Dear Members,
 
 The Directors have pleasure in presenting the Annual Report of your
 Company and the audited accounts for the year ended March 31, 2011.
 
 FINANCIAL RESULTS
 
                                                  Rupees in Millions
 
                                               2010-11       2009-10
 
 The working of your Company for
 the year under review resulted in
 
 -    Profit from operations                 5,925.149     5,123.093
 
 -     Exceptional and other
 non-recurring items                           368.399       699.953
 
                                             6,293.548     5,823.046
 
 Less:
 
 -     Depreciation                            477.470       386.302
 
 -    Taxation
 
 (including deferred tax)                    1,961.365     1,676.529
 
 -    Profit after tax                       3,854.713     3,760.215
 
 Profit B/F from previous year              12,380.525     9,486.445
 
 Profit transferred on Amalgamation              4.030             -
 
 Profit available for appropriation         16,239.268    13,246.660
 
 Your Directors have made the
 following Appropriations :
 
 General Reserve                               500.000       500.000
 
 Proposed Dividend                             326.987       313.986
 
 Corporate Tax on Proposed
 
 Dividend                                       54.309        52.149
 
 Balance carried to the Balance Sheet       15,359.972    12,380.525
 
 EPS - Basic & Diluted (Rupees)                  29.47         32.51
 
 Your Directors propose a Dividend on the equity shares of the Company
 at the rate of Rs. 2.50 per share, including on 5,200,639 Equity Shares
 of 10/- each fully paid up allotted during the year to the shareholders
 of Balaji Distilleries Limited (BDL), since amalgamated with the
 Company.
 
 CAPITAL
 
 During the year under review, consequent to amalgamation of Balaji
 Distilleries Limited with the Company, the Authorised Capital of your
 company stood increased from Rs. 3,292,000,000/- divided into
 245,000,000 Equity Shares of Rs.10/- each and 84,200,000 Preference
 Shares of Rs.10/- each to 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 the Company stood increased from Rs. 1,255,943,290/- divided into
 125,594,329 Equity Shares of Rs.10/- each to Rs.1,307,949,680/- divided
 into 130,794,968 Equity Shares of Rs. 10/- each by issue and allotment
 of 5,200,639 Equity Shares of Rs.10/- each, fully paid-up, to the
 shareholders of Balaji Distilleries Limited consequent to its
 amalgamation with your Company.
 
 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.4274 per GDSs aggregating to
 US$ 130 mn. These GDSs are listed on the Luxembourg Stock Exchange.
 
 As on July 29, 2011, there was an outstanding of 1,662,666 GDSs
 representing 831,333 equity shares.
 
 PERFORMANCE OF THE COMPANY
 
 During the year under review, the Company has achieved a sales volume
 of over 112 million cases, representing a growth of 12% over the
 previous year, thus making it the largest distilled spirits marketeer
 in the world in terms of volume. Profit from operations at Rs.
 5,925.149 millions registered a growth of 16% over the previous year.
 
 Through a combination of premiumization, cost control and increased
 effeciency at every stage of its process, the Company has been able to
 not only mitigate cost increases but also improve its profitabality.
 
 AMALGAMATION OF BALAJI DISTILLERIES LIMITED WITH THE COMPANY
 
 The Hon''ble Appellate Authority for Industrial and Financial
 Reconstruction has sanctioned the Rehabilitation Scheme of Balaji
 Distilleries Limited which includes the Scheme of Arrangement between
 Balaji Distilleries Limited (BDL), Chennai Breweries Private Limited
 (CBPL) and United Spirits Limited (USL) (the Company) and their
 respective Shareholders and Creditors (the Scheme) vide its order
 dated November 29, 2010, and the Scheme became effective from December
 27, 2010. In terms of the sanctioned scheme, all the assets and
 liabilities of BDL, other than Brewery Division Undertaking, as a going
 concern stood transferred to and vested in the Company with effect from
 1st April, 2009, being the Merger Appointed Date and BDL stood
 dissolved without winding up. In terms of the Scheme, the shareholders
 of BDL were issued and alloted in aggregate 5,200,639 equity shares of
 Rs.10/- each of fully paid up in the Company in the ratio of 2 equity
 shares of Rs. 10/- each fully paid up in the Company for every 55
 equity shares of Rs. 10 /- each fully paid up in BDL.
 
 ACQUISITION OF PIONEER DISTILLERIES LIMITED
 
 In terms of Share Purchase Agreement (SPA) executed with the
 promoters of Pioneer Distilleries Limited (PDL), a company listed on
 Pune Stock Exchange Limited, National Stock Exchange of India Limited
 and Bombay Stock Exchange Limited, your Company acquired 7,322,280
 Equity shares constituting 54.69% of the paid up capital of PDL.
 Further, 977,212 Equity shares, constituting 7.30% and 2,677,640 Equity
 shares, constituting 20.00% of the paid up capital of PDL were acquired
 from the open market and through open offer in terms of SEBI Takeover
 Regulations, respectively, thereby acquiring a total of 10,977,132
 Equity shares, aggregating to 81.99% of the paid up capital of PDL.
 Consequently, PDL has become a subsidiary of the Company. PDL is in the
 business of manufacture and sale of Extra Neutral Alcohol (ENA),
 which is the primary ingredient for manufacture of Indian Made Foreign
 Liquor (IMFL) and having a manufacturing plant in Balapur Village,
 Dharmabad Taluk, Nanded District, Maharashtra.
 
 Pursuant to the provisions of listing agreements executed with the
 concerned stock exchanges, the Company would take necessary steps to
 bring down its total shareholding in PDL to 75% of the paid up capital,
 in due course.
 
 ACQUISITION OF SOVEREIGN DISTILLERIES LIMITED
 
 In terms of Share Purchase Agreement (SPA) executed with the
 promoters of Sovereign Distilleries Limited (SDL), your Company
 proposes to acquire 100% of the paid up capital of SDL and has so far
 acquired 35,954,280 equity shares constituting 61.53% of the paid up
 capital of SDL.  Consequently, SDL has become a subsidiary of the
 Company.  SDL is engaged in the business of manufacturing, sale and /
 or marketing of Extra Neutral Alcohol (ENA), and Indian Made Foreign
 Liquor (IMFL) and having a manufacturing plant at Village Singapur,
 District Raichur, Karnataka.
 
 SUBSIDIARIES
 
 During the year under review, Chennai Breweries Private Limited
 (CBPL), a wholly owned subsidiary of Balaji Distilleries Limited
 (BDL) became a wholly owned subsidiary of the Company consequent to
 amalgamation of BDL with the Company. CBPL is proposed to be
 amalgamated with United Breweries Limited, a UB Group Company in terms
 of the Scheme of Amalgamation, subject to the approval of the Hon''ble
 High Court of Karnataka and Madras. Upon the Scheme becoming effective,
 the Company would receive 8,500,000 equity shares of Rs. 1/- each of
 United Breweries Limited for the shares held in CBPL.
 
 Pioneer Distilleries Limited, and Sovereign Distilleries Limited became
 subsidiaries of the Company during the current year consequent upon
 their acquisition as aforesaid.
 
 During the year under review, Herbertsons Limited and Spring Valley
 Investments Holding Inc., have ceased to be subsidiaries of your
 Company consequent to the sale of shares and liquidation respectively.
 
 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 August
 03, 2011 have given their consent for not attaching, inter alia, the
 balance sheet, profit and loss account etc. of its subsidiary companies
 and have also agreed to comply with 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 2009-10 of USNPL ended on July
 14, 2010 and the Accounting Year 2010-11 ended on July 16, 2011 i.e.,
 after the end of the close of the financial year of the Company, which
 ended on March 31, 2011. 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, 2011.
 
 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 30.73 million cases during the
 first quarter of the current financial year and judging by continuing
 growth in the current year, the Company is set to maintain its current
 position as the world''s largest spirits marketeer by volume.
 
 The energy inflation prevailing in the market had adversely affected
 the cost of Extra Neutral Alcohol (ENA), a primary raw material
 required in the manufacture of your Company''s products. Your Company
 presently procures the majority of its ENA requirement from external
 suppliers, some of whom are also competitors in the finished product
 arena. In order to reduce the dependence on such suppliers, your
 Company has acquired two entities having primary distillation units,
 during the year, namely Pioneer Distilleries Limited and Sovereign
 Distilleries Limited, having plants in Maharashtra and Karnataka
 respectively. These also will go a long way to help the Company to gain
 the arbitrage over ENA costs.
 
 The price of glass containers also rose substantially due to inflation
 and the near monopoly situation existing in the market. In order to
 mitigate the cost of glass containers, your Company has developed
 alternate packaging materials viz., PET and Tetra Brick Packaging,
 which have proved a big success in Karnataka and Andhra Pradesh.  Upon
 procuring regulatory approvals, such alternative packaging will be
 rolled out in other markets too. Apart from these measures, your
 Company is evaluating plans to set up a glass manufacturing unit in
 South India for captive consumption.  With these measures, your
 Directors are hopeful that your Company would achieve a structural
 improvement in future profitability in the years to come.
 
 DEPOSITORY SYSTEM
 
 The trading in the equity shares of your Company is under compulsory
 dematerialisation mode. As on July 29, 2011, equity shares representing
 97.49 % 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. M.R. Doraiswamy Iyengar and Mr. B.M. Labroo retire by rotation and
 being eligible, offer themselves for re-appointment.
 
 Mr. V.K. Rekhi ceased to be the Managing Director of the Company with
 effect from April 19, 2011 consequent upon the expiry of his office as
 Managing Director and resigned as a Director of the Company with effect
 from the close of business hours on April 29, 2011.
 
 Your Directors place on record their appreciation of the valuable
 services rendered by Mr. V.K. Rekhi during his tenure as Managing
 Director of your Company.
 
 Mr. Ashok Capoor was appointed as an Additional Director of the Company
 with effect from April 29, 2011 and as Managing Director of the Company
 for a period of 3 (three) years commencing from May 2, 2011 to May 1,
 2014. The appointment of and remuneration payable to Mr. Ashok Capoor
 as approved and recommended by the Compensation Committee of Directors
 is being placed for the approval of the members at this Annual General
 Meeting.
 
 Mr. Ashok Capoor 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 from a member signifying
 the intention to propose the appointment of Mr. Ashok Capoor as a
 Director at the Annual General Meeting.
 
 Mr. Ashok Capoor''s appointment as Director and the appointment and the
 remuneration payable to him as Managing Director of the Company, have
 been included in the Notice convening this Annual General Meeting for
 your approval.
 
 AUDITORS
 
 M/s.Price Waterhouse, your Company''s Auditors are not seeking
 re-appointment at the forthcoming Annual General Meeting. Your
 Directors place on record their appreciation of the valuable services
 rendered by them during their tenure as Auditors of your Company. It is
 proposed to appoint M/s. Walker, Chandiok & Co., Chartered Accountants,
 as the Statutory Auditors to hold office from the conclusion of this
 Annual General Meeting till the conclusion of the next Annual General
 Meeting.
 
 M/s. Walker, Chandiok & Co., Chartered Accountants, have consented to
 be the Auditors of the Company if appointed by the Members at the
 Annual General Meeting and have also confirmed that their appointment
 would be within the limits specified under section 224(1-B) of the
 Companies Act, 1956.
 
 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, 2011.
 
 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
 2011-12 have been paid to these Stock Exchanges.
 
 5,200,639 Equity Shares issued and allotted to the shareholders of
 erstwhile Balaji Distilleries Limited as mentioned above during the
 year under review have also been listed on the aforesaid 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. 5,412.039
 Million as at March 31, 2011. Matured deposits for which disposal
 instructions had not been received from the depositors concerned stood
 at Rs. 53.819 Million as at March 31, 2011. Of this, a sum of Rs.
 24.651 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 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 2010-11.
 
 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 2010-11, 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, 2011;
 
 - 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
 
 New Delhi                                             Dr. VIJAY MALLYA
 
 August 03, 2011                                               Chairman