The Shareholders,
The Directors have pleasure in presenting the Annual Report of your
Company and the audited accounts for the year ended March 31, 2012.
FINANCIAL RESULTS
Rupees in Millions
2011-12 2010-11
The working of your Company for
the year under review resulted in
- Profit from operations 5,755.508 5,925.148
- Exceptional and other (108.163) 368.399
non-recurring items
5,647.345 6,293.547
Less:
- Depreciation 608.453 477.470
- Taxation 1,610.951 1,961.365
(including deferred tax)
- Profit after tax 3,427.941 3,854.712
Profit B/F from previous year 15,357.972 12,380.525
Profit transferred on Amalgamation - 4.030
Profit available for appropriation 18,785.912 16,239.267
Your Directors have made the
following Appropriations :
General Reserve 500.000 500.000
Proposed Dividend 326.987 326.987
Corporate Tax on Proposed
Dividend 53.046 54.309
Balance carried to the Balance Sheet 17,905.879 15,357.971
EPS - Basic & Diluted (Rupees) 26.91 29.47
Your Directors propose a Dividend on the equity shares of the Company
at the rate of Rs. 2.50 per share.
CAPITAL
The Authorised Capital of your Company remained unchanged at
Rs.5,542,000,000/- divided into 395,000,000 Equity Shares of Rs.10/-
each and 159,200,000 Preference Shares of Rs. 10/- each.
The issued, subscribed and paid-up Equity Share Capital of your Company
also remained unchanged at Rs.1,307,949,680/- divided into 130,794,968
equity shares of Rs.10/- each.
GLOBAL DEPOSITORY SHARES
Your Company had issued 17,502,762 Global Depository 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.4274 per GDSs aggregating to
US$ 130 mn. These GDSs are listed on the Luxembourg Stock Exchange.
As on May 25, 2012, there was an outstanding of 1,284,554 GDSs
representing 642,277 equity shares.
PERFORMANCE OF THE COMPANY
During the year under review, your Company has achieved a sales volume
of over 120 million cases (Previous year 112 Million cases),
representing a growth of 7% over the previous year, thus continuing to
maintain its position as the largest distilled spirits marketeer in the
world in terms of volume. Profit from operations stood at Rs.5,755.508
million (previous year Rs.5,925.148 million) registering a marginal
decrease over the previous year mainly on account of increase in input
costs.
SUBSIDIARIES
During the year under review, Chennai Breweries Private Limited (CBPL),
a wholly owned subsidiary ceased to be the subsidiary of the Company
consequent to its amalgamation with United Breweries Limited (UBL), a
UB group Company in terms of Scheme of Amalgamation. Consequent to the
aforesaid amalgamation of CBPL with UBL, your Company received
8,500,000 equity shares of Rs. 1/- each of UBL for the shares held by
the Company in CBPL.
Whyte and Mackay (Americas) Limited, LLC, a wholly owned subsidiary of
Whyte and Mackay Limited, became an utlimate wholly owned subsidiary of
your Company.
Sovereign Distilleries Limited (SDL) which became a subsidiary during
the year under review became a wholly owned subsidiary of your Company
on April 19, 2012 consequent to the acquisition of the balance 38.47%
equity shares in terms of Share Purchase Agreement (SPA) executed with
the erstwhile promoters of Sovereign Distilleries Limited (SDL).
Your Company is considering various steps including infusion of share
capital to make the net worth of its subsidiaries viz. Pioneer
Distilleries Limited, Sovereign Distilleries Limited and Tern
Distilleries Private Limited, positive.
During the year under review, your Company subscribed to 15,612,245 12%
Non Cumulative Redeemable Optionally Convertible Preference shares of
Rs.10/- each at par in Four Seasons Wines Limited (FSWL), a subsidiary
of the Company. Your Company also subscribed during the current year
8,000,000 12% Cumulative Redeemable Preference shares of Rs.10/- each
at par in FSWL.
In terms of Circular No.2/2011 dated February 8, 2011 issued by the
Ministry of Corporate Affairs, Government of India, a general exemption
has been granted from the compliance of Section 212 of the Companies
Act, 1956, requiring holding companies to attach with their balance
sheet, a copy of the balance sheet, profit and loss account and other
documents of each of its subsidiaries provided the Board of Directors
of such companies give consent, by way of a resolution, for not
attaching the balance sheet of the subsidiary companies concerned with
the balance sheet of the Company and certain conditions prescribed by
the Ministry in this regard are complied with.
The Board of Directors of your Company, at their meeting held on May
29, 2012 have given their consent for not attaching, inter alia, the
balance sheet, profit and loss account etc. of its subsidiary companies
since your Company has complied with all the conditions prescribed by
the Ministry vide its circular dated February 8, 2011, in this regard.
In view of the above, the balance sheet, profit and loss account and
other documents/details of the subsidiary companies, which are required
to be attached with the balance sheet of the Company, are not attached.
The Annual Accounts of the Subsidiaries and the related detailed
information will be made available to any shareholder of the Company
seeking such information at any point in time. The Annual Accounts of
the Subsidiary Companies will also be kept for inspection by any
shareholder of the Company at its Registered Office and that of the
Subsidiary Companies concerned, during the business hours on any
working day.
The Accounting Year of United Spirits Nepal Private Limited (USNPL),
your Company’s subsidiary in Nepal is from mid-July to mid-July every
year. Accordingly, Accounting Year of 2010-11 of USNPL ended on July
16, 2011 and the Accounting Year 2011-12 will end on July 16, 2012
i.e., after the end of the close of the financial year of the Company,
which ended on March 31, 2012. For the purpose of compliance under
Accounting Standard - 21, relating to “Consolidated Financial
Statement,” the Accounts of USNPL has been drawn up to March 31, 2012.
For the purpose of compliance under Accounting Standard - 21,
“Consolidated Financial Statement” presented by the Company includes
the financial information of its subsidiaries.
PROSPECTS
Your Company achieved a sales volume of 10.75 million cases during the
first month of the current financial year and judging by the continuing
growth in the current year, the Company is set to maintain its current
position as the world’s largest distilled spirits marketeer by volume.
With the fixation of a more than comfortable floor price for ethanol
supplies for oil blending by the Oil Marketing Companies coupled with
the uncontrolled grant of permissions to export of molasses and spirit,
the potential availability of Extra Neutral Alcohol (ENA), a primary
raw material required in the manufacture of Company’s products, has
been adversely affected. To counter this hardship, as a part of its
business strategy, your Company is continuing with its initiatives of
building up supply side security by integrating backwards into
distillation by way of acquiring substantial interest in Pioneer
Distilleries Limited in Maharashtra and Sovereign Distilleries Limited
in North Central Karnataka, both states rich in sugarcane cultivation.
These will go a long way to reduce the Company’s dependence on external
supplies of ENA.
In order to mitigate the increase in the cost of glass bottles, which
is another key ingredient, as a part of its business strategy
initiatives, your Company has envisaged setting up a glass container
manufacturing facility in south India for captive consumption, besides
developing alternate packaging materials in some of the southern states
of the
Country to reduce the impact of the increased cost of glass bottles.
With all these measures, your Directors are hopeful that your Company
would achieve a structural improvement in its profitability in the
years to come.
DEPOSITORY SYSTEM
The trading in the equity shares of your Company is under compulsory
dematerialisation mode. As on May 25, 2012, equity shares representing
97.64 % of the equity share capital are in dematerialised form. As the
depository system offers numerous advantages, members are requested to
take advantage of the same and avail of the facility of
dematerialisation of the Company’s shares.
DIRECTORS
Mr. Sreedhara Menon and Dr. Vijay Mallya retire by rotation and being
eligible, offer themselves for re-appointment.
Mr. G.N.Bajpai was appointed as Additional Director on January 20, 2012
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. G.N. Bajpai
as Director at the Annual General Meeting.
AUDITORS
M/s. Walker, Chandiok & Co., your Company’s Auditors, are eligible for
re-appointment at the Annual General Meeting and it is necessary to fix
their remuneration.
TAX AUDITORS
Your Directors have appointed M/s. Lodha & Co., Chartered Accountants
as the Tax Auditors of the Company to carry out the tax audit of the
Company for the year ended March 31, 2012.
LISTING OF SHARES OF THE COMPANY
The Equity Shares of your Company continue to remain listed with
Bangalore Stock Exchange Limited, Bombay
Stock Exchange Limited and National Stock Exchange of India Limited.
The listing fees for the year 2012-13 have been paid to these Stock
Exchanges.
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. 6,387.556
Million as at March 31, 2012. Matured deposits for which disposal
instructions had not been received from the depositors concerned stood
at Rs. 105.338 Million as at March 31, 2012. Of this, a sum of Rs.
55.354 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 and Deposits, remaining unclaimed and
unpaid for a period of more than 7 years, have been transferred to the
Investor Education and Protection Fund.
HUMAN RESOURCES
Employee relations remained cordial at all Company’s locations.
Particulars of employees drawing an aggregate remuneration of Rs.
60,00,000/- or above per annum or Rs. 5,00,000/- or above per month, as
required under Section 217(2A) of the Companies Act, 1956, as amended,
is annexed.
EMPLOYEE STOCK OPTION SCHEME
The Company has not offered any stock option to the Employees during
the year 2011-12.
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, 1988, the required information
relating to Conservation of Energy, Technology Absorption and Foreign
Exchange earnings and outgo is annexed.
DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 1956, in relation
to financial statements for the year 2011-12, 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, 2012;
- 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 year’s performance.
By Authority of the Board
Mumbai Dr. VIJAY MALLYA
May 29, 2012 Chairman
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