Annual Report

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, 2007. At the outset, your Directors are pleased to report the strategically important acquisition on May 16, 2007 of Whyte and Mackay Limited, the 4th largest Scotch Distillers in the World. The acquisition of this Glasgow (UK) based Company for an enterprise value of GBP 595 Million was done through a wholly owned subsidiary, United Spirits (Great Britain) Limited. Consequent to the consolidation of the spirits business by amalgamation, inter alia, of Herbertsons Limited, Shaw Wallace Distilleries Limited, Baramati Grape Industries Limited and Triumph Distillers & Vintners Private Limited with the Company, your Company has registered a milestone sale of more than 66 Million cases during the financial year 2006-07. FINANCIAL RESULTS
Rupees in Millions 2006-07 2005-06 The working of your Company for the year under review resulted in Profit from operations Exceptional and Other Non-Recurring Item Less: Depreciation Taxation (including deferred tax) Profit after tax Profit B/F from previous year Profit available for appropriation Your Directors have made the following appropriations: To General Reserve To Capital Redemption Reserve Proposed Dividend: Preference Shares Equity Shares - Interim - Final Corporate Tax on Proposed Dividend Balance carried to the Balance Sheet EPS Basic - Rupees
Your Directors declared an interim dividend on equity shares of the Company @15% in March 2007. Your Directors take pleasure in proposing a final Dividend of 10% to make a total equity dividend distribution of 25% for the year ended March 31, 2007. The proposed final dividend of 10% is on the equity shares including on 4,484,397 equity shares allotted as of date by the Company on conversion of 78,960 Foreign Currency Convertible Bonds (Bonds) subsequent to March 31, 2007, pursuant to the Offering Circular dated March 24, 2006. Your Directors also propose a dividend @ 9% on 7,750,000 9% Non-Cumulative Non-Convertible Redeemable Preference Shares of Rs.10 each fully paid-up, which were outstanding on March 31, 2007 but redeemed on July 11, 2007. CAPITAL The Authorised Capital of your Company remained unchangedatRs.120,00,00,000/-divided into11,00,00,000 equity shares of Rs.10/- each and 1,00,00,000 Preference Shares of Rs.10/- each. During the current year, the Issued, Subscribed and Paid up Equity Share Capital of your Company increased from Rs. 944,819,300/- divided into 94,481,930 equity shares of Rs. 10/- each to Rs. 989,663,270/- divided into 98,966,327 equity shares of Rs. 10/- each on conversion of 78,960 Bonds into 4,484,397 equity shares. The paid-up Preference Capital of your Company became Nil consequent upon the redemption of 7,750,000 9% Non-Cumulative Non-Convertible Redeemable Preference shares of Rs.10/- each on July 11, 2007. PERFORMANCE OF THE COMPANY
3,898.186 2,627.424 6,525.610 309.350 1,276.066 4,940.194 256.572 5,196.766
921.192 921.192 409.002 91.992 420.198 574.238 994.436
500.000 6.975 141.723 98.966 37.881 4,411.221 52.20
50.000 464.446 6.975 188.963 27.480 256.572 4.80
The integration of the Shaw Wallace operations, the active efforts at capitalising on the uptrend of consumer preferences, and relentless cost control, have all helped your company to turn in a sterling performance during the year under review. Operating Profits were consequently up about 400% from Rs. 921 Million to Rs. 3,898 Million. Adding to the results for the year were profits from sale of part of the Treasury Stocks which resulted in Non-Recurring profits of Rs. 2,627 Million.
Report of the Directors (Contd.)

PROSPECTS Barring unforseen circumstances, your Directors expect continuing increase in the profitable conduct of the company's business. The recent acquisitions of the Scotch distiller, Whyte and Mackay Ltd. and Liquidity Inc. in the current year and Bouvet Ladubay, a wine manufacturing Company in France in the year under review, are expected to provide sustained opportunities in the future. Profits for the first six months of the current year are 51% higher than the corresponding period of the year under review. SUBSIDIARIES During the year under review, the following Companies became subsidiaries of your Company : Four Seasons Wines Limited; United Alcobev Limited; United Vintners Limited; McDowell Beverages Limited; USL Holdings Limited; Spring Valley Investments Holdings Inc.; USL Holdings (UK) Limited; United Spirits (UK) Limited; United Spirits (Great Britain) Limited and Herbertsons Limited. Subsequent to the Balance Sheet date, following Companies have become subsidiaries of your Company: McDowell & Company Limited; Liquidity Inc.; Whyte and Mackay Group Limited; Whyte and Mackay Limited; Whyte and Mackay Warehousing Limited; Bruce & Company Limited; Charles Mackinlay & Company Limited; Dalmore Distillers Limited; Dalmore Whyte & Mackay Limited; Edinburgh Scotch Whisky Company Limited; Ewen & Company Limited; Fettercairn Distillery Limited; Findlater Scotch Whisky Limited; Glayva Liqueur Limited; Glentalla Limited; GPS Realisations Limited; Grey Rogers & Company Limited; Hay & MacLeod Limited; Invergordon Distillers (Holdings) Limited; Invergordon Gin Limited; Isle of Jura Distillery Company Limited; Jarvis Halliday & Company Limited; John E McPherson & Sons Limited; KI Trustees Limited; Kensington Distillers Limited; Kyndal Spirits Limited; Leith Distillers Limited; Loch Glass Distilling Company Limited; Longman Distillers Limited; Lycidas (437) Limited; Pentland Bonding Company Limited; Ronald Morrison & Company Limited; St. Vincent Street (437) Limited; Tamnavulin-Glenlivet Distillery Company Limited; TDL Realisations Limited; The Invergordon Distillers Group Limited;The Invergordon Distillers Limited; The Sheep Dip Whisky Company Limited; W & S Strong Limited; Watson & Middleton Limited; Wauchope Moodie & Company Limited; Whyte and Mackay de Venezuela CA; Whyte & Mackay Distillers Limited; Whyte and Mackay Holdings Limited; Whyte and Mackay Property Limited; William Muir Limited and WMB Realisations Limited; Consequent to the dissolution without winding up of Shaw Wallace Financial Services Limited upon its amalgamation with Shaw Wallace Breweries Limited, in terms of the Orders of the Honble High Courts of Calcutta and Bombay, Shaw Wallace Financial Services Limited ceased to be a subsidiary of your Company in the current year. In terms of the approval received from the Government of India pursuant to Section 212(8) of the Companies Act, 1956, the Balance Sheet, Profit & Loss Account, Directors Report, Auditors Report and other particulars of the subsidiary companies as on March 31, 2007 have not been attached with the accounts of the Company. The documents/details will be made available to any Member of the Company upon request to the Company. The annual accounts of the subsidiary Companies as on March 31, 2007 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 McDowell Nepal Limited (MNL) (which has been converted into a Private Limited Company and renamed as United Spirits Nepal Private Limited, in the current year), your Companys Subsidiary in Nepal is from mid-July to mid-July every year. Accordingly, Accounting year of 2005-06 of MNL ended on July 16, 2006 and the Accounting Year 2006-07 ended on July 16, 2007, i.e., after the end of the close of the financial year of your Company which ended on March 31, 2007. For the purpose of compliance under Accounting Standard 21, relating to Consolidated Financial Statement, the Accounts of MNL has been drawn up to March 31, 2007. For the purpose of compliance under Accounting Standard 21-Consolidated Financial Statement presented by the Company includes the financial information of its subsidiaries. DEPOSITORY SYSTEM The trading in the equity shares of your Company is under compulsory dematerialisation mode. As of date, equity shares representing 94.01% 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 Companys shares.

DIRECTORS Mr. P K Kakodkar resigned from the Board with effect from June 01, 2007. Your Directors place on record their appreciation of the valuable services rendered by Mr. P K Kakodkar during his tenure as a Director of your Company. Mr.Sudhindar Krishan Khanna was appointed as Additional Director on June 01, 2007 and will hold office in terms of Section 260 of the Companies Act, 1956 up to the date of the ensuing Annual General Meeting. A Notice in writing has been received by your Company from a member signifying his intention to propose the appointment of Mr. Sudhindar Krishan Khanna as Director at the Annual General Meeting. Dr. Vijay Mallya and Mr. S R Gupte retire by rotation and being eligible, offer themselves for re-appointment. AUDITORS M/s. Price Waterhouse, your Companys 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, 2007. LISTING OF SHARES OF THE COMPANY The equity shares of your Company are listed on Bangalore Stock Exchange Limited (Regional Exchange), Bombay Stock Exchange Limited, National Stock Exchange of India Limited, Madras Stock Exchange Limited, The Delhi Stock Exchange Association Limited, The Calcutta Stock Exchange Association Limited and Ahmedabad Stock Exchange Limited. The listing fees for the year 2007-08 have been paid to all these Stock Exchanges. During the year under review, 34,010,521 Equity shares of Rs.10/- each issued and allotted to the shareholders of the Transferor companies, in terms of the Composite Scheme of Arrangement sanctioned by the Honourable High courts of Karnataka and Bombay, have been listed on the stock exchanges where the existing equity shares of the Company are presently listed. Your Company has distributed the net sale proceeds of fractional shares to the eligible shareholders in proportion to their respective fractional entitlements. Further, Your Directors have allotted during the current year 4,484,397 Equity shares upon conversion of Bonds in terms of the Offering circular for issue of US$100,000,000 2.00 per cent Convertible Bonds due 2011 (Bonds). Out of these equity shares allotted 3,862,039 have been listed on the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE). Similar approvals from other Stock Exchanges concerned are at different stages. As the equity shares of the Company are mainly traded on Bombay Stock Exchange Limited (BSE) and The National Stock Exchange of India Limited (NSE), the Board of Directors have decided to voluntarily de-list the equity shares of the Company from the Stock Exchanges situated at Ahmedabad, Chennai, Kolkata and New Delhi subject to the approval of the shareholders at the ensuing Annual General Meeting, in order to entail savings in recurring Annual Listing Fees and other administrative costs. The equity shares would continue to be listed on BSE, NSE and Bangalore Stock Exchange Limited (the regional stock exchange). ISSUE OF 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$7.4274 per GDS aggregating to US$ 130 mn. These GDSs are listed on the Luxembourg Stock Exchange. As on date, there is an outstanding of 235,004 GDSs representing 117,502 equity shares. ISSUE OF FOREIGN CURRENCY CONVERTIBLE BONDS Your Company had issued US$ 100,000,000 2% Convertible Bonds Due 2011 (Bonds) convertible into equity shares or GDSs (2 GDSs representing 1 equity share).These Bonds are listed on the Singapore Exchange Securities Trading Limited (SGX). In terms of the Offering Circular dated March 24, 2006, your Company has allotted during the current year 4,484,397 equity shares on conversion of 78,960 Bonds. As on date there are 21,040 Bonds outstanding to be converted into equity shares or GDSs.

ANNUAL GENERAL MEETING The Company has obtained from The Registrar of Companies, Karnataka, Bangalore extension of time for holding the Annual General Meeting for the financial year ended March 31, 2007 upto November 30, 2007. 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. 668.010 Million as at March 31, 2007. Matured deposits for which disposal instructions had not been received from concerned depositors stood at Rs. 14.069 Million as at March 31, 2007. Of this, a sum of Rs. 2.397 Million has since been 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 Companys locations. The Voluntary Retirement Scheme introduced for the permanent employees of the Company received moderate response. During the year under review, your Company introduced a new Flexi Compensation Package to replace the existing package and also introduced a Long Term Incentive Scheme for select senior executives. 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 2006- 2007 either under the McD ESOP Scheme or McD- Employee Stock Option Scheme 2002. CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION, ETC. In accordance with the provisions of Section 217(1) (e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors), Rules, 1998 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 200607, 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, 2007; 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 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 years performance. By Authority of the Board Bangalore October 31, 2007 Dr. VIJAY MALLYA Chairman

ANNEXURE TO DIRECTORS REPORT
[Additional information given pursuant to requirement of Section 217(1)(e) of the Companies Act, 1956]
CONSERVATION OF ENERGY
With regard to energy conservation and cost reduction, the steps taken by your Company were as follows: Upgradation of anaerobic digester for increased methane gas generation and utilization in boiler to conserve fuel. Commissioning of Steam Turbines to produce electricity at new locations and upgrading existing ones for increased electricity generation. Upgradation of composting system to ensure full utilization of multi-pressure distillation plant resulting in substantial saving in steam consumption. Replacement of existing Furnace Oil Fired Boilers with alternate bio-fuel (Husk, Bagasse) fired to reduce fuel cost. Reduction in steam consumption in distillation process by optimizing the operating parameters viz., reflux ratios.
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: (in Rs. in Million) (a) Capital 0.013 (b) Recurring 8.004 (c) Total 8.017 (d) Total R & D expenditure as a percentage of total turnover0.02%
TECHNOLOGY ABSORPTION
Technology imported during the last 5 years: Nil
During the year, even though the Company has not imported any technology, your Company has been the first in offering alcohol beverage in Tetra packs in India. The machinery and technology related to packaging of alcohol beverage in Tetra packs is sourced from Tetra Pack India Limited, which is a subsidiary of Tetra Pack, Sweden.
FOREIGN EXCHANGE EARNINGS/OUTGO

2006-07 1 2 Exports & Foreign Exchange earnings Imports/Expenditure in Foreign Currency Nil 686.397 (Rupees in Millions) 2005-06 109.370 726.241
By Authority of the Board Bangalore October 31, 2007 Dr. VIJAY MALLYA Chairman

ANNEXURE TO DIRECTORS REPORT
STATEMENT OF PARTICULARS OF EMPLOYEES AS REQUIRED UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956 AND COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975
DATE OF COMMENCEMENT OF EMPLOYMENT 23-Aug-06 21-Feb-95 15-Jun-92 13-May-05 27-Oct-93 12-Apr-91 12-May-92 1-Nov-88 25-Apr-83 1-Nov-96 20-Sep-04 20-Aug-84 7-Nov-86 14-Dec-88
Sl. No.
NAME
AGE
DESIGNATION/ NATURE OF DUTIES
REMUNERATION
QUALIFICATION
EXP IN YRS
PARTICULARS OF PREVIOUS EMPLOYMENT
1 2 3 4 5 6 7 8 9
Abhay Kewadkar * Alok Gupta Anant Iyer Anil Kumar Kush Arun Bopaiah Arvind Jain Ashok Capoor Ashwin Malik C. Chandrashekar
47 Senior Vice President - Wines 41 Executive Vice President Marketing & Brand India 48 Divisional Vice President Institutional & Trade Marketing 51 Chief Executive - Vittal Mallya Scientific Research Foundation 56 Divisional Vice President Manufacturing 45 Divisional Vice President - Sales 54 Chief Operating Officer - Regional Profit Centre (West) 49 Chief Operating Officer - Regional Profit Centre (North) 52 Divisional Vice President Materials 48 Senior Vice President Sales, UB Global 39 Assistant Vice President Marketing 50 Divisional Vice PresidentManufacturing (S) 49 Divisional Vice President Finance & Accounts 58 Senior Vice President - Quality Assurance & Technical
1,597,848 B.TECH (CHEM) 6,082,372 B.COM, PGDM 3,767,448 M.SC., MMS 5,868,316 Ph.D, MBA 2,547,930 B.SC, LLB 2,803,312 PGDM 7,575,774 B.A. (ECO), MBA 8,564,662 B.A. (ECO), MBA 3,151,082 MBA 3,861,189 PGDBM 2,702,086 B.SC., PGDBM 2,640,747 B.SC., B.Tech., PGDBM 2,938,979 B.COM, ACA, LLB 3,882,641 M.SC., PH.D.,
25 19 23 23 26 23 32 27 31 26 16 24 23 36
Vice President & Wine Maker - Grover Vineyards Ltd. Deputy General Manager - Shaw Wallace & Company Ltd. Controller Marketing, Consolidated Distilleries Ltd. Scientific Director - Genesis Management Consultants Manager - Personnel & Admin, Karnataka Jewels Ltd. Area Manager-Titan Watches Ltd. Chief Operating Officer - Erstwhile Herbertsons Ltd. VP Sales & Mktg, Carew Phipson Ltd. Buyer, Hindusthan Motors Ltd. Chief Operating Officer - Erstwhile Herbertsons Ltd. Head - Marketing & Alliances (Internet Services), Bharti Infotel Ltd, New Delhi Chemist - Eastern Distilleries Pvt. Ltd. Consultant, N M Raiji & Co, Mumbai Sr. Research Officer & Head, Analytical Research Group, Shriram Institute For Ind. Research Vice President - Research and evelopment, Erstwhite Shaw Wallace Distilleries Ltd. Manager Pers & MP Devpt - Pfizer Manager Treasury - Digital Equipment (I) Ltd. Secretary & Finance Manager , UB Electronic Instruments Ltd. Chief Executive Officer-Indian Operations, Mason and Summers Alcobev Pvt Ltd. Regional Manager, Coca Cola India Commodore-Indian Navy Vice President - Marketing, Erstwhile Shaw Wallace Distilleries Ltd. VP - Sales, Erstwhile Shaw Walllace Distilleries Ltd. Adviser - Balaji Group Companies.
10 Debabratha Banerjee 11 Debashish Shyam 12 Debashis Das 13 Dharmarajan S. 14 Dr. Binod K Maitin
15 Dr. Subratha Bhattacharaya 68 Divisional Vice President Research and Development 16 Gerald G D'Souza 17 Harisha Bhat A. 18 I.P. Suresh Menon 19 Kaushik Chatterjee* 20 Laxmi Narasimhan 21 Mongia S. K. 22 Mathew Xavier 23 N R Rajsekher 24 Navratan Dugar 58 Senior Vice President - HR 53 Executive Vice President Corporate Finance 50 Senior Vice President - Planning & Control 47 Chief Operating Officer - Regional Profit Centre (East) 38 Divisional Vice President - Sales 66 Divisional Vice President Business Promotion 43 Divisional Vice President Marketing & Innovations 51 Chief Operating Officer - Regional Profit Centre (AP) 64 Executive Vice PresidentProcurement Planning & Manufacturing 49 Executive Vice President & Chief Financial Officer
4,909,704 M.SC, P.hD
36
1-Apr-05
4,448,169 MA, PERS 7,562,527 CA 4,598,145 BA (HONS), MMS 2,691,507 B.COM 2,645,119 B.E, PGDM 2,887,595 M.SC, DEF SC. 5,185,148 B COM, PGDM 6,873,693 B.SC 7,435,622 B.COM, M.COM, MBA, MCIM 7,574,174 B.COM, ACA
33 29 29 23 13 49 18 28 38
16-Aug-90 22-Nov-90 1-Apr-85 27-Apr-06 8-Dec-03 2-Aug-93 1-Apr-05 8-Apr-82 1-May-01
25 P A Murali
26
5-Jul-93
Executive Vice President - Finance and Accounts, United Breweries Ltd.

STATEMENT OF PARTICULARS OF EMPLOYEES AS REQUIRED UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956 AND COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975
EXP IN YRS DATE OF COMMENCEMENT OF EMPLOYMENT 1-Jan-88 20-Nov-02 19-Feb-96 1-Mar-86 24-Sep-79 1-Jan-90 5-Apr-94 14-Nov-82 5-Oct-84 1-Apr-05 1-Sep-89 7-Mar-91 20-Jan-84 16-Mar-83
Sl. No.
NAME
AGE
DESIGNATION/ NATURE OF DUTIES
REMUNERATION
QUALIFICATION
PARTICULARS OF PREVIOUS EMPLOYMENT
26 P. N. Poddar 27 Philip Sargunar A. B. 28 R Satsangi 29 R.N. Pillai 30 Raghunathan A. 31 Ravi Nedungadi A.K. 32 S.D. Lalla 33 S.K. Rastogi 34 Sharma V. K. 35 Surendra Choudhary 36 S.C. Singhal 37 S.N. Prasad 38 S.R. Jayakumar* 39 T. K. Subramanian 40 T.V. Subramanian 41 V. K. Rekhi 42 V. S. Venkataraman 43 V. Murali 44 Vijay Kumar Arora* 45 Vivek Prakash
54 Senior Vice President Manufacturing 58 Chief Operating Officer - Regional Profit Centre (South) 50 Divisional Vice President Regional Manufacturing Head (N) 51 Divisional Vice President Finance 55 Executive Vice PresidentFinance & Accounts 50 President & Chief Financial officer - UB Group 64 Joint President - Overall Operations 55 Divisional Vice President - Quality Control 64 Executive Director Chairman's office 53 Divisional Vice President - Finance 54 Divisional Vice PresidentManufacturing (E) 49 Assistant Vice President - Finance 51 General Manager - Finance 56 Divisional Vice President Systems 52 Assistant Vice President Business Development 62 Managing Director 53 Company Secretary and Senior Vice President 45 Senior General Manager Distillery 55 Director - Sales 47 Senior Vice President CSD Sales
3,533,303 M.TECH, DMS 7,034,406 B.A., M.A. 2,802,277 B.TECH (MECH) 3,101,925 CA 6,082,717 B.COM, ACA 21,540,007 B.COM (HONS), AICWA, ACA 11,790,901 LC & SE, AMIE (CIVIL) 2,972,719 M.SC., 4,998,802 B.COM, MA, LLB 4,096,201 B COM, LLB, ACA 2,715,958 B.SC., DIFAT 2,850,217 B.COM., ACA, ACS 3,031,239* M.COM. 3,542,808 B.SC., DMS 2,778,351 M.COM, ICWA 22,752,770 MA (Hons), PGDBA 4,169,797 B.COM (Hons.), ACS 3,252,401 ME (CHEM), DBA 2,400,102 B.A. (Hons) 3,455,508 B.COM, LLB
31 37 28 31 32 28 45 35 33 28 30 23 31 36 29 36 35 21 36 25
Production Manager, Union Carbide (I) Ltd. Executive Director & Chief Reputation Officer, The Empee Distilleries Ltd. Plant Manager, Pepsico India Holding Accountant, Royal Oman Police Executive Vice President - Finance & Accounts, Erstwhile Herbertsons Limited Group Finance Director, UB International Ltd., U.K. Managing Director - Erstwhile Herbertsons Limited Quality Control Officer Jagatjit Industries Ltd. Executive Director - Chairmans Office Erstwhile Herbertsons Limited Vice President - Finance, Erstwhile Shaw Wallace Distilleries Ltd. Assistant Manager - Works, Shri Shadilal Enterprises Ltd. Deputy Manager - Finance, UB Hoppecke Energy Products Ltd. Deputy Manager - Finance, LVR Seeds & Minerals Pvt. Ltd. Controller - Systems, UBICS Ltd.
16-June-86 Manager Branch Services - Deccan Marketing Limited 3-Jan-72 20-Aug-82 4-Oct-90 1-Jan-03 15-Jun-98 Regional Director, UB International Ltd., U.K. Deputy Company Secretary, United Breweries Ltd. Manager - Technical Service, Associated Drug Co P Ltd., Jagdale Group Director Sales - Erstwhile Triumph Distillers & Vintners Pvt. Ltd. Dy General Manager - Shaw Wallace & Company Ltd.
* Employed part of the year Notes: No employee is on contract employment. Other terms and conditions are as per service rules of the Company from time to time. None of the above mentioned employees is related to any Director of the Company. Remuneration as shown above includes salary, house rent allowance, Companys contribution to PF and Superannuation Fund, value of residential accomodation, bonus, medical and other facilities. By Authority of the Board Bangalore October 31, 2007 DR. VIJAY MALLYA Chairman
Corporate Governance Report

1. COMPANYS PHILOSOPHY CORPORATE GOVERNANCE ON CODE OF Chairman, a Managing Director and five other Non Executive Directors. During the financial year under review, Ten Board Meetings were held i.e., on April 28, 2006; July 6, 2006; July 14, 2006; September 19, 2006; September 28, 2006; October 30, 2006; November 6, 2006; December 28, 2006; January 23, 2007 and March 16, 2007. 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:
Your Company is committed to excellence in corporate governance practices and recognizes that good corporate governance is a continuous exercise. Your Company aims at achieving transparency, accountability, equity and ethics in all facets of its operations and in all interactions with its stakeholders. Your Company believes that all its operations and actions must result in enhancement of the overall shareholders value over a sustained period of time without compromising in any way compliance with the laws and regulations. 2. BOARD OF DIRECTORS The Board of Directors comprises a Non - Executive Name of Director Category of Directorship
No. of Attendance No. of other No of committees Board at last AGM Companies (other than the Meetings held on in which company) in which attended 28.12.2006 Director Chairman/ Member 8 9 7 9 7 9 3 N.A. Yes Yes Yes Yes Yes Yes Yes N.A. 21 12 2 5 1 8 1 Nil 1 (Chairman of 1) 7 (Chairman of 4) Nil Nil Nil Nil Nil Nil
Dr. Vijay Mallya Mr. S.R.Gupte Mr. V.K.Rekhi Mr. M.R.Doraiswamy Iyengar Mr. P.K.Kakodkar* Mr. B.M.Labroo Mr. Sreedhara Menon
Non Executive Chairman Non Executive Vice Chairman Executive/Managing Director Independent Non Executive Director Independent Non Executive Director Independent Non Executive Director Independent Non Executive Director
Mr. Sudhindar Krishan Khanna** Non Executive Director
NOTE: The above details are in respect of their Directorship only in Indian Companies. a) Out of 21 other Companies in which Dr. Vijay Mallya is a Director, 7 are Private Limited Companies and 3, Section 25 Companies. b) Out of 12 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) Mr. P. K. Kokodkar resigned from the Board with effect from June 1, 2007. **f) Mr. Sudhindar Krishan Khanna was appointed as Additional Director with effect from June 1, 2007.
Corporate Governance Report (Contd.)

DISCLOSURES REGARDING APPOINTMENT AND REAPPOINTMENT OF DIRECTORS Directors retiring by rotation and being reappointed Dr. Vijay Mallya Dr. Vijay Mallya (Dr.Mallya), aged 51 years, who holds a Ph.D. in Business Administration, is a well-known Industrialist and a Member of the Parliament (Council of States). 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. 13. Mallya Private Limited 14. Millennium Alcobev Private Limited 15. Pharma Trading Company Private Limited 16. The Gem Investment & Trading Co.Pvt.Ltd. 17. United East Bengal Football Team Pvt.Ltd. 18. United Mohun Bagan Football Team Pvt.Ltd 19. Motorsports Association of India 20. Royal Western India Turf Club Limited 21. Shaw Wallace Executives Welfare and Benefit Company Chairman Director Chairman Chairman Chairman Chairman Managing Committee Member Managing Committee Member Patron (Chairman)
Dr.Mallya is the Chairman of the Remuneration Committee of Millennium Alcobev Pvt. Ltd. Dr. Mallya holds 10 equity shares in the Company. Mr. Subhash Raghunath Gupte Mr. Subhash Raghunath Gupte (Mr. Gupte), aged 68 years, is a Chartered Accountant. Mr. Gupte has worked with Caltex India Limited for 5 years in various capacities. Mr. Gupte has also worked with Air India for 24 years and took over as Acting Chairman and Managing Director from July 17, 1990. He was also Chairman of Hotel Corporation of India till November, 1991. Mr. Gupte has been with the UB Group for the last 15 years. Mr.Gupte has varied experience in financial, administration and personnel fields as he was heading these fields in Air India. Details of Mr. Guptes directorships in other Indian Companies and Committee Memberships are as under: Other Directorship Position held Director Director Director Director
Details of Dr. Mallyas directorships in other Indian companies and Committee Memberships are as under:Other Directorships 1. Aventis Pharma Limited 2. Bayer CropScience Limited 3. Mangalore Chemicals & Fertilizers Limited 4. McDowell Holdings Limited 5. Shaw Wallace & Company Limited 6. United Breweries Limited 7. United Breweries (Holdings) Limited 8. Four Seasons Wines Limited 9. Kingfisher Airlines Limited Position held Chairman Chairman Chairman Chairman Chairman Chairman Chairman Chairman Chairman & Managing Director Chairman Chairman Chairman
10. Shaw Wallace Breweries Limited 11. United Racing and Bloodstock Breeders Limited 12. Kamsco Industries Private Limited
1. Associated Breweries & Distilleries Limited 2. Aventis Pharma Limited 3. Kingfisher Airlines Limited 4. Mangalore Chemicals & Fertilizers Limited

5. Millennium Beer Industries Limited 6. Shaw Wallace & Company Limited 7. Shaw Wallace Breweries Limited 8. UB Electronic Instruments Limited 9. Federation of Indian Chambers of Commerce & Industry, New Delhi 10. Shaw Wallace Executives Welfare & Benefit Company 11. VJM Media Pvt. Limited 12. United Helicharters Pvt. Limited Director Director Director Chairman Executive Committee Member Management Committee Member Chairman Chairman today is approximately 40,000 people, and is the largest geography for Accenture. He recently retired from Accenture after 30 years his last position being Global Managing Partner Outsourcing, based in London. Mr. Khanna also speaks at a variety of global conferences and interacts with the media globally. Mr. Khanna is a Charter Member of TIE which is a Global Technology Networking/ Mentoring Organization. He is also on the Board of IBPN (Indo British Partnership) and on the Board of the India Advisory Group, which advise the UK and Indian Government on strengthening India British economic ties. Mr. Khanna was appointed as additional Director of the Company on June 01, 2007 and will hold office as Director up to this Annual General Meeting. Mr. Khanna does not hold any share in the Company. 3. AUDIT COMMITTEE 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) Mr. B.M. Labroo Non Executive Independent Director Non Executive Independent Director Non Executive Director
Mr. Gupte is a member of the following Committees: Name of the Committee Audit Committee Aventis Pharma Limited Millennium Beer Industries Limited Mangalore Chemicals & Fertilizers Limited Shaw Wallace & Company Limited Chairman Chairman Member Member Position held
Shareholders / Investors Grievance Committee Aventis Pharma Limited Millennium Beer Industries Limited Shaw Wallace & Company Limited Chairman Chairman Member
Mr. Gupte does not hold any share in the Company. New Director Mr. Sudhindar Krishan Khanna Mr. Sudhindar Krishan Khanna (Mr. Khanna), aged 54, is a qualified Chartered Accountant. He ranked 3rd in the UK in the Intermediate Examination of the Institute of Chartered Accountants in England & Wales and 1st in the Finals with the prize of the best paper in Law. Mr. Khanna joined Accenture, London as a Senior Consultant in the year 1977 and promoted to Partner in 1986. Mr. Khanna possesses a very large range of experience in advising clients in strategy, reengineering and technology across a range of industries at the Chairman/CEO level in approximately 20 countries. Mr. Khanna was responsible for setting up all of Accenture business in India which Mr. S.R. Gupte
Mr. P. K. Kakodkar ceased to a member of the Audit Committee with effect from June 1, 2007 consequent to his resignation from the Board of Directors of the Company. 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 Companys financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.
10

b) Recommending the appointment and removal of external auditor, fixation of audit fee and also approval for 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 . The Committee, inter alia, has reviewed the financial statements including Auditors Report for the year ended March 31, 2007 and has recommended its adoption.In addition, the Committee has also reviewed quarterly results for June 30, 2006, quarterly and half yearly results for September 30, 2006, quarterly results for December 31, 2006 and quarterly results for March 31, 2007, which were subjected to a Limited Review by the Statutory Auditors of the Company. During the financial year, five meetings were held on i.e., April 28, 2006, July 14, 2006, October 30, 2006, November 6, 2006 and January 23, 2007. The details of attendance by members of the Committee are as below: Name of the Director Mr. M.R. Doraiswamy Iyengar (Chairman) Mr. S.R. Gupte Mr. B.M. Labroo Mr. P.K. Kakodkar 4. No. of Meetings 5 5 5 5 Meetings attended 5 4 5 5
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.
COMPENSATION COMMITTEE The Compensation Committee constituted by the Company comprises at present the following Directors:Mr. B.M. Labroo Mr. S.R. Gupte Mr.M.R.Doraiswamy Iyengar Chairman
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) 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.
Mr. P. K. Kakodkar ceased to be a member of the Compensation Committee with effect from June 1, 2007 consequent to his resignation from the Board of Directors of the Company. 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.
11

During the financial year, one meeting was held on October 30, 2006 which was 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, 2006 to March 31, 2007 are given below: a) Executive Directors Managing Director: Mr. V.K.Rekhi Salary & Allowances Performance Perquisites Linked incentive Retirement Benefits
Name of the Director Dr Vijay Mallya Mr. S.R. Gupte Mr. V.K.Rekhi Mr. M.R.Doraiswamy Iyengar Mr. P.K. Kakodkar* Mr. B.M. Labroo Mr. Sreedhara Menon Mr. Sudhindar Krishan Khanna** * ** Sitting fees Nil 2,30,000 Nil 2,65,000 1,90,000 1,65,000 Nil NA
Resigned on June 1, 2007 Appointed as an Additional Director with effect from June 1, 2007.
Rs. 1,17,43,656 Rs. 53,85,085 Notes:
Rs. 26,37,316 Rs. 29,86,713
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 reappointment 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. 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 by giving six months notice on either side 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.
Non Executive Directors are also eligible for Commission on Profits 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. 3,69,91,460 on profits for the year ended March 31, 2007 will be paid after adoption of Accounts by Shareholders at the Annual General Meeting to be held on November 28, 2007 and apportioned amongst the Directors in any manner they deem fit. c) Particulars of Equity Shares of the Company currently held by the Directors, are furnished below:
Name of the Director Dr Vijay Mallya Mr. S.R. Gupte Mr. V.K.Rekhi* Mr. M.R.Doraiswamy Iyengar Mr. P.K. Kakodkar ** Mr. B.M. Labroo*** Mr. Sreedhara Menon Mr. S. K. Khanna **** * ** *** **** No. of Shares held 10 Nil 6100 21 Nil 1,16,200 Nil Nil
held jointly resigned on June 1, 2007 held singly and jointly appointed as an Additional Director with effect from June 1, 2007.
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5. SHAREHOLDERS COMMITTEE / INVESTORS GRIEVANCE The Committee comprises at present the following Directors: Mr. S.R. Gupte Mr. M.R.Doraiswamy Iyengar and Mr. V.K.Rekhi Mr. P.K. Kakodkar ceased to be member of the Committee with effect from June 1, 2007. The Company has a Committee of Directors consisting of the following Directors of the Board in connection with the issue of Global Depository Shares (GDS)/ Foreign Currency Convertible Bonds (FCCB), which has been delegated, inter alia, power to issue and allot shares on conversion of FCCB into fully paid equity shares of the Company or GDS, in terms of the Offering Circular dated March 24, 2006: Mr. S.R.Gupte, Mr. V.K. Rekhi, Mr. M.R. Doraiswamy Iyengar 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 March 31, 2004 Date September 29, 2004 Time 11.00 a.m. Venue Dr. B.R. Ambedkar Bhavana, Millers Road, Vasanthanagar, Bangalore 560 052 Dr. B.R. Ambedkar Bhavana, Millers Road, Vasanthanagar, Bangalore 560 052 Dr. B.R. Ambedkar Bhavana, Millers Road, Vasanthanagar, Bangalore 560 052
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. Mr. P. K. Kokadkar ceased to be the Chairman & member of the Shareholders/Investors Grievance Committee consequent upon his resignation from the Board of Directors of the Company with effect from June 1, 2007. Mr. M. R. Doraiswamy Iyengar was appointed as Chairman and Member of the Committee with effect from June 1, 2007. During the financial year four meetings were held on April 28, 2006, July 14, 2006, October 30, 2006 and January 23, 2007 which were attended by both Mr. P. K. Kakodkar and Mr. B. M. Labroo, members of the Committee. The Company/ Companys Registrars received 350 complaints during the financial year, all of which were resolved to the satisfaction of shareholders/ investors. The company had 4 requests for transfer of 439 shares pending at the close of the financial year, owing to signature difference and these have been registered subsequently within the stipulated time. 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.
March 31, 2005
September 23, 2005
12.15 p.m.
March 31, 2006
December, 28, 2006
11.00 a.m.
All the resolutions set out in the Notices, including Special Resolutions were passed by the Shareholders.
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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 (the Act) and the rules framed thereunder. During the financial year 2005-06, pursuant to Section 192A of the Companies Act, 1956, the Company had conducted the postal ballot exercise following the provisions and rules framed under the Act for conducting Postal Ballot. The details/results of the postal ballot exercise so conducted are as under:
Date of Notice of Postal Ballot October 26, 2005 Date of scrutinizers report December 13, 2005
7.
DISCLOSURES During the financial year ended March 31, 2007, 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 form 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.
Description Special Resolution under Section 17 of the Companies Act, 1956, to amend Clause III(B) of the Objects Clause of the Memorandum of Association of Company by inserting a new clause
Result Carried with requisite majority. No. of votes cast in favour 27,070,369 and no. of votes cast against 20,885
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 The Asian Age, Business Standard and Kannada Prabha. The results are displayed on the Companys Website www.unitedspirits.in. The results are also posted in the website www.sebiedifar.nic.in of the Securities and Exchange Board of India.
The postal ballot exercise, was conducted by Mr. M R Gopinath, a Company Secretary in practice, scrutinizer appointed for the purpose and his reports were filed with the Office of Registrar of Companies, Karnataka, Bangalore. At this meeting also there is no Ordinary or Special Resolution requiring passing by way of Postal Ballot. 9.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT Management Discussion & Analysis Report forms part of this Annual Report.
10. GENERAL SHAREHOLDER INFORMATION a) AGM Date, Time and Venue Wednesday, November 28, 2007 at 3.30 p.m. at Good Shepherd Auditorium, Opp. St.Josephs Pre-University College, Residency Road, Bangalore-560 025. April 1 to March 31 By July 31 By October 31 By January 31 By April 30
b)
Financial Year First Quarterly Results Second Quarterly Results Third Quarterly Results Fourth Quarterly Results
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c) d) e) Date of Books closure Dividend payment date Listing on Stock Exchanges: Thursday, November 22, 2007 to Wednesday, November 28, 2007 (both days inclusive) After November 28, 2007 The shares of the Company are listed on the following Stock Exchanges: 1. Bangalore Stock Exchange Limited (BgSE) 2. Bombay Stock Exchange Limited, (BSE) 3. National Stock Exchange of India Limited (NSE) 4. Madras Stock Exchange Limited (MSE) 5. The Delhi Stock Exchange Association Ltd. (DSE) 6. The Calcutta Stock Exchange Association Ltd. (CSE) 7. Ahmedabad Stock Exchange Limited (ASE)
The listing fees for the years 200607 and 2007-08 have been paid to all the Stock Exchanges. As the equity shares of the Company are mainly traded on Bombay Stock Exchange Limited (BSE) and The National Stock Exchange of India Limited (NSE), the Board of Directors have decided to voluntarily de-list the equity shares of the Company from the Stock Exchanges situated at Ahmedabad, Chennai, Delhi and Kolkata, subject to the approval of the shareholders at the ensuing Annual General Meeting, in order to entail savings in recurring Annual Listing Fees and other administrative costs. The equity shares would continue to be listed on BSE, NSE and Bangalore Stock Exchange Limited (the regional stock exchange). f) Stock Code BSE NSE DSE ASE MSE CSE BgSE g) h) i) j) ISIN No. Market price data Stock performance in comparison to BSE sensex Registrar and Transfer Agents Demat 532432 Physical 32432 SYMBOL-McDOWELL-N 13044 36311 McDowell 23926 & 10023926 McDowell INE854D01016 (As per Annexure A) (As per Annexure B) Alpha Systems Private Limited Registered Office: 30, Ramana Residency, 4th Cross, Sampige Road, Malleswaram, Bangalore 560 003 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. As per Annexure C 94.01% of paid up share capital is held in dematerialised form
k)
Share Transfer System
l) m)
Distribution of Shareholding Dematerialisation of shares
15

n) Outstanding GDRs/ ADRs/ Warrants or any other Convertible instruments Plant Locations 378,904 Global Deposity Shares (GDSs) representing 189,452 Equity Shares of Rs. 10/- each as on March 31, 2007 (2 GDSs representing one equity share of Rs. 10/- each) 1. Cherthala (Kerala) 2. Hyderabad (Andhra Pradesh) 3. Ponda (Goa) 4. Hathidah (Bihar) 5. Kumbalgodu (Karnataka) 6. Rosa (Uttar Pradesh) 7. Udaipur (Rajasthan) 8. Serampore (West Bengal) 9. Bhopal - I (Madhya Pradesh) 10. Bhopal - II (Madhya Pradesh) 11. Asansol (West Bengal) 12. Nasik-I (Maharashtra) 13. Nasik-II (Maharashtra) 14. Pondicherry (Pondicherry) 15. Alwar (Rajasthan) 16. Aurangabad (Maharashtra) 17. Meerut (Uttar Pradesh) 18. Hospet (Karnataka) 19. Pathankot (Punjab) 20. Palwal (Hariyana) 21. Gopalpur - on - sea (Orissa) 22. Palakkad (Kerala) 23. Baddi (Himachal Pradesh) 24. Badrakali (West Bengal) 25. Baramati (Maharashtra) 26. Zuari Nagar (Goa) Shareholder correspondence should be addressed to the Companys Registrars and Transfer Agents: Alpha Systems Private Limited Registered Office: 30, Ramana Residency, 4th Cross Sampige Road Malleswaram, Bangalore 560 003 Tel. Nos. (080) 2346 0815-818 Fax No. (080) 2346 0819 Investors may also write or contact Mr. V.S. Venkataraman, Company Secretary or Mr. Maloy Kumar Gupta, Manager-Secretarial at the Registered Office of the Company at No. 51, Richmond Road, Bangalore 560 025 Tel. Nos. (080) 3051 0600 Fax No. (080) 2227 2973 In compliance with the provisions of Clause 47(f) of the Listing Agreement with the Stock Exchange, an exclusive email id, viz, uslinvestor@ubmail.com has been designated for registering complaint by the Investor, which has been displayed on the website of the Company www.unitedspirits.in.
o)
p)
Address for correspondence
16

NON MANDATORY REQUIREMENTS
a) Chairman of the Board Whether Chairman of the Board is entitled to maintain a Chairmans Office at the Companys expenses and also allowed reimbursement of expenses incurred in performance of his duties b) Remuneration 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.
Dr. Vijay Mallya The Company maintains the Chairman's Office at Company's expenses and also reimburses the expenses incurred in performance of his duties.
The Company Committee.
has
formed
Compensation
The Companys 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.
17

ANNEXURE A : MARKET PRICE PERFORMANCE United Spirits Limited - Monthly BSE
Month Mar-07 Feb-07 Jan-07 Dec-06 Nov-06 Oct-06 Sep-06 Aug-06 Jul-06 Jun-06 May-06 Apr-06 High 870.00 967.90 924.00 914.00 895.00 772.00 727.45 613.00 552.70 553.00 812.70 894.70 Low 663.00 720.00 777.00 760.00 741.05 583.50 566.05 521.05 400.00 362.00 507.35 707.00 Close 827.60 742.60 909.80 864.00 810.35 753.05 618.50 572.40 529.80 426.75 520.30 793.75 Volume 1,404,386 1,582,959 3,185,440 6,575,832 8,150,785 5,748,520 5,984,443 2,688,221 3,682,654 2,628,714 2,309,123 6,640,899 Month Mar-07 Feb-07 Jan-07 Dec-06 Nov-06 Oct-06 Sep-06 Aug-06 Jul-06 Jun-06 May-06 Apr-06
United Spirits Limited - Monthly NSE

High 870.00 967.00 924.20 914.50 895.50 770.00 728.30 611.90 553.45 555.95 812.00 896.70 Low 662.25 710.05 793.05 761.30 732.75 534.65 565.00 520.00 401.00 363.20 508.15 706.00 Close 832.20 743.75 911.45 864.45 811.75 752.15 619.75 570.70 529.40 424.20 520.00 794.70 Volume 5,350,839 6,356,751 7,998,952 10,571,675 20,883,467 13,675,163 13,246,777 5,739,965 8,109,665 5,459,295 5,232,791 15,599,235
ANNEXURE B : UNITED SPIRITS LIMITED - STOCK PERFORMANCE COMPARED TO BSE INDEX

16000 14000 800.00 12000 10000 8000 6000 4000 200.00 2000 0 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 400.00 1,000.00
600.00
BSE
USL
ANNEXURE C : DISTRIBUTION OF SHARE HOLDINGS AS ON MARCH 31, 2007

Valuewise Shareholding of nominal value of Rs. Upto 5,001 10,001 20,001 30,001 40,001 50,001 (1) 5,000 10,000 20,000 30,000 40,000 50,000 100,000 Shareholders Number (2) 72913 1168 478 150 76 57 78 150 Total 75070 % to Total (3) 97.13 1.56 0.64 0.20 0.10 0.08 0.10 0.20 Share Capital In Rs. (4) 68,569,830 8,960,490 6,923,450 3,825,260 2,671,690 2,699,480 5,405,460 845,763,640 % to Total (5) 7.26 0.95 0.73 0.40 0.28 0.29 0.57 89.52 100.00 Total 94,481,930 100.00 Category Promoter Group Resident Body Corporate Banks/FI/FII/MF/Trust NRI/OCB/FFI GDS Resident Individuals Categorywise No of shares 36,628,260 14,790,713 29,871,341 3,587,805 189,452 9,414,359 % of Equity 38.77 15.65 31.62 3.80 0.20 9.96
100,001 and above
100.00 944,819,300
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Certificate on Corporate Governance

The Members of, United Spirits Limited We have examined the compliance of conditions of Corporate Governance by United Spirits Limited (formerly known as McDowell & Company Limited), for the year ended on March 31, 2007, as stipulated in Clause 49 of the Listing Agreement, as amended with effect from December 31, 2005 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, 2007, no grievances are pending against the company as per 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 October 31, 2007
M.R. Gopinath Company Secretary (in practice) FCS 3812 CP 1030
19
CEO / CFO Certificate

In terms of the requirement of the amended Clause 49, the certificates from CEO / CFO have been obtained.
On behalf of the Board of Directors V.K. Rekhi 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 Companys 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, 2007.
V.K. REKHI Managing Director
20
Annexure to Report of the Directors

MANAGEMENT DISCUSSION & ANALYSIS REPORT
A. INDUSTRY OVERVIEW: The India Growth Story is one of a trillion dollar economy growing @ about 9% p.a. Currently the 4th largest economy in the world in terms of Purchasing Power Parity (PPP), its economic growth rate is expected to continue, driven by booming consumer demand and investments in infrastructure. A young economy, India is entering the demographic window with over half the countrys population of 1.1 billion under 25 years of age. This is in contrast to most developed nations which are faced with greying populations and low or negative birth rates. The middle class is already in excess of 300 million and rapid urbanization, changing life styles, higher disposable income and shifts in expenditure patterns, particularly of the youth, are all contributing to growing demand for all manner of products including alcoholic beverages. The alcoholic beverages industry in India comprises 5 key segments, viz. Beer, Wine, Indian Made Foreign Liquor (IMFL), Bottled In Origin (BIO) Alcoholic Products and Country Liquor. Your Company operates primarily in the IMFL space with clearly chalked out plans for the Wine and BIO sectors. In 2006-07, the IMFL industry grew over 16% to register sales of over 157 million cases of 9 Bulk Litres (BL) each. The industry was particularly buoyant with the opening up of the key Northern markets of Punjab, Haryana and Chandigarh. Changes in the alcohol policy in these States opened up the industry from one controlled by a few large syndicates to wide-spread ownership, thereby paving the way for reasonable prices and free play of market forces. The country liquor segment is an unorganized business area and at best guesstimates of the market size alone are available. These guesstimates place the size of the industry at between 200 and 225 million cases of 9 BL each. However, post the year under review, Karnataka, a large and the only remaining bastion of country liquor in South India, decided to close down the country liquor market effective July 2007. This is expected to translate to a spurt in demand for IMFL, albeit at the bottom end of that market. Despite an impressive 21% growth in White Spirits led by a phenomenal 44% growth in the Vodka segment, White Spirits, comprising Gins, White Rums and Vodkas continue to remain a mere 5% of the industry. In sharp contract to global trends, brown spirits continue to dominate the Indian IMFL space Whisky at 57%, Brandy at 16% and Rum at 22% - together aggregating 95% of this 157 mn c/s market. For the very same reasons that are shaping the Indian growth story, the demand for alcoholic beverages is expected to continue to be buoyant with a large population base and a growing number of new entrants into the legal drinking age category. The progressive prohibition of country liquor in many markets is only expected to further propel the growth of the IMFL industry. B. REGULATORY ENVIRONMENT: The Constitution of India has placed the regulation and taxation of the alcoholic beverages industry within the purview of the State Governments and not of the Federal Government. The Central Government continues to licence green-field manufacturing units and impose customs duties on inputs. Every other activity dealing with production, movement, distribution, sale and taxation are controlled by the states. The multiplicity of regulation legislated by different Governments and indeed by different arms of the same Government, make it a highly complex and challenging regulatory environment which undergoes changes virtually every year. The dual control on the industry often creates a position of falling between two stools with both Governments' unwillingness to give up their stated positions due to the revenue implications of any decision. Progressive legislations of the recent past like VAT often do not include the alcoholic beverages industry within their ambit; a similar case is that of CENVAT credit not being available to the industry despite the large contributions made by it towards Excise Duty and other taxes. C. BUSINESS ANALYSIS: Though raw material (molasses) prices have come off their highs of the previous year, the average price during the year remained higher than average. However, there are signs of continuing softening which will benefit operations of the current year. Counterbalancing this is the pressure of increased diversion of spirit towards ethanol spiking of fuel as mandated from time to time.
21
Annexure to Report of the Directors (Contd.)

Fuel prices during the year though have been steady although with the rise in crude prices they have seen a quantum upward shift vis--vis previous years. When prices of the primary raw materials had escalated, your Company had consciously decided to de-emphasize both production and sale of the lowend brands whose profitability was under strain due to the rise in input costs. In FY07 too, this position continued to be the guiding principle for the business, with the result that the business took a drop of 2.95 million cases in sales of the low-end products. Despite this, overall volumes rose by 6.99 million cases to a level of 66.4 million cases. The Companys Key Premium Brands grew by 19%; deliberate de-emphasis of the low-end range however, pulled down the average growth to 12%. D. MARKETING: McDowells No.1 is arguably the largest umbrella brand in the alcoholic beverages business. Offered in the flavours of Whisky, Brandy, Rum and White Rum, the brand sold over 22 million cases during FY07, a 32% growth over the previous fiscal. Bagpiper Whisky continued to remain the worlds largest selling nonScotch whisky - with a 25% growth, its volumes were nearly 14 million cases. Continuous revamping of the key packaging elements to make the brands trendy and contemporary has been one of the main reasons why the Companys products are viewed as best of breed. During the fiscal year, new packaging innovations like substitution of the Nip glass bottle by international class Tetra pack packaging caught the fancy of the customer in the states of Maharashtra and Karnataka where these were introduced. As part of the brand-building exercise, the Company continues to promote key music and sporting events like the sponsorship of international singing events like Shakira, Deep Purple, Iron Maiden, etc. The brands are also continuing their association with upmarket sports like Golf. 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 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 cost of doing business. The Alcoholic Beverages industry is the favourite whipping boy 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 2/3 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 Govt. of India, in keeping with its commitment to the WTO, has been consistently reducing the import tariff on Bottled in Origin (BIO) spirits. Post the end of the fiscal year, 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. Service Tax on the industrys manufacturing arrangements continues to be a contentious issue. Legal opinion obtained by the Company indicates that the Central Govt. would be outside its jurisdiction in attempting to impose service tax on the tie-up manufacturing arrangements under which the products are manufactured by contract manufacturers across the country. It has been mentioned earlier in this report that the prices of Molasses / Rectified spirit / Extra Neutral Alcohol has seen a quantum jump from the levels of the previous years. This is despite a drop in 2005-06
22
Annexure to Report of the Directors (Contd.)

from the high of FY05. A process of dialogue with the State Governments to enable movement of spirit from surplus states to deficit states as also through selective imports and strategic stock build-up, helped the Company cushion the impact of the rise in input costs. In view of its considerably reinforced position as the industry leader, the Company was able to force price increases in the market place. However the duty structure and continuing reluctance on the part of State monopolies to give price increases will continue to pose serious challenges to the industry. It is hoped that over time, buoyancy of tax collection and consumer demand will lead to a less intrusive role of Governments. F. OUTLOOK: In a market where over 50% of the volume is sold to Government agencies who administer the prices of your Companys products, price increases, even to cover normal inflation, are difficult to come about. This has a bearing on the Companys profits. The Company has, through a judicious mix of strategy and cost control / cost cutting, been able to ensure a rise in overall profitability. G. INTERNAL CONTROL SYSTEM: The company has a robust system of internal control which has been incorporated in the enterprise-wide SAP system, which, post the end of the fiscal year, has been rolled out to the merging companies also. Additional checks of the Companys systems are carried out by the independent auditors as also by the Companys own Operations Review team and by the UB Groups Internal Audit Department. H. INTERNATIONAL OPERATIONS: During the current year, the Company launched its international operations with the acquisition of M/s. Bouvet-Ladubay S.A., a 3.2 mn bottle winery in the Saumur Valley in the Loire region of France. This Company is now a subsidiary of your Company. The Companys products are well received in France, Germany and other European markets as also in the U.S. Plans are underway to expand the reach of its products including into the Indian market in BIO form. The expertise of M/s. Bouvet-Ladubay is also being obtained by the Company to set up a state-of-the-art winery in Western India. I. Subsequent to the close of the year, United Spirits Limited acquired the entire capital of Whyte and Mackay Limited, Glasgow, the 4th largest producer of Scotch in the World. The Indian consumer, for whom Whisky comprises the most popular and widespread flavour, Scotch is seen as the most aspirational product. As your Company pursues "up trading", increasing numbers of consumers demand Scotch. Increasing disposable income also makes this segment more affordable. To cater to this emerging opportunity as also to have a perennial source of Scotch to use as blending material for the IMFL products, this acquisition is seen as a strategically vital one. HUMAN RESOURCES: The integration of 2 giant organizations which traditionally have had their daggers drawn in the fiercely competitive market-place was a mammoth task. To the credit of the Company, this has been achieved successfully with very little turbulence. The HR Department is geared to lend its support to the effort to make the Company a preferred employer of choice in the Indian market place. The Companys human capital now exceeds 7,000 employees including factory workmen. There has been no loss of production at any of the manufacturing facilities due to industrial unrest. 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 those expressed or implied in such forward-looking statements. Readers are cautioned not to place undue reliance on these forwardlooking 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.
By Authority of the Board

Bangalore October 31, 2007 Dr. VIJAY MALLYA Chairman
23
Auditors' Report to the Members of United Spirits Limited

1. We have audited the attached Balance Sheet of United Spirits Limited, as at March 31, 2007, 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 Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. 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. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors 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. 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, 2007, and taken on record by the Board of Directors of the Company, we report that none of the directors is disqualified as on March 31, 2007 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 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, 2007;
2.
3.
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.
4.
J. Majumdar Partner Membership Number F 51912 For and on behalf of Price Waterhouse Chartered Accountants Place: Bangalore Date : October 31, 2007
24
Annexure to the Auditors' Report

Annexure to the Auditors Report referred to in paragraph 3 of our report of even date:
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 of by the Company during the year. 2. (a) The inventory (except those in transit at the yearend amounting to Rs.37.504 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) In our opinion, and according to the information and explanations given to us, the Company is maintaining proper records of inventory. The discrepancies between the physical inventory and the book records as noticed on physical verification are not material and have been properly dealt with in the books of account. 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. 5. 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, 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. (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.385.636 million and purchase of services aggregating to Rs.127.808 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. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.
7.
25
Annexure to the Auditors' Report (Contd.)

8. According to the information and explanations given to us, 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. (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, sales-tax, wealth tax, service tax, customs duty, excise duty and cess, and any other material statutory dues, as may be applicable, with the appropriate authorities except dues in respect of Income Tax. The extent of the arrears of statutory dues outstanding as at March 31, 2007, for a period of more than six months from the date they became payable, in respect of income tax is as follows:
Name of the statute Period to Amount which the (Rs. amount Million) relates
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 except for certain term loans for capital expenditure/general purposes/working capital aggregating to Rs.1,500 million, which have been put in general pool of funds, where end-use is not ascertainable. 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. 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. Majumdar Partner Membership Number F 51912 For and on behalf of Price Waterhouse Chartered Accountants Place: Bangalore Date: October 31, 2007
9.
Nature of dues
Due date
Date of Payment
Tax Income Deducted Tax Act, at Source 1961 (TDS)
6.306
July to August to September October 2006 2006
September 7, 2007
(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, 2007, as may be applicable, that 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, 2007 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 explanation 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. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.
26
Appendix 1 to the Auditors' Report

[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, 2007] Name of the Statute The Income-Tax Act, 1961 Amount* Forum where dispute is (Rs. Million) pending 120.647 Commissioner of Income-Tax Appeals 4.140 Appellate Tribunal 0.330 Assessing Officer 0.514 Commissioner of Income-Tax Appeals 172.762 Supreme Court 42.452 118.415 High Court Appellate Tribunal Year To Which The Amount Relates 2003-04 to 2004-05 2004-05 2001-02, 2003-04 1993-94, 1995-96, 1997-1998. 1999 to 2005-06 1982-83,1984-85,1985-86,1988-89,1989-90,1991-92, 1993-94,1994-95,1995-96,1996-97,2003-04,2005-06. 1974-75 to 1975-76,1984-85,1985-86,1986-87,198788, 1988-89,1989-90,1990-91,1991-92,1992-93,199394,1994-95, 1995-96,1996-97,1997-98,1998-99,1999-00 to 2000-01, 2002-03. 1982-83, 1983-84, 2001-2002 1984-85,1985-86,1986-87,1987-88,1988-89,1990-91, 1991-92,1992-93,1993-94,1994-95,1995-96,1997-98, 1998-99,1999-00,2000-01,2002-03,2003-04,2004-05. 1974-75 to 1975-76,1995-96,1996-97,1999-00, 2002-03, 2003-04. 1985-86 1993-94
The Wealth-Tax Act, 1957 Central and Respective State Sales Tax Acts
8.978 16.840
Joint Commissioner Deputy Commissioner
1.709 0.200 0.637 Respective State Excise Acts 4.642 59.636
Assistant Commissioner Assessing Officer Appellate and Revisional Court Supreme Court
0.425 232.929
The Central Excise Act, 1944
12.170 1.631 0.387 8.158 25.635 1.348 0.481
1971-72,1973-74,1977-78,1978-79,1979-80,1980-81, 1981-82,1981-82 to 2005-06. High Court 1972-73,1973-74,1985-86, 1986-87,1987-88,1988-89, 1989-90,1990-91,1991-92,1993-94,1995-96 to 1999-00, 1996-97,2000-01,2001-02,2002-03,2004-05,2005-06. Board of Revenue 1976-77,1977-78,1984-85,1985-86,1986-87. Excise Commissioner 1974-75 to 1980-81,1981-82 to 1983-84,1984-85, 1985-86, 1986-87,1987-88,1988-89,1989-90,1991-92 to 1995-96,1995-96 to 1997-98,1999-00,2000-01,2001-02 to 2005-06. The Assistant District Judge 1981-82 to 1983-84 Superintendent of Excise 1999-00 Distillery Officer 1988-89 Collector 1994-95 High Court 1989-90 to 1996-97,2004-05 Commisioner of Central Excise Assistant Commissioner of Customs 1995-96 1995-96
Net of amounts paid under protest or otherwise. 27
Balance Sheet as at March 31, 2007

Rs. Million 2006
Schedule SOURCES OF FUNDS Shareholders' Funds Share Capital Share Capital Suspense Reserves and Surplus Loan Funds Secured Loans Unsecured Loans Deferred Tax Liability (Net) [Schedule 18 Note 18(b)] APPLICATION OF FUNDS Fixed Assets Gross Block Less: Depreciation Net Block Capital Work in Progress Investments Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances Less: Current Liabilities and Provisions Liabilities Provisions Net Current Assets Statement on Significant Accounting Policies Notes on Accounts 17 18
2007
1 1A 2 3 4
1,022.319 12,397.905 9,485.226 5,192.566 7.935 28,105.951
604.714 417.605 7,938.654 10,047.313 5,274.693 70.569 24,353.548
6 7 8 9 10 11 12
5,862.048 1,323.350 4,538.698 106.102 4,644.800 6,624.619 2,936.496 3,552.463 3,735.750 1,112.095 11,294.735 22,631.539 5,330.672 464.335 5,795.007 16,836.532 28,105.951
5,637.160 1,038.428 4,598.732 26.021 4,624.753 7,022.648 2,818.605 3,003.733 2,234.415 637.783 11,193.139 19,887.675 6,796.459 385.069 7,181.528 12,706.147 24,353.548
The Schedules referred to above and the notes thereon form an integral part of the Accounts. This is the Balance Sheet referred to in our report of even date VIJAY MALLYA Chairman J. MAJUMDAR Partner For and on behalf of Price Waterhouse Chartered Accountants Bangalore October 31, 2007 28 M.R.DORAISWAMY IYENGAR Director V.S.VENKATARAMAN Company Secretary Bangalore October 31, 2007 V.K.REKHI Managing Director P.A.MURALI Chief Financial Officer
Profit and Loss Account for the year ended March 31, 2007
Rs. Million 2006 33,408.555 15,462.219 17,946.336 1,749.853 783.326 488.771 20,968.286 10,504.868 7,875.937 1,666.289 20,047.094 921.192 409.002 512.190 512.190 93.502 (63.622) 62.112 420.198 574.238 994.436 6.975 188.963 27.480 464.446 50.000 256.572 4.80
INCOME Sales (Gross) Less: Excise Duty Income arising from Sale by Manufacturers under 'Tie-up' agreements (Tie-up units) Income from Brand Franchise Other Income EXPENDITURE Materials Manufacturing and Other Expenses Interest and Finance charges Profit before Prior Period, Exceptional and Other Non-Recurring Items, Depreciation and Taxation Depreciation Profit before Prior period, Exceptional and Other Non-Recurring Items and Taxation Prior period, exceptional and other non recurring items (Net) [Schedule 18 Note 11] Profit before Taxation Provision for Taxation: Current Tax Deferred Tax (Credit) Fringe Benefit Tax Profit after Taxation Profit brought forward from previous year Appropriations: Proposed Dividend Preference Shares Equity Shares - Interim Equity Shares - Final Corporate Tax on Proposed Dividend Transfer to Capital Redemption Reserve Transfer to General Reserve Profit carried to Balance Sheet Basic and Diluted Earnings Per Share (Rs.) Statement on Significant Accounting Policies Notes on Accounts
Schedule
2007 43,857.790 19,491.007 24,366.783 2,128.106 710.341 703.547 27,908.777 14,263.215 8,679.742 1,067.634 24,010.591 3,898.186 309.350 3,588.836 2,627.424 6,216.260 1,302.920 (61.354) 34.500 4,940.194 256.572 5,196.766 6.975 141.723 98.966 37.881 500.000 4,411.221 52.20
13 14 15 16
17 18
The Schedules referred to above and the notes thereon form an integral part of the Accounts. This is the Profit and Loss Account referred to in our report of even date VIJAY MALLYA Chairman J. MAJUMDAR Partner For and on behalf of Price Waterhouse Chartered Accountants Bangalore October 31, 2007 M.R.DORAISWAMY IYENGAR Director V.S.VENKATARAMAN Company Secretary Bangalore October 31, 2007 29 V.K.REKHI Managing Director P.A.MURALI Chief Financial Officer
Cash Flow Statement for the Year Ended March 31, 2007
Rs. Millions 2006
2007 A. CASH FLOW FROM OPERATING ACTIVITIES Net profit before prior period, exceptional and other non-recurrings items and taxation and Non- recurring items Adjustments for : Depreciation Unrealised Foreign Exchange Loss / (Gain) Bad Debts/ Advances written off Loss/(Gain) on Fixed Assets Sold/Written Off (Net) Loss/(Gain) on Sale of Investments (Net) Liabilities no longer required written back Provision for Doubtful Debts/Advance/Deposits Provision for diminution in value of Investments (Net) Provision - Others Interest Expense & Finance charges Income from investments Interest Income Operating profit before working capital changes (Increase)/decrease in Trade and other receivables (Increase)/decrease in Inventories Increase/(decrease) in Trade payables Cash generated from operations Direct taxes paid Fringe Benefit taxes paid Cash flow before prior period, Exceptional and other Non - recurring items Exceptional and Non - recurring items Cash flow before and after extraordinary items and net cash from operating activities B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of fixed assets Sale of fixed assets Finance Lease Payments Purchase of long term investments Purchase of current Investments Sale of long term investments Sale of current investments Investments in Subsidiaries Disposal of Investments in Subsidiaries
3,588.836
512.190
309.350 (43.571) 49.434 14.954 (0.794) (390.687) 78.805 0.264 48.937 1,218.670 (22.109) (151.036) (139.854) (117.891) (1,081.155)
409.002 (33.299) 16.765 (27.148) (79.582) (141.020) 137.827 16.857 1,733.055 (42.893) (66.766) (525.668) (410.046) 783.321
1,112.217 4,701.053
1,922.798 2,434.988
(1,338.900) 3,362.153 (1,077.296) (32.114) 2,252.743 3,007.199 5,259.942
(152.393) 2,282.595 (265.633) (35.383) 1,981.579 1,981.579
(328.951) 8.709 (7.785) (703.646) 1.784 700.001 (132.582) -
(346.971) 75.994 (1.195) (4.627) (327.762) 69.036 327.200 (10,548.691) 4,876.097
30
Cash Flow Statement for the Year Ended March 31, 2007 (Contd.)
Rs. Millions 2006 (9,457.197) 2,191.662 68.218 42.893 (1,640.718) (13,035.343)
2007 Loan given to: Subsidiaries Realisation of Loan from: Subsidiaries Interest received Dividend received Net cash used in investing activities (1,362.807) 50.957 111.956 21.646
C. CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issue of rights shares by a subsidiary company Proceeds from Preference Shares of a subsidiary company Redemption of Preference Shares of a subsidiary company Proceeds from issue of Global Depositary Shares (GDS) Proceeds from issue of 2% Foreign Currency Convertible Bonds (FCCB) Expenses incurred on issuance of GDS & FCCB Expenses relating to Amalgamation Proceeds/(Repayment) of long term loans: Proceeds 3,830.041 Repayment (4,281.999) Proceeds/(Repayment) of fixed deposits (52.284) Proceeds/(Repayment) of Inter Corporate Deposits: Proceeds Repayment Working Capital Loan/Cash Credit from Banks (net) (143.266) Interest and Finance Charges paid [including on Finance Lease Rs 0.681 Million] (1,171.053) Dividends paid (251.972) Corporate Tax on distributed profit (47.356) Net cash used in financing activities Net (Decrease)/ Increase in cash and cash equivalents Cash and cash equivalents as at March 31, 2006 Cash and Cash Equivalents of Transferor companies as at April 1, 2005 Cash and cash equivalents as at March 31, 2007
535.559 500.000 (1,000.000) 5,796.051 4,458.500 (242.569) (306.192) 9,805.724 (9,058.807) 17.610 (207.370) 748.085 (1,709.140) (142.274) (14.507) (2,117.889) 1,501.335 2,234.415 3,735.750 1,501.335 9,180.670 (1,873.094) 424.888 3,682.621 2,234.415 (1,873.094)
31
Cash Flow Statement for the Year Ended March 31, 2007 (Contd.)
Notes :
1. 2. The above Cash Flow Statement has been compiled from and is based on the Balance Sheet as at March 31, 2007 and the related Profit and Loss Account for the year ended on that date. The above cash flow statement has been prepared under the indirect method as set out in the Accounting Standard - 3 on Cash Flow Statements issued by The Institute of Chartered Accountants of India and reallocation required for this purpose are as made by the Company. Previous year's figures have been regrouped wherever necessary in order to confirm to this year's presentation.
3.
This is the Cash Flow Statement referred to in our report of even date.
VIJAY MALLYA Chairman J. MAJUMDAR Partner For and on behalf of Price Waterhouse Chartered Accountants Bangalore October 31, 2007 M.R.DORAISWAMY IYENGAR Director V.S.VENKATARAMAN Company Secretary Bangalore October 31, 2007
V.K.REKHI Managing Director P.A.MURALI Chief Financial Officer
32
Schedules forming part of Balance Sheet as at March 31, 2007

Rs. Million 2006
2007 1. SHARE CAPITAL Authorised 110,000,000 (2006: 110,000,000) Equity Shares of Rs.10/- each 10,000,000 (2006: 10,000,000) Preference Shares of Rs.10/- each Issued, Subscribed and Paid-up 94,481,930 (2006: 60,471,409) Equity Shares of Rs.10/- each fully paid up. 7,750,000 (2006: Nil) 9% Non-Cumulative Non-Convertible Redeemable Preference Shares of Rs.10/- each fully paid up. Notes : Of the above, 1. 51,719,968 (2006: 51,719,968) Equity Shares were allotted as fully paid up on July 9, 2001 to the shareholders of the erstwhile McDowell & Co. Ltd., pursuant to the schemes of Amalgamation for consideration other than cash. 2. 34,010,521 (2006: Nil) 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 (2006: 8,751,381) Equity shares of Rs.10/- each fully paid up represent 17,502,762 (2006: 17,502,762) Global Depository Shares issued by the Company on March 29, 2006. 4. 7,750,000 (2006: Nil) 9% Non-Cumulative Non-Convertible Redeemable Preference Shares of Rs 10/- each were issued as fully paid up on November 6, 2006 to 9 % Non-Cumulative Non-Convertible Redeemable Preference Shareholders of erstwhile Shaw Wallace Distilleries Limited pursuant to a Scheme of Amalgamation for consideration other than cash. The above 7,750,000 (2006: Nil) 9% Non-Cumulative Non-Convertible Redeemable Preference Shares of Rs 10/- each have been redeemed at par on July 11, 2007 1A. SHARE CAPITAL SUSPENSE Equity Share Suspense Nil (2006: 34,010,521) 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 Preference Share Suspense Nil (2006: 7,750,000) 9% Non-Cumulative Non-Convertible Redeemable Preference shares of Rs.10/- each to be issued as fully paid up to 9% Non-Cumulative Non-Convertible Redeemable Preference Shareholders of erstwhile Shaw Wallace Distilleries Limited pursuant to the Scheme of Amalgamation for consideration other than cash The above 7,750,000 9% Non-Cumulative Non-Convertible Redeemable Preference shares of Rs.10/- each to be issued will be redeemable at par on July 11, 2007.
1,100.000 100.000 944.819 77.500 1,022.319
1,100.000 100.000 604.714 604.714
340.105
77.500
417.605 33
Schedules forming part of Balance Sheet as at March 31, 2007 (Contd.)

Rs. Million 2006
2. RESERVES AND SURPLUS Central Subsidy As per last Balance Sheet Received during the year Capital Redemption Reserve As per last Balance Sheet Transferred from the Profit and Loss Account on redemption of Preference Shares Securities Premium Account As per last Balance Sheet Addition during the year: (a) On issue of Global Depository Shares (b) On conversion of 6,500,000 9% Cumulative Convertible Preference shares of Rs. 10/- each fully paid in Shaw Wallace Distilleries Limited, a Transferor Company Less: Adjustments during the year: (a) Expenses incurred on issuance of Global Depository Shares (GDS) and 2% Convertible Bonds in Foreign Currency (FCCB) Legal and Professional Underwriting Fee and Other costs Miscellaneous Income (b) Premiuim payable on Redemption of FCCB Foreign Currency Translation Reserve Addition during the year (Schedule 18 Note 5) Contingency Reserve As per last Balance Sheet General Reserve As per last Balance sheet Add: Addition during the year: (a) Reserve arising on appreciation (net of diminuition) in value of certain assets of the Company (b) Transferred from Profit and Loss Account Less: (a) Adjustments relating to Demerger (b) Adjustment on Amalgamation (c) Expenses relating to Amalgamation (d) Adjustment on adoption of Accounting Standard on 'Employee Benefits' [net of deferred tax credit of Rs 1.280 Million (2006: Nil)] [Schedule18 Note 12(a)] Surplus in Profit and Loss account
2007 1.500 1.500 464.446 464.446 5,505.775 5,505.775 5,708.537 41.786 5,750.323
1.500 464.446
1.500
464.446
(47.963)
5,457.811 (144.912) 110.000
(116.760) (141.122) 15.313 (1.979)
5,505.775 110.000
1,600.361 500.000 2,100.361 -
1,673.368 770.650 50.000 2,494.018 (435.758) (151.707) (306.192)
(2.522) 2,097.839 4,411.221 12,397.905
1,600.361 256.572 7,938.654
34

Rs. Million 2006
2007 3. SECURED LOANS Term Loans From Banks [Note (i)] [Repayable within one year: Rs.733.068 Million (2006: Rs.425.318 Million)] From Others [Note (ii)] [Repayable within one year: Rs. Nil (2006: Rs.42.500 Million)] Working Capital Loan / Cash Credit from Banks [Note (iii) ] Finance Lease [Note (iv)] Interest accrued and due Notes: (i) Out of the above loans: (a) Secured by charge on certain fixed assets of the Company including Land and Building. (b) Secured by charge on certain fixed assets of the Company, pledge of certain shares held by the Company and also by pledge of certain investments held by other companies. (c) Foreign Currency Borrowings secured by charge on fixed assets of the company, pledge of certain shares held by the Company and also by pledge of certain investments held by other companies. (d) Secured by a second charge on certain fixed assets of the Company including Land and Building. (e) Secured by charge on a brand (f) Foreign Currency External Commercial Borrowings secured by charge on specific fixed assets and a brand (g) Secured by hypothecation of specific fixed assets acquired under respective agreements. (ii) Out of the above loans: (a) Secured by a charge on certain fixed assets of the Company and pledge of certain shares and properties of other companies (b) Secured by charge on certain fixed assets of the Company including Land and Building (iii) (a) Secured by charge on certain fixed assets of the Company including Land and Building and hypothecation of inventories, book debts and other current assets. (b) Includes Foreign Currency Non-Resident [FCNR(B)] Loans (iv) Secured against assets acquired under lease agreements 4. UNSECURED LOANS Fixed Deposits [Repayable within one year Rs.187.112 Million (2006: Rs. 196.371 Million)] From Banks [Repayable within one year Rs.100.000 Million (2006: Rs.100.000 Million)] 2% Convertible Bonds in Foreign Currency Interest accrued and due
6,192.267 3,215.824 28.713 48.422 9,485.226
6,286.876 375.000 3,359.090 12.390 13.957 10,047.313
489.910 3,688.816 282.349 187.500 6.600 1,522.850 14.242 396.331
1,178.527 500.000 3,000.000 21.000 1,561.350 25.999 320.000 55.000 841.515
668.010 100.000 4,423.643 0.913 5,192.566
713.204 100.000 4,461.000 0.489 5,274.693
35
36 Rs. Million NET BLOCK 2007 2007 2006 2006 GROSS BLOCK On Deletion/ Revaluation Amalgamation Additions Adjustments 2007 2006 DEPRECIATION For the Deletion/ year Adjustments - 28.811 - 40.141 - 145.409 9.357 1,544.808 - 213.027 - 1,214.627 12.490 2,470.644 163.779 52.938 671.374 197.475 2.376 216.717 866.473 1,544.808 1,525.354 213.027 213.027 997.910 1,010.707 1,604.171 1,666.351 4.604 - 12.435 - 269.525 1,700.700 394.156 4.604 3.377 186.262 44.637 5,862.048 99.156 5,637.160 19.504 18.621 19.413 33.089 194.987 1.132 89.330 7.045 20.954 18.675 8.177 91.609 0.026 3.377 140.348 24.428 1,323.350 48.721 1,038.428 24.912 103.378 12.453 106.449 4.578 45.914 64.391 4,538.698 4,598.732 106.102 26.021 4,644.800 4,624.753 0.026 112.813 30.912 1,038.428 309.350 678.147 409.002
5. FIXED ASSETS
Tangible Land (Note 1 below): Freehold 1,525.354 Leasehold 213.027 Buildings (Notes 2 and 3 below) 1,174.486 Plant & Machinery 2,337.725 Furniture & Fixture and Office Equipments: Finance Lease 13.585 Others 195.779 Vehicles: Finance Lease Others 177.204 5,637.160 2006 2,829.798 811.662 Capital Work-in-Progress (including Advances)
Notes:
1.
The Company is in the process of registering certain freehold and leasehold land in its own name.
2.
Cost of buildings includes the following payments made for the purpose of acquiring the right of occupation of Mumbai godown space :
i) 660 equity shares (unquoted) of Rs.100 each fully paid in Shree Madhu Industrial Estate Limited Rs.0.066 Million (2006: Rs.0.066 Million). Application has been made for duplicate Share certificates and the same is in the process.
ii) 199 6 % Debentures (unquoted) of Rs.1,000 each fully paid in Shree Madhu Industrial Estate Limited Rs. 0.199 Million (2006: Rs.0.199 Million). Application has been made for duplicate Debentures certificates and the same is in the process.
iii) Deposit with Shree Madhu Industrial Estate Limited Rs. 0.132 Million (2006: Rs. 0.132 Million)
3.
Include value of fully paid shares Rs. 0.003 Million (2006: Rs 0.003 Million) held in Co-operative Housing Societies.

6. INVESTMENTS Particulars CURRENT Quoted Investments Units (Fully Paid) SBI Mututal Fund Total Current Investments LONG TERM Quoted Investments A. Trade Fully Paid Equity Shares Mangalore Chemicals & Fertilizers Limited (Note 2) United Breweries (Holdings) Limited (Rs. 377) [Note 4] United Breweries Limited (Rs.251) [Note 5] McDowell Holdings Limited In Subsidiary Company Shaw Wallace & Company Limited Face Value Rs. Rs. Million Nos. 2007 Nos. 2006
10
419,767
4.207 4.207
56,051
0.562 0.562
10 10 1 10
6,150 480 1,600 50,000
0.032 0.000 0.000 0.500
6,150 267 178 -
0.032 0.000 0.000 -
10 15,072,311
4,888.877 15,072,311 4,888.877 4,889.409 4,888.909
B. Non-Trade Fully Paid Equity Shares Vijaya Bank Whirlpool of India Limited Bank of India Limited Premier Fertilizers Limited (Note 3) Radico Khaitan Limited Khaitan Chemicals & Fertilizers Limited Rampur Fertilizers Limited (Note 3) IndusInd Bank Limited Indo Lowenbraw Breweries Limited (Notes 2 and 3) Hero Honda Motors Limited Rampur Engineering Co., Limited (Notes 2 and 3) Shree Synthetics Limited (Rs.350) (Notes 2 and 3) Gammon India Limited (Note 2) Ashok Leyland Limited (Rs. 117) Crompton Greaves Limited Daewoo Motors Limited (Note 3) Exide Industries Limited (Rs.132) Gec Alsthom (I) Limited (Rs.387) (Note 3) Harrisons Malayalam Limited Hindustan Motors Limited (Rs.51) (Note 3)
10 10 10 100 10 10 10 10 10 2 10 10 10 10 10 10 10 10 10 10
42,100 300 107,570 13,880 27,760 10,400 18 175 1,001 35 1,000 10 40 50 2 6 20 2
0.466 0.001 2.043 0.725 0.527 0.468 0.035 0.010 0.000 0.000 0.005 0.001 0.000 0.000 0.002 0.000
42,100 150 9,000 300 107,570 13,880 27,760 10,400 18 175 1,001 35 1,000 10 40 50 2 6 20 2
0.466 0.001 0.405 0.001 2.043 0.725 0.527 0.468 0.035 0.010 0.000 0.000 0.005 0.001 0.000 0.000 0.002 0.000
37

6. INVESTMENTS (Contd.) Particulars Indian Rayon and Industries Limited (Note 3) MRF Limited Nirlon Limited (Rs.254) Rallis India Limited Siemens (India) Limited Units (Fully Paid) Unit Trust of India (Note 1) - 6.75% Tax Free US 64 Bonds - UTI Balance Fund -Income -Retail (formerly known as US 2002) Total Quoted Investments (A+B) Unquoted Investments C. Trade Fully paid Equity Shares Goa Fruit Distilleries Pvt Limited Madhav Co-operative Housing Society Limited (Rs.250) North West Distilleries Pvt Limited Phipson & Co. (Pakistan) Limited (Rs.1) (Note 6) Sangam Bhavan Cooperative Housing Society Limited Utkal Distilleries Limited U.B. Electronics Instruments Limited Baramati Teluka Fruits Growers Fed Limited Shaw Scott Distilleries Private Limited Stridewell Leather India Private Limited (Rs.20) Ashoka Securities Private Limited McDowell Holdings Limited In Subsidiary Companies Asian Opportunities & Investments Limited McDowell Nepal Limited Primo Distributors Private Limited Zelinka Limited Four Seasons Wines Limited McDowell Scotland Limited Daffodils Flavours & Fragrances Private Limited Face Value Rs. 10 10 10 10 10 Rs. Million Nos. 10 5 12 28 15 2007 0.003 0.004 0.000 0.003 0.008 Nos. 10 5 12 28 15 2006 0.003 0.004 0.000 0.003 0.008
100 10
312,246 294,945
31.224 3.175 38.702 4,928.111
312,246 426,318
31.224 2.711 38.643 4,927.552
100 50 10 100 50 100 100 100 100 10 10 10 US$1 NRS 100 10 CYP 1 10 1 10
350 5 1,000 3,942 10 10,700 1,996 5,000 1 2 25 4,998,706 67,716 3,920,010 1,000 50,000 1,575,000 10,000
0.035 0.000 0.010 0.000 0.001 7.448 0.129 0.500 0.001 0.000 0.003 301.000 65.626 1,030.000 0.101 0.500 125.505 0.100
350 5 1,000 3,942 10 10,700 1,996 5,000 1 2 25 50,000 4,998,706 67,716
0.035 0.000 0.010 0.000 0.001 7.448 0.129 0.500 0.001 0.000 0.003 0.500 301.000 65.626
3,920,010 1,030.000 1,000 0.101 -
38

6. INVESTMENTS (Contd.) Particulars United Vintners Limited USL Holdings Limited McDowell Beverages Limited United Alcobev Limited Herbertsons Limited Fully paid Preference Shares 11% Redeemable Preference Shares of Ganges Soap Works Private Limited 9.3% Cumulative Redeemable Preference Shares of Rampur Engineering Company Limited Face Value Rs. 10 US$ 1 10 10 10 Rs. Million Nos. 50,000 100,000 50,000 50,000 54,000 2007 0.500 4.437 0.500 0.500 0.540 Nos. 2006 -
100 10
2,000 25,000
0.250 1,537.686
2,000 25,000
0.250 1,405.604
D. Non-Trade In Government Securities Indira Vikas Patra National Savings/Plan/Def. Certificates (Deposited with Govt.Authorities) In Fully Paid Debentures Non-Redeemable 6.5% Bengal Chamber of Commerce & Industry 5% Woodland Hospital & Medical Centre Limited Fully paid Equity Shares McDowell & HRB Emp. Co-op Society Limited Koel Manufacturing and Investment (P) Limited Janata Sahakari Bank Limited., Pune Maltings Limited Central Investment (P) Limited Consolidated Breweries Limited Goa Urban Co-Operative Bank Limited Mapusa Urban Co-Operative Bank Limited (Rs.130) The Cosmas Co-op Bank Limited Baramati Sahakari Bank Limited Thane Janta Sahakari Bank Limited Rupee Co- op Bank Limited
0.003 0.702
0.003 0.812
0.002 0.007 200 10 100 10 10 10 50 25 20 100 50 25 10 1 695 305 750 199 5 71,875 9 10 40 0.002 0.002 0.010 0.000 1.438 0.001 0.001 0.001 2.168 10 1 4,750 695 305 750 199 5 71,875 9 10 40
0.002 0.007 0.002 0.002 0.475 0.010 0.000 1.438 0.001 0.001 0.001 2.754
39
6. INVESTMENTS (Contd.) Particulars E. Others Interest as Sole Beneficiary in USL Benefit Trust Total Unquoted Investments (C+D+E) Total Long Term Investments (A+B+C+D+E) Total Current and Long Term Investments Less: Provision for diminution in the value of investments Total Aggregate value of Quoted Investments: - Book value - Market value Aggregate Book value of Unquoted Investments Notes: 1. 2. 3. 4. 5. 6. Investments in units of Unit Trust of India amounting to Rs.34.399 Million represent those made under Rule 3A of the Companies (Acceptance of Deposit) Rules, 1975. An application has been made for duplicate certificate. Market Quotations are not available. Bonus shares issued in the ratio of 1:1 for each equity share of Rs.10 held in United Breweries (Holdings) Limited. Each equity share of face value of Rs.10 held in United Breweries Limited has been split into 10 equity shares of Rs.1 each during the year. The erstwhile amalgamating Carew Phipson Limited has submitted its claim to Custodian of Enemy Property for India towards the full payment of the value of shares of which 25% was received and the balance value of investment was written off in the books in 1977, retaining a token amount of Re.1 in the books pending disposal of the representation to the custodian for final payment in this regard. Also Refer Schedule 18 Note 8. Face Value Rs. Rs. Million Nos. 2007 Nos. 2006
153.536 153.536 1,693.390 6,621.501 6,625.708 1.089 6,624.619 4,931.229 1,794.536 1,693.390
687.001 687.001 2,095.359 7,022.911 7,023.473 0.825 7,022.648 4,927.289 2,824.094 2,095.359
7.
40

Rs. Million 2006 564.244 294.537 1,207.853 751.971 2,818.605
2007 7. INVENTORIES Raw Materials including materials in transit Packing Materials, Stores and Spares Finished goods including goods in transit Work-in-Progress 513.730 370.850 996.638 1,055.278 2,936.496
8. SUNDRY DEBTORS (Unsecured) Exceeding six months Considered Good Considered Doubtful Others: Considered Good Less: Provision for doubtful debts
103.985 86.706 190.691 3,448.478 3,639.169 86.706 3,552.463
27.383 282.812 310.195 2,976.350 3,286.545 282.812 3,003.733
9. CASH AND BANK BALANCES Cash on Hand Remittances-in-Transit/ Cheques on Hand Balances with Scheduled Banks: On Current Accounts [Note (i)] On Unpaid Dividend Account On Deposit Account [Notes (ii), (iii) and (iv)]
6.074 8.065 331.148 104.779 3,285.684 3,735.750
5.824 117.903 614.967 18.881 1,476.840 2,234.415
Notes: (i) (ii) (iii) (iv) includes Rs. 27.271 Million (2006: Rs. 28.438 Million) in Exchange Earners Foreign Currency (EEFC) Account and Rs.18.052 Million (2006: Rs. 0.611 Million) in Foreign Currency. includes Rs. 0.214 Million (2006: Rs. 3.899 Million) pledged with Government Departments. includes Rs. Nil (2006: Rs.6.433 Million) kept as margin against letter of credit and Rs. 0.550 Million (2006: Rs.0.692 Million) as margin against Bank Guarantee. includes Nil (2006: Rs.1,114.625 Million) deposits in Foreign Currency.
41

Rs. Million 2006
2007 10. OTHER CURRENT ASSETS (Unsecured, Considered Good except where otherwise stated) Income accrued on Investments and Deposits Other Deposits - Considered Good - Considered Doubtful Fixed assets held for sale Less: Provision for Doubtful Deposits
41.470 1,067.835 7.125 2.790 1,119.220 7.125 1,112.095
2.390 632.603 7.125 2.790 644.908 7.125 637.783
11. LOANS AND ADVANCES (Unsecured, Considered Good except where otherwise stated) Loans and Advances to Subsidiaries Advances recoverable in cash or in kind or for value to be received: Advances to Tie-up units - Considered Good Advances to Tie-up units - Considered Doubtful Advance Income Tax (Net of Provisions) Advance Fringe Benefit Tax (Net of Provisions) Other Advances - Considered Good Other Advances - Considered Doubtful Less: Provision for Doubtful Advances
8,888.068 643.581 21.519 51.359 1,711.727 101.282 11,417.536 122.801 11,294.735
8,562.879 977.955 19.448 276.983 1.845 1,373.477 11.362 11,223.949 30.810 11,193.139
42

Rs. Million 2006
2007 12. CURRENT LIABILITIES AND PROVISIONS A. Liabilities Acceptances * Sundry Creditors Due to Small Scale Industrial (SSI) undertakings [Schedule 18 Note 9(a)] Others Dues to Directors Investor Education and Protection Fund [Schedule 18 Note 10] Unclaimed Debentures Unclaimed Dividends Unclaimed Fixed Deposits Security Deposit ** Advances Received from Customers Interest accrued but not due Other Liabilities
643.214 115.867 3,719.199 37.434 7.997 19.757 14.069 136.379 124.024 71.331 441.401 5,330.672
512.486 99.983 5,050.203 5.960 8.570 18.809 21.158 224.900 245.193 58.603 550.594 6,796.459
* Includes bills drawn against inland letters of credit of Rs.113.031 Million (2006: Rs.331.696 Million)and secured by a charge on debtors, inventories and other current assets. ** Includes due to a subsidiary Rs. 48.000 Million (2006 : Nil)
B. Provisions Proposed Dividend Preference Shares Equity Shares - Interim Equity Shares - Final Corporate Tax on Proposed Dividend Fringe Benefit Tax (Net of Payments) Provision for redemption premium Employee Benefits
6.975 84.741 98.966 18.005 0.541 49.943 205.164 464.335
6.975 188.963 27.480 1.979 159.672 385.069
43
Schedules forming part of Profit & Loss Account for the year ended March 31, 2007
Rs. Million 2006
2007 13. OTHER INCOME Income from Investments: Dividend income from Subsidiary (Gross) [Tax deducted at source Rs.0.635 Million (2006: Rs. 0.799 Million)] Dividend income from trade investments Dividend income from other investments Profit on Sale of Fixed Assets (Net) Profit on Sale of Investments Liabilities no longer required written back Exchange Gain (Net) Bad debts/advances recovered Scrap Sales Insurance Claims Export Incentive Miscellaneous
12.697 9.412 0.296 0.794 390.687 101.240 18.993 91.165 18.404 59.859 703.547
30.484 2.185 10.224 35.134 79.582 141.020 0.591 64.860 0.195 7.034 117.462 488.771
14. MATERIALS Raw Materials Consumed Purchase of Finished Goods Packing Materials Consumed Movement in Stocks Opening Stock: Work-in-Progress Finished Goods Add : Taken over on Amalgamation Work-in-Progress Finished Goods Closing Stock: Work-in-Progress Finished Goods (Increase)/ Decrease in Stocks Excise Duty on Opening/Closing Stock of Finished Goods (net)
5,762.873 3,324.762 5,472.588
4,580.528 1,562.709 4,534.553
751.971 1,207.853 1,959.824 1,055.278 996.638 2,051.916 (92.092) (204.916) 14,263.215
537.048 332.959 870.007 225.080 444.677 669.757 751.971 1,207.853 1,959.824 (420.060) 247.138 10,504.868
44
Schedules forming part of Profit & Loss Account for the year ended March 31, 2007 (Contd.)
Rs. Million 2006 1,313.108 242.253 93.677 15.600 189.473 74.984 13.883 66.271 88.878 105.535 188.580 46.639 535.641 292.309 531.278 2,234.419 326.943 216.365 221.347 96.131 7.986 0.855 5.517 27.004 16.765 137.827 12.920 179.337 384.693 209.719 7,875.937
15. MANUFACTURING AND OTHER EXPENSES Employee Cost: Salaries, Wages and Bonus Contribution to Provident and Other Funds Workmen and Staff Welfare Voluntary Retirement Scheme Compensation Power and Fuel Stores and Spares Consumed Repairs and Maintenance: Buildings Plant and Machinery Others Rent Rates and Taxes Insurance Travelling and Conveyance Legal and Professional Freight Outwards Advertisement and Sales Promotion Commission on Sales Royalty/ Brand Fee/ Trade Mark Licence Fees Cash Discount Sales Tax Fixed Assets Written Off Directors' Remuneration: Sitting Fee Commission [Schedule 18 Note 20] Exchange Loss (Net) Bad Debts and Advances Written Off Provision for Doubtful Debts/ Advances/Deposits Provision for Diminution in Value of Investments Research and Development Others Personnel and Administration Selling and Distribution Miscellaneous 16. INTEREST AND FINANCE CHARGES Interest on : Fixed Loans Other Loans Finance Charges (Including Bill Discounting) Less : Interest Income : On Investments On Deposits and Other Accounts (Gross) [Tax Deducted at Source Rs.20.192 Million (2006: Rs.8.907 Million)] On Income Tax Refunds
2007 1,472.704 239.484 87.435 8.476 144.435 45.881 38.221 51.672 45.204 107.135 186.560 43.955 384.279 269.034 516.498 2,908.588 215.889 294.792 191.426 138.243 15.250 1.520 36.991 49.434 78.805 0.264 8.004 258.127 670.977 170.459 8,679.742
866.932 257.867 93.871 1,218.670 2.234 144.878 3.924 1,067.634
978.680 278.591 475.784 1,733.055 2.121 64.560 0.085 1,666.289
45
Schedules forming part of account for the year ended March 31, 2007
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 issued by the Institute of Chartered Accountants of India 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. 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 managements estimate of useful life of the assets concerned: i) Computers and Vehicles over a period of three and five 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 Plant & Machinery Vehicles Computers 1 to 30 years 1 to 20 years 1 to 4 years 1 to 2 years
c) Assets taken on finance lease are depreciated over their estimated useful lives or the lease term, whichever is lower.
46
Schedules forming part of account for the year ended March 31, 2007 (Contd.)
d) Leasehold Land are not amortised. e) Goodwill arising on amalgamation is charged to the Profit and Loss Account in the year of amalgamation. 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: Foreign currency liabilities contracted for acquiring fixed assets from a country outside India are restated at the rates ruling at the year end and all exchange differences arising as a result of such restatement are adjusted to the cost of fixed assets. Exchange differences arising on a monetary item that, in substance, forms part of an enterprises net investment in a non-integral foreign operation is accumulated in a foreign currency translation reserve in the enterprises financial statements until the disposal of the net investment.
47
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. Also refer Note 5 on Schedule 18. 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 Companys 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, 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. Provident Fund: Companys Provident Funds administered by trusts set up by the Company where the Companys 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.
48
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 Earning per equity share (basic/diluted) is arrived at based on Net Profit after taxation available to equity shareholders to the basic/weighted average number of equity shares. 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. 49
18. NOTES ON ACCOUNTS
1. Contingent Liabilities 2007 a) (i) Guarantee given on behalf of other bodies corporate (including performance guarantees) (ii) Guarantees given by the Companys bankers for which Counter Guarantees have been given by the Company b) Disputed claims against the Company not acknowledged as debts, currently under appeal / sub judice: (i) Excise demands for excess wastages and distillation losses (ii) Other miscellaneous claims (iii) Income Tax demand (including interest) under appeal (iv) Sales Tax demands under appeal in various states c) Bills Receivables discounted - since fully settled d) Co-accepted bills of Tie-up Units - since fully settled e) Claims from suppliers not acknowledged as debts 31.250 98.012 (Rs. Million) 2006 250.000 75.778
214.841 217.549 79.499 438.350 71.651 58.583
181.650 232.904 44.407 387.331 120.899 67.940 45.865
The Management is hopeful of succeeding in the above appeals / disputes based on legal opinions / legal presidents. 2. (a) Under a Scheme of Arrangement sanctioned by the Honble High Courts of Karnataka and Bombay (the Scheme), amalgamation of eight companies into erstwhile McDowell & Company Limited and demerger of investment business into a resulting company (McDowell Holdings Limited) became effective from October 5, 2006 with the appointed date as April 1, 2005 and the name of the company was changed from McDowell & Company Limited to United Spirits Limited. Pursuant to the Scheme, the Company at their meeting held on November 6, 2006, allotted 34,010,521 Equity Shares of Rs.10/- each fully paid up and 7,750,000 9% Non Cumulative Non Convertible Redeemable Preference Shares of Rs.10/- each fully paid up to the shareholders of the transferor companies. The Company has also received the listing and trading permission for the equity shares from the National Stock Exchange of India Limited, Bombay Stock Exchange Limited, Bangalore Stock Exchange Limited, Ahmedabad Stock Exchange Limited and Madras Stock Exchange Limited, The Delhi Stock Exchange Association Limited and the Calcutta Stock Exchange Association Limited. Subsequent to the end of the financial year, the Non-Cumulative Non-Convertible Redeemable Preference Shares have been fully redeemed. (b) Board of Directors of the erstwhile Central Distilleries & Breweries Limited (CDBL) (amalgamated with SWDL 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 Honble High Court of Delhi on September 13,1988. The Honble High Court of Delhi has vacated its order and has ordered to keep in abeyance the allotment on 72,556 shares and the matter is subjudice. The holders, in exchange of these shares will be entitled to 17,776 equity shares of Rs.10 each of the Company pursuant to the Scheme. Necessary adjustments in this respect will be carried out on disposal of the matter pending before the aforesaid Court. (c) Pursuant to the Scheme, the bank accounts, agreements, licences, Investments and certain immovable properties are in the process of being transferred in the name of the Company. (d) The Company has also distributed the proceeds towards the sale of fractional shares entitlement to the eligible shareholders. 50
3. a) The Company had issued, during 2006, 100,000, 2% Convertible Bonds in Foreign Currency (FCCB) denominated in Bond certificates of US$1,000 each aggregating US$ 100 Million. The FCCBs are, at the option of FCCB holders, convertible into fully paid Equity Shares of Rs.10/- of the Company (Equity Share) or Global Depository Shares (GDS), with two GDS representing one Equity Share, at any time on or after May 9, 2006 upto the close of business on March 15, 2011 at an initial conversion price of Rs.858 per share with a fixed rate of exchange on conversion of Rs.44.43 equal to US$ 1.00, subject to adjustments in the manner specified in the Offering Circular (OC) dated March 29, 2006 upon occurrence of certain events. The Company, subject to fulfilment of certain conditions, has an option to mandatorily convert these FCCBs into Equity Shares, in whole but not in part, at any time on or after September 29, 2007 but not less than seven business days prior to the Maturity Date (March 30, 2011), at a conversion price to be determined in the manner specified in the OC. The Company, subject to fulfilment of certain conditions and obtaining requisite approvals, has an option to redeem these FCCBs, in whole but not in part, at an Early Redemption Amount, to be determined in the manner specified in the OC so that together with any interest and unpaid interest it represent a gross yield of 6.50 percent to the FCCB holders, on a semi annual basis, together with accrued or unpaid interest. The outstanding FCCBs on the Maturity Date (March 30, 2011) will be redeemed at 127.07 percent of the principal amounts of the FCCBs. The initial conversion price of Rs.858 per share has been adjusted in the manner specified in the OC and new conversion price of Rs.781 per share is effective from June 8, 2007. b) Subsequent to the year end, 78,960 Bonds aggregating to US$ 78.960 Million have been converted into 4,484,397 Equity shares. Consequently, the paid up equity share capital increased from 94,481,930 equity shares of Rs.10/- each to 98,966,327 equity shares of Rs.10/- each as of date. c) Since the market price of the Companys Equity Shares is less than the initial conversion price of FCCB, the option embedded in the said FCCB to subscribe to Equity Shares is, at the year-end, anti-dilutive 4. a) Subsequent to the year end, the Company acquired through its wholly owned subsidiary, United Spirits (Great Britain) Limited, the entire share capital of Whyte and Mackay Group Limited, which in turn holds the entire share capital of Whyte and Mackay Limited, a Scotland based Spirits manufacturing company. The Company has provided security / guarantee on behalf of the above wholly owned subsidiary for a sum of US $ 618.915 Million in favour of the lenders. b) Consequent upon the above acquisition, the following companies became wholly owned subsidiaries of the Company. Whyte and Mackay Group Limited, Whyte and Mackay Limited, Whyte and Mackay Warehousing Limited, Bruce & Company (Leith) Limited, Charles Mackinlay & Company Limited, Dalmore Distillers Limited, Dalmore Whyte & Mackay Limited, Edinburgh Scotch Whisky Company Limited, Ewen & Company Limited, Fettercairn Distillery Limited, Findlater Scotch Whisky Limited, Glayva Liqueur Limited, Glentalla Limited, GPS Realisations Limited, Grey Rogers & Company Limited, Hay & MacLeod Limited, Invergordon Distillers (Holdings) Limited, Invergordon Distillers Group Limited, Invergordon Distillers Limited, Invergordon Gin Limited,Isle of Jura Distillery Company Limited, Jarvis Halliday & Company Limited, John E McPherson & Sons Limited, Kensington Distillers Limited, Kyndal Spirits Limited, Leith Distillers Limited, Loch Glass Distilling Company Limited, Longman Distillers Limited, Lycidas (437) Limited, Pentland Bonding Company Limited, Ronald Morrison & Company Limited, St The Sheep Dip Whisky Company Limited, Vincent Street (437) Limited, Tamnavulin-Glenlivet Distillery Company Limited, TDL Realisations Limited, W & S Strong Limited, Watson & Middleton Limited, Wauchope Moodie & Company Limited, Whyte & Mackay Distillers Limited, William Muir Limited, WMB Realisations Limited, Whyte and Mackay Property Limited, Whyte and Mackay de Venezuela CA and KI Trustees Limited.
51
5. The Company, in earlier year, granted interest free loans in foreign currency aggregating to Rs.7,356.189 Million to Zelinka Limited (Zelinka), Cyprus, a subsidiary of the Company, for acquisition of long term strategic investment in Shaw Wallace & Company Limited. Management is of the view that these loans, from the inception of the grant of loan, in substance, form part of the Companys net investment in Zelinka as the settlement of these loans is neither planned nor likely to occur in the foreseeable future and management intends to convert this loan into investment in share capital of Zelinka in near future. Accordingly, in accordance with AS 11 - The Effects of Changes in Foreign Exchange Rates (AS 11), exchange difference aggregating to Rs.144.912 Million [including exchange difference aggregating to Rs.36.478 Million recognised in the Profit and Loss Account in the previous year reversed during the year and disclosed as Prior Period Item in Note 11(a) below] 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 Zelinka would be recognised as income or as expenses. 6. Fixed Assets Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) - Rs.143.321 Million (2006: Rs.12.688 Million). 7. Current Assets, Loans and Advances a) Loans and Advances include: i) Rs. 8,769.805 Million (2006: Rs.7,604.592 Million) given as loan to the subsidiaries. Out of the above, loan of Rs.262.898 Million (2006: Rs.248.403 Million) is interest bearing. ii) Rs.118.263 Million (2006: Rs. 958.286 Million) given as an advance to a subsidiary, which is also a Tie up unit. iii) An amount of Rs.336.462 Million (2006: Rs. 307.873) due from a Tie-up unit secured by the assets of the Tie-up unit. iv) Share application money of Rs.17.746 Million (2006: Rs.Nil) paid to USL Holdings Limited for which the share allotment is still pending. v) Rs.3 Million (2006: 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. vi) Due from an Officer of the Company Rs.1.223 Million (2006: Rs.0.974 Million). Maximum amount outstanding at any time during the year Rs.1.223 Million (2006: Rs.0.974 Million). vii) Due from the Managing Director of the Company Rs.2.595 Million (2006: Rs.2.359 Million). Maximum amount outstanding at any time during the year Rs.2.595 Million (2006: Rs.2.359 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.
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8. Investment a) Face Value CURRENT Units (Fully Paid) SBI Mutual funds Investments (Including dividend Reinvestment 10 Units: 8,62,097.302; Value: Rs.8.648 Million) LONG TERM A. Quoted Fully Paid Equity Shares Trade United Breweries (Holdings) Limited (Rs.42) 10 United Breweries Limited (Rs.28) 10 Non-Trade Whirlpool India Limited 10 Bank of India Limited 10 Units (Fully Paid) US 2002 (Transferred to UTI Balance Fund - Income 10 - Retail on November 21,2006) UTI Balance Fund - Income - Retail (Including Dividend Reinvestment - Units: 24,754.497; 10 Value: Rs.0.464 Million) B. Unquoted Fully Paid Equity Shares In Subsidiary Companies Four Seasons Wines 10 McDowell Scotland Limited 1 Daffodils Flavours & Fragrances Private Limited 10 United Vintners Limited 10 USL Holdings Limited US$ 1 McDowell Beverages Limited 10 United Alcobev Limited 10 Herbertsons Limited 10 Non Trade Janata Sahakari Bank Limited.Pune 100 Non Trade other Investments: In Government Securities National Savings/Plan/Def. Certificates (Deposited with Government Authorities) Total Interest as Sole Beneficiary in USL Benefit Trust Purchased During the year Nos Rs. Million Sold during the year Nos Rs. Million
70,136,953
703.646 69,773,237
700.001
294,945
3.175
54 18 150 9,000 426,318 -
0.000 0.000 0.001 0.405 2.711 -
50,000 1,575,000 10,000 50,000 100,000 50,000 50,000 54,000 -
0.500 125.505 0.100 0.500 4.437 0.500 0.500 0.540 -
4,750
0.475
839.403 839.403
0.110 703.703 533.465 1,237.168
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8. Investment (Contd) b) The carrying cost of investment in Shaw Wallace & Company Limited (SWCL), a subsidiary Company, amounting to Rs.4,888.877 Million, substantially exceeds the net worth and the market value of shares in SWCL. Considering that the acquisition of the Shaw Wallace Group has given to the Company access to very valuable brands, critical distilling and manufacturing capacities and distribution capabilities in important markets in India and abroad, the management of the Company believes that this reflects intrinsic value far in excess of the carrying cost of investments in SWCL and that such shortfall in net worth / decline in market value of shares in SWCL is purely temporary in nature and, hence, no provision is considered necessary for the same. 9. a) Names of Small Scale Industrial (SSI) Undertakings to whom the Company owes any sum which is outstanding for more than thirty days as on March 31, 2007 is given below: Abhijeet Chemicals; Adarsh Packagers; Akash Multipack; Anupama Industries; Astra Packaging Private Limited; Avasas Pack & Print; Better Pac Industries; Bhargav Packaging; Brilliant Packing; Carto Pack; Ceekay Enterprise; Chandigarh Chemicals; Chemline India Private Limited; Chromaprint (India) Private Limited; Citizen Packaging Industries; Classic Image Offset Private Limited; Cliffton Metal Closures; Competent Metal Closures; Dastagir Packaging Industries; De Simran Cartons; Dolphin Impressions Private Limited; Dwarakamai Packaging; Excel Prints & Packs; Excellent Packaging; Ghandhar Marketing; Global Packaging; Graphic Prints; J K Packaging; K & G Packaging; K.G. Printpack Private Limited; Kamala Board Box; Kamani Packaging Industries; Kengeri Packers Private Limited; Kishor Bottles; Kolkata Closures Private Limited; Krishna Cap Box Private Limited; Lawande Packaging; Lotus Packaging; M.B.Packers; Sai Prasanthi Container; Ritesh Packaging; Subhodaya Paper; Magnaa Corrugators; Mahabir Cartons & Co; Mahima Packaging; Mahima Packwell; Manohar Canister Private Limited; Manohar Packaging; Manohar Packagings Private Limited; Margaret Packaging; Mega Packaging; Modern Packaging Industries; Nancy Packages PrivateLimited; P.N.Mukherjee,Calcutta; Pack Care Products; Pack-In-Box; Peninsulars Packes Private Limited; Perfect Packaging Inds; Premraj Packaging Industries; Priya Packaging; Quality Cartons; Quality Packaging and alliedIndustries Limited; R. R. Roto Packaging Industries; Raghava Containers; Raj Seals & Pack; Raja Lakshmi Packaging; Rajshil Papers Private Limited; Ruby Corrugated Products; S V Printers & Packagers; Shah Pack & Print; Shakunta Packers; Shakunta Industries; Sharada Packaging Private Limited; Shree Packwell Industries; Sree Kailas Paper Cartons; Sreyas Packaging Industries; Sri Lakshmi Venkateswara; Standard Packaging; Standard Pack & Plastic; Subhodaya Enterprise; Subhodaya Packaging; Surinder & Co; Swastik Packaging & Allied Industries;The Flavors India Private Limited;Tirumala Corrugated Packaging Private Limited; Uday Kartons; United Packers; V N Box Process The above information and that disclosed in Schedule 12 - Current Liabilities and Provisions regarding SSI undertakings 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. b) This being the first year of applicability, the Company is in the process of compiling the additional information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006. The management does not envisage any material impact on the financial statement in this regard, which has been relied upon by the auditors. 10. As required under Section 205C of the Companies Act, 1956, the Company has transferred Rs. 2.966 Million (2006: Rs. 3.890 Million) to the Investor Education and Protection Fund (IEPF) during the year. On March 31, 2007, no amount was due for transfer to the IEPF.
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11. a) Prior period, exceptional and other non recurring items [(Debit)/Credit] include: Sl.No. Particulars Prior period items i) Provision for Gratuity ii) Provision for leave encashment iii) Exchange difference [Note 5 above] Total Exceptional and other non recurring items iv) The surplus being excess of net sale proceeds over corresponding carrying value of interest in the USL Benefit Trust. [Note 11(b) below] v) Provision for doubtful debts written back Total Grand Total 2007 (23.739) 16.492 36.478 29.231 Rs. Million 2006 -
(2,473.735) (182.920) (2,656.655) (2,627.424)
b) USL Benefit Trust, formed in terms of the Scheme approved by the Honble High Courts of Karnataka and Bombay, sold during the year 3,500,000 equity shares of the Company held by it. Being the sole beneficiary of the Trust, the Company received net sale proceeds from the Trust. The surplus of Rs.2,473.735 Million being the excess of net sale proceeds over corresponding carrying value of interest in the Trust has been shown under Exceptional and other non recurring Items. 12. Employee Benefits The Institute of Chartered Accountants of India issued Accounting Standard 15 (revised 2005) (AS 15R) on Employee Benefits, which supersedes the earlier accounting standard on retirement benefits. The Company adopted the provisions of AS 15R effective April 1, 2006. Consequent to early adoption of AS15R, following disclosure have been made as required by the Standard: a) The Company has reviewed and revised its accounting policy in respect of accumulating leaves to the credit of its employees. Accordingly, an amount of Rs.2.522 Million (net of deferred tax credit Rs.1.280 Million) being resultant increase in net liability as on April 1, 2006 has been recognised with corresponding adjustment to opening balance of General Reserve and an additional liability for the current year amounting to Rs.0.894 Million has been recognised in the Profit and Loss Account having consequential effect on the net profit for the year. b) 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 Governments 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 employees salary.
55
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: Provident Fund and Employees Pension Scheme * Superannuation Fund Employees State Insurance * Excluding contribution to PF made to trusts managed by the Company c) 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 employees 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 Companys 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 employees 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. Rs. Million Funded Non-Funded Gratuity PF Death-Benefit A) Reconciliation of opening and closing balances of the present value of the defined benefit obligation Obligation at the beginning of the year 408.428 699.831 3.092 Contributions by plan participants 60.767 Current service cost 58.275 50.044 0.433 Interest cost 32.674 61.419 Actuarial (gain)/ loss on obligations 1.249 Benefits paid (49.399) (72.428) Obligation at the end of the year 451.227 799.633 3.525 Rs.Million 40.182 24.933 7.309 72.424
56
Rs. Million Non-Funded Death-Benefit -
B) Reconciliation of opening and closing balances of the fair value of plan assets Plan Assets at the beginning of the year Prior period adjustment Contributions by plan participants Contributions by the Company Expected return on plan assets Actuarial gains / (losses) Benefits paid Plan assets at the end of the year C) Reconciliation of present value of defined benefit obligation and the fair value of plan assets to the assets and liabilities recognised in the balance sheet: Present value of obligation at the end of the year Fair value of plan assets at the end of the year Liability/(Net Asset) Recognised in Balance Sheet [Included under Provisions in Schedule 12(B)] D) Expenses recognised in the Profit and Loss Account Current service cost Interest cost Expected return on plan assets Prior period adjustment Actuarial (gains)/losses Total Expenses recognised in the Profit and Loss Account Included in: Contribution to Provident and Other Funds in Schedule 15 Workmen and Staff Welfare in Schedule 15 Prior period item in the Profit and Loss Account E) Investment details of plan assets Government securities Securities guaranteed by Government Private Sector Bonds Public Sector / Financial Institutional Bonds Special Deposit Scheme Fund balance with Insurance Companies Others (including bank balances)
Funded Gratuity 313.827 23.739 107.141 27.005 (7.492) (49.399) 414.821
PF 699.831 60.767 39.029 56.839 (36.842) (72.428) 747.196
451.227 414.821 36.406
799.633 747.196 52.437
3.525 3.525
58.275 32.674 (27.005) (23.739) 6.243 46.448 70.187 (23.739) 46.448 19% 35% 2% 1% 7% 30% 6% 100%
50.044 61.419 (56.839) 36.842 91.466 91.466 91.466 32% 0% 0% 41% 22% 0% 5% 100%
0.433 0.433 0.433 0.433
57
Based on the above allocation and the prevailing yields on these assets, the long term estimate of the expected rate of return on fund assets has been arrived at. Assumed rate of return on assets is expected to vary from year to year reflecting the returns on matching government bonds. F) Actual return on plan assets G) Assumptions Discount Rate (per annum) Expected Rate of Return on Plan Assets Rate of increase in Compensation levels Average past service of employees (years) Mortality rates 8.00% 8.00% 5.00% 14.46 LIC 199496 ultimate table 8.00% 8.19% Not Applicable Not Applicable LIC 199496 ultimate table 6.94% 8.19%
The estimates of future increase in compensation levels, considered in the actuarial valuation, have been taken on account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. As this is the first year in which AS 15R has been applied the amounts of the present value of the obligation, fair value of the plan assets, surplus or deficit in the plan and experience adjustment arising on plan liabilities and plan assets for the previous periods have not been furnished. As per the best estimate of the management, contribution of Rs.105 Million is expected to be paid to the plans during the year ending March 31, 2008. 13. Borrowing Costs Rs. Million 2007 a) Interest capitalised on fixed assets b) Interest included in the Closing Stock of Malt and Grape Spirit under maturation 14. 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 Companys operations outside India did not exceed the quantitative threshold for disclosure envisaged in AS 17 on Segment Reporting issued by the Institute of Chartered Accountants of India. 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. 46.145 2006 0.957 48.801
58
15. Related Party Disclosures a) Names of related parties and description of relationship Enterprise where there is control Associates with Key Employees Benefit Plans whom transactions Management where there is significant have taken place personnel influence during the year Utkal Distillers Limited (Utkal) Mr.V.K.Rekhi Managing Director 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) The Bengal Distilleries Company Limited Staff Provident Fund (BD PF)
(i) Subsidiary companies: Asian Opportunities & Investment Limited (AOIL) Bouvet - Ladubay S.A.S (BL) *^ Chapin Landais S.A.S (CL) *^ Zelinka Limited Montrose International SA (MI) ^ Palmer Investment Group Limited (PIG) ^ JIHL Nominees Limited (JIHL) ^ RG Shaw & Company Limited (RGSC) ^ Shaw Derby & Company Limited (SDC) ^ Shaw Scott & Company Limited (SSC) ^ McDowell Nepal Limited (MNL) Thames Rice Milliing Company Limited (TRMCL) ^ Shaw Wallace Breweries Limited (SWBL)^ Shaw Wallace & Company Limited (SWCL) Shaw Wallace Overseas Limited (SWOL)^ Ramanretti Investment & Trading Limited (RITL) ^ Primo Distributors Private Limited (PDPL) McDowell Scotland Limited (MSL) * McDowell Beverages Limited (MBL) * USL Holdings Limited (USLHL) *^ Spring Valley Investment Holdings Inc (SVIHI) *^ USL Holdings (UK) Limited *^ United Spirits (UK) Limited *^ United Spirits (Great Britain) Limited *^ Daffodils Fragrance and Flavours Private Limited (DFFPL) * Four Seasons Wines Private Limited (FSWPL) * Herbertsons Limited (HL) *^ United Vintners Limited (UVL) * United Alcobev Limited (UAL) * (ii) USL Benefit Trust [Note 11(b) above] * ^ Became a subsidiary during the year No transactions during the year
59
b) Summary of the transactions with related parties:
2007 Key Management personnel Associates 2006 Key Management personnel Associates
Rs. Million
Total Entities where there is control Employees Benefit Plans where there is significant influence Total
Sl. Nature of transactions ** No.
Entities where there is control
a)
b)
c)
d)
Purchase of goods - SWCL - Utkal Sale of goods -SWCL - Primo - AOIL - Utkal - Others Income from sale by Tie-up Units. - SWCL - Utkal Income from Brand Franchise
Employees Benefit Plans where there is significant influence -
3.145 36.578 126.430 12.647
3.145 36.578 126.430 12.647
2.819 222.666 75.789 62.868
0.522 3.691 -
2.819 0.522 222.666 75.789 3.691 62.868
369.140 -
79.469
369.140 79.469
318.499 -
22.521
318.499 22.521
- MNL 12.296 - Utkal e) Purchase of Investment in PDPL - SWFSL f) Sale of Investment in PDPL - SWFSL g) Sale/ (Purchase) of fixed assets -Utkal h) Other Income - MNL 12.697 - SWCL i) Commission on Sales - Others j) Royalty and Brand Fee - SWCL 227.384 - AOIL 9.294 k) Interest Income (net) - AOIL 12.760 l) Rental Deposit m) Interest as Sole Beneficiary in USL Benefit Trust 153.536 n) Receipt from USL Benefit 3,007.200 Trust [Note 11(b)]
2.595 -
12.296 12.697 227.384 9.294 12.760 2.595 153.536 3,007.200
19.205
7.542 0.077 -
2.359 -
19.205 7.542 1030.000 4612.758 0.077 15.412 15.072 12.407 216.365 11.682 2.359 687.001 -
1030.000 4612.758 15.412 15.072 12.407 216.365 11.682 687.001 -
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b) Summary of the transactions with related parties (Contd.): Rs. Million
Key Management personnel Key Management personnel Associates Associates Sl. Nature of transactions ** No. Entities where there is control 2007 Employees Benefit Plans where there is significant influence Total Entities where there is control 2006 Employees Benefit Plans where there is significant influence Total
Finance (including loans and equity contributions in cash or in kind) -SWCL (1061.435) - (1061.435) -Zelinka (10.910) (10.910) -AOIL 965.398 965.398 -Utkal - (24.384) (24.384) -Others 27.118 27.118 p) Guarantees and Collaterals given -MNL 31.250 31.250 q) Managing Directors - 22.753 22.753 Remuneration r) Rent - 2.536 2.536 s) Contribution to Gratuity Fund - McD OGF 38.506 38.506 - McD SGF 18.311 18.311 - SWDL OGF 15.339 15.339 - SWDL EGF 33.866 33.866 t) Contribution to Provident Fund - McD PF 34.772 34.772 - HL EPF 1.803 1.803 - BD PF 2.454 2.454 u) Dividend Paid - PDPL 4.573 4.573 - SWCL 20.565 20.565 - USL Benefit Trust 3.229 3.229 v) Amount due from - AOIL 1,217.268 - 1,217.268 - Utkal - 336.462 336.462 - Zelinka 7345.279 - 7,345.279 -SWCL 163.994 163.994 - Others 209.528 209.528 w) Amount due to - PDPL 48.000 48.000 ** Excludes Reimbursement of Expenses and Cost sharing arrangements.
o)
7,356.189 (22.212) 250.000 -
27.669 -
20.772 2.305 -
- 7,356.189 27.669 - (22.212) 56.376 26.867 250.000 20.772 2.305 56.376 26.867 -
259.858 - 335.894 7,356.189 958.286 32.077 39.009 -
259.858 335.894 - 7,356.189 958.286 32.077 39.009
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.
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16. (a) The Companys significant leasing arrangements in respect of operating leases for premises (residential, office, stores, godown, 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 equipments 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 2007 Particulars Later than one year and not later than five years Later than five years Not later than one year Less: Finance Charges Present value of net minimum lease payments 17. Earnings Per Share: a) Net Profit after tax (Rs. Million) Less: Proposed Dividend on Preference Shares (including Corporate tax thereon) (Rs. Million) Net Profit available for equity shares (Rs. Million) b) Basic number of Equity Shares of Rs.10 each outstanding during the year c) Weighted Average number of Equity Shares of Rs.10 each outstanding during the year d) Basic/Diluted Earnings Per Share (Rs.)** 2007 4,940.194 8.160 4,932.034 94,481,930 94,481,930 52.20 2006 420.198 7.953 412.245 *94,481,930 *85,802,478 4.80 Present Value of payments 16.850 16.850 11.863 28.713 Minimum lease payments 18.150 18.150 13.711 31.861 3.148 28.713 2006 Present Value of payments 8.042 8.042 4.348 12.390 Minimum lease payments 8.368 8.368 4.782 13.150 0.760 12.390
* including Equity shares to be issued and included under Share Capital Suspense in Schedule 1A ** Also refer Note 3 above.
62
18. Taxes on Income: a) Current Taxation Provision for current taxation includes: 2007 i) ii) Income Tax [including relating to earlier year Rs. Nil (2006: 81.502 Million)] Wealth Tax Total 1,291.720 11.200 1,302.920 2006 81.502 12.000 93.502 Rs. Million
b) Deferred Taxation The net Deferred Tax (Asset) / Liability as on March 31, 2007 amounting to Rs.7.935 Million (2006: Rs.70.569 Million) has been arrived at as follows: Rs. Million Deferred Tax (Assets) / Liabilities as on 1.4.2006 296.243 (118.527) (44.758) (62.389) 70.569 70.569 Current Year charge / (credit) (40.871) 44.894 44.758 (110.135) (61.354) (1.280) (62.634) Deferred Tax (Assets) / Liabilities as on 31.03.2007 255.372 (73.633) (172.524) 9.215 (1.280) 7.935 Rs. Million 2007 Salary and Allowances Incentives paid Contribution to Provident and other Funds * Value of Perquisites 11.744 5.385 2.987 2.637 22.753 * 2006 11.083 4.491 2.825 2.373 20.772
Particulars
Difference between book and tax depreciation Provision for Doubtful Debts Unabsorbed Business Loss/ Depreciation Allowance Others Total Add: Adjustment on adoption of Accounting Standard on Employee Benefits [Note 12(a) above] 19. Remuneration paid/payable to Managing Director
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.
63
20. Directors Commission 2007 Computation of Net Profits under Section 198 of the Companies Act, 1956 Net Profit before Taxation Add: Depreciation as per Books Remuneration to Managing Director Directors Fees Directors Commission Book deficit/(surplus) on fixed assets sold, written-off, etc (net) as per books Provision for Doubtful Debts Diminution in value of Investments 6,216.260 309.350 22.753 1.520 36.991 14.954 0.264 6,602.092 309.350 0.794 2,473.735 14.954 Rs. Million 2006 512.190 409.002 20.772 0.855 5.517 (27.148) 137.827 1,059.015 409.002 79.582 18.711
Less:
Depreciation under Section 350 of the Companies Act, 1956 Profit on Sale of Investments The surplus being excess of net sale proceeds over corresponding carrying value of interest in the USL Benefit Trust [Note 11(b) above] Deficit/(Surplus) on disposal of fixed assets under Section 349 of the Companies Act, 1956 Provision for Doubtful debts written back (including Rs.182.920 Million credited to prior period items [Note 11(a) above])
104.115 Net profit 3,699.146 551.720 Commission 1% thereof 36.991 5.517 The total remuneration as stated above is within the maximum permissible limit under the Companies Act, 1956. 21. Quantitative Information in respect of goods manufactured and sold by the Company a. Particulars of Capacity and Production: Licensed Capacity 2007 Installed Capacity Actual Production Licensed Capacity 2006 Installed Capacity Actual Production
Description Beverage Alcohol [Note (i)] Notes:
Unit
Ltrs 164,560,592 192,150,600 161,374,408
164,560,592 192,150,600 147,654,722
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 Companys applications for the Carry On Business licenses for other Units are still pending with the authority. iii. The Licenced and Installed Capacity has been certified by the Companys management and relied upon by the Auditors, this being a technical matter.
64
b. Particulars of opening stock of Finished Goods: 2007 Quantity Value 1,271,147 1,092.814 115.039 1,207.853 Rs. Million 2006 Quantity Value 362,103 326.311 6.648 332.959
Description Beverage Alcohol Others Total
Unit Cases
c. Particulars of stock of Finished Goods acquired on amalgamation Description Beverage Alcohol Others Total Unit Cases Quantity Value Quantity 527,920 Value 444,227 0.450 444.677
d. Particulars of closing stock of Finished Goods: Description Beverage Alcohol Others (including by-products) e. Particulars of Turnover: Description Beverage Alcohol Others (including by-products) f. Unit Cases Quantity Value 33,991,350 43,019.761 838.029 43,857.790 Quantity Value 28,712,847 31,768.267 1,640.288 33,408.555 Unit Cases Quantity 967,072 Value 996.638 996.638 Quantity 1,271,147 Value 1,092.814 115.039 1,207.853
Particulars of purchase of traded goods: Description Beverage Alcohol Others Unit Cases Quantity 2,300,070 Value 3,324.762 3,324.762 Quantity 1,741,873 Value 1,562.315 0.394 1,562.709
22. Particulars of Raw Materials Consumed: 2007 Quantity Value 109,192,051 3,609.765 8,925,070 194.249 128,136,220 496.441 1,462.418 5,762.873 % 6 94 100 Value 321.420 5,441.453 5,762.873 2006 Quantity Value 91,731,198 2,985.405 8,409,250 155.262 143,262,618 684.564 755.297 4,580.528 % 5 95 100 Value 278.930 4,301.598 4,580.528
Description Spirits Malt Molasses Others
Unit Litres Kg. Kg.
Whereof: Imported Indigenous
65
23. Consumption of Packing Material, Stores and Spares: (including stores consumed in Repairs and Maintenance expenses) % 1 99 100 2007 Value 27.250 5,505.716 5,532.966 % 1 99 100 2006
Rs. Million Value 1.716 4,627.402 4,629.118
Imported Indigenous 24. Value of Imports on C.I.F. basis: Raw Materials and Packing Materials Components and Spare Parts Plant and Machinery 25. Earnings in Foreign Currency: FOB value of Export sales Others (net)* *
2007 248.637 2.972 251.609
2006 238.237 1.716 3.377 243.330
2007 47.009 47.009
2006 94.058 42.717 136.775
including Rs. Nil (2006: Rs. 15.312 Million) towards reimbursement of expenses on issue of Global Depository Shares credited to Share Premium Account. 2007 327.766 107.022 434.788 2006 211.352 271.559 482.911
26. Expenditure in Foreign Currency: Interest Others (Royalty, Travelling, Subscription, Professional fees, Foreign Travel Expenses, Advertisement, Bank Charges, Finance Charges, etc.)* *
Including Rs. Nil (2006: Rs.230.293 Million) towards Professional Fees for Share/ Foreign Currency Convertible Bonds issued.
27. Auditors Remuneration * 2007 8.200 4.300 1.856 14.356 2006 5.300 0.500 7.251 0.440 13.491
Statutory Audit ** Tax Audit Fee Other Services Out-of-pocket Expenses (including service tax) *
Included under Legal and Professional Charges in Schedule 15, except Rs. Nil (2006: Rs.4.201 Million) and Rs. Nil (2006: Rs.0.500 Million) debited to Share Premium Account and General Reserve respectively.
** Including relating to earlier year Rs. 1.200 Million (2006 : Nil)
66
Rs. Million 28. (a) Repairs to Plant and Machinery include: Wages Stores Consumed (b) Repairs to Building include: Wages Stores consumed 29. Research and Development expenses comprise the following: Salaries and Wages Contribution to Provident Fund and other Funds Staff Welfare Expenses Rent Miscellaneous Expenses 30. Previous years figures have been regrouped / rearranged wherever necessary. 2007 4.413 0.445 0.220 0.954 1.972 8.004 2006 8.115 1.270 0.230 1.894 1.411 12.920 2007 1.960 12.929 14.889 0.036 1.568 1.604 2006 1.468 17.825 19.293 0.493 1.756 2.249
VIJAY MALLYA Chairman J. MAJUMDAR Partner For and on behalf of Price Waterhouse Chartered Accountants Bangalore October 31, 2007 M.R.DORAISWAMY IYENGAR Director V.S.VENKATARAMAN Company Secretary Bangalore October 31, 2007
V.K.REKHI Managing Director P.A.MURALI Chief Financial Officer
67
Statement Pursuant To Section 212(1)(e) Of The Companies Act, 1956 As At March 31, 2007
a) No of shares held at the end b) Extent of holding of the financial year of the subsidiary % % Sl. Name of the subsidiary no. United Spirits Ltd Other subsidiary companies Net aggregate Profit/loss of the subsidiary so far as it concerns the members of the company with in the the company (ii ) for the previous financial years of the subsidiary since it became a subsidiary b) Dealt with in the accounts of the company (i ) (ii ) for the for the previous subsidary's financial years financial of the subsidiary year ended since it became 31.03.2007 a subsidiary (Rs. Million) 7 8 9 (1.002) 15.541 (13.623) 468.603 (0.064) 1229.396 6.723 (0.127) 7.547 2.037 1.991 1.583 0.377 2.544 8.755 -
a) Not dealt accounts of United Other (i ) Spirits Ltd subsidiary for the companies subsidiary's financial year ended 31.03.2007 4 100% 82.46% 100% 31.40% 100% 5 38.75% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 6 (34.733) 22.675 2.568 820.768 (0.070) 207 10.250 (0.315) (0.969) (0.134) (0.035) (0.303) (0.291) (0.101) 6.542 39.610 (0.247) (10.195) (0.051)
1 1 Asian Opportunities & Investments Ltd 2 McDowell Nepal Ltd 3 Zelinka Ltd 4 Shaw Wallace & Company Ltd 5 Ramanreti Investments & Trading Ltd 6 Shaw Wallace Breweries Ltd 7 Primo Distributors Private Ltd 8 Palmer Investment Group Ltd 9 RG Shaw & Company Ltd 10 Shaw Scott & Company Ltd 11 Shaw Darby & Company Ltd 12 Thames Rice Milling Company Ltd 13 Shaw Wallace Overseas Ltd 14 JIHL Nominees Ltd 15 Montrose International S.A 16 Bouvet Ladubay 17 Chapin Landais
2 4,998,706 Shares 67,716 Shares 1,000 Shares 15,072,311 Shares -
3,920,010 Equity Shares 15,000,000 Shares 7,690,180 Shares 105,609 Shares 130,845 Shares 90,160 Shares 357,745 Shares 10 Shares -
18,601,288 Shares 50,000 Shares 152,615,018 Shares -
500 Shares 3,600,000 Shares 5,000 Shares 1,575,000 Shares 50,000 Shares
18 McDowell & Co. (ScotLand) Ltd 19 Spring Valley Investments Holdings Inc
68
Statement Pursuant To Section 212(1)(e) Of The Companies Act, 1956 As At March 31, 2007 (Contd.)
a) No of shares held at the end b) Extent of holding of the financial year of the subsidiary % % Sl. Name of the subsidiary no. United Spirits Ltd Other subsidiary companies Net aggregate Profit/loss of the subsidiary so far as it concerns the members of the company with in the the company (ii ) for the previous financial years of the subsidiary since it became a subsidiary 7 b) Dealt with in the accounts of the company (i ) (ii ) for the for the previous subsidary's financial years financial of the subsidiary year ended since it became 31.03.2007 a subsidiary (Rs. Million) 8 9 -
a) Not dealt accounts of United Other (i ) Spirits Ltd subsidiary for the companies subsidiary's financial year ended 31.03.2007 4 5 100% 100% 100% 100% 6 (0.051) (0.055) (0.051) (0.051) (0.040) (0.012) (0.011) (0.023)
1 20 United Spirits (Great Britain) Ltd 21 USL Holdings Ltd 22 USL Holdings (UK) Ltd 23 United Spirits (UK) Ltd
24 Daffodils Flavours & Fragrances Pvt Ltd 25 Four Seasons Wines Ltd 50,000 Shares 26 Herbertsons Ltd 28 United Alcobev Ltd 29 United Vintners Ltd 54,000 Shares -
3 100 Shares 100,000 Shares 100,000 Shares 100,000 Shares 10,000 Shares -
100% 100% 90% 100% 100% 100%
27 McDowell Beverages Ltd 50,000 Shares 50,000 Shares 50,000 Shares -
Statement Pursuant To Section 212(1)(f) Of The Companies Act, 1956 As At March 31, 2007
Sl. Name of the no subsidiary Subsidiary Financial year ended on 16.07.2006 Company's Interest in the Subsidiary 82.46%
1 McDowell Nepal Limited V.S.VENKATARAMAN Company Secretary
Material changes that have occurred between the close of subsidiary's financial year and March 31, 2007 Subsidiary's Subsidiary's Moneys Moneys borrowed by the Fixed Investments lent by the subsidiary for the purposes Assets Subsidiary other than that of meeting current liabilities (Rs. Million) (1.699) 18.750 V.K.REKHI Managing Director P.A.MURALI Chief Financial Officer 69
VIJAY MALLYA Chairman M.R.DORAISWAMY IYENGAR Director
70 (Amount in Millions) R.G. Shaw & Palmer Investment Company Limited Group Limited GBP 0.077 0.612 0.786 0.786 0.720 (0.011) (0.011) JIHL Nominees Limited INR 6.081 48.238 62.575 62.575 56.972 (0.969) (0.969) USD 15.000 1.223 20.013 20.013 16.234 (0.007) (0.007) INR 654.450 53.400 872.702 872.702 708.289 (0.315) (0.315) Shaw Shaw Scott Thames Rice Wallace & Montrose Shaw Darby & & Company Milling Company Company International S.A. Company Limited Limited Limited Limited INR USD INR GBP INR GBP INR GBP INR 480.061 0.500 21.815 0.106 8.351 0.131 10.347 0.090 7.129 774.292 0.019 1.397 2,340.795 0.527 23.000 0.106 8.966 0.095 10.347 0.109 8.527 2,340.795 0.527 23.000 0.106 8.966 0.095 10.347 0.109 8.527 1,586.940 0.097 7.716 0.109 8.587 0.123 9.702 2,321.468 0.875 38.081 1,148.069 0.150 6.542 (0.002) (0.133) (0.000) (0.035) (0.004) (0.303) 327.301 820.768 0.150 6.542 (0.002) (0.133) (0.000) (0.035) (0.004) (0.303) 72.009 USD INR 0.000 0.000 0.047 2.053 0.050 2.053 0.050 2.053 (0.002) (0.100) (0.002) (0.100) Primo Spring Valley United Spirits Distributors USL Holdings USL Holdings United Spirits (UK) Investments (Great Britain) Private (UK) Limited Limited Limited Holding Inc. Limited Limited INR GBP INR USD INR USD INR GBP INR GBP INR 76.200 0.010 0.087 0.050 2.218 0.100 4.779 0.000 0.000 0.000 0.000 72.465 148.665 0.227 19.453 0.448 19.579 0.100 4.779 0.227 19.400 0.227 19.400 148.665 0.227 19.453 0.448 19.579 0.100 4.779 0.227 19.400 0.227 19.400 55.010 0.000 0.000 0.002 0.087 0.050 2.218 0.000 0.000 473.667 13.419 (0.001) (0.051) (0.001) (0.051) (0.001) (0.055) (0.001) (0.051) (0.001) (0.051) 3.169 10.250 (0.001) (0.051) (0.001) (0.051) (0.001) (0.055) (0.001) (0.051) (0.001) (0.051) -
Details of Subsidiary Companies
Name of the Subsidiary
1. Capital 2. Reserves 3. Total Assets 4. Total Liabilities 5. Investments 6. Turnover 7. Profit before Taxation 8. Provision for Taxation 9. Profit after Taxation 10. Proposed Dividend
Details of Subsidiary Companies (Contd.)

(Amount in Millions)
McDowell Nepal Limited
1. Capital 2. Reserves 3. Total Assets 4. Total Liabilities 5. Investments 6. Turnover 7. Profit before Taxation 8. Provision for Taxation 9. Profit after Taxation 10. Proposed Dividend McDowell (Scotland) Limited Bouvet Ladubay S.A.S Chapin Landias S.A.S Herbertsons Limited Zelinka Limited
Ramanreti Investments and Trading Company Private Ltd INR 0.500 23.139 23.139 16.860 (0.069) (0.069) NRS 8.212 106.379 146.669 146.669 334.398 51.331 15.051 36.280 24.635 INR 5.132 66.487 91.668 91.668 208.998 32.082 9.407 22.675 15.397
Shaw Shaw Four Asian Opportunities United United McDowell Wallace Wallace Seasons and Investments Vintners Alcobev Beverages Overseas Breweries Wines Limited Limited Limited Limited Limited Limited Limited USD INR INR INR INR INR INR INR 4.999 239.987 30.500 1,645.850 0.500 0.500 0.500 0.500 33.200 1,444.532 30.500 4,524.412 32.336 0.730 0.530 0.530 33.200 1,444.532 30.500 4,524.412 32.336 0.730 0.530 0.530 21.004 970.259 - 1,971.798 1.612 70.158 0.483 261.277 (0.798) (34.733) (0.239) 242.842 (0.040) (0.023) (0.011) (0.011) 35.819 (0.798) (34.733) (0.239) 207.023 (0.040) (0.023) (0.011) (0.011) -
GBP 1.575 2.886 2.886 (0.120) (0.120) -
INR EURO 131.780 3.600 4.566 246.014 8.890 246.014 8.890 0.145 - 10.633 (10.195) 1.120 0.437 (10.195) 0.683 -
INR 212.015 259.784 501.303 501.303 8.451 616.268 63.612 25.319 38.293 -
EURO 0.100 0.064 0.164 0.164 0.143 1.514 (0.049) 0.007 (0.042) -
INR 5.889 3.450 9.586 9.586 0.830 87.730 (0.287) 0.041 (0.246) -
INR 0.600 0.600 0.600 (0.012) (0.012) -
USD 0.002 168.826 168.826 162.071 0.128 0.071 0.012 0.059 -
INR 0.099 7,345.647 7,345.647 7,071.181 5.580 3.080 0.512 2.568 -
Daffodils Flavours & Fragrances Private Limited INR 0.100 17.699 17.699 -
71
Balance Sheet Abstract

BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE
I Registration Details Registration No. Balance Sheet Date II Public issue Bonus Shares Others III Total Liabilities Sources of funds Paid-up Capital Share Capital Suspense Unsecured Loans Application of Funds Net Fixed Assets Net Current Assets Accumulated Losses IV Performance of Company (Rs. Million) Turnover (Gross Revenue) (+) Profit / (-) Loss Before Tax + 6 2 1 6 . 2 6 0 5 2 . 2 0 0 0 0 1 0 1 R U M (+) Profit / (-) Loss After Tax (incl. Deferred Tax) Earnings (Diluted) per Share in Rs. V Item Code No. (ITC Code) Product Description Item Code No. (ITC Code) Product Description Item Code No. (ITC Code) Product description Dividend rate % 2 5 Generic Name of Three Principal Products / Services of Company (as per monetary items) 2 2 0 8 3 0 2 2 0 8 2 0 2 2 0 8 4 0 WH I S K Y B R A N D Y + 4 9 4 0 . 1 9 4 2 7 9 0 8 . 7 7 7 Total Expenditure 2 4 0 1 0 . 5 1 9 4 6 4 4 . 8 0 0 1 6 8 3 6 . 5 3 2 N I L Investments Misc. Expenditure 6 6 2 4 . 6 1 9 N I L 5 1 9 2 . 5 6 6 1 0 2 2 . 3 1 9 N I L Secured Loans Deferred Tax Loans Liability (Net) 7 . 9 3 5 9 4 8 5 . 2 2 6 Reserves & Surplus 1 2 3 9 7 . 9 0 5 0 8 - 2 4 9 9 1 3 1 0 3 2 0 0 7 N I N I L L Rights issue Private Placement Naked Warrants / Pref. offer Total Assets N I N I N I L L L
Capital Raised during the period (Rs. Million)
4 1 7 . 6 0 5 2 8 1 0 5 . 9 5 1
Position of Mobilisation and Deployment of Funds (Rs. Million) 2 8 1 0 5 . 9 5 1
VIJAY MALLYA Chairman Bangalore October 31, 2007
V.K. REKHI Managing Director P.A. MURALI Chief Financial Officer
M.R. DORAISWAMY IYENGAR Director V.S. VENKATARAMAN Company Secretary
72
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, 2007, 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 Limiteds 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. 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. We did not audit the financial statements of certain subsidiaries, whose financial statements reflect total assets of Rs.17,918.973 Million as at March 31, 2007, total revenues of Rs.3,378.851 Million and net cash inflow/(outflow) amounting to Rs.669.089 Million for the year ended on that date and associates whose financial statements reflect the United Spirits Limited Groups share of loss of Rs.0.109 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 Limiteds 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, issued by The Institute of Chartered Accountants of India. 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, 2007;
5.
2.
ii) in the case of the Consolidated Profit and Loss account, of the profit 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.
3.
J. Majumdar Partner Membership Number F 51912 For and on behalf of Price Waterhouse Chartered Accountants Place: Bangalore Date: October 31, 2007
73
Consolidated Financial Statement Balance Sheet as at March 31, 2007

Schedule SOURCES OF FUNDS Shareholders' Funds Share Capital Share Capital Suspense Reserves and Surplus Minority Interest Loan Funds Secured Loans Unsecured Loans Deferred Tax Liability (Net) [Schedule 18 Note 20(b)] APPLICATION OF FUNDS a) Fixed Assets Gross Block Less: Depreciation Net Block Capital Work in Progress 2007 Rs. Million 2006
1 1A 2
828.930 12,863.346 1,712.285 9,507.589 5,294.050 18.618 30,224.818
604.714 224.216 7,588.850 1,285.164 10,081.142 5,350.285 85.810 25,220.181
3 4
5 6,821.724 1,764.466 5,057.258 133.227 5,190.485 11,324.130 2,044.080 3,552.856 3,991.387 5,778.013 1,218.462 4,389.510 18,930.228 6,049.607 1,214.498 7,264.105 11,666.123 30,224.818 17 18 6,056.444 1,218.172 4,838.272 26.106 4,864.378 10,835.286 2,484.518 2,945.268 3,220.063 3,611.420 727.892 3,908.470 14,413.113 6,309.169 1,067.945 7,377.114 7,035.999 25,220.181
b) Goodwill on Consolidation Investments Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances Less: Current Liabilities and Provisions Liabilities Provisions Net Current Assets Statement on Significant Accounting Policies Notes on Accounts
6 7 8 9 10 11 12
The Schedules referred to above and the notes thereon form an integral part of the Accounts. This is the Consolidated Balance Sheet referred to in our report of even date VIJAY MALLYA Chairman J. MAJUMDAR Partner For and on behalf of Price Waterhouse Chartered Accountants Bangalore October 31, 2007 M.R.DORAISWAMY IYENGAR Director V.S.VENKATARAMAN Company Secretary Bangalore October 31, 2007 V.K.REKHI Managing Director P.A.MURALI Chief Financial Officer
74
Consolidated Financial Statement Profit and Loss Account for the year ended March 31, 2007
Schedule INCOME Sales (Gross) Less : Excise Duty Income arising from Sale by Manufacturers under 'Tie-up' agreements (Tie-up units) Income from Brand Franchise Other Income EXPENDITURE Materials Manufacturing and Other Expenses Interest and Finance charges Profit before Prior Period, Exceptional and Other Non-Recurring Items, Depreciation and Taxation Depreciation Profit before Prior period, Exceptional and Other Non-Recurring Items and Taxation Prior period, exceptional and other non recurring items (Net) [Schedule 18 Note 14(a)] Profit before Taxation Provision for Taxation: Current Tax Deferred Tax Fringe Benefit Tax Profit after Taxation and before share in Profits / (Losses) of Associates Share in Profits / (losses) of Associates (Net) Profit before Minority Interest Minority Interest in (Profit ) / Loss Net Profit for the year Profit brought forward from previous year Appropriations: Proposed Dividend Equity Shares - Interim Equity Shares - Final Corporate Tax on Proposed Dividend Transfer to Capital Redemption Reserve Transfer to General Reserve Profit carried to Balance Sheet Basic and Diluted Earnings Per Share (Rs.) Statement on Significant Accounting Policies Notes on Accounts 2007 47,646.449 20,867.652 26,778.797 1,531.581 938.716 875.518 30,124.612 16,046.969 8,844.500 873.405 25,764.874 4,359.738 337.861 4,021.877 3,134.686 7,156.563 1,077.621 (65.912) 37.599 6,107.255 (0.254) 6,107.001 (437.478) 5,669.523 932.348 6,601.871 101.163 85.596 50.119 542.648 5,822.345 68.40 17 18 Rs. Million 2006 35,400.085 16,406.439 18,993.646 1,716.672 774.343 595.096 22,079.757 11,331.911 8,229.663 1,524.206 21,085.780 993.977 425.621 568.356 568.356 130.518 (71.277) 63.625 445.490 (4.777) 440.713 813.085 1,253.798 416.481 1,670.279 188.963 34.522 464.446 50.000 932.348 16.38
13 14 15 16
The 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
VIJAY MALLYA Chairman J. MAJUMDAR Partner For and on behalf of Price Waterhouse Chartered Accountants M.R.DORAISWAMY IYENGAR Director V.S.VENKATARAMAN Company Secretary V.K.REKHI Managing Director P.A.MURALI Chief Financial Officer
Bangalore October 31, 2007 75
Consolidated Financial Statement Cash Flow Statement for the Year Ended March 31, 2007
2007 A. CASH FLOW FROM OPERATING ACTIVITIES Net profit / (loss) before Prior Period, Exceptional and Other Non-recurring items and Taxation Adjustments for : Depreciation Unrealised Foreign Exchange Loss / (Gain) Bad Debts/ Advances written off Loss/(Gain) on Fixed Assets Sold/Written Off (Net) Loss/(Gain) on Sale of Investments (Net) Liabilities no longer required written back Provision for Doubtful Debts Provision for diminution in value of Investments written back Provision - Others Interest and Finance Charges Income from investments Interest Income Operating profit before working capital changes (Increase)/decrease in Trade and other receivables (Increase)/decrease in Inventories Increase/(decrease) in Trade payables Cash generated from operations Direct taxes paid Fringe Benefit taxes paid Cash flow before Prior Period, Exceptional and Other Non-recurring items Prior Period, Exceptional and Other Non-recurring items Cash flow before and after extraordinary items and net cash from operating activities (1,590.403) (117.721) (151.741) 4,021.877 337.861 (150.466) 43.476 (79.230) (0.794) (400.537) 96.828 (1.098) 142.434 1,230.950 (106.632) (357.545) 425.621 56.158 37.010 (42.959) (91.961) (177.509) 137.827 18.844 1,772.357 (12.315) (248.151) Rs. Million 2006 568.356
755.247 4,777.124
1,874.922 2,443.278
(1,859.865) 2,917.259 (559.274) (63.787) 2,294.198 3,007.199 5,301.397
(1,307.635) (331.671) 402.005
(1,237.301) 1,205.977 (648.822) (36.896) 520.259 520.259
CASH FLOW FROM INVESTING ACTIVITIES Purchase of fixed assets Sale of fixed assets Finance Lease Payments Purchase of long terms investments Purchase of current investments Consideration paid on acquisitions of shares in Subsidiaries [net of cash and cash equivalent on the acquisition date Rs. 27.202 Million (2006 : Rs. 7,259.504 Million) Sale of long term investments Sale of current investments Disposal of Investments in Subsidiaries Sale of Preference Shares in Subsidiary Loan given to : Inter Corporate Deposits Interest received Dividend received Net cash used in investing activities
(403.074) 154.564 (7.785) (698.612) (795.468) (1,070.778)
(371.344) 118.357 (1.195) (1,004.742) (327.762) (9,312.913)
754.612 700.001 320.638 106.169 (939.733)
398.292 327.200 263.339 68.192 (362.107) 257.004 12.315 (9,935.364)
76
Consolidated Financial Statement Cash Flow Statement for the Year Ended March 31, 2007 (Contd.)
2007 C. CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issue of rights shares by a subisidary company Proceeds from Preference Shares of a subsidiary company Redemption of Preference Shares of a subsidiary company Net Proceeds from issue of Global Depositary Shares (GDS) Net Proceeds from issue of 2% Foreign Currency Convertible Bonds (FCCB) Expenses incurred on issuance of GDS and FCCB Expenses relating to Amalgamation Proceeds / (Repayment) of long term loans Proceeds Repayment Proceeds / (Repayment) of fixed deposits Proceeds / (Repayment) of short terms loans Working Capital Loan / Cash Credit from Banks (net) Interest and Finance charges Paid Dividends paid Tax on distributed profit Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents as at April 1 (Opening Balance) Cash and Cash Equivalents of Transferor companies as at April, 2005 Cash and Cash Equivalents as at March 31 (Closing Balance) 3,830.041 (4,285.349) (52.283) (69.507) (159.587) (1,183.813) (222.927) (51.646) (2,195.071) 2,166.593 3,611.420 5,778.013 2,166.593 339.700 500.000 (1,000.000) 5,796.051 4,458.500 (242.569) (306.192) 9,808.849 (9,059.023) 15.951 (1,477.500) 715.495 (1,748.837) (177.754) (27.039) 7,595.632 (1,819.473) 5,087.996 342.897 3,611.420 (1,819.473) Rs. Million 2006
Notes : 1. 2. The above Consolidated Cash Flow Statement has been compiled from and is based on the Consolidated Balance Sheet as at March 31, 2007 and the related Consolidated Profit and Loss Account for the year ended on that date. The above Consolidated Cash Flow Statement has been prepared under the indirect method as set out in the Accounting Standard - 3 on Cash Flow Statements issued by The Institute of Chartered Accountants of India and reallocation required for this purpose are as made by the Group. Previous year's figures have been regrouped wherever necessary in order to confirm to this year's presentation.
3.
This is the Consolidated Cash Flow Statement referred to in our report of even date. VIJAY MALLYA Chairman J. MAJUMDAR Partner For For and on behalf of Price Waterhouse Chartered Accountants Bangalore October 31, 2007 M.R.DORAISWAMY IYENGAR Director V.S.VENKATARAMAN Company Secretary Bangalore October 31, 2007 V.K.REKHI Managing Director P.A.MURALI Chief Financial Officer
77
Consolidated Financial Statement Schedules forming part of Balance Sheet as at March 31, 2007
2007 1. Share Capital Authorised 110,000,000 (2006:110,000,000) Equity Shares of Rs.10/- each 10,000,000 (2006:10,000,000) Preference Shares of Rs.10/- each Issued, Subscribed and Paid-up 94,481,930 (2006: 60,471,409) Equity Shares of Rs.10/each fully paid up. Less:11,588,984 (2006: Nil)Equity Shares held by Subsidiaries 7,750,000 (2006:Nil) 9%, Non Cumulative Non Convertible Redeemable Preference Shares of Rs.10/- each fully paid up Less: 7,750,000 (2006:Nil) 9%, Non Cumulative Non Convertible Redeemable Preference Shares held by a subsidiary Notes : Of the above, 1. 51,719,968 (2006: 51,719,968) Equity Shares were allotted as fully paid upon July 9, 2001 to the shareholders of the erstwhile McDowell & Co. Ltd., pursuant to the schemes of Amalgamation for consideration other than cash. 2. 34,010,521 (2006: Nil) 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. 8,751,381 (2006: 8,751,381) Equity shares of Rs.10/- each fully paid up represent 17,502,762 (2006: 17,502,762) Global Depository Shares issued by the Company on March 29, 2006. 7,750,000 (2006: Nil) 9% Non-Cumulative Non-Convertible Redeemable Preference Shares of Rs 10/- each are issued as fully paid up on November 6, 2006 to 9 % Non-Cumulative Non-Convertible Redeemable Preference Shareholders of erstwhile Shaw Wallace Distilleries Limited pursuant to the scheme of Amalgamation for consideration other than cash. Rs. Million 2006
1,100.000 100.000
1,100.000 100.000
944.819 115.889 828.930
604.714
604.714
77.500
77.500 -
3.
4.
The above 7,750,000 (2006: Nil) 9% Non-Cumulative Non-Convertible Redeemable Preference Shares of Rs 10/- each have been redeemed at par on July 11, 2007
78
2007 1A. Share Capital Suspense Equity Share Suspense Nil (2006: 34,010,521) 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 Less: Nil (2006: 11,588,984) Equity shares to be issued to Subsidiaries Preference Share Suspense Nil ( 2006: 7,750,000) 9% Non-Cumulative Non-Convertible Redeemable Preference shares of Rs.10/- each to be issued as fully paid up to 9% Non-Cumulative Non-Convertible Redeemable Preference Shareholders of erstwhile Shaw Wallace Distilleries Limited pursuant to the Scheme of Amalgamation for consideration other than cash Less: Preference shares to be issued to Subsidiaries The above 7,750,000 9% Non-Cumulative Non-Convertible Redeemable Preference shares of Rs.10/- each to be issued will be redeemable at par on July 11, 2007. Rs. Million 2006
340.105
115.889 224.216
77.500 (77.500) -
224.216
79
2007 2. RESERVES AND SURPLUS Central Subsidy As per last Balance Sheet Received during the year Capital Redemption Reserve As per last Balance Sheet Transferred from the Profit and Loss Account on redemption of Preference Shares Securities Premium Account As per last Balance Sheet Addition during the year: (a) On issue of Global Depository Shares (b) On conversion of 6,500,000 9% Cumulative Convertible Preference shares of Rs. 10/- each fully paid in Shaw Wallace Distilleries Limited, a Transferor Company Less: Adjustments during the year: (a) Expenses incurred on issuance of Global Depository Shares (GDS) and 2% Convertible Bonds in Foreign Currency (FCCB) Legal and Professional Fees Underwriting Fee and Other costs Miscellaneous Income (b) Premiuim payable on Redemption of FCCB Employee Housing Fund As per last Balance Sheet Foreign Currency Translation Reserve [Schedule 18 Note 7] Contingency Reserve As per last Balance Sheet General Reserve As per last Balance sheet Add: Addition during the year: (a) Reserve arising on appreciation (net of diminuition) in value of certain assets of the Company (b) Adjustment including reversal of Goodwill and Minority interest relating to Subsidiaries and an Associate, on amalgamation / demerger (c) Transferred from Profit and Loss Account Less: (a) Adjustments relating to equity share dapital to be issued to Subsidiaries (b) Adjustments relating to Demerger (c) Reserve arising on Amalgamation (d) Expenses relating to Amalgamation (e) Adjustment on adoption of Accounting Standard on 'Employee Benefits' [net of deferred tax credit of Rs 1.280 Million (2006: Nil)] [Schedule18 Note 9(a)] Surplus in Profit and Loss account 1.500 1.500 464.446 464.446 5,505.775 5,505.775 5,708.537 41.786 5,750.323 464.446 464.446 Rs. Million 2006 1.500 1.500
(47.964) 5,457.811 0.625 (107.368) 110.000 573.861 -
(116.760) (141.122) 15.313 (1.979) 5,505.775 0.625 0.295 110.000 1,683.868 770.650
542.648 1,116.509 -
116.687 50.000 2,621.205 (1,153.687) (435.758) (151.707) (306.192)
(2.522) 1,113.987 5,822.345 12,863.346
573.861 932.348 7,588.850
80
2007 3. SECURED LOANS Term Loans From Banks [Note (i)] [Repayable within one year: Rs.733.068 Million (2006: Rs.425.318 Million)] From Others [Note (ii)] [Repayable within one year: Rs. Nil (2006: Rs.42.500 Million)] Working Capital Loan / Cash Credit from Banks [Note (iii) ] Finance Lease [Note (iv)] Interest accrued and due Notes: (i) Out of the above loans: (a) Secured by charge on certain fixed assets of the Company including Land and Building (b) Secured by charge on certain fixed assets of the Company, pledge of certain shares held by the Company and also by pledge of certain shares of other companies. (c) Foreign Currency Borrowings secured by charge on fixed assets of the company, pledge of certain shares held by the Company and also by pledge of investments held by other companies. (d) Secured by a second charge on certain fixed assets of the Company including Land and Building. (e) Secured by charge on a brand (f) Foreign Currency External Commercial Borrowings secured by charge on specific Fixed Assets and a Brand (g) Secured by hypothecation of specific fixed assets acquired under respective agreements. (ii) Out of the above loans: (a) Secured by a charge on certain fixed assets of the Company and pledge of certain shares and properties of other companies (b) Secured by charge on certain fixed assets of the Company including Land and Building (iii) (a) Secured by charge on certain fixed assets of the Company including Land and Building and hypothecation of inventories, book debts and other current assets. (b) Includes Foreign Currency Non-Resident [FCNR(B)] Loans (iv) Secured against assets acquired under lease agreements 4. UNSECURED LOANS Fixed Deposits [Repayable within one year Rs.187.112 Million (2006: Rs. 196.371 Million)] From Banks [Repayable within one year Rs.100.000 Million (2006: Rs.100.000 Million)] 2% Convertible Bonds in Foreign Currency [Schedule 18 Note 5(a)] From others Interest accrued and due Rs. Million 2006
6,192.267 3,238.187 28.713 48.422 9,507.589
6,290.225 375.000 3,389.570 12.390 13.957 10,081.142
489.910
1,178.527
3,688.816
500.000
282.349 187.500 6.600 1,522.850 14.242
3,000.000 21.000 1,561.350 25.999
320.000 55.000
396.331 -
841.515 -
668.010 117.388 4,423.643 43.503 41.506 5,294.050
713.204 100.000 4,461.000 35.000 41.081 5,350.285
81
82 Rs. Million NET BLOCK 2007 2007 2006 2006 GROSS BLOCK Acquisition Deletion/ (Note 4 Additions Adjustments and 5) 2007 2006 DEPRECIATION Acquisition Deletion/ (Note 4 For the year Adjustments and 5) 28.811 43.723 179.661 25.051 1,825.863 0.360 215.246 45.464 1,416.124 15.621 2,828.993 205.078 761.478 74.458 157.033 58.525 211.982 11.974 326.087 4.302 1,126.191 1,825.863 1,575.715 215.246 215.606 1,090.037 1,101.820 1,702.802 1,729.680 19.504 30.777 4.604 12.982 320.062 418.446 4.604 4.298 227.191 112.108 6,821.724 142.006 6,056.444 131.283 1,218.172 964.477 248.578 (105.941) 21.314 33.089 270.614 1.132 119.201 17.087 7.045 25.368 0.026 34.915 337.861 425.621 19.612 8.177 142.044 0.026 4.257 161.941 40.145 1,764.466 65.987 1,218.172 24.912 128.570 12.453 115.774 4.578 65.250 87.224 5,057.258 4,838.272 133.227 26.106 5,190.485 4,864.378
Consolidated Financial Statement Schedules forming part of Balance Sheet as at March 31, 2007(Contd.)
5. FIXED ASSETS
Tangible Land (Note 1 below) : Freehold 1,575.715 246.388 Leasehold 215.606 Buildings (Notes 2 and 3 below) 1,306.898 110.967 Plant & Machinery 2,491.158 173.795 Furniture & Fixture and Office Equipments: 13.585 Finance Lease Others 234.975 26.176 Vehicles: Finance Lease Others 218.507 6,056.444 557.326 2006 3,321.726 2,458.278 Capital Work-in-Progress (including Advances)
Notes:
1. 2.
3. 4. 5.
The Company is in the process of registering certain freehold and leasehold land in its own name. Cost of buildings includes the following payments made for the purpose of acquiring the right of occupation of Mumbai godown space : i) 660 equity shares (unquoted) of Rs.100 each fully paid in Shree Madhu Industrial Estate Limited Rs.0.066 Million (2006: Rs.0.066 Million). Application has been made for duplicate Share certificates and the same is in the process. ii) 199 6 % Debentures (unquoted) of Rs.1,000 each fully paid in Shree Madhu Industrial Estate Limited Rs. 0.199 Million (2006: Rs.0.199 Million). Application has been made for duplicate Debentures certificates and the same is in the process. iii) Deposit with Shree Madhu Industrial Estate Limited Rs. 0.132 Million (2006: Rs. 0.132 Million) Include value of fully paid shares Rs. 0.003 Million (2006: Rs 0.003 Million) held in Co-operative Housing Societies. Taken over pursuant to acquisition of subsidiary companies. Refer Note 2 of Schedule 17. Gross Block acquisitions and depreciation acquisitions for the year ended March 31, 2006 includes adjustments pertaining to Amalgamation / Revaluation amounting to Rs. 2,081.700 million and Rs. 264.927 million respectively.
6. INVESTMENTS Particulars CURRENT Quoted Investments Units (Fully Paid) Mutual Funds Investments Total Current Investments LONG TERM Quoted Investments A. Trade Fully Paid Equity Shares B. Non-Trade Fully Paid Equity Shares Units (Fully Paid) (Note 1) Total Quoted Investments (A + B) Unquoted Investments C. Trade Fully paid Equity Shares (Note 2) Associates ** Add : Accumulated Profits / (Losses) of Associates (net of dividend received) ** Including Goodwill on cquisition of Associates Rs. 7.310 Million (2006 : Rs. 7.310 Million) Fully paid Preference Shares 9.3% Cumulative Redeemable Preference Shares of Rampur Engineering Company Limited 2007 Rs. Million 2006
796.030 796.030
0.562 0.562
0.033
0.033
4.554 4.587 35.317 39.904
5.344 5.377 34.855 40.232
2.621 7.199 (3.778) 3.421 7.199 (3.524)
2.648 -
3.675
0.250 6.292
0.250 6.573
D. Non-Trade In Government Securities In Fully Paid Debentures Fully paid Equity Shares
1,000.960 0.048 8.182 1,009.190
1,751.323 0.009 1.929 1,753.261
83
Rs. Million Particulars E. Others (Note 3) 2007 194.676 194.676 Total Unquoted Investments (C+D+E) Total Long Term Investments (A+B+C+D+E) Total Current and Long Term Investments Less: Provision for diminution in the value of investments Total Aggregate value of Quoted Investments - Book value - Market value Aggregate Book value of Unquoted Investments Acquired on acquisition Additions during the year Adjustments to Investments - Demerger Adjustments to Investments (Note 3(b) below Sold during the year Notes: 1. 2. Investments in units of Unit Trust of India amounting to Rs.34.398 Million represent those made under Rule 3A of the Companies (Acceptance of Deposit) Rules, 1975. The erstwhile amalgamating Carew Phipson Limited has submitted its claim to Custodian of Enemy Property for India towards the full payment of the value of shares of which 25% was received and the balance value of investment was written off in the books in 1977, retaining a token amount of Re.1 in the books pending disposal of the representation to the custodian for nal payment in this regard. Others include : a) Rs.153.536 million (2006:Rs.687.001 million) pertaining to 2,152,660 equity shares (2006: 5,652,660) of Rs.10 each fully paid up issued to USL Benet Trust pursuant to the scheme of amalgamation, to hold such shares with all addition or accretion there to in trust for the benet of the company. b) Rs.41.140 million being interest in SWFSL Benet Trust referred to in Note 3 on Schedule 18. 833.921 852.023 1,210.159 7.006 1,495.052 41.140 1,984.735 39.969 131.785 2,444.548 2,010.531 1,332.042 (437.648) 984.837 1,210.159 1,250.062 2,046.092 2.013 2,044.080 2006 687.001 687.001 2,446.835 2,487.067 2,487.629 3.111 2,484.518
3.
84
2007 7. INVENTORIES Raw Materials including materials in transit Packing Materials, Stores and Spares Finished goods including goods in transit Work-in-Progress 654.622 412.162 1,063.708 1,422.364 3,552.856 Rs. Million 2006 585.731 331.010 1,267.500 761.027 2,945.268
8. SUNDRY DEBTORS (Unsecured) Exceeding six months Considered Good Considered Doubtful Others : Considered Good Less : Provision for Doubtful debts
113.020 108.618 221.638 3,878.367 4,100.005 108.618 3,991.387
124.072 285.141 409.213 3,095.991 3,505.204 285.141 3,220.063
9. CASH AND BANK BALANCES Cash on Hand Remittance-in-Transit/ Cheques on Hand Balances with Scheduled Banks: On Current Accounts [Note (i)] On Unpaid Dividend Account On Deposit Account [Notes (ii)
7.044 8.065 490.214 104.779 5,167.911 5,778.013
6.870 217.903 711.687 18.881 2,656.079 3,611.420
Notes: (i) (ii) includes Rs.27.271 Million (2006: Rs. 28.438 Million) in Exchange Earners Foreign Currency (EEFC) Account and Rs.18.052 Million (2006 : Rs. 0.611 Million) in Foreign Currency. (a) includes Rs. 0.214 Million (2006: Rs. 3.899 Million) pledged with Government Departments. (b) includes Rs. Nil (2006 : Rs. 6.433 Million) kept as margin against letter of credit and Rs. 0.550 Million (2006: Rs.0.692 Million) as margin against Bank Guarantee. (c) includes Rs. Nil (2006 : Rs.1,114.625 Million) deposits in Foreign Currency. (d) includes Rs. 1,092.205 Million (2006 : 1,066.833 Million) in escrow account in terms of a separate agreement dated May 27, 2005 between SWBL and MBL.
85
2007 10. OTHER CURRENT ASSETS (Unsecured, Considered Good except where otherwise stated) Income accrued on Investments and Deposits Other Deposits - Considered Good - Considered Doubtful Fixed assets held for sale Less : Provision for Doubtful Deposits 11. LOANS AND ADVANCES (Unsecured, Considered Good except where otherwise stated) Advances recoverable in cash or in kind or for value to be received: Advances to Tie-up units - Considered Good - Considered Doubtful Advance Income Tax (Net of Provisions) Advance for Acquisition of Trade Mark (Schedule 18 Note 12(a) (ii)] Other Advances - Considered Good - Considered Doubtful Less : Provision for Doubtful Advances 12. CURRENT LIABILITIES AND PROVISIONS A. Liabilities Acceptances * Sundry Creditors Dues to Directors Investors Education and Protection Fund [Schedule 18 Note 13] Unclaimed Debentures Unclaimed Dividends Unclaimed Fixed Deposits Security Deposit Advances Received from Customers Interest accrued but not due Other Liabilities * Includes bills drawn against inland letters of credit of Rs. 113.031 Million (2006: Rs. 331.696 Million) and secured by a charge on debtors, inventories and other current assets. B. Provisions Proposed Dividend Equity Shares - Interim Equity Shares - Final Corporate Tax on Proposed Dividend Taxation (net of payments) Fringe Benefit Tax (Net of Payments) Provision for redemption premium Provision for Contingencies [Schedule 18 Note 4 (c)] Employee Benefits 45.321 1,170.351 9.999 2.790 1,228.461 9.999 1,218.462 Rs. Million 2006 8.414 713.317 8.777 6.161 736.669 8.777 727.892
643.581 21.519 217.493 3,528.436 130.119 4,541.148 151.638 4,389.510
977.955 19.448 129.794 223.030 2,577.691 42.981 3,970.899 62.429 3,908.470
643.214 4,439.423 37.434 7.997 19.757 14.069 99.653 125.192 71.331 591.537 6,049.607
512.486 4,639.494 5.960 8.570 22.229 21.158 235.715 246.452 59.083 558.022 6,309.169
87.319 85.596 30.242 388.553 0.541 49.493 284.788 287.966 1,214.498
188.963 28.715 26.729 1.979 615.000 206.559 1,067.945
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Consolidated Financial Statement Schedules forming part of Profit & Loss Account for the year ended March 31, 2007
2007 13. OTHER INCOME Income from Investments: Dividend income from trade investments Dividend income from other investments Lease Rent Profit on Sale of Fixed Assets (Net) Profit on Sale of Investments Liabilities no longer required written back Provision for Diminution in Value of Investment written back Exchange Gain (Net) Bad debts/advances recovered Scrap Sales Insurance Claims Export Incentive Miscellaneous 106.632 94.480 0.794 400.537 1.098 60.229 18.993 91.355 18.404 82.996 875.518 2.185 10.130 1.269 50.945 91.961 177.509 0.591 64.860 0.195 7.034 188.417 595.096 Rs. Million 2006
14. MATERIALS Raw Materials Consumed Purchase of Finished Goods Packing Materials Consumed Movement in Stocks Opening Stock: Work-in-Progress Finished Goods Add : Taken over on Amalgamation / Acquisition Work-in-Progress Finished Goods Closing Stock: Work-in-Progress Finished Goods (Increase)/ Decrease in Stocks Excise Duty on Opening/Closing Stock of Finished Goods (Net)
6,689.816 3,554.982 5,974.641
4,869.985 1,571.075 4,864.212
761.027 1,267.500 2,028.527 484.096 5.771 489.867 1,422.364 1,063.708 2,486.072 32.322 (204.792) 16,046.969
545.566 495.247 1,040.813 236.250 494.721 730.971 761.027 1,267.500 2,028.527 (256.743) 283.382 11,331.911
87
Consolidated Financial Statement Schedules forming part of Profit & Loss Account for the year ended March 31, 2007
2007 15. MANUFACTURING AND OTHER EXPENSES Employee Cost : Salaries, Wages and Bonus Contribution to Provident and Other Funds Workmen and Staff Welfare Voluntary Retirement Scheme Compensation Power and Fuel Stores and Spares Consumed Repairs and Maintenance : Buildings Plant and Machinery Others Rent Rates and Taxes Insurance Travelling and Conveyance Legal and Professional Freight Outwards Advertisement and Sales Promotion Commission on Sales Cash Discount Sales Tax Fixed Assets Written Off Directors' Remuneration: Sitting Fee Commission Exchange Loss (Net) Bad Debts and Advances Written Off Provision for Doubtful Debts/ Advances/Deposits Research and Development Others : Personnel and Administration Selling and Distribution Miscellaneous Rs. Million 2006
1,655.531 271.969 95.812 174.774 46.039 40.786 59.273 47.163 111.876 210.627 50.798 427.882 420.857 577.829 2,942.247 215.889 191.426 138.243 15.250 2.633 36.991 43.476 96.828 8.004 357.880 384.270 220.147 8,844.500
1,385.978 246.090 97.333 15.600 215.948 75.139 15.527 73.683 89.282 115.574 198.245 51.697 543.376 328.015 541.385 2,260.893 386.364 221.347 96.131 7.986 0.855 5.517 185.237 37.010 137.827 12.920 173.207 401.777 309.720 8,229.663
16. INTEREST AND FINANCE CHARGES Interest on : Fixed Loans Other Loans Finance Charges (Including Bill Discounting charges) Less : Interest Income : On Investments On Deposits and Other Accounts (Gross) [Tax Deducted at Source Rs. 36.482 Million (2006 : Rs. 14.669 Million)] On Income Tax Refunds
866.932 270.147 93.871 1,230.950 2.234 351.387 3.924 873.405
978.680 317.893 475.784 1,772.357 2.121 176.104 69.926 1,524.206
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Consolidated Financial Statement Schedules forming part of Accounts for the year ended March 31, 2007
17. 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 Accounting Standard (AS 23) on Accounting for Investments in Associates in Consolidated Financial Statement issued by the Institute of Chartered Accountants 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 Companys 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 Companys 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:
Name of the Company Country of Incorporation Proportion of owner-ship interest (%) Proportion of voting power held directly or indirectly, if different from proportion of ownership interest(%) 2007 100 100 2006 100 100 100 -
2007 1 2 3 4 5 6 7 8 9 10 Asian Opportunities & Investments Limited (AOIL) McDowell Nepal Limited (MNL) Zelinka Limited (ZL) Shaw Wallace & Company Limited (SWCL) Ramanretti Investments & Trading Ltd. (RITL) Shaw Wallace Financial Services Ltd. (SWFSL) (i) Shaw Wallace Breweries Limited (SWBL) Primo Distributors Pvt. Ltd. (PDPL) Palmer Investment Group Ltd.(PIG) RG Shaw & Company Ltd. (RGSC) Mauritius Nepal Cyprus India India India India India British Virgin Islands U.K. 100 82.47 100 75 75 75 100 100 100
2006 100 82.47 100 75 75 75 75 100 100 100
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Consolidated Financial Statement Schedules forming part of Accounts for the year ended March 31, 2007 (Contd.)
Name of the Company Country of Incorporation Proportion of owner-ship interest (%) Proportion of voting power held directly or indirectly, if different from proportion of ownership interest(%) 2007 100 100 2006 100 -
2007 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Shaw Scott & Company Ltd. (SSC) Shaw Darby & Company Ltd. (SDC) Thames Rice Milling Company Limited (TRMC) Shaw Wallace Overseas Limited (SWOL) JIHL Nominees Limited(JIHL) Montrose International S.A (MI) USL Holdings Limited (UHL)(ii) Spring Valley Investments Holding Inc.(SVIH) (ii) USL Holdings (UK) Limited (UHUKL) (ii) United Spirits (UK) Limited (USUKL) (ii) United Spirits (Great Britain) Limited (USGBL) (ii) Four Seasons Wines Limited (FSWL) (ii) United Vintners Limited (UVL) (ii) United Alcobev Limited (UAL) (ii) McDowell Beverages Limited (MBL) (ii) McDowell (Scotland) Limited (MSL) (iii) Bouvet Ladubay S.A.S (BL) (iii) Chapin Landias S.A.S (CL) (iii) Herbertsons Limited (HL) (ii) Daffodils Flavours & Fragrances Private Limited (DFFPL) (ii) U.K. U.K. U.K. U.K. Jersey Islands Panama British Virgin Islands British Virgin Islands U.K U.K U.K India India India India Scotland France France India India 100 100 100 75 100 100 100 100 100 100 100 100 100 100 100 100 100 100 90 100
2006 100 100 100 75 100 100 -
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2. Subsidiary and Associate Companies considered in the Consolidated Financial Statements: (B) Associate Companies (Note (iv) below) Name of the Company 1 (i) (ii) (iii) (iv) 3. Utkal Distillery Limited (Utkal) Country of Incorporation India Proportion of owner-ship interest (%) 2007 2006 43 43
Ceased to be subsidiary due to amalgamation of the same with SWBL w.e.f. April 1, 2005 . Became subsidiaries during the year. Acquired during the year ( Refer schedule 18 Note 10 ) Consolidated Financial Statements also include USL Benefit Trust and SWFSL Benefit Trust.
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 Groups share of profits or losses after the date of acquisition have been adjusted in the investment value. 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 Honble Supreme Court of India vesting the distillery unit with the state of Bihar. Since the Company does not have any investments/significant influence in respect of UBDL, the same has not been accounted for as an associate in these Consolidated Financial Statements under the Equity Method. .
b)
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 issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.
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. (d) Goodwill represents the difference between the Companys 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.
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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 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. 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 except for the following, which are based on managements estimate of useful life of the assets concerned: i) ii) b) Computers and Vehicles over a period of three and five years respectively; 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;
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 Plant & Machinery Vehicles Computers 1 to 30 years 1 to 20 years 1 to 4 years 1 to 2 years
c) d) e) f)
Assets taken on finance lease are depreciated over its estimated useful life or the lease term whichever is lower. Leasehold Land are not amortised. Goodwill arising on amalgamation is charged to the Profit and Loss Account in the year of amalgamation. Goodwill arising on Consolidation is not amortised.
Depreciation charged as above is not less than the minimum specified as per Schedule XIV of the Companies Act, 1956. 9. Impairment Impairment loss, if any, is provided to the extent, the carrying amount of assets exceeds 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. 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.
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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. 13. Foreign Currency Translation 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: Foreign currency liabilities contracted for acquiring fixed assets from a country outside India are restated at the rates ruling at the year end and all exchange differences arising as a result of such restatement are adjusted to the cost of fixed assets. Exchange differences arising on a monetary item that, in substance, forms part of an enterprises net investment in a non-integral foreign operation is accumulated in a foreign currency translation reserve in the financial statements until the disposal of the net investment. 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. 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.
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14. 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 Companys 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 group 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: Groups Provident Funds administered by trusts set up by the group, where the groups 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 being 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.
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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. 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 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. 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 per Share Earning per equity share (basic/diluted) is arrived at based on Net Profit after taxation available to equity shareholders to the basic/weighted average number of equity shares. 19. Provisions A provision is recognised when an enterprise has a present obligation as a result of 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. 20. Contingencies Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty is 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 [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.
16.
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22. Expenditure Expenses are net of taxes recoverable, where applicable. 23. Government grants Government grants related to revenue is 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.
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18. Notes on Accounts 1. Contingent Liabilities 2007 a) (i) Guarantee given on behalf of other bodies corporate (including performance guarantees) (ii) Guarantees given by the Companys bankers for which Counter Guarantees have been given by the Company b) Disputed claims against the Company not acknowledged as debts, currently under appeal / sub-judice: (i) Excise demands for excess wastages and distillation losses (ii) Other miscellaneous claims (iii) Income Tax demand (including interest) under appeal (iv) Sales Tax demands under appeal in various states c) d) e) f) Bills Receivables discounted since fully settled Co-accepted bills of Tie-up Units - since fully settled Claims from suppliers not acknowledged as debts Minority share of dividend on 11% Cumulative Redeemable Preference shares 239.091 437.264 1504.867 492.628 71.651 58.583 2.750 197.015 446.768 65.475 448.277 136.798 67.940 45.865 729.130 (Rs. Million) 2006 250.000 542.199
The Management is hopeful of succeeding in the above appeals /disputes based on legal opinions / legal precedents. 2. (a) Under a Scheme of Arrangement sanctioned by the Honble High Courts of Karnataka and Bombay (the Scheme), amalgamation of eight companies into erstwhile McDowell & Company Limited and demerger of investment business into a resulting company (McDowell Holdings Limited) became effective from October 5, 2006 with the appointed date as April 1, 2005 and the name of the company was changed from McDowell & Company Limited to United Spirits Limited. Pursuant to the Scheme, the Company at their meeting held on November 6, 2006, allotted 34,010,521 Equity Shares of Rs.10/- each fully paid up and 7,750,000 9% Non Cumulative Non Convertible Redeemable Preference Shares of Rs.10/- each fully paid up to the shareholders of the transferor companies. The Company has also received the listing and trading permission for the equity shares from the National Stock Exchange of India Limited, Bombay Stock Exchange Limited, Bangalore Stock Exchange Limited, Ahmedabad Stock Exchange Limited and Madras Stock Exchange Limited, The Delhi Stock Exchange Association Limited and the Calcutta Stock Exchange Association Limited. Subsequent to the end of the financial year, the Non-Cumulative Non-Convertible Redeemable Preference Shares have been fully redeemed.
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(b) Board of Directors of the erstwhile Central Distilleries & Breweries Limited (CDBL) (amalgamated with SWDL in an earlier year) on April 29, 1986 decided to issue 134,700 Equity Shares of Rs.10 each and allotment whereof was stayed by the Honble High Court of Delhi on September 13,1988. The Honble High Court of Delhi has vacated its order and has ordered to keep in abeyance the allotment on 72,556 shares and the matter is subjudice. The holders, in exchange of these shares will be entitled to 17,776 equity shares of Rs.10 each of the Company pursuant to the Scheme. Necessary adjustments in this respect will be carried out on disposal of the matter pending before the aforesaid Court. (c) Pursuant to the Scheme, the bank accounts, agreements, licences, Investments and certain immovable properties are in the process of being transferred in the name of the Company. (d) The company has also distributed the proceeds towards the sale of fractional shares entitlement to the eligible shareholders. 3. a) Under a Scheme of Amalgamation sanctioned by the Honble High Courts of Bombay and Calcutta (the Scheme), amalgamation of SWFSL into SWBL became effective from December 1, 2006 with the appointed date as April 1, 2005 and SWFSL ceases to be a subsidiary of SWCL and the Company effective April 1, 2005., b) The Consolidated Financial Statements of the Group for the year ended March 31, 2006 incorporated unaudited Consolidated Financial Statements of SWCL as provided by the management of the subsidiary company which were prepared before the amalgamation of SWFSL with SWBL became effective. Accordingly, based on audited consolidated financial statements of SWCL, the Scheme has been given effect to and following adjustments have been made in these Consolidated Financial Statements: (i) Excess provision for Income Tax amounting to Rs. 628.62 millions has been written back in the Profit and Loss Account. (ii) 72,416,505 Equity Shares of SWBL whose beneficial ownership vested with SWFSL are kept with escrow agents in view of court orders. Pursuant to the Scheme of amalgamation, such beneficial interest are held in trust by the trustees of SWFSL Benefit Trust for the benefit of SWBL which have been accounted as Investment at book value of such investments amounting to Rs.41.14 million. Accordingly, necessary adjustments have been made to Goodwill and Minority Interest arising on acquisition of SWCL on June 14, 2005. 4. The status of various income tax demands and matters relating to SWCL, pending before various authorities are as follows: a) SWCLs application for settlement of income tax matters pertaining to the financial years 1986-1987 till August 27, 1996 pertaining to block assessment and financial years 1995-96, 1997-98 to 2002-2003, has been disposed during the year by the Settlement Commission, Calcutta Bench (the Commission) vide its order dated March 6, 2007. Moreover, in respect of the other financial years (including 1993-94 and 1994-95) the matters have been decided by the Income Tax Appellate Tribunal and refunds have been granted to SWCL. However, appeals before the High Court filed by SWCL and the income tax department in respect of these are pending for disposal. 98
In view of the above, the liability for income tax as provided for in the accounts in earlier years has been reviewed and differential liability of Rs.135.40 million has been provided during the year. On disposal of SWCLs application as above and as directed by the Commission in its order dated March 6, 2007, the Bank Guarantee of Rs.600.00 million has been released and the Declaration made under section 281 (1) and Distraint Order under section 225 (5), declaring certain transaction undertaken by the company as void and not effective, have been revoked, by the Department, subsequent to the year-end. b) With a view to achieve expeditious completion of assessment and quantification of liability for tax, SWCL has filed another application before the Settlement Commission, Calcutta Bench for the Financial Years 2003-04 to 2005-06 and the same has been admitted. The additional tax liability for these years amounting to Rs.97.30 millions as admitted, has been paid / adjusted against the refunds due and has been provided for and included under Provision for tax for earlier years (net) in these accounts. c) In view of the above, Contingency provision of Rs.615.00 million made in earlier years have been reviewed and Rs.330.212 millions being no longer required have been written back and included under exceptional and other non recurring items [Refer Note 14(a) below] . The remaining amount of Rs.284.788 million has been kept as a matter of abundant caution to meet liabilities arising in future on account of various claims and other disputes pending against SWCL. 5. a) The Company had issued, during 2006, 100,000, 2% Convertible Bonds in Foreign Currency (FCCB) denominated in Bond certificates of US$1,000 each aggregating US$ 100 Million. The FCCBs are, at the option of FCCB holders, convertible into fully paid Equity Shares of Rs.10/- of the Company (Equity Share) or Global Depository Shares (GDS), with two GDS representing one Equity Share, at any time on or after May 9, 2006 upto the close of business on March 15, 2011 at an initial conversion price of Rs.858 per share with a fixed rate of exchange on conversion of Rs.44.43 equal to US$ 1.00, subject to adjustments in the manner specified in the Offering Circular (OC) dated March 29, 2006 upon occurrence of certain events. The Company, subject to fulfilment of certain conditions, has an option to mandatorily convert these FCCBs into Equity Shares, in whole but not in part, at any time on or after September 29, 2007 but not less than seven business days prior to the Maturity Date (March 30, 2011), at a conversion price to be determined in the manner specified in the OC. The Company, subject to fulfilment of certain conditions and obtaining requisite approvals, has an option to redeem these FCCBs, in whole but not in part, at an Early Redemption Amount, to be determined in the manner specified in the OC so that together with any interest and unpaid interest it represent a gross yield of 6.50 percent to the FCCB holders, on a semi annual basis, together with accrued or unpaid interest. The outstanding FCCBs on the Maturity Date (March 30, 2011) will be redeemed at 127.07 percent of the principal amounts of the FCCBs. The initial conversion price of Rs.858 per share has been adjusted in the manner specified in the OC and new conversion price of Rs.781 per share is effective from June 8, 2007. b) Since the market price of the Companys Equity Shares is less than the initial conversion price of FCCB, the option embedded in the said FCCB to subscribe to Equity Shares is, at the year-end, anti-dilutive. c) Subsequent to the year end, 78,960 Bonds aggregating to US$ 78,960 million have been converted into 4,484,397 Equity shares. Consequently, the paid up equity share capital increased from 94,481,930 equity shares of Rs.10/- each to 98,966,327 equity shares of Rs.10/- each as of date. 99
6. a) Subsequent to the year end, the Company acquired through its wholly owned subsidiary, United Spirits (Great Britain) Limited, the entire share capital of Whyte and Mackay Group Limited, which in turn holds the entire share capital of Whyte and Mackay Limited, a Scotland based Spirits manufacturing company. The Company has provided security / guarantee on behalf of the above wholly owned subsidiary for a sum of US $ 618.915 million in favour of the lenders. b) Consequent upon the above acquisition, the following companies became wholly owned subsidiaries of the Company. Whyte and Mackay Group Limited, Whyte and Mackay Limited, Whyte and Mackay Warehousing Limited, Bruce & Company (Leith) Limited, Charles Mackinlay & Company Limited, Dalmore Distillers Limited, Dalmore Whyte & Mackay Limited, Edinburgh Scotch Whisky Company Limited, Ewen & Company Limited, Fettercairn Distillery Limited, Findlater Scotch Whisky Limited, Glayva Liqueur Limited, Glentalla Limited, GPS Realisations Limited, Grey Rogers & Company Limited, Hay & MacLeod Limited, Invergordon Distillers (Holdings) Limited, Invergordon Distillers Group Limited, Invergordon Distillers Limited, Invergordon Gin Limited,Isle of Jura Distillery Company Limited, Jarvis Halliday & Company Limited, John E McPherson & Sons Limited, Kensington Distillers Limited, Kyndal Spirits Limited, Leith Distillers Limited, Loch Glass Distilling Company Limited, Longman Distillers Limited, Lycidas (437) Limited, Pentland Bonding Company Limited, Ronald Morrison & Company Limited, St The Sheep Dip Whisky Company Limited, Vincent Street (437) Limited, Tamnavulin-Glenlivet Distillery Company Limited, TDL Realisations Limited, W & S Strong Limited, Watson & Middleton Limited, Wauchope Moodie & Company Limited, Whyte & Mackay Distillers Limited, William Muir Limited, WMB Realisations Limited, Whyte and Mackay Property Limited, Whyte and Mackay de Venezuela CA and KI Trustees Limited. 7. The Company, in earlier year, granted interest free loans in foreign currency aggregating to Rs.7,356.189 million to Zelinka Limited, Cyprus, a subsidiary of the Company (Zelinka), for acquisition of long term strategic investment in Shaw Wallace & Company Limited. Management is of the view that these loans, from the inception of the grant of loan, in substance, form part of the Companys net investment in Zelinka as the settlement of these loans is neither planned nor likely to occur in the foreseeable future and management intends to convert this loan into investment in share capital of Zelinka in near future. Accordingly, in accordance with AS 11 - The Effects of Changes in Foreign Exchange Rates (AS 11), exchange differences amounting to Rs.144.912 million debit [including / net of exchange difference aggregating to Rs.36.478 Million recognised in the Profit and Loss Account in the previous year reversed during the year and disclosed as Prior Period Item in Note 14(a) below arising on the loan has been accumulated in a foreign currency translation reserve, which at the time of the disposal of the net investment in Zelinka would be recognised as income or as expenses. 8. Interest on unsecured loans others 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.
100
9. Employee Benefits The Institute of Chartered Accountants of India issued Accounting Standard 15 (revised 2005) (AS 15R) on Employee Benefits, which supersedes the earlier accounting standard on retirement benefits. The Company adopted the provisions of AS 15R effective April 1, 2006. Consequent to early adoption of AS15R, following disclosure have been made as required by the Standard: a) The Company has reviewed and revised its accounting policy in respect of accumulating leaves to the credit of its employees. Accordingly, an amount of Rs.2.522 million (net of deferred tax credit Rs.1.280 million) being resultant increase in net liability as on April 1, 2006 has been recognised with corresponding adjustment to opening balance of General Reserve and an additional liability for the current year amounting to Rs.0.894 million has been recognised in the Profit and Loss Account having consequential effect on the net profit for the year. b) Defined Contribution Plans The Company 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 Company, while other contributions are made to the Governments 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 employees 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 Provident Fund and Employees Pension Scheme* Superannuation Fund Employees State Insurance 42.631 25.091 7.474 75.196 *Excluding contribution to PF made to trusts managed by the Company.
101
c) 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 employees 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. In certain subsidiaries gratuity plan is funded. Retirement Bonus: The allowance for retirement bonus to be given to the employees on the retirement calculated on actuarial basis. 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 Companys 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 employees 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.
102
c) Defined Benefit Plans contd.
(in Rs.Million) Funded Particulars A) Reconciliation of opening and closing balances of the present value of the dened benet obligation Obligation at the beginning of the year Contribution by Plan Participants Current service cost Interest cost Actuarial (gain)/loss on obligations Benets paid Obligation at the end of the year B) Reconciliation of opening and closing balances of the fair value of plan assets Plan Assets at the beginning of the year Prior period adjustment Contribution by Plan Participants Contribution by the Company Expected return on plan assets Actuarial gains / (losses) Benets paid Plan assets at the end of the year C) Reconciliation of present value of dened benet obligation and the fair value of plan assets to the assets and liabilities recognised in the balance sheet: Present value of obligation at the end of the year Fair value of plan assets at the end of the year Liability/(Net Asset) Recognised in Balance Sheet [Included under Provisions in Schedule 12(B)] 478.663 427.553 51.110 962.623 896.106 66.517 5.269 5.269 3.525 3.525 322.915 23.739 10.797 27.707 (7.642) (49.963) 427.553 911.667 68.616 44.055 69.241 (38.020) (159.453) 896.106 434.691 59.428 33.195 1.312 (49.963) 478.663 911.667 68.616 69.072 72.721 (159.453) 962.623 5.255 0.010 0.004 0.000 5.269 3.092 0.433 3.525 Gratuity PF Non-Funded Total Gratuity Death Benet
103
c) Defined Benefit Plans contd.
Funded Particulars D) Expenses recognised in the Prot and Loss Account Current service cost Interest cost Expected return on plan assets Prior period adjustments Actuarial (gains)/losses Total Expenses recognised in the P & L Account Included in: Contribution to Provident and Other Funds in Schedule 15 Workmen and Staff Welfare in Schedule 15 Prior period item in the Prot and Loss Account E) Investment details of plan assets Government securities Securities guaranteed Government Private Sector Bonds Public Sector / Financial Institutional Bonds Special Deposit Scheme Fund balance with Insurance Companies Others (including bank balances) Gratuity PF Non-Funded Total Gratuity Death Benet
59.428 33.195 (27.707) (23.739) 6.330 47.507 71.246 (23.739) 47.507
69.072 72.721 (69.241) 38.020 110.572 110.572 110.572
0.010 0.004 0.014 0.014 0.014
0.433 0.433 0.433 0.433
18% 28% 35% 0% 2% 0% 1% 34% 7% 34% 31% 0% 6% 4% 100% 100% Based on the above allocation and the prevailing yields on these assets, the long term estimate of the expected rate of return on fund assets has been arrived at. Assumed rate of return on assets is expected to vary from year to year reecting the returns on matching government bonds. 6.51% 7.70%
F) Actual return on plan assets G) Assumptions Discount Rate (per annum) Expected Rate of Return on Plan Assets Rate of increase in Compensation levels Average past service of employees (years) Mortality rates
8% 8% 5% 14.04 LIC 1994-96 ultimate table
8% 7.98% Not Applicable Not Applicable LIC 1994-96 ultimate table
104
c) Defined Benefit Plans contd. The estimates of future increase in compensation levels, considered in the actuarial valuation, have been taken on account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. As this is the first year in which AS 15R has been applied the amounts of the present value of the obligation, fair value of the plan assets, surplus or deficit in the plan and experience adjustment arising on plan liabilities and plan assets for the previous periods have not been furnished. As per the best estimate of the management, contribution of Rs105 million is expected to be paid to the plan during the year ending March 31, 2008. 10. MSL, BL and CL became subsidiaries of the Company during the year. The figures of the current year include figures relating to these subsidiaries as given below : Rs. Million Liabilities: Secured Loans Unsecured Loans Current Liabilities Provisions Deferred Tax Liability Assets: Net Block of Fixed Assets Goodwill on Consolidation Investments Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances Prot/(Loss) after tax for the year* * Profit/ (Loss) after tax for the period before minority interest, where-ever applicable 11. Fixed Assets Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) - Rs. 143.818 Million (2006: Rs. 13.188 Million). 321.809 488.844 9.281 510.307 174.654 58.883 30.321 4.638 27.851
3.613 150.715 343.360 24.272 -
105
12. Current Assets, Loans and Advances a) Loans and Advances include: i) An amount of Rs 336.462 Million (2006: Rs. 307.873 Million) due from a Tie-up Unit secured by the assets of the Tie-up unit. ii) Advance for acquisition of trade marks amounting to Rs.217.493 Million (2006: Rs. 223.030 Million) paid by AOIL pursuant to a license agreement entered on December 30, 2002 with Guinness United Distillers & Vintners Amsterdam, BV to use its license trade marks in specific territories. AOIL will acquire title to the trade marks only upon the expiry of the licence agreement of 5 years or termination thereof, whichever is earlier and the same has been confirmed by an independent legal opinion. 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. 13. As required under Section 205C of the Companies Act, 1956, the Company has transferred Rs. 2.966 Million (2006: Rs. 3.890 Million) to the Investor Education and Protection Fund (IEPF) during the year. On March 31, 2007, no amount was due for transfer to the IEPF. a) Prior period, exceptional and other non recurring items [(Debit)/Credit] include: Sl.No. i) ii) iii) Particulars Prior period items Provision for Gratuity Provision for leave encashment Exchange difference Total Exceptional and other non recurring items The surplus being excess of net sale proceeds over corresponding carrying value of interest in the USL Benet Trust. [Note 14(b) below] Provision for doubtful debts recovered Contingency Provision [Note 4(c) above] Total Grand Total b) 2007 (23.739) 16.492 (140.572) (147.819) Rs. Million 2006 -
14.
iv) v) vi)
(2,473.735) (182.920) (330.212) (2,986.867) (3,134.686)
USL Benefit Trust, formed in terms of the Scheme approved by the Honble High Courts of Karnataka and Bombay, sold during the year 3,500,000 equity shares of the Company held by it. Being the sole beneficiary of the Trust, the Company received net sale proceeds from the Trust. The surplus of Rs.2,473.735 million being the excess of net sale proceeds over corresponding carrying value of interest in the Trust has been shown under Exceptional and other non recurring Items.
106
15. Borrowing Costs 2007 46.145 Rs. Million 2006 0.957 48.801
a) b) 16.
Interest capitalised on xed assets Interest included in the Closing Stock of Malt and Grape Spirit under maturation
Segment Reporting The Group is engaged in the business of manufacture, purchase and sale of Beverage Alcohol (Spirits and Wines) including through Tie-up Manufacturing/ brand franchise, which constitutes a single business segment. The Groups other operations and operations outside India did not exceed the quantitative threshold for disclosure envisaged in AS-17 on Segment Reporting issued by the Institute of Chartered Accountants of India. In view of the above, primary and secondary reporting disclosures for business/geographical segments, as envisaged in AS-17 are not applicable to the Group.
17
Related Party Disclosures a) Names of related parties and description of relationship Associates with whom transactions have taken place during the year Utkal Distillers Limited (Utkal) UB Distilleries Limited [Schedule 17 Note 4(b)]
Key Management Personnel Mr.V.K.Rekhi Managing Director Mr. S. D Lalla, Executive Director of SWCL
Employees Benet Plans where there is signicant inuence
Mc Dowell & Company Limited Staff Gratuity Fund (McD SGF) McDowell & Company Limited Ofcers Gratuity Fund (McD OGF) SWDL Group Ofcers 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) The Bengal Distilleries Company Limited Staff Provident Fund (BD PF) Shaw Wallace & Associated Companies Employees Gratuity Fund Shaw Wallace & Associated Companies Executive Staff Gratuity Fund Shaw Wallace & Associated Companies Provident Fund
107
17 b) Summary of the transactions with related parties:
2007 Sl. No. a) Nature of transactions ** Purchase of goods - Utkal b) Sale of goods -Utkal Income from sale by Tie-up Units. - Utkal d) Income from Brand Franchise - Utkal Sale/ (Purchase) of fixed assets -Utkal f) g) Rental Deposit 2.595 2.595 0.077 2.359 0.077 2.359 3.691 3.691 0.522 0.522 Associates Key Management personnel Employees Benefit Plans where there is significant influence Associates Key Management personnel 2006 Employees Benefit Plans where there is significant influence
Rs. Million
Total
Total
c)
79.469
79.469
22.521
22.521
7.542
7.542
e)
Finance (including loans and equity contributions in cash or in kind) -Utkal (24.384) Managing Directors Remuneration Rent Amount due from - Utkal 344.448 -
22.753 2.536
(24.384) 22.753 2.536
27.669
20.772
27.669 20.772 2.305 335.894
h) i) j) k)
2.305
344.448
335.894
Contribution to Gratuity Fund -McD OGF -McD SGF -SWDL OGF -SWDL EGF Contribution to Provident Fund - McD PF - HL EPF - BD PF
38.506 18.311 15.339 33.866
38.506 18.311 15.339 33.866
56.376 26.867 -
56.376 26.867 -
l)
34.772 1.803 2.454
34.772 1.803 2.454
** 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. 108
18 (a) The Groups significant leasing arrangements in respect of operating leases for premises (residential, office, stores, godown, 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) During the year, the Company has acquired computer equipment and cars on finance leases. The lease agreement is for a primary period of 48 months for computer equipments 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 Particulars 2007 Present Minimum Value of lease payments payments 16.850 16.850 11.863 28.713 18.150 18.150 13.711 31.861 3.148 28.713 2006 Present Minimum Value of lease payments payments 8.042 8.042 4.348 12.390 8.368 8.368 4.782 13.150 0.760 12.390
Later than one year and not later than ve years Later than ve years Not later than one year Less: Finance Charges Present value of net minimum lease payments 19 Earnings Per Share :
2007 a) b) c) Net Prot after tax and Prot/Loss attributable to Minority (Rs. Million) Basic number of Equity Shares of Rs.10 each and outstanding during the year.* Weighted Average number of Equity Shares of Rs.10 each and outstanding during the year.** Basic/Diluted Earnings Per Share after Loss attributable to Minority (Rs.)*** 5,669.523 82,892,946
2006 1,253.798 82,892,946
82,892,946 68.40
*76,563,042 16.38
d)
* Including Equity Shares to be issued and included under Share Capital Suspense in Schedule IA ** Net of 11,588,984 Equity shares held by subsidiaries. *** Also refer Note 5 above.
109
20. Taxes on Income: a) Current Taxation Provision for current taxation includes: 2007 i) ii) Income Tax [including relating to earlier year Rs.249.227 Million (2006: 81.502 million) and net of write back of provision relating to earlier year Rs.628.626 (2006: Nil) ] Wealth Tax Total 1066.421 11.200 1,077.621 2006 118.518 12.000 130.518 Rs. Million
b) Deferred Taxation The net Deferred Tax (Asset) / Liability as on March 31, 2007 amounting to Rs.18.618 Million (2006: Rs. 85.810 Million) has been arrived at as follows Rs. Million Particulars Deferred Tax (Assets) / Liabilities as on 1.4.2006 322.965 (118.527) (44.758) (73.870) 85.810 85.810 Current Year charge / (credit) (40.441) 44.894 44.758 (115.123) (65.912) (1.280) (67.192) Deferred Tax (Assets) / Liabilities as on 31.03.2007 282.524 (73.633) (188.993) 19.898 (1.280) 18.618
Difference between book and tax depreciation Provision for Doubtful Debts Unabsorbed Business Loss/ Depreciation Allowance Others Total Add: Adjustment on adoption of Accounting Standard on Employee Benets [Note 9(a) above] 21.
Housing Fund provided in earlier years have been disposed off in accordance with an agreement reached with the McDowell Nepal Limited Exec. Staff & Workers Kalyankari samiti amount required for construction has, however, left in the fund account. Previous years figures have been regrouped / rearranged wherever necessary. VIJAY MALLYA Chairman M.R.DORAISWAMY IYENGAR Director V.S.VENKATARAMAN Company Secretary V.K.REKHI Managing Director P.A.MURALI Chief Financial Officer
22.
J. MAJUMDAR Partner For and on behalf of Price Waterhouse Chartered Accountants
110

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Report of the Directors

3,898.186 2,627.424 6,525.610 309.350 1,276.066 4,940.194 256.572 5,196.766

921.192 921.192 409.002 91.992 420.198 574.238 994.436

500.000 6.975 141.723 98.966 37.881 4,411.221 52.20

50.000 464.446 6.975 188.963 27.480 256.572 4.80

Report of the Directors (Contd.)

Report of the Directors (Contd.)

Report of the Directors (Contd.)

Report of the Directors (Contd.)

RESEARCH & DEVELOPMENT (R&D)

FOREIGN EXCHANGE EARNINGS/OUTGO

Report of the Directors (Contd.)

DESIGNATION/ NATURE OF DUTIES

PARTICULARS OF PREVIOUS EMPLOYMENT

4,909,704 M.SC, P.hD

16-Aug-90 22-Nov-90 1-Apr-85 27-Apr-06 8-Dec-03 2-Aug-93 1-Apr-05 8-Apr-82 1-May-01

Executive Vice President - Finance and Accounts, United Breweries Ltd.

Report of the Directors (Contd.)

DESIGNATION/ NATURE OF DUTIES

PARTICULARS OF PREVIOUS EMPLOYMENT

Corporate Governance Report

Mr. Sudhindar Krishan Khanna** Non Executive Director

Corporate Governance Report (Contd.)

Corporate Governance Report (Contd.)

Corporate Governance Report (Contd.)

Corporate Governance Report (Contd.)

Rs. 1,17,43,656 Rs. 53,85,085 Notes:

Rs. 26,37,316 Rs. 29,86,713

Corporate Governance Report (Contd.)

March 31, 2005

September 23, 2005

March 31, 2006

December, 28, 2006

Corporate Governance Report (Contd.)

Corporate Governance Report (Contd.)

Share Transfer System

Distribution of Shareholding Dematerialisation of shares

Corporate Governance Report (Contd.)

Address for correspondence

Corporate Governance Report (Contd.)

The Company Committee.

Corporate Governance Report (Contd.)

United Spirits Limited - Monthly NSE

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

ANNEXURE C : DISTRIBUTION OF SHARE HOLDINGS AS ON MARCH 31, 2007

100,001 and above

Certificate on Corporate Governance

Bangalore October 31, 2007

M.R. Gopinath Company Secretary (in practice) FCS 3812 CP 1030

CEO / CFO Certificate

Bangalore October 31, 2007

On behalf of the Board of Directors V.K. Rekhi Managing Director

Declaration Regarding affirmation of Code of Conduct

Bangalore October 31, 2007

V.K. REKHI Managing Director

Annexure to Report of the Directors

Annexure to Report of the Directors (Contd.)

Annexure to Report of the Directors (Contd.)

By Authority of the Board

Auditors' Report to the Members of United Spirits Limited

Annexure to the Auditors' Report

Annexure to the Auditors' Report (Contd.)