1. UB City Luxury residential Project
The Company has executed a Joint Development Agreement with a Developer
on 26th April, 2010 for development of a luxury residential building
named as Kingfisher Towers - Residences at UB City in the available
land in UB City. The super built up area of the building would be
767,870 sq ft. The super built up area falling to the share of the
Company would be 418,388 sq. ft.
The Company has issued allotment letters in respect of two residential
units in Kingfisher Towers by collecting booking amounts of Rs. 20
2. Estimated amount of contracts remaining to be executed on capital
account as at 31st March 2011 and not provided for is Rs. 23.550 million
(net of advances) (Pr year Rs. 85.699 million).
3. Secured Loans:
i) Details of securities provided for loans availed from banks :
a) Loan from The Lakshmi Vilas Bank Limited amounting to Rs. 323.228
million (Pr year Rs. 362.902 million) is secured by assignment of future
receivables for use of Pegasus logo by Group Companies. An amount of Rs.
45.198 million is repayable within one year.
b) Loan from State Bank of India amounting to Rs. 107.401 million is
secured by the pledge of 395,000 shares in United Spirits Limited held
by the Company. The entire amount of Rs. 107.401 million has been since
c) Loan from Yes Bank Limited amounting to Rs. 2,001.429 million is
secured by subservient charge on all current assets and movable fixed
assets of the Company, both present and future, deposit in Debt Service
Reserve Account equal to a total amount of scheduled interest payment
due for one month and assignment of 4,434,000 shares in United
Breweries Limited and 1,285,000 shares in United Spirits Limited held
by the Company. No amount is repayable within one year.
d) Overdraft facility from HDFC Bank Limited amounting to Rs. 33.679
million is secured by pledge of 297,103 shares in United Spirits
Limited, 4,753,881 shares in Mangalore Chemicals & Fertilisers Limited
held by the Company, first charge on movable fixed assets ie. plant and
machinery, furniture & fixtures valued at Rs. 370 million and a lien
marked on a fixed deposit of Rs. 6.400 million.
e) Packing credit facility availed from Federal Bank Limited amounting
to Rs. 114.762 million is secured by hypothecation of current assets of
ii) Details of securities provided for loans availed from others :
a) Loans from HDFC, amounting to Rs. 6,854.515 million (Pr year Rs.
1,943.242 million) are secured by the pledge of 1,585,154 shares in
United Spirits Limited, 317,030 shares in McDowell Holdings Limited
held by the Company, mortgage by deposit of title deeds of the
Company''s land in Bangalore, the super structure thereon and assignment
of the rent receivable from the property let out, securitisation of
future sale proceeds from the luxury residential building Kingfisher
Towers - Residences in UB City and pledge of 5,000,000 shares in
United Spirits Limited and 35,222,231 shares in Kingfisher Airlines
Limited held by a subsidiary company. An amount of Rs. 563.645 million is
repayable within one year.
b) Loan from IL&FS Financial Services Limited amounting to Rs. 1,000
million (Pr year Rs. 1,500.410 million) is secured by the pledge of
1,000,000 shares in United Spirits Limited held by the Company and
pledge of 875,647 shares in United Spirits Limited held by a subsidiary
company. No amount is repayable within one year.
c) Loan from IFCI Limited amounting to Rs. 2,514.671 million (Pr year
Rs.2,512.937 million) is secured by the pledge of 1,237,477 shares in
United Spirits Limited and 7,673,422 shares in United Breweries Limited
held by the Company and pledge of 1,467,523 shares in United Spirits
Limited held by a subsidiary company. No amount is repayable within one
4. Contingent liabilities:
a Guarantees given by the Company on
behalf of subsidiaries to banks and 72,321.000 72,897.227
financial institutions and others
b Guarantees given by the Company on
behalf of associates to banks 1,778.400 2,578.400
c Demand raised by Income Tax
authorities against which the Company has 127.700 - Nil -
d) Loan from SICOM Limited amounting toRs. 540 million (Pr yearRs. 430
million) is secured by pledge of 400,000 shares in Kingfisher Airlines
Limited and 250,000 shares in United Spirits Limited held by the
Company and pledge of 17,600,000 shares in Kingfisher Airlines Limited
held by a subsidiary company. The facility has been availed for
revolving period of 3 years, renewable every year on a put-call option.
e) Loan from Future Capital Holdings Limited amounting to Rs. 1,009.321
million (Pr year nil) is secured by the pledge of 10,93,688 shares in
United Spirits Limited held by the Company and 363,312 shares in United
Spirits Limited held by a subsidiary company and a non-disposable
undertaking of 86,000 shares in United Spirits Limited held by the
Company and 667,000 shares in United Spirits Limited held by a
subsidiary company. No amount is repayable within one year.
f) Loan from L&T Finance Limited amounting to Rs. 33.578 million (Pr year
41.999 million) is secured by the fixed assets for which the loan was
taken. An amount of Rs. 9.669 million is repayable within one year.
g) Loan from ECL Finance Limited amounting to Rs. 500 million (Pr year Rs.
500 million) is secured by the pledge of 1,115,000 shares in United
Spirits Limited held by the Company. The entire amount of Rs. 500 million
has been since repaid.
h) Loan from Quant Capital and Investment Private Limited amounting to
Rs. 500 million (Pr year nil) is secured by the pledge of 870,000 shares
in United Spirits Limited held by the Company. The entire amount of Rs.
500 million is repayable within one year.
i) Loan from Religare Finvest Limited amounting to Rs. 1,000 million (Pr
year nil) is secured by the pledge of
2,052,683 shares in United Spirits Limited held by the Company. No
amount is repayable within one year.
4. Unsecured Loans
The Company, during the year has accepted fixed deposits from the
Public amounting to Rs. 62.355 million (Pr year Rs. 1,287.902 million). An
amount of Rs. 983.100 million is repayable within one year.
5. Events occurring after the Balance Sheet date
After the Balance Sheet date, the Company has issued the following
corporate guarantees :
a) Guarantees for Rs. 2,815.400 million in favour of lenders on behalf of
b) Guarantees for Rs. 140.000 million in favour of others on behalf of an
6. Fixed Assets
a) The Company''s land in Bangalore was revalued in August 2001, based
on an independent valuer''s report. Accordingly, the value of the land
was restated at Rs. 1,707 million, with a corresponding adjustment to the
Fixed Assets Revaluation Reserve.
b) The Company owns certain valuable trademarks which are carried at
NIL value. Some of these trademarks / logo have been licenced to Group
c) The Company''s UB City property is under charge in favour of HDFC for
facility granted to the Company.
d) The Company''s property in Goa is under charge in favour of a bank
for facilities granted to a subsidiary.
a) The Company has pledged 10,193,910 shares held in United Spirits
Limited, 10,000,000 shares held in Mangalore Chemicals & Fertilisers
Limited, 769,728 shares held in UB Engineering Limited, 85,985,156
shares held in Kingfisher Airlines Limited and 2,700,000 shares held in
McDowell Holdings Limited to secure the borrowings of subsidiary
companies and associate companies.
Subsequent to the Master Debt Recast Agreement [MDRA], executed by the
Company''s Subsidiary, Kingfisher Airlines Limited with its Bankers, the
Company was allotted 113,213,399 equity shares of Kingfisher Airlines
Limited, which is since pledged to secure the borrowings of the
In addition to the above, the Company has given negative lien of shares
in United Breweries Limited amounting Rs. 1,250 million in favour of
ICICI Bank Limited to secure the borrowings of a subsidiary company.
b) The Company has given a letter of undertaking in favour of ICICI
Bank Limited, undertaking not to dispose of its investments in
Kingfisher Airlines Limited, till such time as there are borrowings
from ICICI Bank Limited to Kingfisher Airlines Limited.
c) The Company''s investment of Rs. 160.000 million with IDFC Mutual Fund
is given as a lien to secure the borrowings of a subsidiary company.
d) The investment in subsidiaries (including step down subsidiaries)
have been considered as long term strategic investments and diminution
in their market value / net worth, though significant is considered
temporary and hence no provision is considered necessary.
e) The Redemption of the Preference Shares issued by a wholly owned
overseas subsidiary, UB Overseas Limited will be made at the end of 10
years from the date of allotment of the shares. The Preference
shareholder will have the option for partial / full conversion into
equity shares of the subsidiary, at the rate of one equity share for
one preference share held, at face value of USD 1 each to be determined
and issued by the Issuer.
8. A major subsidiary of the Company, Kingfisher Airlines Limited has
entered into a Master Debt Recast Agreement [MDRA] with its Bankers.
The terms of the MDRA include inter-alia:
a) Conversion of part of the outstanding loan into Compulsorily
Convertible Preference Shares [CCPS] and part into Cumulative
Redeemable Preference Shares [CRPS] redeemable at par after twelve
b) The remnant loans will be repayable over a nine year period
including a two year moratorium and a graduated schedule over seven
c) Interest for the period from July 2010 to March 2011 was converted
into a term loan repayable over five years.
d) The interest rate has been reduced by over 300 bps.
e) Sanction of additional loan of Rs. 7,680 million
The Company is a signatory to the MDRA
Simultaneously the Company has converted its existing loan of Rs. 6,330
million as well as Non Convertible Preference Shares [NCPS] of Rs. 970
million into Compulsorily Convertible Preference Shares [CCPS].
The Company''s existing guarantees and pledge to secure the KFA debt
have been extended for the period of outstanding.
The Master Debt Recast Agreement [MDRA] executed by the Company''s
Subsidiary, Kingfisher Airlines Limited [KFA] with its Banks has been
implemented in totality. The Company has exercised its option to
convert all its 730,000,000 Compulsorily Convertible Preference Shares
[CCPS] acquired at a cost of Rs. 7,300 million and KFA has allotted
113,213,399 equity shares to the Company. The shareholding of the
Company in KFA now stands at 40.09%. Along with the holding with its
Subsidiaries, the shareholding of the Company in KFA now stands at
55.57%. In terms of the MDRA, the entire share holding of the company
in KFA is pledged with the Security Trustee acting on behalf of
consortium of lenders.
9. Confirmation of balances from certain Sundry Debtors and Sundry
Creditors are awaited. Adjustment for differences, if any, arising out
of confirmation and reconciliation thereof would be made in the current
year. The Management is of the opinion that the impact of adjustments,
if any, is not likely to be significant.
10. The Company, over the years has advanced significant amounts to
subsidiaries including overseas subsidiaries aggregating Rs. 19,236.010
million (including Rs. 10,556.250 million advanced during the year).
Interest has not been charged on loans advanced aggregating Rs.
10,387.428 million. Considering, the income stream of those companies,
the repayment of loans could possibly take protracted period of time
beyond those stipulated in the Loan Agreements. The Directors are of
the view that all the amounts are ultimately recoverable with interest
wherever applicable taking into consideration their business plans and
growth strategies. Accordingly the advances to subsidiaries are
considered presently good and recoverable except to the extent of Rs. 20
11. Strategic investment in APB India
During the year under review, your Company through its wholly owned
overseas subsidiary, UB Overseas Limited has acquired strategic
interest by way of acquisition of 50% of the issued and paid up capital
of UB Ajanta Breweries Private Limited and UB Nizam Breweries Private
Limited (collectively referred to as APB India) from Heineken
International B.V., Netherlands.
12. Cash in hand includes foreign currency notes.
13. As required under Section 205C of the Companies Act, 1956, the
Company has transferred Rs 0.367 million (Pr year Rs.0.134 million) to
the Investor Education and Protection Fund (IEPF) during the year. As
on March 31, 2011, no amount was due to be transferred to the IEPF.
14. Guarantee Commission represents the commission charged by the
Company for the corporate guarantees provided on behalf of subsidiaries
and certain associate companies. Security Commission represents the
commission charged by the Company for the securities pledged on behalf
of a subsidiary and an associate company.
The Company has significant guarantee exposure on behalf of
subsidiaries and other associated companies. Wherever any guarantee has
been invoked, the guaranteed amount has been paid by the beneficiaries.
The Management is reasonably confident that none of the other
guarantees would eventually devolve upon the Company.
15. Given the nature of the Company''s cash flow, the Company has been
borrowing from time to time. Management has comprehensive plans
including additional borrowings to ensure liquidity besides accelerated
sale of residential and/ or office space in the UB City. Accordingly
the accounts have been prepared on principles applicable to going
16. Remuneration to Chairman, Managing Director and Managerial
i) The Chairman of the Company has received remuneration from two
subsidiaries, amounting to USD 120,000 (Pr year USD 120,000) and GBP
89,600 (Pr year GBP 89,600) for the year 2010-11.
ii) The Company as a policy does not pay any remuneration to the
Mr. R.N. Pillai, who was the Managing Director of the Company up to the
close of business hours of August 20, 2010 did not draw any
remuneration and perquisites from the Company. However, he has received
remuneration of Rs. 1.455 million till August 2010 as an executive of an
Mr. A. Harish Bhat was appointed as Managing Director of the Company
with effect from the close of business hours of August 20, 2010 in
place of Mr. R.N. Pillai without payment of any remuneration. However,
he has received remuneration of Rs. 6.015 million from September 2010 to
March 2011 as an executive of an associate company.
iii) Subsidiaries have paid sitting fees of Rs. 0.100 million (Pr year Rs.
0.155 million) to Directors including the Managing Director.
17. Details of outstanding to Micro, Small and Medium Enterprises and
Small Scale Industries.
Based on the response received by the Company, there are no outstanding
as at March 31, 2011 to suppliers, as defined under the Micro, Small &
Medium Enterprises Development Act, 2006.
Amount due to Small Scale Industries (SSI) is nil to the extent of
information disclosed by creditors.
18. The Company has recognised the rent from cancellable operating
leases in accordance with the terms of the lease deed.
In respect of the non- cancellable operating leases, the Company has
recognised the rent on a straight line basis over the non- cancellable
Future minimum lease payments receivable under non-cancellable
operating lease up to one year Rs. Nil (Pr year nil)
3 Segment results represents profit/(loss) before finance expenses,
interest income and tax.
4 Capital expenditure represents the gross additions made to fixed
assets during the year.
5 Segment assets include Fixed Assets, Investments, Current Assets,
Loans & Advances except income tax assets.
6 Segment Liabilities include Secured and Unsecured Loans, Current
Liabilities and Provisions except provision for tax and dividend.
19. Related Party Transactions:
Key Management Personnel: Mr. R.N. Pillai - Managing Director up to
Mr. A. Harish Bhat - Managing Director wef 21.10.2010
i) Name of the Related Parties and description of relationship
UB Electronic Instruments Limited *, UB Infrastructure Projects Limited
*, UB International Trading Limited *, Kingfisher Finvest India
Limited*, Kingfisher Airlines Limited *, Kingfisher Training and
Aviation Services Limited*, Kingfisher Aviation Training Limited*,
Kingfisher Goodtimes Private Limited, City Properties Maintenance
Company Bangalore Limited*, Bangalore Beverages Limited *, UB Sports
Limited*, Vitae India Spirits Limited, Rigby International Corp.,
United Breweries of America Inc, Delaware, Inversiones Mirabel, S.A,
Mendocino Brewing Co. Inc, USA, United Breweries International [UK]
Limited, Kingfisher Beer Europe Limited (formerly known as UBSN
Limited), Rubic Technologies, Inc, Releta Brewing Company LLC, UB
Overseas Limited *, UBHL (BVI) Limited *
United Spirits Limited *, Mangalore Chemicals & Fertilizer Limited *,
UB Engineering Limited*, WIE Engineering Limited (Under Liquidation),
McDowell Holdings Limited*, Pixray India Limited, UB Pharma (Kenya)
Limited, DCL Holdings Private Limited and UB Ajantha Breweries Private
Limited & UB Nizam Breweries Private Limited.
Subsidiary of an Associate
Shaw Wallace Breweries Limited*
* With which there have been transactions during the year.
20. With a view to facilitating the smooth business operation of its
subsidiary, Kingfisher Airlines Limited, the Company, as part of its
obligation as Holding Company has expressed its intention to honour the
financial obligations to the lending institutions on the due dates.
21. The Board of Directors have proposed a dividend of Re.1/- per
share (10%) for the year ended March 31, 2011 (previous year Re.1/- per
22. All amounts are in Rupees million, unless otherwise stated.
23. Previous year''s figures have been regrouped wherever necessary to
conform with the current year''s classification/ presentation.