United Breweries Holdings

The Directors have pleasure in presenting the Annual Report of your
 Company and the Audited Accounts for the year ended March 31, 2008.
 
 FINANCIAL RESULTS
 
                                                  [Figures in million]
                                            2007 - 2008   2006 - 2007
 
 The working of your Company for 
 the year  under review resulted in
 Profit before Depreciation and Taxation        825.217       301.315
 
 Less:
 
 - Depreciation                                  39.004        25.796
 
 - Taxation                                     138.329        23.246
 
 Profit after tax                               647.884       252.273
 
 Profit available for appropriation             647.884       252.273
 
 Your Directors have made the 
 following appropriations:
 
 Proposed Dividend                               66.819        59.442
 
 Corporate Tax on Proposed Dividend              11.356        10.102
 
 Balance Carried to the Balance Sheet           569.709       182.729
 
 
 DIVIDEND
 
 Your Directors have pleasure in recommending a Dividend for the year
 ended March 31, 2008 at 10 % for the financial year 2007-08. The
 dividend, if declared as above, would involve an outflow of Rs.66.819
 million towards dividend and Rs. 11.356 million towards dividend tax,
 resulting in a total outflow of Rs. 78.175 million.
 
 CAPITAL
 
 a] Qualified Institutional Placement
 
 In the year under review, your Company allotted on Private Placement
 basis 5,405,405 Equity Shares of Rs. 10 each for cash at a Price of Rs.
 1,110/- per Equity Share aggregating to Rs. 600 Crores to Qualified
 Institutional Buyers as defined under Clause 2.2.2B[v] of Chapter XIII
 -A of the Securities and Exchange Board of India [Disclosure and
 Investor Protection] Guidelines, 2000.
 
 b] Preferential Issue of Equity Warrants to Promoter
 
 In the year under review, your Company has allotted 6,387,117 Equity
 Warrants on preferential basis to FirStart Inc, an overseas Promoter
 Company on December 13, 2007 in terms of Chapter XIII of SEBI [DIP]
 Guidelines, 2000 for Preferential Issues. Each warrant is convertible
 into one equity share of the face value of Rs.10/- each of the Company,
 at a price of Rs. 1,110/- per share, at the option of the Warrant
 holder at anytime within 18 months from the date of allotment of the
 Warrants.  The Promoter Company exercised its option to convert
 1,971,218 Warrants into Equity out of its total entitlement of
 6,387,117 warrants. The new shares on conversion of Warrants were
 allotted to the Promoter Company on January 28, 2008. These converted
 shares are under lock- in for a period of three years from the date of
 allotment.
 
 c] Subscribed and Paid up Capital
 
 Consequent to the allotment of the new equity shares to Qualified
 Institutional Buyers (QIB) and conversion of warrants into equity
 allotted to the Promoter Group, the Issued, Subscribed and Paid up
 Capital stands increased from Rs.594,418,980 to Rs.668,185,210. The
 Authorised Capital remained at Rs.1,000,000,000.
 
 The details pertaining to the utilization of QIB and Issue of Warrants
 proceeds is specified in the notes to the accounts section of the
 Annual Report.
 
 OPERATIONS
 
 Your Directors are pleased to report profit during the year under
 review which includes profit on sale of certain investments / land of
 Rs.396.652 million besides Trademark licence fees, Dividend, Guarantee
 Commission and interest on deposits, Rental of Property of UB CITY and
 Export Sales. The office space allotted to the Company under the Joint
 Development Agreement have mostly been leased out to group companies,
 leading companies /firms. The retail space owned by the Company have
 also been let out to leading international brands. Final negotiations
 are continuing with high-end retail stores for letting out the balance
 retail space available in UB CITY. It is expected that some of the best
 international brands will soon have a presence in UB CITY.
 
 PROPERTY DEVELOPMENT
 
 UB CITY has changed the skyline of Bangalore in less than 3 years.
 Standing tall on Vittal Mallya Road and Kasturba Road, the 4 towers of
 UB CITY - Canberra, Comet, Concorde & UB Tower demonstrate how chrome
 and glass seamlessly blend with the greenery in the neighbouring Cubbon
 Park.
 
 In terms of the Joint Development Agreement entered into by the Company
 with Prestige Estates Projects Private Limited [Developers], undivided
 portion of the Companys land to the extent of 137,844.13 sq.ft
 situated at Vittal Mallya Road, Bangalore, has been transferred to the
 Developers and their Nominees in exchange for 556,503 Sq.ft of
 constructed office space, at an agreed value which has been
 capitalized.
 
 EXPORT DIVISION
 
 UB Global (a Division of the Company) received the APEDA Silver Trophy
 for the 9th consecutive year for best export performance.
 
 UB Global also received the Gold Best Merchant Exporter Award at the
 Export Excellence Award 2008 organised by the Federation of Karnataka
 Chambers of Commerce and Industry.
 
 Footwear Division:
 
 With over ten years experience in export of leather footwear, UB Global
 has developed a diverse portfolio of leathers comprising nubucks,
 suedes, wrinkles, washes and other special finishes to meet the
 ever-changing trends in world fashion.
 
 Besides existing customers like GEOX and Esprit, UB Global has bagged
 orders from prestigious clients such as Bugatti and Pavers England.
 
 Apparel Division:
 
 The Textile Apparel Export division, the newest constituent of UB
 Globals diverse business portfolio, caters to leading European brands
 such as Asda, Colins, Gaastra, George, Lafuna and Next across the
 breadth of Casual wear.
 
 Spirits:
 
 UB Global has made inroads into brand new markets, notably Peru, Guyana
 and Haiti in the Americas, Zimbabwe, Burkina Faso, Ghana, Tonga and
 Morocco in Africa, Lebanon and Indonesia.
 
 Spirits sales soared to hit the highest ever level. The achievement in
 Spirits is strongly embellished by the Highest ever Sales of Beers, as
 well. Kingfisher continued to explore newer markets in South East and
 Far East Asia, with shipments to Vietnam and Tonga.
 
 COMPOSITE SCHEME OF ARRANGEMENT
 
 Pursuant to the Composite Scheme of Arrangement between Deccan Aviation
 Limited, Deccan Charters Limited and Kingfisher Airlines Limited
 sanctioned by the Honble High Court of Karnataka at Bangalore vide
 Order dated June 16, 2008, the Commercial Airline Division Undertaking
 of Kingfisher Airlines Limited stood transferred to and vested in
 Deccan Aviation Limited with effect from April 1, 2008 and the Charter
 business of Deccan Aviation Limited stood transferred to and vested in
 Deccan Charters Limited, on and from the Slump Sale Appointed Date
 i.e., January 1, 2008.
 
 DIRECTORS
 
 Mr P A Murali resigned from the Board of Directors of the Company with
 effect from July 24, 2008. The Board places on record its appreciation
 for the distinguished contribution by Mr P A Murali to the
 deliberations of the Board during his tenure as Director.
 
 Mr S G Ruparel, Mr A Harish Bhat and Mr P G Mankad, Directors, retire
 by rotation and, being eligible, offer themselves for re- appointment.
 
 Brief resume of the Directors offering themselves for re-appointment is
 appended and forms an integral part of the Report on Corporate
 Governance.
 
 LISTING OF SHARES OF THE COMPANY
 
 The shares of your Company are presently listed on Bangalore Stock
 Exchange Limited [Regional Exchange] and The Bombay Stock Exchange
 Limited, Mumbai.
 
 With a view to increase investor participation of the Companys shares
 in the Stock Exchanges, your Company applied for and listed its Equity
 Shares with the National Stock Exchange of India Limited [NSE]. The
 trading of the equity shares in NSE commenced from May 21, 2008.
 
 The Calcutta Stock Exchange Association Limited accepted Companys
 request to Voluntarily Delist the shares of the Company from their
 Exchange.
 
 The listing fees for the year 2008-09 have been paid to all the Stock
 Exchanges.
 
 CORPORATE GOVERNANCE
 
 A report on Corporate Governance is annexed separately as part of the
 report along with a certificate of compliance from the Statutory
 Auditor. Necessary requirements of obtaining certifications /
 declarations in terms of Clause 49 have been complied with.
 
 SUBSIDIARIES
 
 During the year under review, the Companys subsidiary, Kingfisher
 Airlines Limited, has made tremendous progress in its operations, fleet
 acquisition, all India coverage and customer satisfaction and
 patronage. Kingfisher Airlines which is now in the fourth year of its
 operations has won several Awards.
 
 As stated earlier, the Composite Scheme of Arrangement between Deccan
 Aviation Limited, Deccan Charters Limited and Kingfisher Airlines
 Limited had been approved by the Honble High Court of Karnataka at
 Bangalore vide Order dated June 16, 2008, and in terms thereof the
 Commercial Airline Division Undertaking of Kingfisher Airlines Limited
 stood transferred to and vested in Deccan Aviation Limited with effect
 from April 1, 2008 and the Charter business of Deccan Aviation Limited
 transferred to and vested in Deccan Charters Limited, on and from the
 Appointed Date i.e January 1, 2008.
 
 The following subsidiaries of the Company have changed their
 
 names:
 
 1.  Kingfisher Airlines Limited to Kingfisher Training and Aviation
 Services Limited on September 5, 2008.
 
 2.  Deccan Aviation Limited to Kingfisher Airlines Limited on September
 5, 2008.
 
 3.  Kingfisher Aviation Training Limited to Deccan Charters Limited on
 07-02-2008
 
 4.  Kingfisher Training Academy Limited to Kingfisher Aviation Training
 Limited on 05-03-2008, and
 
 5.  Kingfisher Radio Limited to Kingfisher Finvest India Limited on
 19.06.2008.
 
 The performance of certain significant subsidiary companies has been
 covered in the Chairmans statement, which forms part of the Annual
 Report.
 
 The following are the subsidiaries of the Company.
 
 Indian Subsidiary Companies
 
 1.  UB Electronic Instruments Limited
 
 2.  UB Infrastructure Projects Limited
 
 3.  UB International Trading Limited
 
 4.  Kingfisher Finvest India Limited [ Formerly Kingfisher Radio
 Limited]
 
 5.  Kingfisher Airlines Limited
 
 6.  City Properties Maintenance Company Bangalore Limited
 
 7.  Deccan Charters Limited [Formerly Kingfisher Aviation Training
 Limited]
 
 8.  Kingfisher Aviation Training Limited [Formerly Kingfisher Training
 Academy Limited ]
 
 Foreign Subsidiary Companies
 
 1.  Rigby International Corp.
 
 2.  United Breweries of America Inc. Delaware
 
 3.  lnversiones Mirabel, S.A
 
 4.  Mendocino Brewing Co. Inc., U.S.A
 
 5.  United Breweries International [U.K.] Limited
 
 6.  UBSN Limited
 
 7.  Releta Brewing Company LLC
 
 8.  Rubic Technologies Inc.
 
 9.  UB Overseas Limited
 
 10. UBHL [BVI] Limited
 
 The Ministry of Corporate Affairs, Government of India, has vide its
 letter dated July 21, 2008 given permission to the Company to dispense
 with the circulation of audited accounts of the above 18 [Eighteen]
 Subsidiaries in view of the inclusion of their Consolidated Financial
 Statements in the Companys Annual Report.
 
 Bangalore Beverages Limited has become a wholly owned subsidiary of the
 Company from July 2008.
 
 The Company will make available the audited annual accounts and related
 information of the subsidiary companies, where applicable, upon request
 by any member of the Company.  These documents will also be available
 for inspection during business hours at the Registered Office the
 Company.
 
 The consolidated Financial Statements prepared in terms of Accounting
 Standards and Listing Agreements include financial information of the
 subsidiary companies also.
 
 CHANGE OF REGISTERED OFFICE OF THE COMPANY
 
 The Companys Registered Office was shifted from UB Anchorage, 5th
 Floor, 100/1, Richmond Road, Bangalore 560 005, to its own premises at
 UB Tower, Level 12, UB CITY, No.24, Vittal Mallya Road, Bangalore 560
 001, with effect from January 31, 2008.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 Pursuant to Clause 49 of the Listing Agreement with the Stock
 Exchanges, Management Discussion and Analysis Report is appended and
 forms an integral part of the Report on Corporate Governance.
 
 FIXED DEPOSITS
 
 The Company discontinued accepting fixed deposits from Public and
 Shareholders since August 2003. A sum of Rs.0.907 lacs from Public and
 Shareholders remained unclaimed as at March 31, 2008.
 
 There have been no defaults in the repayment of fixed deposits during
 the year.
 
 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.
 
 PARTICULARS OF EMPLOYEES
 
 The information as are required to be provided in terms of Section
 217[2A] of the Companies Act, 1956 read with the Companies [Particulars
 of Employees] Rules, 1975, have been included as an annexure to this
 report.
 
 PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
 FOREIGN EXHANGE EARNINGS AND OUT GO
 
 Particulars of Conservation of Energy, Technology Absorption:
 
 The Provisions of Section 217[1][e] of the Act relating to conservation
 of energy and technology absorption do not apply to this Company since
 it is not engaged in manufacturing activities. The Company has,
 however, used information and technology extensively in its operations.
 
 Foreign Exchange Earnings and outgo
 
 The particulars are as under:                       (Rs. in million)
 
 Description                                  Year ended
                                   March 31, 2008      March 31. 2007
 
 Foreign exchange earnings              1,853.230           1,423.046
 
 Foreign exchange outgo                   337.792             128.989
 
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to the requirement of Section 217[2AA] of the Companies Act,
 1956 the Board of Directors hereby state that:
 
 [i] in the preparation of the Annual Accounts, the applicable
 accounting standards have been followed.
 
 [ii] accounting policies have been selected and applied consistently
 and the judgments and estimates made are reasonable and prudent so as
 to give a true and fair view of the state of affairs of the Company at
 the end of the financial year and of the profit of the Company for that
 year.
 
 [iii] 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
 prevention and detection of fraud and other irregularities.
 
 [iv] the Annual Accounts have been prepared on a going concern basis.
 
 AUDITORS
 
 Messrs. Vishnu Ram & Co., Chartered Accountants, retire as Auditors of
 the Company at the conclusion of the forthcoming Annual General Meeting
 and are eligible for re-appointment.
 
 ACKNOWLEDGEMENT
 
 Your Directors place on record their appreciation for the support
 received from Group Companies, shareholders, depositors, banks,
 financial institutions and suppliers. Your Directors also acknowledge
 the contribution of all employees.
 
                                         By authority of the Board
 
                                                      N Srinivasan
 Bangalore                                              R N Pillai
 November 29, 2008                                       Directors