

elev

ant

fact

ors

su

ch a

s su

pp

ly a

nd

dem

and

in t

he

emp

loym

ent

mar

ket.

As

per

th

e b

est

esti

mat

e o

f th

e m

anag

emen

t, c

on

trib

uti

on

of

Rs

120

Mill

ion

is e

xpec

ted

to

be

pai

d t

o t

he

pla

ns

du

rin

g t

he

year

en

din

g

Mar

ch 3

1, 2

010.


58 5958 59


11. Borrowing Costs Rs. Million

2009 2008Interest included in the Closing Stock of Malt and Grape Spirit under maturation 82.643 38.117


a) The Company has marked to market all the outstanding derivative contracts on the Balance Sheet date and has

recognised the resultant loss amounting to Rs. Nil (2008: Rs 55.238 Million) during the year.

b) As on March 31, 2009, the Company has the following derivative instruments outstanding:

i) Interest and currency swap arrangement (USD-INR) amounting to USD 35 Million (2008: USD 35 Million).

c) The year end foreign currency exposures that have not been hedged by a derivate instrument or otherwise are as

under:

i) Loans and Advances to Subsidiaries USD 76.086 Million, GBP 55.200 Million, Euro 24.750 Million (2008: USD

216.400 Million, GBP 57.850 Million, Euro 19.250 Million).

ii) FCNR Nil (2008: USD 22.260 Million).

d) The central Government vide notification dated March 31, 2009 has amended Accounting Standard (AS-11)- The

Effects of changes in Foreign Exchange Rates, notified under the Company’s (Accounting Standard) Rules, 2006.

The Company has exercised the option stated in Paragraph 46 of AS 11 retrospectively from April 1, 2007.

As a result, the Company has changed its accounting policy for recognition of exchange differences arising on

reporting of long term foreign currency monetary items, with the exception of exchange differences arising

on a monetary item that, in substance, forms part of an enterprise’s net investment in a non-integral foreign

operation, at rates different from those at which they were initially recorded during the period or reported in

previous financial statements, which hitherto were charged to the Profit and Loss Account, as below:

(i) In so far as they relate to the acquisition of depreciable capital assets, are added to or deducted from the

cost of asset and are depreciated over the balance life of the asset. This, however, did not have any impact

on the results for the year ended March 31, 2009; and

(ii) In other cases, the said exchange differences are accumulated in a ‘Foreign Currency Monetary Item Translation

Difference Account’ and amortised over the balance period of such long term asset/liability but not beyond

March 31, 2011. Exchange difference recognised in the Profit and Loss Account upto last financial year ending

March 31, 2008 relating to said long term monetary items in foreign currency aggregating to Rs.93.245

Million (net of deferred tax Rs. 48.014 Million) has been debited to the opening revenue as provided in the

rules. As a result of this change in accounting for exchange difference, net profit for the year is lower by

Rs.170.089 Million. The amount remaining to be amortised in the financial statement as on March 31, 2009

is Rs.311.347 Million.

60 6160 61


13. Segment Reporting

The Company is engaged in the business of manufacture, purchase and sale of Beverage Alcohol (Spirits and Wines)

including through Tie-up units/ brand franchise, which constitutes a single business segment. The Company’s operations

outside India did not exceed the quantitative threshold for disclosure envisaged in AS 17 on ‘Segment Reporting’

specified in the Companies (Accounting Standard) Rules 2006. In view of the above, primary and secondary reporting

disclosures for business/geographical segment as envisaged in AS-17 are not applicable to the Company.

14. Related Party Disclosures

a) Names of related parties and description of relationship

Enterprise where there is control

i) Subsidiary Companies:

1) United Spirits Nepal Private Limited (USNPL), 2) Asian Opportunities & Investment Limited (AOIL), 3) Bouvet-

Ladubay S.A.S (BL)^, 4) Chapin Landais S.A.S (CL)^, 5) Palmer Investment Group Limited(PIG)^, 6) Montrose

International SA (MI)^, 7) JIHL Nominees Limited (JIHL)^, 8) RG Shaw & Company Limited (RGSC)^, 9) Shaw

Darby & Company Limited (SDC)^, 10) Shaw Scott & Company Ltd (SSC)^, 11) Thames Rice Milling Company

Limited (TRMCL)^, 12) Shaw Wallace Overseas Limited (SWOL)^, 13) McDowell (Scotland) Limited (MSL), 14) USL

Holdings Limited (USLHL), 15) Royal Challengers Sports Private Limited (RCSPL), 16) Spring Valley Investment

Holdings Inc (SVIHI)^, 17) USL Holdings (UK) Limited^, 18) United Spirits (UK) Limited^, 19) United Spirits

(Great Britain) Limited^, 20) Shaw Wallace Breweries Limited (SWBL), 21) Ramanretti Investment & Trading

Limited (RITL)^, 22) Daffodils Fragrance and Flavours Private Limited (DFFPL), 23) Four Seasons Wines Private

Limited (FSWPL), 24)Herbertsons Limited (HL), 25) United Vintners Limited (UVL), 26) United Alcobev Limited

(UAL) , 27) McDowell Beverages Limited (MBL), 28) McDowell & Company Limited, 29) Jasmine Flavours and

Fragrances Limited, 30) Liquidity Inc, 31) Whyte and Mackay Group Limited^, 32) Whyte and Mackay Holdings

Ltd^, 33) Whyte and Mackay Limited (W&M), 34) Whyte and Mackay Warehousing Limited^, 35) Bruce &

Company (Leith) Limited^, 36) Charles Mackinlay & Company Limited^, 37) Dalmore Distillers Limited^, 38)

Dalmore Whyte & Mackay Limited^, 39) Edinburgh Scotch Whisky Company Limited^, 40) Ewen & Company

Limited^, 41) Fettercairn Distillery Limited^, 42) Findlater Scotch Whisky Limited^, 43) Glayva Liqueur Limited^,

44) Glentalla Limited^, 45) GPS Realisations Limited^, 46) Grey Rogers & Company Limited^, 47) Hay &

MacLeod Limited^, 48) Invergordon Distillers (Holdings) Limited^, 49) Invergordon Distillers Group Limited^,

50) Invergordon Distillers Limited^, 51) Invergordon Gin Limited^, 52) Isle of Jura Distillery Company Limited^,

53) Jarvis Halliday & Company Limited^, 54) John E McPherson & Sons Limited^, 55) Kensington Distillers

Limited^, 56) Kyndal Spirits Limited^, 57) Leith Distillers Limited^, 58) Loch Glass Distilling Company Limited^,

59) Longman Distillers Limited^, 60) Lycidas (437) Limited^, 61) Pentland Bonding Company Limited^,

62) Ronald Morrison & Company Limited^, 63) St The Sheep Dip Whisky Company Limited^, 64) Vincent Street

(437) Limited^, 65) Tamnavulin-Glenlivet Distillery Company Limited^, 66) TDL Realisations Limited^, 67) W & S

Strong Limited^, 68) Watson & Middleton Limited^, 69) Wauchope Moodie & Company Limited^, 70) Whyte &

Mackay Distillers Limited^, 71) William Muir Limited^, 72) WMB Realisations Limited^, 73) Whyte and Mackay

Property Limited^, 74) Whyte and Mackay de Venezuela CA^, 75) KI Trustees Limited^, 76) USL Shanghai

Trading Company Limited *.

* Became a subsidiary during the year

^ No transactions during the year.

60 6160 61

ii) USL Benefit Trust

Associates with whom transactions have taken place during the year

Utkal Distilleries Ltd (Utkal) (upto July 25, 2008) and Wine Soc. of India Private Limited.

Key Management personnel

Mr. V.K.Rekhi, Managing Director

Employees’ Benefit Plans where there is significant influence:

Mc Dowell & Company Limited Staff Gratuity Fund (McD SGF), McDowell & Company Limited Officers' Gratuity

Fund (McD OGF), SWDL Group Officers Gratuity Fund (SWDL OGF), SWDL Employees Gratuity Fund (SWDL

EGF), Herbertsons Limited Employees Gratuity Fund (HL EGF), Phipson & Company Limited Management Staff

Gratuity Fund. (PCL SGF), Phipson & Company Limited Gratuity Fund. (PCL GF), Carew & Company Ltd. Gratuity

Fund (CCL GF), McDowell & Company Limited Provident Fund (McD PF), Herbertsons Limited Executives

Provident Fund (HL EPF) and The Bengal Distilleries Company Limited Staff Provident Fund (BD PF), Shaw

Wallace & Associated Companies Employees Gratuity Fund (SWCEGF), Shaw Wallace & Associated Companies

Executive Staff Fund (SWCSGF), Shaw Wallace & Co. Associated Companies Provident Fund (SWCPF).


62 6362 63

Schedules forming part of account for the year ended March 31, 2009 (Contd.)b

) Su

mm

ary

of

the

tran

sact

ion

s w

ith

rel

ated

par

ties

:

Rs. M

illio

n

2009

2008

Sl.

No.

Nat

ure

of tr

ansa

ctio

ns *

*En

titie

s

whe

re th

ere

is c

ontr

olA

ssoc

iate

sKe

y M

anag

emen

t pe

rson

nel

Empl

oyee

s’

Bene

fit P

lans

w

here

ther

e is

sig

nific

ant

influ

ence

Tota

l

Entit

ies

w

here

th

ere

is

cont

rol

Ass

ocia

tes

Key

Man

agem

ent

pers

onne

l

Empl

oyee

s’

Bene

fit

Plan

s w

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62 6362 63

Sl.

No.

Nat

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of tr

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titie

s

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re th

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is c

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Ass

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tes

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l

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lans

w

here

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e is

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nific

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lEn

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s

whe

re

ther

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l

Ass

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tes

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agem

ent

pers

onne

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fit

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s w

here

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ntee

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n

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31,3

97.5

58

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24

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--

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7420

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--

207.

809

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627

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719

6.30

5-

--

196.

305

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ue to

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95)

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and

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ts.

The

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ve i

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rmat

ion

has

bee

n d

eter

min

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o t

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exte

nt

such

par

ties

hav

e b

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.

Schedules forming part of account for the year ended March 31, 2009 (Contd.)b

) Su

mm

ary

of

the

tran

sact

ion

s w

ith

rel

ated

par

ties

: (C

on

td.)

64 6564 65


15. (a) The Company’s significant leasing arrangements in respect of operating leases for premises (residential, office, stores, godown, manufacturing facilities etc), which are not non-cancellable, range between 11 months and 3 years generally (or longer in certain cases) and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as Rent under Schedule 15 to the accounts.

Leasing arrangements entered into prior to April 1, 2001 have not been considered for treatment under AS 19 ‘Accounting for Leases’.

(b) The Company has acquired computer equipment and cars on finance leases. The lease agreement is for a primary period of 48 months for computer equipment and 36 months to 60 months for cars. The Company has an option to renew these leases for a secondary period. There are no exceptional/restrictive covenants in the lease agreements.

The minimum lease payments and their present value, for each of the following periods are as follows:

Rs. Million

2009 2008

ParticularsPresent

Value of payments

Minimumlease

payments

PresentValue of

payments

Minimum lease

payments

Later than one year and not later than five years 15.618 17.137 24.074 26.683Later than five years - - - -

15.618 17.137 24.074 26.683Not later than one year 11.106 12.930 17.477 20.304

26.724 30.067 41.551 46.987

Less: Finance Charges 3.343 5.436

Present value of net minimum lease payments 26.724 41.551

16. Earnings Per Share: 2009 2008

Nominal Value of equity shares (Rs) 10 10a) Net Profit after tax (Rs. Million) 2,966.624 3,112.759

Less: Proposed Dividend on Preference Shares (including Corporate tax thereon) - 2.258Net Profit available for equity shares 2,966.624 3,110.501

b) Basic number of Equity Shares of Rs.10 each outstanding during the year** 107,912,377 100,163,256

c) Weighted Average number of Equity Shares of Rs.10 each outstanding during the year** 107,912,377 97,702,675

d) Basic Earnings Per Share (Rs.) (a /c) 27.49 31.84e) Dilutive Effect on Profit (Rs Million) * - 23.130f) Profit attributable to equity shareholders for computing Diluted EPS

(Rs. Million) (a+e) 2,966.624 3,133.631g) Dilutive Effect on Weighted average number of equity shares

outstanding during the year * - 2,080,338h) Weighted average number of Equity Shares and equity equivalent

shares for computing Diluted EPS (c+g) 107,912,377 99,783,013i) Diluted Earnings Per Share (Rs.) (f / h) 27.49 31.40

* Dilutive effect on weighted average number of equity shares and profit attributable is on account of Foreign Currency Convertible Bonds.

** Including Equity Shares to be issued referred to in Note 2(A)(I)(a).

64 6564 65

Rs. Million

2009 2008

17. Taxes on Income:

a) Current Taxation

Provision for current taxation includes:

i) Income Tax 1,747.925 1,697.500ii) Wealth Tax 13.000 12.500

1,760.925 1,710.000

b) Deferred Taxation

The net Deferred Tax (Asset) / Liability as on March 31, 2009 has been arrived at as follows:

Particulars

Deferred Tax (Assets) /

Liabilities as on 1.4.2008

Taken over on

Amalgamation*

Current Year charge / (credit)



Difference between book and tax depreciation 251.044 40.279 14.934 306.257Provision for Doubtful Debts (131.814) - (71.496) (203.310)Employee Benefits (68.486) (2.650) (47.184) (118.320)Others (55.906) (14.849) (130.275) (201.030)

(5.162) 22.780 (234.021) (216.403)

Less: Adjustment on adoption of notification for amendment to AS11 (48.013)

186.008

* Including deferred tax assets/(liabilities) of the Transferor Companies arising/ reversing during the year ended

March 31, 2008. (Note 2 (D) above).

18. Remuneration paid/payable to Managing Director

2009 2008

Salary and Allowances 18.062 14.966 Incentives paid 17.085 10.213Contribution to Provident and other Funds * 3.940 3.383Value of Perquisites 3.275 2.877

42.362 31.439

* Provision for contribution to employee retirement/post retirement and other employee benefits which are based

on actuarial valuation done on an overall company basis are excluded above.


66 6766 67

Rs. Million

2009 2008

19. Directors’ Commission

Computation of Net Profits under Section 198 of the Companies Act, 1956 Net Profit before Taxation 4,591.604 4,849.662Add: Depreciation as per Books 361.565 326.112 Remuneration to Managing Director 42.362 31.439 Directors’ Fees 1.180 1.070 Directors’ Commission 48.727 51.044 Book deficit/(surplus) on fixed assets sold, written-off, etc (net) as per books (45.105) 20.354 Provision for Doubtful Debts 210.345 171.171

Diminution in value of Investments 0.030 0.0515,210.708 5,450.903

Less: Depreciation under Section 350 of the Companies Act, 1956 361.565 326.112 Profit on Sale of Investments 3.355 - Deficit/(Surplus) on disposal of fixed assets under Section 349 of the Companies Act, 1956 (26.891) 20.354Net profit 4,872.679 5,104.437Commission 1% thereof 48.727 51.044

The total remuneration as stated above is within the maximum permissible limit under the Companies Act, 1956.

20. Quantitative Information in respect of goods manufactured and sold by the Company

a. Particulars of Capacity and Production:

2009 2008

Description Unit Licensed Capacity

Installed Capacity

Actual Production (Note iv)

Licensed Capacity

InstalledCapacity

Actual Production

Beverage Alcohol [Note (i)] Ltrs 201,627,259 229,217,267 186,609,997 164,560,592 192,150,600 150,225,898

Notes:

i. Includes alcohol produced and bottled out of purchased rectified spirit. This activity is not considered as

manufacture under the Industries (Development and Regulation) Act, 1951.

ii. The Company's applications for the Carry On Business licenses for certain Units are still pending with the

authority.

iii. The Licensed and Installed Capacity has been certified by the Company’s management and relied upon by

the Auditors, this being a technical matter.

iv. Includes production at manufacturing facilities taken on lease.


66 6766 67

Rs. Million

2009 2008

b. Particulars of opening stock of Finished Goods:

Description Unit Quantity Value Quantity Value

Beverage Alcohol Cases 1,342,421 1,526.985 967,072 996.638

1,526.985 996.638

c. Particulars of stock of finished goods of the Transferor Companies as on April 1, 2008 (Note 3 (D) above) acquired on amalgamation


Beverage Alcohol Cases 66,899 56.647 - -

56.647 - -

d. Particulars of closing stock of Finished Goods:


Beverage Alcohol Cases 1,530,313 2,052.475 1,342,421 1,526.985

2,052.475 1,526.985

e. Particulars of Turnover:



71,130.831 51,784.918

f. Particulars of purchase of traded goods:



5,186.702 4,072.316

21. Particulars of Raw Materials Consumed:


Spirits Litres 175,537,178 7,841.101 121,714,329 3,721.819

Malt Kg. 15,426,159 415.177 8,732,860 206.760

Molasses Kg. 123,317,858 605.718 124,989,972 314.633

Others 1,345.962 1,181.159

10,207.958 5,424.371

Whereof: % Value % Value

Imported 18 1,888.249 15 817.613

Indigenous 82 8,319.709 85 4,606.758

100 10,207.958 100 5,424.371


68 6968 69

22. Consumption of Packing Material, Stores and Spares:

(including stores consumed in Repairs and Maintenance expenses) Rs Million

2009 2008

% Value % Value

Imported 1 124.304 1 55.499

Indigenous 99 9,410.332 99 6,581.998

100 9,534.636 100 6,637.497

Rs. Million

2009 2008 23. Value of Imports on C.I.F. basis:

Raw Materials and Packing Materials 1,470.157 538.831

Components and Spare Parts 2.691 0.794

Plant and Machinery 25.131 28.153

1,497.979 567.778

24. Earnings in Foreign Currency:

Interest on Fixed Deposits (net) 1.936 0.552

Dividend income from subsidiary 40.206 19.045

42.142 19.597

25. Expenditure in Foreign Currency:

Interest 115.803 121.616

Rent 104.805 -

Others (Royalty, Travelling, Subscription, Professional fees, Foreign Travel Expenses, Advertisement, Bank Charges, Finance Charges, etc.) 225.427 102.924

446.035 224.540

26. Auditors’ Remuneration *

Statutory Audit ** 11.000 7.000

Other Services 5.950 7.670

Out-of-pocket Expenses (including service tax) 0.407 0.293

17.357 14.963

* Included under Legal and Professional Charges in Schedule 15.

** Including relating to earlier year Rs. 1 Million (2008 : Nil).


68 6968 69

Rs. Million

2009 2008 27. (a) Repairs to Plant and Machinery include:

Wages 7.588 6.479

Stores Consumed 7.840 23.674

15.428 30.153

(b) Repairs to Building include:

Wages 1.708 9.853

Stores consumed 1.168 9.688

2.876 19.541

28. Research and Development expenses comprise the following:

Salaries and Wages 15.959 14.795

Contribution to Provident Fund and other Funds 1.674 1.598

Staff Welfare Expenses 0.972 0.884

Rent 3.861 3.710

Miscellaneous Expenses 7.567 6.694

30.033 27.681

29. a) Previous year's figures have been regrouped / rearranged wherever necessary.

b) In view of the amalgamation described in Note 2 above, the figures for the year ended March 31, 2009 are not comparable with those of previous year.

J. MAJUMDAR M.R.DORAISWAMY IYENGAR V.K. REKHI

Partner Director Managing Director

For and on behalf of

Price Waterhouse V.S.VENKATARAMAN P.A. MURALI

Chartered Accountants Company Secretary Chief Financial Officer

Bangalore Bangalore

July 29, 2009 July 29, 2009


70 7170 71

Statement Pursuant To Section 212(1)(e) Of The Companies Act, 1956 As At March 31, 2009

a) No of shares held at the end of the financial year of the

subsidiary

b) Extent of holding Net aggregate Profit/loss of the subsidiary so faras it concerns the members of the company

% % a) Not dealt with in theaccounts of the company

b) Dealt with in theaccounts of the company

Sl.No.

Name of the subsidiary United Spirits Ltd.

Other subsidiarycompanies

United Spirits Ltd.


(i )for thesubsidiary'sfinancialyear ended31.03.2009

(ii )for the previousfinancial years of the subsidiarysince it becamea subsidiary

(i )for thesubsidary'sfinancialyear ended31.03.2009


(Rs. Million)1 2 3 4 5 6 7 8 9

1 Asian Opportunities & Investments Ltd.

4,998,706Shares

- 100% - (60.572) (148.097) - -

2 United Spirits Nepal P. Ltd.(formerly known as McDowell Nepal Ltd.)

67,716Shares

- 82.46% - 38.828 67.697 - -

3 Ramanreti Investments & Trading Ltd.

- 50,000 Shares

- 100% (0.064) (0.211) - -

4 Shaw Wallace Breweries Ltd.*

78,512,509Shares

1,686,004 51.44% 1.10% 227.303 1,686.014 - -

5 Palmer Investment Group Ltd.

15,000,000Shares

- 0% (0.321) (0.569) - -

6 RG Shaw & Company Ltd. - 7,690,180Shares

- 100% 18.383 22.029 - -

7 Shaw Scott & Company Ltd.

- 105,609Shares

- 100% 4.556 6.204 - -

8 Shaw Darby & Company Ltd

- 130,845Shares

- 100% 3.115 6.305 - -

9 Thames Rice Milling Company Ltd

- 90,160Shares

- 100% 2.462 4.736 - -

10 Shaw Wallace Overseas Ltd - 357,745Shares

- 100% 0.607 0.257 - -

11 JIHL Nominees Ltd - 10Shares

- 100% 2.085 5.951 - -

12 Montrose International S.A

- 500Shares

- 100% 12.686 17.792 - -

13 Bouvet Ladubay - 5,40,000Shares

- 100% 18.255 106.117 - -

14 Chapin Landais - 5,000Shares

- 100% 0.802 (0.351) - -

15 McDowell & Co. (ScotLand) Ltd

- 1,575,000Shares

- 100% (35.206) (23.453) - -

16 Spring Valley Investments Holdings Inc

- 50,000Shares

- 100% (0.119) (0.219) - -

17 United Spirits (Great Britain) Ltd

- 100Shares

- 100% (1,251.126) (1,077.225) - -

18 USL Holdings Ltd - 100,000Shares

- 100% 477.551 (9.606) - -

19 USL Holdings (UK) Ltd - 100,000 Shares

- 100% (6,402.734) (1,821.350) - -

20 United Spirits (UK) Ltd - 100,000 Shares

- 100% (0.158) (0.325) - -

21 Daffodils Flavours & Fragrances Pvt Ltd

10,000 Shares

- 100% - 1.473 (2.641) - -

70 7170 71

a) No of shares held at the end of the financial year of the

subsidiary

b) Extent of holding Net aggregate Profit/loss of the subsidiary so faras it concerns the members of the company

% % a) Not dealt with in theaccounts of the company

b) Dealt with in theaccounts of the company

Sl.No.

Name of the subsidiary United Spirits Ltd.


United Spirits Ltd.


(i )for thesubsidiary'sfinancialyear ended31.03.2009


(i )for thesubsidary'sfinancialyear ended31.03.2009


(Rs. Million)1 2 3 4 5 6 7 8 9

22 Four Seasons Wines Ltd 50,000Shares

- 100% - (78.976) (46.419) - -

23 Herbertsons Ltd 54,000 Shares

- 90% - (0.024) (0.041) - -

24 McDowell Beverages Ltd 50,000 Shares

- 100% - (0.077) (0.026) - -

25 United Alcobev Ltd 50,000 Shares

- 100% - (0.072) (0.038) - -

26 United Vintners Ltd 50,000Shares

- 100% - (12.581) (12.241) - -

27 McDowell and Co. Ltd 50,000Shares

- 100% - (0.053) (0.152) - -

28 Royal Challengers Sportsd Pvt. Ltd

10,000Shares

- 100% - (55.774) (7.987) - -

29 Jasmine Flavours and Fragrances P Ltd

10,000Shares

- 100% - (0.029) (0.098) - -

30 Whyte and Mackay Limited

4,600,349,728Shares

- 100% 257.704 2,141.720 - -

31 Liquidity Inc., 4,000,000Shares

51% (66.647) (34.984) - -

32 United Spirits Trading (Shanghai) Co. P Ltd

5,000,000Shares

100% (26.410) - - -

* Balance 72,416,505 equity shares vest with SWFSL Benefit Trust whose beneficiary is Shaw Wallace Breweries Ltd.

Statement Pursuant to Section 212(1)(f) Of The Companies Act, 1956 as at March 31, 2009Material changes that have occurred between the close

of subsidiary's financial year and March 31, 2009Sl. no

Name of thesubsidiary

SubsidiaryFinancialyear endedon

Company'sInterestin theSubsidiary

Subsidiary'sFixedAssets

Subsidiary'sInvestments

Moneyslent by theSubsidiary

Moneys borrowed by thesubsidiary for the purposes other than that of meetingcurrent liabilities

(Rs. Million)

1 United Spirits Nepal P. Ltd.(formerly known as McDowell Nepal Ltd.)

16.07.2008 82.46% 0.229 - - 0.000

M.R.DORAISWAMY IYENGAR V.K.REKHI P. A. MURALI V.S.VENKATARAMAN Director Managing Director Chief Financial Officer Company Secretary angalore

July 29, 2009

Statement Pursuant To Section 212(1)(e) Of The Companies Act, 1956As At March 31, 2009 (Contd.)

72 7372 73

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74 PB

BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILEI Registration Details

Registration No. L 0 1 5 5 1 K A 1 9 9 9 P L C 0 2 4 9 9 1 State Code 0 8

Balance Sheet Date 3 1 0 3 2 0 0 9

II Capital Raised during the period (Rs. Million)

Public issue N I L Rights issue N I L

Bonus Shares N I L Private Placement N I L

Others* N I L Naked Warrants / Pref. offer N I L

III Position of Mobilisation and Deployment of Funds (Rs. Million)

Total Liabilities 5 0 3 2 7 . 0 2 8 Total Assets 5 0 3 2 7 . 0 2 8

Sources of funds

Paid-up Capital 1 0 0 1 . 6 3 3 Reserves & Surplus 2 9 7 0 8 . 0 3 7

Share Capital Secured Loans 1 3 0 6 4 . 7 9 0

Suspense 7 7 . 4 9 1 Unsecured Loans 6 1 6 3 . 7 3 0

Application of Funds

Net Fixed Assets 6 2 0 8 . 9 6 7 Investments 2 0 5 1 4 . 7 6 5

Net Current Assets 2 3 4 8 6 . 8 9 3 Misc. Expenditure N I L

Accumulated Losses N I L Deferred Tax Asset (Net) 2 1 6 . 4 0 3

IV Performance of Company (Rs. Million)

Turnover 4 1 5 2 9 . 7 7 1 Total Expenditure 3 6 5 7 6 . 6 0 2

(Gross Revenue)

(+) Profit / (-) Loss (+) Profit / (-) Loss

Before Tax + 4 5 9 1 . 6 0 4 After Tax + 2 9 6 6 . 6 2 4

(incl. Deferred Tax)

Earning (Basic) per share in Rs. 2 7 . 4 9

Earnings (Diluted) per Share in Rs. 2 7 . 4 9 Dividend rate % 2 0

V Generic Name of Three Principal Products / Services of Company (as per monetary items)

Item Code No. (ITC Code) 2 2 0 8 3 0 0 0

Product Description W H I S K Y


Product Description B R A N D Y


Product description R U M

V.K.REKHI M.R.DORAISWAMY IYENGER P. A. MURALI Managing Director Director Chief Financial Officer

Bangalore V.S. VENKATARAMAN July 29, 2009 Company Secretary

BALANCE SHEET ABSTRACT

75

Auditors' Report to the Board of Directors of United Spirits Limited

1. We have audited the attached Consolidated Balance

Sheet of United Spirits Limited and its subsidiaries

(United Spirits Limited Group) as at March 31, 2009,

the Consolidated Profit and Loss account for the

year ended on that date annexed thereto, and the

Consolidated Cash Flow Statement for the year

ended on that date, which we have signed under

reference to this report. These Consolidated Financial

Statements are the responsibility of the United Spirits

Limited’s management and have been prepared by

the management on the basis of separate financial

statements and other financial information regarding

components. Our responsibility is to express an opinion

on these Consolidated Financial Statements based on

our audit.

2. We conducted our audit in accordance with auditing

standards generally accepted in India. Those Standards

require that we plan and perform the audit to obtain

reasonable assurance about whether the financial

statements are free of material misstatement. An

audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial

statements. An audit also includes assessing the

accounting principles used and significant estimates

made by the management, as well as evaluating the

overall financial statement presentation. We believe

that our audit provides a reasonable basis for our

opinion.

3. We did not audit the financial statements of certain

subsidiaries, whose financial statements reflect total

assets of Rs. 68,927.464 Million as at March 31, 2009,

total revenues of Rs. 16,381.334 Million and net cash

outflow amounting to Rs. 731.870 Million for the year

ended on that date as considered in the Consolidated

Financial Statements and associates whose financial

statements reflect the United Spirits Limited Group’s

share of loss of Rs. 1.308 Million for the year ended on

that date as considered in the Consolidated Financial

Statements. These financial statements and other

information of these subsidiaries and associates have

been audited by other auditors, whose reports have

been furnished to us, and our opinion, insofar as it

relates to the amounts included in respect of these

subsidiaries, is based solely on the report of the other

auditors.

4 We report that the Consolidated Financial Statements

have been prepared by United Spirits Limited’s

management in accordance with the requirements

of Accounting Standard 21, Consolidated Financial

Statements and Accounting Standard 23, Accounting

for Investments in Associates in Consolidated Financial

Statements, as specified in the Companies (Accounting

Standard) Rules, 2006.

5. Based on our audit and on consideration of the reports

of other auditors on separate financial statements and

on the other financial information of the components,

in our opinion and to the best of our information and

according to the explanations given to us, the attached

Consolidated Financial Statements, give a true and

fair view in conformity with the accounting principles

generally accepted in India:

i) in the case of the Consolidated Balance Sheet, of

the state of affairs of the United Spirits Limited

Group as at March 31, 2009;

ii) in the case of the Consolidated Profit and Loss

account, of the loss for the year ended on that

date; and

iii) in the case of the Consolidated Cash Flow

Statement, of the cash flows for the year ended

on that date.

J. MajumdarPartner

Membership Number – F 51912For and on behalf of

Place: Bangalore Price WaterhouseDate : July 29, 2009 Chartered Accountants

76

Consolidated Financial StatementBalance Sheet as at March 31, 2009

Rs. Million Schedule 2009 2008

SOURCES OF FUNDSShareholders’ Funds

Share Capital 1 1,001.633 885.744 Share Capital Suspense 1A 28.239 -Reserves and Surplus 2 22,826.141 19,886.905

Minority Interest 62.854 1,992.239

Loan FundsSecured Loans 3 69,926.045 65,270.189 Unsecured Loans 4 3,678.829 771.175

Term Liability towards Franchisee rights [Schedule 19 Note 4] 4,431.413 -Deferred Tax Liability (Net) [Schedule 19 Note 15(b)] - 18.029

101,955.154 88,824.281 APPLICATION OF FUNDS

a) Fixed Assets 5 Gross Block 22,919.456 16,985.241 Less: Depreciation 6,649.966 6,357.133 Net Block 16,269.490 10,628.108 Capital Work in Progress 288.382 534.432

16,557.872 11,162.540

b) Goodwill on Consolidation 44,738.318 53,259.734

Investments 6 9,501.457 2,119.087

Deferred Tax Asset (Net) [Schedule 19 Note 15(b)] 917.977 -

Foreign Currency Monetory Item Translation Difference [Schedule 19 Note17(d)(ii)] 5,597.523 -

Current Assets, Loans and AdvancesInventories 7 17,458.044 14,850.027 Sundry Debtors 8 8,879.604 8,369.997 Cash and Bank Balances 9 4,490.023 5,437.838 Other Current Assets 10 2,145.024 1,469.204 Loans and Advances 11 7,399.294 4,350.572

40,371.989 34,477.638 Less: Current Liabilities and Provisions 12

Liabilities 13,878.812 11,933.516 Provisions 2,584.477 1,227.972

16,463.289 13,161.488 Net Current Assets 23,908.700 21,316.150

Miscellaneous Expenditure ( to the extent not written off) 13 733.307 966.770

101,955.154 88,824.281 Statement on Significant Accounting Policies 18 Notes on Accounts 19


This is the Consolidated Balance Sheet referred to in our report of even date

J. MAJUMDAR M. R. DORAISWAMY IYENGAR V. K. REKHIPartner Director Managing DirectorFor and on behalf of Price Waterhouse V. S. VENKATARAMAN P. A. MURALIChartered Accountants Company Secretary Chief Financial Officer


77

Consolidated Financial StatementProfit and Loss Account for the year ended March 31, 2009

Rs. Million

Schedule 2009 2008

INCOMESales (Gross) 88,991.063 71,710.354 Less: Excise Duty 38,449.701 28,993.749

50,541.362 42,716.605 Income arising from Sale by Manufacturers under ‘Tie-up' agreements (Tie-up units) 2,286.740 2,393.603Income from Brand Franchise 1,417.905 1,165.041 Income from IPL Franchise 434.608 - Other Income 14 1,038.408 1,063.172

55,719.023 47,338.424 EXPENDITURE

Materials 15 26,909.455 20,905.933 Manufacturing and Other Expenses 16 20,067.629 14,670.312 Interest and Finance charges 17 7,175.643 5,447.563 Exchange Loss (Net) 3,809.315 81.168

57,962.042 41,104.976 Profit before Exceptional and Other (2,243.019) 6,233.448 Non-Recurring items, Depreciation and Taxation Depreciation 925.839 741.412 Profit before Exceptional and Other Non-Recurring Items and Taxation (3,168.858) 5,492.036 Exceptional and Other Non-Recurring Items (Net) - Contingency Provision Written Back - 181.258 (Loss)/ Profit before Taxation and before share in Profit/Losses) of Associates (3,168.858) 5,673.294 Provision for Taxation:

Current Tax 1,815.351 1,841.299 Deferred Tax (949.703) 773.129 Fringe Benefit Tax 50.063 46.815

(Loss)/Profit after Taxation and before share in (4,084.569) 3,012.051 Profits/(Losses) of AssociatesShare in Profits/ (losses) of Associates (Net) (1.308) (7.419)(Loss) / Profit before Minority Interest (4,085.877) 3,004.632 Minority Interest in (Profit)/Loss (1.741) (284.048)Net (Loss)/ Profit for the year (4,084.136) 2,720.584 Profit brought forward from previous year 8,036.929 5,822.345 Profit transferred on Amalgamation [Schedule 19 Note 2(D)] (162.543) -

3,790.250 8,542.929 Appropriations:Proposed Dividend

Equity Shares - Interim 8.552 - Equity Shares - Final 206.280 132.623 Corporate Tax on Proposed Dividend 36.679 25.877 Transfer to Capital Redemption Reserve - 77.500 Transfer to General Reserve 350.000 270.000

Profit carried to Balance Sheet 3,188.739 8,036.929 Basic Earnings Per Share (Rs.) (Face Value of Rs.10 each) (39.66) 31.59 Diluted Earnings Per Share (Rs.) (Face Value of Rs.10 each) (39.66) 31.11 Statement on Significant Accounting Policies 18Notes on Accounts 19The Schedules referred to above and the notes thereon form an integral part of the Accounts.This is the Consolidated Profit and Loss Account referred to in our report of even date



78

Consolidated Financial StatementCash Flow Statement for the Year Ended March 31, 2009


A. CASH FLOW FROM OPERATING ACTIVITIESNet profit/(loss) before Exceptional and OtherNon- recurring items and Taxation (3,168.858) 5,492.036 Adjustments for :Depreciation 925.839 741.412 Unrealised Foreign Exchange Loss/(Gain) 3,174.218 (72.702)Bad Debts/Advances written off 19.289 187.060 Loss/(Gain) on Fixed Assets Sold/Written Off (Net) (142.002) (97.325)Loss/(Gain) on Sale of Investments (Net) (24.500) 5.798 Liabilities no longer required written back (136.619) (199.962)Provision for Doubtful Debts/Advances/Deposits 212.444 135.350 Provision for diminution in value of Investments/(Written back) 0.031 0.051 Provision for Onerous Lease/(written back) 403.578 (82.863)Provision - Others 1,057.645 77.550 Interest and Finance Charges 7,377.259 5,880.823 Income from investments (31.696) (94.097)Interest Income (201.616) 12,633.870 (433.260) 6,047.835 Operating profit before working capital changes 9,465.012 11,539.871

(Increase)/decrease in Trade and other receivables (3,991.660) (2,597.188)(Increase)/decrease in Inventories (2,608.017) (793.677)Increase/(decrease) in Trade payables 1,846.147 (4,753.530) (3,208.175) (6,599.040)

Cash generated from operations 4,711.482 4,940.831

Direct taxes paidFringe Benefit taxes paidCash flow before Exceptional and Other Non-Recurring Items

(2,314.180) (2,222.266)

(43.632) (45.320)2,353.670 2,673.245

Prior Period, Exceptional and Other Non-Recurring items - -Cash flow after extraordinary itemsand net cash from operating activities 2,353.670 2,673.245

B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of fixed assets (951.509) (2,641.536)Payment towards Franchise rights (501.575) -Sale of fixed assets 189.223 168.906 Finance Lease Payments (17.257) (15.159)Purchase of long term investments (9.683) (14.582)Purchase of current investments (50.000) (1,303.931)Consideration paid on acquisitions of shares in Subsidiaries - (36,574.961)[net of cash and cash equivalent on the acquisition date Rs. NIL (2008: Rs.112.446 Million)]

Disposal of Investment in Associate 10.700 - Sale of long term investments 1,068.924 1.539 Sale of current investments 881.551 1,249.216 Interest received 214.423 419.443 Dividend received 29.993 82.958

Net cash used in investing activities 864.790 (38,628.107)

79

Consolidated Financial StatementsCash Flow Statement for the Year Ended March 31, 2009 (Contd.)


C. CASH FLOW FROM FINANCING ACTIVITIESShare Application Money in a Subsidiary Company 50.000 - Expenses incurred on arrangement of borrowings - (788.716)Proceeds/(Repayment) of long term loans

Proceeds 2,170.756 40,742.225 Repayment (4,465.117) (505.269)

Proceeds/(Repayment) of fixed deposits 95.169 (117.669)Proceeds/(Repayment) of short term loans 2,814.552 (1,700.328)Working Capital Loan / Cash Credit from Banks (net) 2,415.467 2,340.240 Interest and Finance charges Paid

[including on Finance lease Rs. 2.981 Million (2008: Rs. 3.003 Million)]

(7,104.189) (4,124.167)

Dividends paid (142.913) (175.510)Corporate Tax on distributed profit - (56.119)

Net cash used in financing activities (4,166.275) 35,614.687

Net increase in cash and cash equivalents (947.815) (340.175)Cash and cash equivalents as at March 31, 2008 5,437.838 5,778.013 Cash and cash equivalents as at March 31, 2009 4,490.023 5,437.838

(947.815) (340.175)

Notes:

1. The above Cash Flow Statement has been compiled from and is based on the Balance Sheet as at March 31, 2009 and the related Profit and Loss Account for the year ended on that date.

2. The above cash flow statement has been prepared under the indirect method as set out in the Accounting Standard - 3 on Cash Flow Statements as notified under Section 211(3C) of the Companies Act, 1956 and reallocation required for this purpose are as made by the Company.

3. Previous year’s figures have been regrouped wherever necessary in order to conform to this year’s presentation.

This is the Consolidated Cash Flow Statementreferred to in our report of even date.



80

Rs. Million

2009 2008

1. SHARE CAPITAL

Authorised

245,000,000 (2008: 110,000,000) Equity Shares of Rs.10/- each 2,450.000 1,100.000

84,200,000 (2008: 10,000,000) Preference Shares of Rs.10/- each 842.000 100.000

[Schedule 19 Note 2(A)(IV)] 3,292.000 1,200.000

Issued, Subscribed and Paid-up

100,163,256 (2008: 100,163,256) Equity Shares of Rs.10/- each fully paid up. 1,001.633 1,001.633

Less: Nil (2008: 11,588,984)Equity Shares held by Subsidiaries - 115.889

1,001.633 885.744

Notes :

Of the above,

1. 51,719,968 (2008: 51,719,968) Equity Shares were allotted as fully paid up on July 9, 2001 to the Shareholders of the erst-while McDowell & Company Limited, pursuant to the Schemes of Amalgamation for consideration other than cash.

2. 34,010,521 (2008: 34,010,521) Equity Shares were alloted as fully paid on November 6, 2006 to Equity Shareholders of erstwhile Herbertsons Limited, Triumph Distillers & Vintners Private Limited, Baramati Grape Industries Limited, United Distillers India Limited and Shaw Wallace Distilleries Limited pursuant to a Scheme of Amalgamation for consideration other than cash.

3. 8,751,381 (2008: 8,751,381) Equity shares of Rs.10/- each fully paid up represent 17,502,762 (2008: 17,502,762) Global Depository Shares issued by the Company on March 29, 2006.

4. 5,681,326 (2008: 5,681,326) Equity shares of Rs.10/- each fully paid up were alloted consequent to conversion of 100,000, 2% Convertible Bonds in Foreign Currency during 2008.

1A. SHARE CAPITAL SUSPENSE

Equity Share Suspense

7,749,121 (2008: Nil) Equity Shares of Rs.10/- each to be issued as fully paid up to the Equity Shareholders of Transferor Companies pursuant to the Scheme of Amalgamation for consideration other than cash [Schedule 19 Note 2(A)(I)]

77.491 -

Less: 4,925,231 (2008: 11,588,984) Equity Shares to be held by Subsidiaries 49.252 -

28.239 -

Consolidated Financial StatementSchedules forming part of Balance Sheet as at March 31, 2009

81

Rs. Million

2009 20082. RESERVES AND SURPLUS

Central SubsidyAs per Last Balance Sheet 1.500 1.500

Capital Redemption Reserve As per last Balance Sheet 578.946 464.446

Transferred from the General Reserve - 37.000 Transferred from the Profit and Loss Account - 77.500

578.946 578.946

Securities Premium AccountAs per last Balance Sheet 9,893.918 5,457.811 Addition during the year:(a) Conversion of 100,000, 2% Convertible Bonds in Foreign

Currency - 4,386.164

(b) Premium payable on redemption of 2% Convertible Bonds in Foreign Currency reversed during the year

- 49.943

9,893.918 9,893.918 Employee Housing Fund

As per last Balance Sheet 0.625 0.625

Foreign Currency Translation Reserve 350.527 (82.000)

Contingency ReserveAs per last Balance Sheet 110.000 110.000

General ReserveAs per last Balance sheet 1,346.987 1,113.987 Add: Addition during the year (a) Reserve arising on amalgamation [Schedule 19 Note 2(A)(V)

(d) and 2(B)(II)(c)]7,849.035 -

(b) Adjustment on adoption of notification under Companies (Accounting Standards) Rules, 2009 relating to AS11 - “The Effects of Changes in Foreign Exchange Rates” [Schedule 19 Note 17(d)]

99.360 -

(c) Transferred from Profit and Loss Account 350.000 270.000 9,645.382 1,383.987

Less: (a) Expenses relating to Amalgamation [Schedule 19 Note 2(C)] (146.879) –

(b) Diminution in value of certain fixed assets of the Company [Schedule 19 Note 2(A)(V)(e)]

(80.704) -

(c) Transfer from Foreign Currency Translation Reserve onamalgamation [Schedule 19 Note 2(B)(II)(d)]

(715.913) -

(d) Transferred to Capital Redemption Reserve - (37.000)8,701.886 1,346.987

Surplus in Profit and Loss Account 3,188.739 8,036.929 22,826.141 19,886.905

Consolidated Financial StatementSchedules forming part of Balance Sheet as at March 31, 2009 (Contd.)

82

Rs. Million

2009 20083. SECURED LOANS

Term Loans From Banks [Note (i)] 61,893.339 59,638.123 [Repayable within one year: Rs.6,314.639 Million (2008: Rs.1,604.634 Million)]

Working Capital Loan / Cash Credit from Banks [Note (ii) and (iii)] 8,005.982 5,590.515 Finance Lease [Note (iv)] 26.724 41.551

69,926.045 65,270.189 Notes: (i) Out of the above loans:

(a) Secured by charge on certain fixed assets of the Company including Land and Building. 1,426.205 488.222

(b) Secured by charge on certain fixed assets of the Company including Land and Buildings, pledge of certain shares held by the Company and also by pledge of certain shares of other Companies. 2,062.412 3,906.754

(c) Foreign Currency Borrowings and External Commercial Borrowings secured by charge on certain fixed assets of the Company inlcuding land and buildings, a trade mark and fixed deposits with bank (charge created subsequent to year end). 1,775.550 1,404.200

(d) Secured by a second charge on certain fixed assets of the Company including land and building. 62.500 125.000

(e) Secured by hypothecation of specific fixed assets acquired under respective agreements. 0.305 4.627

(f) Secured by a charge on fixed and floating securities over the Group's assets including a pledge on Group's maturing stock and pledge over the Share Capital of Subsidiary Companies in United Kingdom. 24,358.044 28,307.701

(g) Secrued by hypothecation of certain trademarks of the Group Pledge of certain shares held by the Group and Trust including charge on Immovable property, current assets including inventories held by the Group. 31,428.520 24,856.350

(h) Secured by charge on property 308.200 255.938 (i) Secured by fixed assets and inventory 471.603 289.331

(ii) Secured by charge on certain fixed assets of the Company including land and building and hypothecation of inventories (except those held outside India), book debts and other current assets..

(iii) Includes Foreign Currency Non-Resident [FCNR(B)] Loans. - 893.069 (iv) Secured against assets acquired under lease agreements

4. UNSECURED LOANS Fixed Deposits 631.505 553.385

[Repayable within one year Rs.148.294 Million (2008: Rs. 367.072 Million)]Long term loan from a bank (Note below) 750.000 - [Repayable within one year Rs.Nil (2008: Rs. Nil)]Short term loan from banks 2,150.000 - [Repayable within one year Rs.2,150 Million (2008: Rs. Nil)]From Others 106.732 177.198

Interest accrued and due 40.592 40.592 3,678.829 771.175

Note: Out of the above loans Rs.750 Million (Rs. Nil) is guaranteed by a promoter/ director of the Company.


83

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84

Rs. Million 2009 2008

6. INVESTMENTSCURRENTUnquoted InvestmentsUnits (Fully Paid)

Mutual funds Investments 21.386 851.233 Total Current Investments 21.386 851.233

LONG TERM

Quoted InvestmentsA. Trade Fully Paid Equity Shares 0.532 10.155 B. Non-Trade Fully Paid Equity Shares 4.147 6.124

4.679 16.279 Units (Fully Paid) (Note 1) 3.839 35.982 Total Quoted Investments (A+B) 8.518 52.261

Unquoted InvestmentsC. Trade

Fully paid Equity Shares 10.828 0.683 Associates** 8.721 15.896 Add: Accumulated Profits/ (Losses) of Associates

(net of dividend received) (8.721) (11.197) - 4.699

** Including Goodwill on acquisition of Associates Rs.3.518 Million (2008: Rs. 10.828 Million)

Fully paid Preference Shares - 0.250

10.828 5.632 D. Non-Trade

In Government Securities 0.200 1,006.501 In Fully Paid Debentures 0.048 0.048 Fully Paid Equity Shares 10.675 10.800

10.923 1,017.349 E. Others (Note 2) 9,450.681 194.676

9,450.681 194.676 Total Unquoted Investments (C+D+E) 9,472.432 1,217.657

Total Long Term Investments (A+B+C+D+E) 9,480.950 1,269.918

Total Current and Long Term Investments 9,502.336 2,121.151

Less: Provision for diminution in the value of Investments (Note 3)

0.879 2.064

Total 9,501.457 2,119.087


85

Rs. Million

2009 2008

6. INVESTMENTS (Contd.)

Aggregate Value of Quoted Investments

- Book Value 8.518 901.430

- Market Value 68.748 1,182.416

Aggregate book value of Unquoted Investments 9,472.432 1,217.657

Acquired on acquisition - 9.378

Additions during the year 52.666 1,322.503

Adjustments to Investments 9,256.005 -

Sold during the year 1,927.486 1,256.823

Notes:

1. Investments in units of Unit Trust of India amounting to Rs.3.175 Million (2008: Rs. 34.400 Million) represent those made

under Rule 3A of the Companies (Acceptance of Deposit) Rules, 1975.

2. Include:

a) Rs. 9,409.541 Million (2008: Rs.153.536 Million) pertaining to investment in USL Benefit Trust represents beneficial

interest USL Benefit Trust which holds 3,459,090 (2008: 2,152,659) equity shares of Rs.10 each of the Company, with

all additions or accretions thereto in trust for the benefit of the Company and includes 10,282,553 Shares held by

erstwhile Shaw Wallace and Company referred to in Schedule 19 Note 2(A)(III).

b) Rs. 41.140 Million (2008: Rs. 41.140 Million) pertaining to 72,416,505 (2008: 72,416,505) Equity Shares of SWBL whose

beneficial ownership vested with SWFSL are kept with escrow agent in view of court order. Pursuant to a scheme

of amalgamation, such beneficial interest are held in trust by the trustee of SWFSL benefit trust for the benefit of

SWBL

3. Investments written off during the year aggregated to Rs.1.216 Million (2008: Rs. Nil) adjusted against the provision for

diminution in the value of Investment.


86

Rs. Million

2009 2008

7. INVENTORIES

Raw Materials including materials in transit 1,210.364 777.277

Packing Materials, Stores and Spares 1,065.984 754.209

Finished goods including goods in transit 3,320.363 2,548.239

Work-in-Progress 11,861.333 10,770.302

17,458.044 14,850.027

8. SUNDRY DEBTORS

(Unsecured)

Exceeding six months:

Considered Good 14.434 64.064

Considered Doubtful 147.707 149.849

162.141 213.913

Others: Considered Good 8,865.170 8,305.933

9,027.311 8,519.846

Less: Provision for Doubtful debts 147.707 149.849

8,879.604 8,369.997

9. CASH AND BANK BALANCES

Cash on Hand 5.527 6.558

Remittance in Transit/ Cheques on Hand 232.624 30.675

Balances with Scheduled Banks:

On Current Accounts [Note (i)] 2,398.959 1,010.607

On Unpaid Dividend Account 17.878 19.730

On Deposit Account [Note (ii) and Note (iii)] 1,835.035 4,370.268

4,490.023 5,437.838

Notes:

(i) includes Rs.32.097 Million (2008: Rs.25,285 Million) in Exchange Earners Foreign Currency . (EEFC) Account and Rs.8.703 Million (2008: Rs.1.155 Million) in Foreign Currency

(ii) (a) includes Rs. 0.587 Million (2008: Rs. 8.403 Million) pledged with Government Departments.

(b) includes Rs. 1.300 Million (2008: Rs.2.673 Million) as margin.

(iii) includes Rs.133.926 Million (2008: Nil) pledge as Security against loan from a bank

10. OTHER CURRENT ASSETS

(Unsecured, Considered Good except otherwise stated)

Income accrued on Investments and Deposits 46.331 59.138

Other Deposits – Considered Good 2,093.820 1,405.448

– Considered Doubtful 9.940 8.031

Fixed assets held for sale 4.873 4.618

2,154.964 1,477.235

Less: Provision for Doubtful Deposits 9.940 8.031

2,145.024 1,469.204


87

Rs. Million

2009 200811. LOANS AND ADVANCES

(Unsecured, considered good except where otherwise stated)Advances recoverable in cash or in kind or for value to be receivedAdvances to Tie-up units – Considered Good 2,522.168 917.736 – Considered Doubtful 20.314 21.519 Advances Income Tax (Net of Provisions) 491.243 - Other Advances – Considered Good 4,385.883 3,432.836 – Considered Doubtful 500.947 295.564

7,920.555 4,667.655 Less: Provision for Doubtful Advances 521.261 317.083

7,399.294 4,350.572

12. CURRENT LIABILITIES AND PROVISIONSA. Liabilities

Acceptances * 1,126.924 753.918 Sundry Creditors 9,790.924 8,502.305 Dues to Directors 49.193 51.486 Investors Education and Protection Fund [Schedule 19 Note 8]

Unclaimed Debentures 0.001 0.001 Unclaimed Dividends 19.518 22.840 Unclaimed Fixed Deposits 28.074 11.025

Security Deposit 130.847 115.810 Advances Received from Customers 371.992 183.105 Interest accrued but not due 1,847.209 1,734.259 Other Liabilities 514.130 558.767

13,878.812 11,933.516 * Includes bills drawn against inland letters of credit of Rs. 876.924 Million

(2008: Rs. 215.149 Million) and secured by a charge on debtors, inventories and other current assets.

B. ProvisionsProposed Dividend

Equity Shares - Final 206.280 131.039Corporate Tax on Proposed Dividend 36.679 -Taxation (Net of Payments) - 7.586Fringe Benefit Tax (Net of Payments) 8.467 2.036Provision for Contingencies - 103.744Onerous Lease Provision [Schedule 19 Note 16] 909.890 600.601Employee Benefits 1,423.161 382.966

2,584.477 1,227.972

13. MISCELLANEOUS EXPENDITUREExpenditure Incurred for Raising Borrowed FundsAs per the last Balance Sheet 966.770 - Add: Additions during the year - 1,078.845

966.770 1,078.845

Less: Amortisation during the year 160.140 112.075 806.630 966.770

Less: Translation Adjustments 73.323 -733.307 966.770


88

Rs. Million

2009 2008

14. OTHER INCOME

Income from Investments:

Dividend income from other investments 31.696 94.097

[Tax deducted at source Rs. 1.905 Million (2008: Rs.1.905 Million)]

Lease Rent 322.776 261.801

Profit on Sale of Fixed Assets (Net) 142.012 114.274

Profit on Sale of Investments 24.500 -

Provision for Onerous Lease written back - 82.863

Liabilities no longer required written back 136.619 199.962

Bad debts/ Advances recovered 0.088 3.173

Scrap Sales 158.491 160.114

Insurance Claims 2.814 3.308


1,038.408 1,063.172

15. MATERIALS

Raw Materials Consumed 12,140.730 8,160.766

Purchase of Finished Goods 5,292.096 4,409.791

Packing Materials Consumed 11,097.935 8,522.697

Movement in Stocks:

Opening Stock:

Work-in-Progress 10,770.302 1,422.364

Finished Goods 2,548.239 1,063.708

13,318.541 2,486.072

Add : Taken over on Amalgamation/Acquisition

Work-in-Progress - 9,188.949

Finished Goods - 1,083.380

- 10,272.329

Closing Stock:

Work-in-Progress 11,861.333 10,770.302

Finished Goods 3,320.363 2,548.239

15,181.696 13,318.541

(Increase)/ Decrease in Stocks (1,863.155) (560.140)

Excise Duty on Opening/Closing Stock of Finished Goods (Net) 241.849 372.819

26,909.455 20,905.933

Consolidated Financial StatementSchedules forming part of Profit & Loss Account for the year ended March 31, 2009

89

Rs. Million

2009 2008

16. MANUFACTURING AND OTHER EXPENSES

Employee Cost:

Salaries, Wages and Bonus 4,174.779 3,748.690

Contribution to Provident and Other Funds 441.248 408.542

Workmen and Staff Welfare 132.447 117.749

Voluntary Retirement Scheme Compensation - 4.053

Actuarial Loss/ (Gain) on Pension 1,746.228 (975.539)

6,494.702 3,303.495

Direct Expenses on IPL Franchise 411.571 -

Power and Fuel 706.332 444.233

Stores and Spares Consumed 130.584 110.942

Repairs and Maintenance:

Buildings 87.824 71.483

Plant and Machinery 182.926 155.477

Others 217.315 136.034

Rent 107.924 281.236

Rates and Taxes 457.318 417.433

Insurance 133.719 117.390

Travelling and Conveyance 640.265 561.727

Legal and Professional 656.441 633.271

Freight Outwards 1,008.744 815.710

Advertisement and Sales Promotion 5,378.471 4,781.123

Commission on Sales 390.848 405.644

Royalty/ Brand Fee/ Trade Mark Licence Fees 60.032 96.925

Cash Discount 363.748 206.742

Sales Tax 194.732 142.850

Fixed Assets Written Off 0.010 16.949

Loss on Sale of Investments - 5.798

Directors’ Remuneration:

Sitting Fee 1.180 2.311

Commission 48.727 51.044

Bad Debts and Advances Written Off 19.289 187.060

Provision for Doubtful Debts/ Advances / Deposits 212.444 135.350

Provision for Onerous Lease 403.578 -

Provision for Diminution in Value of Investments (Net) 0.031 0.051

Research and Development 30.536 28.779

Others:

Personnel and Administration 415.636 360.199

Selling and Distribution 977.023 947.971


20,067.629 14,670.312

Consolidated Financial StatementSchedules forming part of Profit & Loss Account for the year ended March 31, 2009 (Contd.)

90

Rs. Million

2009 2008

17. INTEREST AND FINANCE CHARGES

Interest on:

Fixed Loans 4,795.748 3,842.234

Others Loans 1,998.334 1,617.936

Amortisation of Expenditure Incurred for Raising Borrowed Funds 160.140 112.075

Finance Charges (including Bill discounting charges) 423.037 308.578

7,377.259 5,880.823

Less : Interest Income:

On Investments 1.222 2.144

On Deposits and Other Accounts (Gross) 196.009 341.877

On Income Tax Refunds 4.385 89.239

7,175.643 5,447.563

Consolidated Financial StatementSchedules forming part of Profit & Loss Account for the year ended March 31, 2009 (Contd.)

PB 91

Consolidated Financial StatementSchedules forming part of account for the year ended March 31, 2009

18. STATEMENT ON SIGNIFICANT ACCOUNTING POLICIES

1. Basis of Preparation of Consolidated Financial Statements

The Consolidated Financial Statements relate to United Spirits Limited (the Company) and its subsidiaries and

associates (the Group). The Consolidated Financial Statements are prepared in accordance with Accounting

Standard (AS) 21 on Consolidated Financial Statements and AS 23 on Accounting for Investments in Associates in

Consolidated Financial Statement as specified in the Companies (Accounting Standard) Rules, 2006, and the relevant

provisions of the Companies Act, 1956 of India. The Consolidated Financial Statements are prepared by adopting

uniform accounting policies for like transactions and other events in similar circumstances and are presented to

the extent possible, in the same manner as the Company’s separate financial statement. Accounting policies have

been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an

existing accounting standard requires a change in the accounting policy hitherto in use.

On occasion, a subsidiary company whose financial statements are consolidated may issue its shares to third parties

as either a public offering or private placement at per share amounts in excess of or less than the Company's

average per share carrying value. With respect to such transactions, the resulting gains or losses arising from

the dilution of interest are recorded as Capital Reserve/Goodwill. Gains or losses arising on the direct sale by the

Company of its investment in its subsidiaries or associated companies to third parties are transferred to the profit

and loss account. Such gains or losses are the difference between the sale proceeds and the net carrying value of

the investments.

2. Subsidiary and Associate Companies considered in the Consolidated Financial Statements:

(A) Subsidiary Companies:

Sl.No.

Name of the CompanyCountry of

Incorporation

Proportion of owner-ship interest

(%)

Proportion of voting power held directly or indirectly, if different from proportion of

ownership interest (%)

2009 2008 2009 2008

1 Asian Opportunities & Investments Limited (AOIL)

Mauritius 100 100 - -

2 United Spirits Nepal Private Limited Nepal 82.47 82.47 - -

3 Zelinka Limited (ZL) (ii) Cyprus - 100 - -

4 Shaw Wallace & Company Limited (SWCL) (ii)

India - 75 - -

5 Ramanretti Investments & Trading Ltd. (RITL) (iii) India 100 75 - -

6 Shaw Wallace Breweries Limited (SWBL) (iii)

India 100 75 - 100

7 Primo Distributors Pvt. Ltd. (PDPL) (ii) India - 100 - -

8 Palmer Investment Group Ltd.(PIG) British Virgin Islands

100 100 - -

9 RG Shaw & Company Ltd. (RGSC) U.K. 100 100 - -

10 Shaw Scott & Company Ltd. (SSC) U.K. 100 100 - -

11 Shaw Darby & Company Ltd. (SDC) U.K. 100 100 - -

12 Thames Rice Milling Company Limited (TRMC) U.K. 100 100 - -

92 9392 93

Consolidated Financial StatementSchedules forming part of account for the year ended March 31, 2009 (Contd.)

(A) Subsidiary Companies ( Contd.)

Sl.No.


IncorporationProportion of owner-

ship interest (%)



2009 2008 2009 2008

13 Shaw Wallace Overseas Limited (SWOL) (iii) U.K. 100 75 - 100

14 JIHL Nominees Limited(JIHL) Jersey Islands 100 100 - -

15 Montrose International S.A (MI) Panama 100 100 - -

16 USL Holdings Limited (UHL)British Virgin

Islands100 100 - -

17Spring Valley Investments Holding Inc.(SVIH)

British Virgin Islands

100 100 - -

18 USL Holdings (UK) Limited (UHUKL) U.K 100 100 - -

19 United Spirits (UK) Limited (USUKL) U.K 100 100 - -

20United Spirits (Great Britain) Limited (USGBL)

U.K 100 100 - -

21 Four Seasons Wines Limited (FSWL) India 100 100 - -

22 United Vintners Limited (UVL) India 100 100 - -

23 United Alcobev Limited (UAL) India 100 100 - -

24 McDowell Beverages Limited (MBL) India 100 100 - -

25 McDowell (Scotland) Limited (MSL) Scotland 100 100 - -

26 Bouvet Ladubay S.A.S (BL) France 100 100 - -

27 Chapin Landias S.A.S (CL) France 100 100 - -

28 Herbertsons Limited (HL) India 100 100 - -

29 Daffodils Flavours & Fragrances Private Limited (DFFPL)

India 100 100 - -

30 Jasmine Flavours and Fragrances Private Limited

India 100 100 - -

31 Royal Challengers Sports Private Limited India 100 100 - -

32 McDowell and Company Limited India 100 100 - -

33 Liquidity Inc. USA 51 51 - -

34 USL Shanghai Trading Company Limited (USLS) (i)

China 100 - - -

Whyte and Mackay Group

35 Whyte and Mackay Group Limited U.K 100 100

36 Bruce & Company (Leith) Limited U.K 100 100 - -

37 Charles Mackinlay & Company Limited U.K 100 100 - -

38 Dalmore Distillers Limited U.K 100 100 - -

39 Dalmore Whyte & Mackay Limited U.K 100 100 - -

40 Edinburgh Scotch Whisky Company Limited

U.K 100 100 - -

41 Ewen & Company Limited U.K 100 100 - -

42 Fettercairn Distillery Limited U.K 100 100 - -

43 Findlater Scotch Whisky Limited U.K 100 100 - -

92 9392 93

Sl.No.


IncorporationProportion of owner-

ship interest (%)



2009 2008 2009 2008

44 Glayva Liqueur Limited U.K 100 100 - -

45 Glentalla Limited U.K 100 100 - -

46 GPS Realisations Limited U.K 100 100 - -

47 Grey Rogers & Company Limited U.K 100 100 - -

48 Hay & MacLeod Limited U.K 100 100 - -

49 Invergordon Distillers (Holdings) Limited U.K 100 100 - -

50 Invergordon Distillers Group Limited U.K 100 100 - -

51 Invergordon Distillers Limited U.K 100 100 - -

52 Invergordon Gin Limited U.K 100 100 - -

53 Isle of Jura Distillery Company Limited U.K 100 100 - -

54 Jarvis Halliday & Company Limited U.K 100 100 - -

55 John E McPherson & Sons Limited U.K 100 100 - -

56 Kensington Distillers Limited U.K 100 100 - -

57 Kyndal Spirits Limited U.K 100 100 - -

58 Leith Distillers Limited U.K 100 100 - -

59 Loch Glass Distilling Company Limited U.K 100 100 - -

60 Longman Distillers Limited U.K 100 100 - -

61 Lycidas (437) Limited U.K 100 100 - -

62 Pentland Bonding Company Limited U.K 100 100 - -

63 Ronald Morrison & Company Limited U.K 100 100 - -

64 St Vincent Street (437) Limited U.K 100 100 - -

65 Tamnavulin-Glenlivet Distillery Company Limited

U.K 100 100 - -

66 TDL Realisations Limited U.K 100 100 - -

67 The Sheep Dip Whisky Company Limited U.K 100 100 - -

68 W & S Strong Limited U.K 100 100 - -

69 Watson & Middleton Limited U.K 100 100 - -

70 Whyte & Mackay Distillers Limited U.K 100 100 - -

71 William Muir Limited U.K 100 100 - -

72 WMB Realisations Limited U.K 100 100 - -

73 Whyte and Mackay Property Limited U.K 100 100 - -

74 Whyte and Mackay de Venezuela CA Venezuela 100 100 - -

75 KI Trustees Limited U.K 100 100 - -

76 Wauchope Moodle & Company Limited U.K 100 100 - -

77 Whyte and Mackay Limited U.K 100 100 - -

78 Whyte and Mackay Warehousing Limited U.K 100 100 - -

79 Whyte and Mackay Holdings Limited U.K 100 100 - -

(A) Subsidiary Companies (Contd.)


94 9594 95

2. Subsidiary and Associate Companies considered in the Consolidated Financial Statements: (Contd.)

(B) Associate Companies (Note 4 below)


IncorporationProportion of owner-ship

interest (%)2009 2008

1 Utkal Distillery Limited (Utkal) (iv) India - 432 Wine Soc of India Private Limited India 49 49

(i) Became subsidiaries/ associate during the year.

(ii) Ceased to be subsidiaries due to amalgamation (Schedule 19 Note 2).

(iii) Became wholly owned subsidiaries due to amalgamation (Schedule 19 Note 2).

(iv) Sold during the year.

(v) Consolidated Financial Statements also include financial statements of USL Benefit Trust and SWFSL Benefit

Trust.

3. Principles of Consolidation

These Consolidated Financial Statements have been prepared by consolidation of the financial statements of the

Company and its subsidiaries on a line-by-line basis after fully eliminating the inter-Company transactions.

4. Accounting for Investment in Associates

a) Accounting for Investments in Associate Companies has been carried out under the Equity Method of accounting

prescribed under AS 23 wherein Goodwill/Capital Reserve arising at the time of acquisition and the Group’s

share of profits or losses after the date of acquisition have been adjusted in the investment value.

b) U B Distilleries Limited (UBDL)

UBDL, which was an associate company of erstwhile HL in view of significant influence, ceased its operations

in 2003-04, consequent to the order of the Hon’ble Supreme Court of India vesting the distillery unit with the

state of Bihar. Since the Company does not have any investment /significant influence in UBDL, the same has

not been accounted for as an associate in these Consolidated Financial Statements under the Equity Method.

5. Basis of presentation of Financial Statements

The Consolidated Financial Statements of the Group have been prepared under historical cost convention, except as

otherwise stated, in accordance with the Generally Accepted Accounting Principles (GAAP) in India, the Accounting

Standards as specified in the Companies (Accounting Standard) Rules, 2006, and the relevant provisions of the

Companies Act,1956 of India.

6. Fixed Assets

(a) Fixed assets are stated at their original cost of acquisition and subsequent improvements thereto including taxes,

duties, freight and other incidental expenses related to acquisition and installation of the assets concerned,

except amounts adjusted on revaluation and amalgamation. Interest on borrowings attributable to qualifying

assets are capitalised and included in the cost of fixed assets as appropriate.

(b) The costs of fixed assets acquired in amalgamations are determined at their fair values, on the date of acquisition

or nearer thereto, or as approved under the schemes of amalgamation.

(c) Assets held for disposal are stated at their net book value or estimated net realisable values, whichever is

lower.


94 9594 95

(d) Goodwill represents the difference between the Company’s share in the net worth of a subsidiary and cost

of acquisition at each point of time of making the investment in the subsidiary. Negative goodwill is shown

separately as Capital Reserve on consolidation.

(e) Intangible assets are stated at the consideration paid for acquisition less accumulated amortisation.

7. Leases

Assets acquired under Leases, where the Company has substantially all the risks and rewards of ownership, are

classified as finance leases. Such leases are capitalised at the inception of the lease at lower of the fair value or the

present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental

paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on

the outstanding liability for each period.

Assets acquired on leases, where a significant portion of the risk and rewards of ownership are retained by the

lessor, are classified as operating leases. Lease rentals are charged to the Profit and Loss Account on accrual basis.

Income from operating leases is credited to Profit and Loss Account on a straight line basis over the lease term.

8. Depreciation and Amortisation

a) Depreciation is provided on the Straight Line Method, including on assets revalued, at rates prescribed in Schedule XIV to the Companies Act, 1956 of India except for the following, which are based on management’s estimate of useful life of the assets concerned :

i) Computers, Vehicles and Aircrafts over a period of three, five and eleven years respectively;ii) In respect of certain items of Plant and Machinery eligible for triple shift allowance, depreciation is provided

for the full year on triple shift basis;iii) In respect of fixed assets of Whyte and Mackay Group, depreciation is provided based on management

estimate of useful lives of the assets concerned as below:

Buildings 50 years

Plant and Machinery 10 to 20 years

Vehicles 4 years

Computers 3 years

Also refer Note 6(b) on Schedule 19

b) Fixed assets acquired on amalgamation, over the remaining useful life computed based on rates prescribed in Schedule XIV to the Companies Act, 1956 of India, as below:

Buildings – Factory 1 to 30 years – Non Factory 1 to 54 yearsPlant & Machinery 1 to 20 yearsVehicles 1 to 4 yearsComputers 1 to 2 years

c) Assets taken on finance lease are depreciated over their estimated useful life or the lease term, whichever is lower.

d) Leasehold Land are not amortised.

e) Goodwill arising on amalgamation is charged to the Profit and Loss Account in the year of amalgamation.

f) Goodwill arising on Consolidation is not amortised.


96 9796 97

g) Intangible assets are amortised, on a straight line basis, commencing from the date the asset is available for its use, over their respective individual estimated useful lives as estimated by the management:

Trademark , formulae and License 10 Years Franchise Rights in Perpetuity 50 Years (Refer Schedule 19 Note 4)

9. Impairment

Impairment loss, if any, is provided to the extent the carrying amounts of assets exceed their recoverable amounts.

Recoverable amount is higher of the net selling price of an asset and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

10. Investments

Long-term Investments are stated at cost to the Company. Provision for diminution in the value is made to recognise a decline, other than temporary, in the value of long-term investments.

Current investments are valued at cost or market value, whichever is less.

11. Inventories

Inventories are valued at lower of cost and net realisable value. The costs are, in general, ascertained under Weighted Average Method. Finished goods and Work-in-Progress include appropriate manufacturing overheads and borrowing costs, as applicable. Excise/ Customs duty payable on stocks in bond is added to the cost. Due allowance is made for obsolete and slow moving items.

12. Revenue Recognition

Sales are recognised when goods are despatched from distilleries/ warehouses of the Company in accordance with the terms of sale except where such terms provide otherwise, where sales are recognised based on such terms. Gross Sales are inclusive of excise duty but are net of trade discounts and sales tax, where applicable.

Income arising from sales by manufacturers under “Tie-up” agreements (Tie-up units) and income from brand franchise are recognised in terms of the respective contracts on sale of the products by the Tie-up unit/Franchisees. Income from brand franchise is net of service tax, where applicable.

Dividend income on investments are recognised and accounted for when the right to receive the payment is established.


Transactions in foreign currency are recognised at the rates of exchange prevailing on the dates of the transactions.

Liabilities/ assets in foreign currencies are reckoned in the accounts as per the following principles:

Exchange differences arising on a monetary item that, in substance, forms part of an enterprise’s net investment in a non-integral foreign operation is accumulated in a foreign currency translation reserve in the enterprise’s financial statements until the disposal of the net investment.

Exchange differences arising on reporting of long term foreign currency monetary items, with the exception of exchange differences arising on a monetary item that, in substance, forms part of an enterprise’s net investment in a non-integral foreign operation, at rates different from those at which they were initially recorded during the

period or reported in previous financial statements are accounted as below:


96 9796 97

(a) In so far as they relate to the acquisition of depreciable capital assets, are added to or deducted from the cost

of the asset and are depreciated over the balance life of the asset; and

(b) In other cases, the said exchange differences are accumulated in a ‘Foreign Currency Monetary Item Translation

Difference Account’ and amortised over the balance period of such long term asset/liability but not beyond

March 31, 2011.

All other monetary assets and liabilities denominated in foreign currency are restated at the rates ruling at the

year end and all exchange gains/ losses arising therefrom are adjusted to the Profit and Loss Account, except those

covered by forward contracted rates where the premium or discount arising at the inception of such forward

exchange contract is amortised as expense or income over the life of the contract.

Exchange differences on forward contracts are recognised in the Profit and Loss Account in the reporting period

in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such forward contracts

is recognised as income or expense for the year.

For forward exchange contracts and other derivatives that are not covered by AS-11 ‘The Effects of Changes in

Foreign Exchange Rates’, the Company follows the guidance in the announcement of the Institute of Chartered

Accountants of India (ICAI) dated March 29,2008 whereby for each category of derivatives, the Company records any

net mark- to- market losses. Net mark-to-market gains are not recorded for such derivatives. [Also refer Schedule

19 Note 17 below]

Foreign Company:

In respect of overseas subsidiary companies, Income and Expenses are translated at average exchange rate for the

year. Assets and Liabilities, both monetary and non-monetary, are translated at the year-end exchange rates. The

differences arising out of translation are included in the foreign currency translation reserve. Any Goodwill or

Capital Reserve arising on acquisition of non integral operation is translated at closing rate.


a) Defined-contribution plans

These are plans in which the Group pays pre-defined amounts to separate funds and does not have any legal

or informal obligation to pay additional sums. These comprise of contributions to the employees’ provident

fund with the government, superannuation fund and certain state plans like Employees’ State Insurance

and Employees’ Pension Scheme. The Group’s payments to the defined contribution plans are recognised as

expenses during the period in which the employees perform the services that the payments cover.

b) Defined-benefit plans

Gratuity:

The Group provides for gratuity, a defined benefit plan (the Gratuity Plan), to certain categories of employees.

Liability with regard to the Gratuity Plan is accrued based on actuarial valuation, based on Projected Unit

Credit Method at the balance sheet date, carried out by an independent actuary. Actuarial Gains and Losses

comprise experience adjustments and the effect of changes in the actuarial assumptions and are recognised

immediately in the Profit and Loss Account as income or expense.


98 9998 99

Pension:

Whyte and Mackay Group operates and contributes in a defined benefit pension scheme (the Pension Plan).

Liability with regard to Pension Plan is accrued based on actuarial valuation, based on Projected Unit Credit

Method at the balance sheet date, carried out by an independent actuary. Actuarial Gains and Losses comprise

experience adjustments and the effect of changes in the actuarial assumptions and are recognised immediately

in the Profit and Loss Account as income or expense.

Provident Fund:

Group’s Provident Funds administered by trusts set up any company in the Group where the company’s

obligation is to provide the agreed benefit to the employees and the actuarial risk and investment risk fall,

in substance, on the company, are treated as a defined benefit plan. Liability with regard to such provident

fund plans are accrued based on actuarial valuation, based on Projected Unit Credit Method, carried out by an

independent actuary at the balance sheet date. Actuarial Gains and Losses comprise experience adjustments

and the effect of changes in the actuarial assumptions and are recognised immediately in the Profit and Loss

Account as income or expense.

Death Benefit:

Death Benefit payable at the time of death is actuarially ascertained at the year-end and provided for in the

accounts.

c) Other long term employee benefits:

Compensated absences which are not expected to occur within twelve months after the end of the period

in which the employee renders the related services are recognised as a liability at the present value of the

defined benefit obligation at the balance sheet date based on actuarial valuation carried out at each balance

sheet date.

d) Short term employee benefits:

Undiscounted amount of short term employee benefits expected to be paid in exchange for the services

rendered by employees is recognised during the period when the employee renders the services. These

benefits include compensated absences such as paid annual leave and performance incentives.

15. Expenditure on account of Voluntary Retirement Scheme

Expenditure on account of Voluntary Retirement Scheme of employees is expensed in the period in which it is

incurred.

16. Research and Development

Revenue expenditure on research and development is charged to Profit and Loss Account in the period in

which it is incurred. Capital Expenditure is included as part of fixed assets and depreciated on the same basis

as other fixed assets.

17. Taxes on Income

Provision for income tax comprises current taxes and deferred taxes. Current tax is determined as the amount

of tax payable in respect of taxable income for the period in accordance with the applicable laws.

Deferred tax is recognised on timing differences between the accounting income and the taxable income for

the year and quantified using the tax rates and laws enacted or substantively enacted as on the balance sheet

date.


98 9998 99

Deferred tax assets are recognised and carried forward to the extent that there is a reasonable / virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realised.

Fringe Benefit Tax is determined at current applicable rates on expenses falling within the ambit of “Fringe Benefit” as defined under the Income Tax Act, 1961.

18. Earnings / (Loss) per Share (EPS)

Basic EPS is arrived at based on Net Profit after Taxation available to equity shareholders to the weighted average number of equity shares outstanding during the year. The Diluted EPS is calculated on the same basis as Basic EPS, after adjusting for the effects of potential dilutive equity shares unless impact is anti-dilutive.

19. Provisions

A provision is recognised when an enterprise has a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions, other than employee benefits, are not discounted to their present value and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.

Onerous Lease Provision:

When a leasehold property ceases to be used in the business or a commitment is entered into which would cause this to occur, provision is made for the entire amount by which the recoverable amount of interest in the property is expected to be insufficient to cover future obligations relating to the lease.

20. Contingencies

Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty are treated as contingent and, to the extent not provided for, are disclosed by way of notes on the accounts.

21. Share / Foreign Currency Convertible Bonds [FCCBs] issue expenses and Premium on Redemption of FCCB :

Share/ FCCBs issue expenses incurred are expensed in the year of issue and premium payable on FCCBs is expensed over the currency of FCCBs. Both are adjusted to the Securities Premium Account as permitted by Section 78(2) of the Companies Act, 1956.

22. Expenditure

Expenses are net of taxes recoverable, where applicable.

23. Government grants

Government grants related to revenue expenses are recognised on a systematic basis in the Profit and Loss Account over the periods necessary to match them with the related costs which they are intended to compensate.

24. Miscellaneous Expenditure (to the extent not written off)

Expenditure incurred for raising borrowed funds represents ancillary costs incurred in connection with the arrangement of borrowings and is amortised over the tenure of the respective borrowings. Amortisation of

such Miscellaneous Expenditure is included under Interest and Finance charges.


100 101100 101

19. NOTES ON ACCOUNTS

1. Contingent Liabilities Rs. Million

2009 2008a) Guarantees given by the Company’s bankers for which Counter

Guarantees have been given by the Company 172.217 141.942

b) Disputed claims against the Company not acknowledged as debts, currently under appeal / sub judice: (i) Excise demands for excess wastages and distillation losses 238.384 231.804(ii) Other miscellaneous claims 244.274 367.582(iii) Income Tax demand (including interest) under appeal 1,436.973 211.573(iv) Sales Tax demands under appeal in various states 604.036 682.086

c) Co-accepted bills of Tie-up Units - since fully settled 15.016 216.740d) Claims from suppliers not acknowledged as debts 45.490 50.967

The Management is hopeful of succeeding in the above appeals /disputes based on legal opinions / legal

precedents.

2. A. The Scheme of Amalgamation under Section 391 to 394 of the Companies Act, 1956 for the amalgamation

of Shaw Wallace & Company Limited (‘SWCL’), a subsidiary company, and Primo Distributors Private Limited

(‘Primo’), a wholly owned subsidiary company, (together ‘Transferor Companies’) with the Company (‘the

Scheme’) and their respective shareholders, with effect from April 1, 2007 being the Appointed Date, has

been sanctioned by Hon’ble High Court of Karnataka, Hon’ble High Court of Judicature at Bombay and

Hon’ble High Court at Calcutta.

Upon necessary filings with the respective Registrar of Companies, the Scheme has become effective on July

6, 2009 and effect thereof have been given in the accounts. Consequently,

a. In terms of the Scheme the entire business and undertaking of Transferor Companies including all assets

and liabilities, as a going concern, stand transferred to and vested in the Company (hereinafter referred

to as ‘Amalgamation’) with effect from April 1, 2007 being the Merger Appointed Date.

b. Primo ceased to be subsidiary of the Company and Shaw Wallace Breweries Limited (SWBL) became a

direct subsidiary of the Company. Primo stand dissolved without being wound up. SWCL will be dissolved

without winding up by separate order by the Hon’ble High Court at Calcutta.

c. The SWCL was engaged in manufacture and sale of potable alcohol and Primo was engaged in the

business of distribution of alcoholic beverages.

(I) (a) In Consideration of the amalgamation, the Company will issue:

7,749,121 equity shares of Rs.10/- each aggregating to Rs.77.491 Million in the ratio of 4 (four) fully paid

up Equity Shares of the face value of Rs.10/- each of the Company for every 17 (Seventeen) fully paid up

equity shares of Rs.10/- each held in SWCL. [also refer Note 2 A (II) below]:

Pending issue of these Equity Shares, a sum of Rs. 77.491 million has been shown under Equity Share

Capital Suspense. Subsequently, on July 24, 2009, the allotment of the Company’s shares to the eligible

shareholders of SWCL has been completed. Steps have been taken to list the shares with the stock

exchanges where existing shares of the company are currently listed.

(b) As primo was a wholly owned subsidiary of the Company, no consideration was payable pursuant to

amalgamation of Primo with the Company.


100 101100 101

(II) Pursuant to the Scheme, Equity Shares to be issued as above include 4,925,231 Equity Shares of Rs.10/- each fully paid up to be issued to Palmer Investment Group Limited (Palmer), R.G.Shaw & Company Limited (R G Shaw), JIHL Nominees Limited (JIHL Nominees), Shaw Scott & Company Limited (Shaw Scott), Shaw Darby & Company Limited (Shaw Darby) and Thames Rice Milling Company Limited (Thames Rice), subsidiaries of the Company, in exchange for the 20,932,244 Equity Shares of Rs.10/- each fully paid up held by them in the share capital of SWCL, in the proportion of Equity Shares held by them respectively.

(III) Pursuant to the Scheme, 10,282,553 Equity Shares of Rs.10/- each fully paid up held by SWCL and 1,306,431 Equity Shares of Rs.10/- each fully paid up held by Primo in the share capital of the Company were to be transferred to the SWCL Benefit Trust and the Primo Benefit Trust established by virtue of trust deeds dated July 25, 2008 for the benefit of SWCL and Primo respectively. Upon the Scheme becoming effective, the beneficial interest in SWC Benefit Trust and Primo Benefit Trust stands transferred and vested in the USL Benefit Trust established by virtue of trust deed dated September 26, 2006 for the benefit of the Company. Subsequent to the year end, on June 30, 2009 SWCL has sold 10,282,553 Equity Shares held by it in the Company in the open market, through the stock exchanges and 1,306,431 Equity shares held by Primo in the Company has been transferred to Primo Benefit Trust on July 6, 2009 which stands vested with USL Benefit Trust in terms of the scheme.

(IV) Pursuant to the scheme, the Authorised Share Capital of the Company stands increased and reclassified, without any further act or deed on the part of the Company, including payment of stamp duty and Registrar of Companies fees, by the authorised share capital of the transferor companies amounting to Rs 2,092 Million and the Memorandum of Association and Articles of Association of the Company stand amended accordingly without any further act or deed as the part of the Company.

(V) Accounting for Amalgamation

The amalgamation of the Transferor Companies with the Company is accounted for on the basis of the Purchase Method as envisaged in the Accounting Standard (AS) -14 on Accounting for Amalgamations specified in the Companies (Accounting Standard) Rules 2006 and in terms of the Scheme, as below:

a. All tangible assets [excluding investment in shares held by the Transferor Companies in the Company and the interest in the USL Benefit Trust in accordance with the terms of the Scheme as explained in Note 2 (A) (III) above] and liabilities of the Transferor Companies at their respective fair values.

b. Interest in USL Benefit Trust, arising from the terms of the Scheme as explained in Note 2 (A) (III) above, has been accounted as Investment, valued and recorded, in the manner prescribed in the Scheme, at the average of the weekly high and low of the closing price of the Company, on the stock exchange where the shares of the Company are more frequently traded in terms of turnover, for the period ended six months preceding the Appointed Date, i.e. April 1, 2007, aggregating to Rs. 9,256.006 Million.

c. The equity shares directly held by the Company in the Transferor Companies stand cancelled and debited to General Reserve of the Company. [refer (d) below].

d. Rs.7,860.187 Million being the difference between the value of net assets of the Transferor Companies transferred to the Company (determined as stated above) and the face value of equity shares to be issued and after adjusting for the equity shares directly held by the Company in the Transferor Companies which are cancelled, is credited to General Reserve of the Company. This accounting treatment of the reserve has been prescribed in the Scheme. Had the Scheme not prescribed this treatment, this amount

would have been credited to Capital Reserve.


2. A. (Contd.)

102 103102 103

e. The Company, based on the reports by Independent valuer, has revalued, at their respective fair values, all

fixed assets being Land, Buildings, Plant and Machinery, Furniture and Fixtures and Office Equipment and

Vehicles, at one location, as at April 1, 2007 and an amount of Rs. 80.704 Million, being diminution in value

of certain Plant and Machinery determined based on their respective disposal value as estimated by the

independent valuer, has been debited to General Reserve. This accounting treatment has been prescribed in

the Scheme. Had the scheme not prescribed this treatment, Rs.80.704 Million being diminution in value of

certain fixed assets would have been debited to the Profit and Loss Account for the year instead of General

Reserve, having corresponding impact on the net profit for the year.

B. The Scheme of Amalgamation under Section 391 to 394 of the Companies Act, 1956 for the amalgamation of

Zelinka Limited (‘Zelinka’ or the ‘Transferor Company’), Cyprus, with the Company (‘the ZL Scheme’) and their

respective shareholders, with April 1, 2007 being the Appointed Date, has been sanctioned by Hon’ble High Court

of Karnataka and the certified copy of the Order of the Hon’ble High Court of Karnataka has been filed with

the Registrar of Companies. Zelinka has complied with the procedure required to be followed under the local

corporate laws of Cyprus to give effect to the ZL scheme. Accordingly, the ZL scheme became operative from

March 26, 2009. The Company has given effect to the ZL Scheme in these accounts with effect from April 1, 2007

being the Appointed Date. Consequently, in terms of the ZL Scheme:

a. The entire business and undertaking of Zelinka including all assets and liabilities, as a going concern, stand

transferred to and vested in the Company with effect from April 1, 2007 being the Merger Appointed Date.

b. Zelinka ceased to be subsidiary of the Company and Palmer Investment Group Ltd, British Virgin Island and

Montrose International SA, Panama have became wholly owned subsidiaries of the Company and Liquidity

Inc, USA has become direct subsidiary of the Company.

Zelinka was engaged in Investment related activities.

I. As Zelinka was a wholly-owned subsidiary of the Company, no consideration was payable pursuant to the

amalgamation of Zelinka with the Company.

II. Accounting treatment

The amalgamation of Zelinka with the Company is accounted on the basis of the Purchase Method

as envisaged in the Accounting Standard (AS) -14 on Accounting for Amalgamations specified in the

Companies (Accounting Standard) Rules 2006 and in terms of the Scheme, as below:

a) All assets and liabilities of the Transferor Company at their respective book values.

b) The investment held by the Company in the equity share capital of the Transferor Company stands

cancelled and debited to General Reserve of the Company. [refer (e) below].

c) Rs.11.152 Million being the difference between the value of net assets of the Transferor Company

transferred to the Company (determined as stated above) after adjusting for investments cancelled

is debited to General Reserve of the Company. This accounting treatment of the reserve has been

prescribed in the ZL Scheme. Had the ZL Scheme not prescribed this treatment, this amount would

have been debited to Goodwill, which would have been charged to the Profit and Loss Account for

the year as per the accounting policy of the Company, with a corresponding impact on the net profit

for the year.


2. A. (v) (Contd.)

102 103102 103

d) Interest free loans in foreign currency aggregating to Rs. 7,345.279 Million as on April 1, 2007, granted by the Company to Zelinka for acquisition of long term strategic investments, stand cancelled. Exchange difference on such loans aggregating to Rs.144.912 million as on April 1, 2007, accumulated by the Company in Foreign Currency Translation Reserve, has been transferred to General Reserve. This accounting treatment of the reserve has been prescribed in the ZL Scheme. Exchange differences of Rs.570.131 million during the year ended March 31, 2008 stands reversed on cancellation of such loans on amalgamation. Had the ZL Scheme not prescribed this treatment, this amount would have been debited to the Profit and Loss Account for the year instead of General Reserve, having corresponding impact on the net loss for the year.

e) The difference as on the appointed dated, i.e. April 1, 2007, between the cost of investment of Zelinka in the shares of its subsidiary viz., Palmer and similarly the cost of investment of Palmer in the shares of its subsidiaries viz., RG Shaw, JIHL nominees, Shaw Scott, Shaw Derby and Thames Rice, and the cost of shares of the Company, if any, held by these subsidiaries after considering the book values of the assets (net of liabilities), has been reflected as Goodwill on Consolidation. Had the ZL Scheme not prescribed this treatment, Goodwill on Consolidation and General Reserves would have been lower by Rs.3,793.500 Million.

C. All costs and expenses (including those of the Transferor Companies) incidental with the finalisation of the schemes and to put these into operation, including expenses in connection with excise and label re-registrations, all advisory fees, stamp duty charges, meeting expenses, professional fees, consultant fees including expenses and other expenses or charges attributable to the implementation of the Scheme (expenses relating to amalgamation), aggregating to Rs. 146.879 Million are debited to General Reserve in the books.

This accounting treatment of the cost and expenses has been prescribed in the Schemes. Had the Scheme not prescribed this treatment, this amount would have been debited to the Profit and Loss Account for the year instead of General Reserve, having corresponding impact on the net loss for the year.

D. From April 1, 2007, the Transferor Companies had carried out the business in trust on behalf of the Company. Accordingly, adjustment to the Profit for the year ended March 31, 2008 of the Transferor Companies on amalgamation aggregating to Rs. 162.543 have been debited to the Balance in Profit and Loss Account.

E. Board of Directors of the erstwhile Central Distilleries & Breweries Limited (CDBL) (amalgamated with erstwhile SWDL amalgamated with the Company in an earlier year) on April 29, 1986 decided to issue 134,700 Equity Shares of Rs.10 each, the allotment whereof was stayed by the Hon’ble High Court of Delhi on September 13,1988. The Hon’ble High Court of Delhi had vacated its order and has ordered to keep in abeyance the allotment on 72,556 shares and the matter is sub-judice. The holders, in exchange of these shares will be entitled to 17,776 equity shares of Rs.10 each of the Company pursuant to a Scheme of Arrangement. Necessary adjustments in this respect will be carried out on disposal of the matter pending before the aforesaid Court.

F. Pursuant to the schemes of amalgamation, the bank accounts, agreements, licences and certain immovable properties are in the process of being transferred in the name of the Company.

3. The Board of Directors of the Company at their meeting held on November 29, 2008 have approved the proposal of merger of Balaji Distilleries Limited (‘BDL’) with the Company with effect from April 1, 2009 as per the Scheme of Arrangement between BDL, Chennai Breweries Private Limited (‘CBPL’) and the Company, subject to the necessary approvals.

The Draft Rehabilitation Scheme along with the Scheme of Arrangement is pending with the Board for Industrial and Financial Reconstruction formed under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 , for approval.


2. B. (ii) (Contd.)

104 105104 105


4. (a) The Group through Royal Challengers Sports Private Limited, a subsidiary Company, holds the perpetual

right to the Bangalore Franchise of BCCI-IPL. Although this right is perpetual it would be prudent to consider

this as having a ‘finite’ rather than an ‘infinite’ life. The limited over version of the game which was first

introduced in 1970s is continuing even now after 38 years and an even shorter version (20 over) has only

recently being introduced and is more popular than the 50 over format. The Management has held discussion

internally as well as with other experts in the field on the subject of useful life and the period of amortisation.

Although the Management regards the useful life as indefinite, as a measure of prudence a useful life of 50

years is considered as appropriate and the rights are amortised over 50 years having regard to the following

factors:

• The game of cricket has been in existence for over 100 years and there is no indication of interest in the

game and the commercial prospects waning

• The shorter version of the game is increasingly popular.

• The commercial exploitation of the shorter version is on an increasing scale and is expected to reach the

scale which other games like soccer have reached.

• This industry (cricket) is, therefore, highly stable and the market demand for this game is likely to remain

for more than 50 years with its spread to many countries.

• IPL and its teams have acquired brand status and teams are not identified with countries or geographies

but with brand names.

• The franchisees have the intent and ability to provide the necessary financial and other resources required

to obtain the expected future economic benefits from this for atleast 50 years.

The carrying value of the capitalized Rights would be assessed for impairment at every balance sheet date

The carrying amount of Franchise Rights as at March 31, 2009 is Rs.4,834.328 Million to be amortised over

the remaining period of 49 years.

Term liability towards franchisee rights at the year end aggregating to Rs.4,431.413 Million is payable over a

period of 9 years, of which Rs.492.379 Million is payable within one year.

(b) The governing bodies of this sport in India and globally, over a period of last 7 to 15 years have experienced

an annualised growth of 19 to 35% in their Media/Central Rights. The management believes, given the sheer

appeal of this format which has surpassed all expectations, an annualised growth of 20% from 2015 to 2025,

a 15% annualized growth from 2026 to 2035 and a 4% annualised growth for the balance period of life. The

Gate Receipts and Merchandising revenues are based on specific interventions designed to increase the same

in the near to medium term, including geographical expansion in the case of Merchandising revenue, with a

5-7% inflation / premiumisation assumptions built in. The key assumption in Local Rights has been indexed

to Central Rights.

Management has tested for impairment of Franchise Rights at the balance sheet date based on the cash flow

projection using the above assumptions, which did not indicate any impairment.

104 105104 105



a) Defined Contribution Plans

The Group offers its employees defined contribution plan in the form of Provident Fund (PF) with the government, Superannuation Fund (SF) and certain state plans such as Employees’ State Insurance (ESI) and Employees’ Pension Scheme (EPS). PF and EPS cover substantially all regular employees while the SF covers certain executives and the ESI covers certain workers. Contribution to SF is made to trust managed by the Group, while other contributions are made to the Government’s funds. While both the employees and the Group pay predetermined contributions into the Provident Fund and the ESI Scheme, contributions into the Pension Fund and the Superannuation Fund are made only by the Group. The contributions are normally based on a certain proportion of the employee’s salary.

During the year, the Group has recognised the following amounts in the Profit and Loss Account, which are included in Contribution to Provident and other funds in Schedule 16:

Rs.Million2009 2008

Provident Fund and Employees’ Pension Scheme* 95.887 96.287Superannuation Fund 33.494 29.726Employees’ State Insurance 8.738 8.819

138.119 134.832

* Excluding contribution to PF made to trusts managed by the Company.

b) Defined Benefit Plans

Gratuity:

The Group provides for gratuity, a defined benefit plan (the Gratuity Plan), to certain categories of employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement or termination of employment, an amount based on the respective employee’s last drawn salary and years of employment with the Group. The Group has employees’ gratuity funds managed by the Group as well as by Insurance Companies. In certain subsidiaries gratuity plan is funded.

Pension:

Whyte and Mackay Group operates and contributes in a defined benefit Pension Scheme, under which amounts are held in a separately administered trust.

Provident Fund:

For certain executives and workers of the Group, contributions are made as per applicable Indian laws towards Provident Fund to certain Trusts set up and managed by the Group, where the Company’s obligation is to provide the agreed benefit to the employees and the actuarial risk and investment risk fall, in substance, on the Group. Having regard to the assets of the Fund and the return on the investments, shortfall in the assured rate of interest notified by the Government, which the Group is obliged to make good is determined actuarially.

Death Benefit:

The Company provides for Death Benefit, a defined benefit plan, (the Death Benefit Plan) to certain categories of employees. The Death Benefit Plan provides a lump sum payment to vested employees on Death, an amount based on the respective employee’s last drawn salary and remaining years of employment with the Company after adjustments for any compensation received from the insurance Company and restricted to

limits set forth in the said plan. The Death Benefit Plan is Non-Funded.

106 107106 107


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106 107106 107


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108 109108 109

6. Fixed Assets

a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) – Rs. 472.728 Million (2008: Rs. 553.079 Million).

b) In view of different sets of environment in which foreign subsidiaries operate in their respective countries, provision for depreciation is made to comply with local laws and use of management estimate. It is practically not possible to align rates of depreciation of such subsidiaries with those of the Company. However on review, the management is of the opinion that provision of such depreciation is adequate.

Accounting policies followed by Whyte and Mackay Group in respect of depreciation on fixed assets are different from accounting policies of the Company as mentioned in Note 8(iii) Schedule 18. The proportion of the fixed assets in the consolidated financial statement to which different accounting policies have been applied are as below:

Rs. Million

2009 2008Gross Block Proportion

%Gross Block Proportion

%Building 2,195.330 49% 2,325.689 54%Plant & Machinery 5,193.470 61% 5,361.108 62%Vehicles 28.880 16% 31.723 13%

7. Current Assets, Loans and Advances

a) Loans and Advances include:

(i) An amount of Rs. 736.429 Million (2008: Rs. 489.847 Million) due from a Tie-up unit secured by the assets of the Tie-up unit.

(ii) An amount of Rs. 250 Million (2008: Rs. Nil) due from a proposed tie-up unit secured by the shares of the proposed tie-up unit.

b) Certain confirmation of balances from Sundry Debtors, Loans and Advances, Deposits and Sundry Creditors are awaited and the account reconciliations of some parties where confirmations have been received are in progress. Adjustment for differences, if any, arising out of such confirmations/reconciliations would be made in the accounts on receipt of such confirmations and reconciliation thereof. The management is of the opinion that the impact of adjustments, if any, is not likely to be significant. In the opinion of the management, all Current Assets, Loans and Advances including advances on capital accounts would be realised at the values at which these are stated in the accounts, in the ordinary course of business.

c) Bank balances with scheduled bank includes Rs 154.000 Million (2008: Rs. 715.055 Million) out of the proceeds of the beer business sold in the earlier year, kept under escrow pending resolution of various taxation matters. Subsequent to the year end, the taxation matters have been resolved and the escrow amount has been released.

d) The Company has granted interest free loans in foreign currency amounting to Rs.7,435.245 Million [2008: Rs. 6190.725 Million, excluding Rs.6836.073 Million relating to Zelinka cancelled on amalgamation as referred to in Note 2(B)(II)(d) above] given to USL Holdings Limited (USL Holdings), BVI, a subsidiary of the Company, for acquisition of long term strategic investments. Management is of the view that out of these loans, Rs.3,630.300 Million (2008: Rs.3,987.000 Million), from the inception of the grant of loans, in substance, form part of the Company’s net investment in the subsidiary, as the settlement of these loans is neither planned nor likely to occur in the foreseeable future and management intends to convert these loans into investment in share capital of the subsidiary in near future. Accordingly, in accordance with AS 11 - The Effects of Changes in Foreign Exchange Rates (AS 11), exchange difference aggregating to Rs.463.905 Million (2008: Rs. 106.905 Million excluding Rs.715.043 Million relating to loans to Zelinka referred in Note 2(B)(II)(d) above) arising on such loans has been accumulated in a foreign currency translation reserve, which at the time of the disposal

of the net investment in these subsidiaries would be recognised as income or as expenses.


108 109108 109

8. As required under Section 205C of the Companies Act, 1956, the Company has transferred Rs. 4.678 Million (2008: Rs. 10.517 Million) to the Investor Education and Protection Fund (IEPF) during the year. On March 31, 2009, no amount was due for transfer to the IEPF.

9. Interest on inter corporate deposit included under Unsecured Loan – others in Schedule 4 acquired on amalgamation, where negotiation/ settlement has not been finalised, has been provided in terms of the decree and / or otherwise considered adequate by the management. In the opinion of the management, interest so far provided is adequate and no further provision is necessary in this respect. Adjustments, if any, are carried out as and when the amounts are determined on final disposal / settlement of the matter.

10. Borrowing Costs Rs. Million

2009 2008a) Interest included in the Closing Stock of Malt and Grape Spirit under

maturation 82.643 38.117

b) Amortisation of Expenditure Incurred for Raising Borrowed Funds 160.140 112.075

11. Segment Reporting

The Company is primarily organised into two main geographic segments:

India: The ‘India’ segment is engaged in the business of manufacture, purchase and sale of Beverage Alcohol (Spirits and Wines) including through Tie-up units/ brand franchisees within India.

Outside India: The ‘Outside India’ segment is engaged in the business of manufacture, purchase and sale of Beverage Alcohol (Spirits and Wines) including through Tie-up units/ brand franchisees outside India.

A. Primary Segmental Reporting Rs. Million

Geographic Segment India Outside IndiaUn allocated /

EliminationTotal

2009 2008 2009 2008 2009 2008 2009 2008(i) Revenue

External 75,414.761 58,607.017 18,722.267 17,631.059 - - 94,137.028 76,238.076 Less: Excise Duty 33,655.018 24,616.008 4794.683 4377.741 - - 38,449.701 28,993.749 Inter-segment 118.227 38.630 1803.187 314.774 (1,921.414) (353.404) - - Total Revenue 41,641.516 33,952.379 12,124.396 12,938.544 (1,921.414) (353.404) 55,687.327 47,244.327

(ii) ResultSegment Result Profit/(Loss)

6,534.077 6,541.923 (2,558.988) 4,303.579 - - 3,975.089 10,845.502

Unallocated corporate expenses/(income)

- - - - - - - -

Income from Investments 7.964 - 23.732 - - 94.097 31.696 94.097 Interest and Finance Charges

3,496.371 - 3,679.272 - - 5,447.563 7,175.643 5,447.563

Profit/(Loss) before Taxation

3,045.670 6,541.923 (6,214.529) 4,303.579 - (5,353.466) (3,168.858) 5,492.036

Prior Period, Exceptional and Other Non-Recurring Items

- 181.258 - - - - - 181.258

Profit before taxation 3,045.670 6,360.665 (6,214.529) 4,303.579 - (5,353.466) (3,168.858) 5,673.294Provision for taxation - - - - 915.711 2,661.243 915.711 2,661.243 Profit/(Loss) after Taxation 3,045.670 6,360.665 (6,214.529) 4,303.579 (915.711) (8,014.709) (4,084.569) 3,012.051Total Revenue 55,687.327 47,244.327 Income from Investments 31.696 94.097

55,719.023 47,338.424


110 111110 111

Geographic Segment India Outside IndiaUn allocated /

EliminationTotal

2009 2008 2009 2008 2009 2008 2009 2008(iii) Other information

Segment Assets 55,644.947 22,991.609 11,519.678 25,734.426 44,738.318 53,259.73 111,902.943 101,985.769 Segment Liabilities 17,526.859 6,798.504 7,355.128 4,574.720 69,617.589 67,847.657 94,499.576 79,220.881 Capital Expenditure 106.662 1215.284 844.847 1,426.254 - - 951.509 2,641.538 Depreciation 463.294 322.780 462.545 15.081 - - 925.839 337.861 Other non cash expenses 290.926 197.160 1,265.452 2.889 - - 1,556.378 200.049

B. Secondary Segmental Reporting

The Group is engaged in the business of manufacture, purchase and sale of Beverage Alcohol (Spirits and Wines) including through Tie-up units / brand franchisees, which constitutes a single business segment. The Group’s other operations did not exceed the quantitative threshold for disclosure as envisaged in AS 17- ‘Segment Reporting’ specified in the Companies (Accounting Standard) Rules 2006.

Notes: a. Segment accounting policies are in line with the accounting policy of the Company.b. Segment revenue includes sales and other income directly identifiable with/allocable to the segment including

intersegment revenues.c. Expenses that are directly identifiable with/allocable to segment are considered for determining the segment

results. Expenses which relates to the group as a whole and not allocable to segments, are included under “Unallocable Corporate expenses”.

d. Income which relates to the group as a whole and not allocable to segments is included in “Unallocable Corporate income”.

e. Segment revenue resulting from transactions with other segments is accounted on the basis of transfer price agreed between the segments. Such transfer prices are either determined to yield a desired margin or agreed on a negotiated basis.

f. Segment assets and liabilities includes those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represents the assets and liabilities that relates to the company as a whole and not allocable to any segment. Unallocable assets mainly comprise trade investments in associate companies.

Unallocable liabilities include mainly loan funds and proposed dividend.

12. Related Party Disclosures

a) Names of related parties and description of relationship

Associates with whom transactions have takenplace during the year

Key Management personnel

Employees' Benefit Plans where there is significant influence

(i) Utkal Distillers Limited(Utkal) (upto July, 2008)

Mr.V.K.Rekhi Managing Director

Mc Dowell & Company Limited Staff Gratuity Fund (McD SGF)

UB Distilleries Limited [Schedule 18 Note 4(b) ]^

McDowell & Company Limited Officers'Gratuity Fund(McD OGF)

Wine Soc of India Private Limited

SWDL Group Officers Gratuity Fund (SWDL OGF)^

SWDL Employees Gratuity Fund (SWDL EGF)^Herbertsons Limited Employees Gratuity Fund (HL EGF)^

Phipson & Company Limited Management Staff Gratuity Fund. (PCL SGF)^Phipson & Company Limited Gratuity Fund. (PCL GF)^Carew & Company Ltd. Gratuity Fund (CCL GF)^Mc Dowell & Company Limited Provident Fund (McD PF)Herbertsons Limited Executives Provident Fund (HL EPF)^


11 A. Primary Segmental Reporting (Contd.)

110 111110 111

The Bengal Distilleries Company Limited Staff Provident Fund(BD PF)Shaw Wallce & Associated Companies Employees’ Gratuity Fund^Shaw Wallce & Associated Companies Executive Staff Gratuity Fund^Shaw Wallce & Associated Companies Provident Fund^Whyte and Mackay Pension Scheme

^ No transactions during the year.

b) Summary of the transactions with related parties: Rs. Million

2009 2008

Sl.No.

Nature of transactions *A

ssoc

iate

s

Key

Man

agem

ent

pers

onne

l

Empl

oyee

s’ Be

nefit

Pl

ans w

here

ther

e is

signi

fican

t in

fluen

ce

Total

Ass

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tes

Key

Man

agem

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pers

onne

l

Empl

oyee

s’ Be

nefit

Pl

ans w

here

ther

e is

signi

fican

t in

fluen

ce

Total

a) Purchase of goods- Utkal - - - - 0.309 - - 0.309

b) Sale of goods- Utkal 0.981 - - 0.981 6.328 - - 6.328

c) Income from sale by Tie-up Units.- Utkal 30.858 - - 30.858 125.223 - - 125.223

d) Sale/ (Purchase) of Fixed Assets- Utkal - - - - 0.336 - - 0.336

e) Interest received fromassociates - Wine Soc 1.809 - - 1.809 - - - -

f) Rental Deposit - 3.140 - 3.140 - 2.859 - 2.859g) Finance (including loans and equity

contributions in cash or in kind)- Wine Soc of India 49.320 - - 49.320 2.000 - - 2.000- Utkal (126.478) - - (126.478) (135.830) - - (135.830)

h) Managing Directors’ Remuneration - 42.362 - 42.362 - 31.439 - 31.439i) Rent - 3.069 - 3.069 - 2.790 - 2.790j) Contribution to Gratuity Fund

- McD OGF - - 43.693 43.693 - - 5.984 5.984- McD SGF - - 33.493 33.493 - - 33.621 33.621- SWC PF - - 0.654 0.654 - - - -

k) Contribution to Provident Fund-McD PF - - 55.068 55.068 - - 48.015 48.015-HL EPF - - - - - - - -- BD PF - - - - - - 0.863 0.863

l) Contribution to Pension SchemeWhyte and Mackay Pension Scheme - - 351.416 351.416 - - 1,584.514 1,584.514

m) Amount due from- Utkal - - - - 489.847 - - 489.847- Wine Soc 49.320 - - 49.320 - - - -

* Excludes Reimbursement of Expenses and Cost sharing arrangements.

The above information has been determined to the extent such parties have been identified on the basis of

information provided by the Company, which has been relied upon by the auditors.


12 a) Names of related parties and description of relationship (Contd.)

112 113112 113

13. (a) The Company’s significant leasing arrangements in respect of operating leases for premises (residential, office,

stores, godown, manufacturing facilities etc), which are not non-cancellable, range between 11 months and

3 years generally (or longer in certain cases) and are usually renewable by mutual consent on mutually

agreeable terms.

Leasing arrangements entered into prior to April 1, 2001 have not been considered for treatment under AS

19 ‘Accounting for Leases’.

The Whyte and Mackay Group entered into an operating lease agreement in September 2006 to rent a

property over a 30 year period at an annual cost of Rs.69.31 Million. The annual rent payable is subject to

review every 5 years. There are no contingent rent payments.

The aggregate lease rentals payable are charged as Rent under Schedule 16 to the accounts.

Sub-lease payments received Rs. 322.776 Million (2008: Rs. 261.801 Million) have been recognised in the

statement of Profit and Loss for the year and are included under Schedule 14.

Total of future minimum lease payments under non-cancellable operating leases for each of the following periods:


(i) Not later than one year; 30.228 8.611(ii) later than one year and not later than five years; 9.337 38.514(iii) later than five years; the total of future minimum sublease payments expected to be received under non-cancellable subleases at the balance sheet date;

68.764 69.294

108.329 116.419

(b) The Company has acquired computer equipment and cars on finance leases. The lease agreements are for a

primary period of 48 months for computer equipments and for 36 months to 60 months for cars. The Company

has an option to renew these leases for a secondary period. There are no exceptional/restrictive covenants in

the lease agreements.

The minimum lease payments and their present value, for each of the following periods are as follows:

Rs. Million

2009 2008

Particulars Present Value of

payments

Minimum lease

payments

Present Value of

payments

Minimum lease

payments

Later than one year and not later than five years 15.618 17.137 24.074 26.683Later than five years - - - -

15.618 17.137 24.074 26.683

Not later than one year 11.106 12.930 17.477 20.304

26.724 30.067 41.551 46.987

Less: Finance Charges 3.343 5.436Present value of net minimum lease payments 26.724 41.551


112 113112 113

2009 2008

14. Earnings / (Loss) per Share:

Nominal Value of equity shares (Rs) 10 10a) Net Profit/(Loss) after tax and attributable to Minority (Rs. Million) (4,084.136) 2,720.584b) Basic number of Equity Shares of Rs.10 each outstanding during the year # 102,985,569 88,574,272c) Weighted Average number of Equity Shares of Rs.10 each outstanding

during the year 102,985,569 86,113,691d) Basic Earnings Per Share (Rs.) (a /c) (39.66) 31.59e) Dilutive Effect on Profit (Rs Million) * - 23.131f) Profit/(Loss) attributable to equity shareholders for computing Diluted

EPS (Rs. Million) (a+e) (4,084.136) 2,743.715g) Dilutive Effect on Weighted average number of equity shares outstanding

during the year * - 2,080,338h) Weighted average number of Equity Shares and equity equivalent shares

for computing Diluted EPS (c+g) 102,985,569 88,194,029i) Diluted Earnings Per Share(Rs.) (f / h) (39.66) 31.11

* Diluted effect on weighted average number of equity shares and profit attributable is on account of Foreign Currency Convertible Bonds.

# Including Equity Shares to be issued referred to in Note 2(A)(I)(a).

15. Taxes on Income:

a) Current Taxation Rs. Million

Provision for current taxation includes:

2009 2008

i) Income Tax 1,802.351 1,828.799ii) Wealth Tax 13.000 12.500

Total 1,815.351 1,841.299

b) Deferred Taxation

The net Deferred Tax (Asset) / Liability as on March 31, 2009 has been arrived at as follows:

Rs. Million

Particulars Deferred Tax (Assets) / Liabilities as on 1.4.2008

Current Year charge

/ (credit)

Translation Adjustment



Difference between book and tax depreciation 477.296 318.299 (9.614) 785.981

Provision for Doubtful Debts (131.814) (71.496) - (203.310)

Employee Benefits (220.526) (362.280) 37.816 (544.990)

Others (106.927) (881.120) 32.389 (955.658)

Total 18.029 (996.597) 60.591 (917.977)

Less: Adjustment on adoption of notification for amendment to AS 11

(48.014)

(949.703)


114 115114 115

16. Onerous Lease Provision

Rs. Million

2009 2008At the beginning of the year 600.601 -Add: Taken over on acquisition - 683.464Less: Translation Adjustment (94.289) -

506.312 683.464

Add/ (Less): Provisions made/ (Written back) during the year - (82.863)

Charged/ (Credited) to income statement 403.578 (82.863)

(Less): Utilised (incurred and charged against provision) during the year - -

At the end of the year 909.890 600.601

Note:

These provisions were set up in relation to certain leasehold properties of Whyte and Mackay Group, which are

un-let or sub-let at a discount. The provisions take account of current market conditions and expected future

vacant periods and are utilised over the remaining period of the lease, which at March 31, 2009 is between 7 and

20 years.


a) The Group has marked to market all the outstanding derivative contracts on the balance sheet date and has

recognised the resultant loss amounting to Rs.1,350.142 Million (2008: Rs. 423.716 Million ) during the year.

b) As on March 31, 2009, the Group has the following derivative instruments outstanding:

i) Forward currency exchange contracts (Euro - GBP) amounting to Euro. 1 Million (2008: Nil) for the purpose

of hedging its exposures to foreign currency loans.

ii) Interest and Currency Swap arrangement (USD-INR) in connection with borrowings amounting to USD 35

Million (2008: USD 35 Million).

iii) Interest Rate Swap arrangements in connection with borrowings amounting to GBP 171.250 Million

(2008: GBP. 171.250 Million).

c) The year end foreign currency exposures that have not been hedged by a derivate instrument or otherwise

are as under :

i) Receivables: USD 0.876 Million (2008: USD 0.845 Million), Euro 0.188 Million (2008: Euro 1.816 Million),

Canadian Dollars 0.298 Million (2008: Rs.Nil), Taiwan Dollar 3.639 Million (2008: Rs. Nil)

ii) Term Loans USD 641.175 Million (2008: USD 641.175 Million).

d) The Central Government vide notification dated March 31, 2009 has amended Accounting Standard (AS-

11)- The effects of changes in Foreign Exchange Rates, notified under the Company’s (Accounting Standard)

Rules, 2006. The Company has exercised the option stated in Paragraph 46 of AS 11 retrospectively from

April 1, 2007.

As a result, the Company has changed its accounting policy for recognition of exchange differences arising on

reporting of long term foreign currency monetary items, with the exception of exchange differences arising

on a monetary item that, in substance, forms part of an enterprise’s net investment in a non-integral foreign

operation, at rates different from those at which they were initially recorded during the period or reported

in previous financial statements, which hitherto were charged to the Profit and Loss Account, as below :


114 115114 115

(i) In so far as they relate to the acquisition of depreciable capital assets, are added to or deducted from

the cost of asset and are depreciated over the balance life of the asset. This, however, did not have any

impact on the results for the year ended March 31, 2009; and

(ii) In other cases, the said exchange differences are accumulated in a ‘Foreign Currency Monetary Item

Translation Difference Account’ and amortised over the balance period of such long term asset/liability

but not beyond March 31, 2011. Exchange difference recognised in the Profit and Loss Account upto

last financial year ending March 31, 2008 relating to said long term monetary items in foreign currency

aggregating to Rs. 99.360 Million (net of deferred tax Rs. 48.014 Million) has been credited to the opening

revenue as provided in the rules. As a result of this change in accounting for exchange difference, net

Loss for the year is lower by Rs. 8,817.723 Million. The amount remaining to be amortised in the financial

statement as on March 31, 2009 is Rs.5,597.523 Million.

18. a) Previous year’s figures have been regrouped / re-arranged wherever necessary.

b) In view of the amalgamation described in Note 2 above, the figures for the year ended March 31, 2009 are

not comparable with those of previous year.




17. Foreign Currency Transactions (Contd.)

116 117116 117116

NOTES

116 117116 117

NOTES

118 PB

NOTES

Sitting from left to right - V.S.Venkataraman, T.K.Subramanian, P.A.B.Sargunar, V.K.Rekhi,P.A.Murali, Ashok Capoor, K.Laxminarasimhan and K.Chatterjee.Standing from left to right - Dr. B.K.Maitin, Amrit Thomas, Ravi Nedungadi, S.D.Lalla, Vivek Prakash,Abhay Kewadkar, N.R.Rajsekher, P.S.Gill, Sanjay Raina, I.P.Suresh Menon and Ajay Baliga.

S.R. GupteVice Chairman

M. R. D. Iyengar

Board of Directors

Dr. Vijay MallyaChairman

The Team

Sreedhara Menon

V. K. RekhiManaging Director

B. M. Labroo

S. K. Khanna

Level 6-10, UB Tower, UB City, 24 Vittal Mallya Road, Bangalore - 560 001.www.unitedspirits.in

www.theubgroup.com

USL Annual Report 08 09

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