United Spirits
BSE: 532432 | NSE: MCDOWELL-N | ISIN: INE854D01016 | Breweries & Distilleries
- Directors Report
- Chairman's Speech
- Auditors Report
- Notes To Accounts
- Accounting Policy
- Finished Products
- Raw Materials
| Directors Report | Year End : Mar '08 |
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
Rupees in Million
2007-08 2006-07
The working of your Company for
the year under review resulted in
Profit from operations 5,175.774 3,898.186
Exceptional and Other
Non-Recurring Item - 2,627.424
5,175.774 6,525.610
Less:
Depreciation 326.112 309.350
Taxation
(including deferred tax) 1,736.903 1,276.066
Profit after tax 3,112.759 4,940.194
Profit brought forward from previous year 4,411.221 256.572
Profit available for appropriation 7,523.980 5,196.766
Your Directors have made the
following appropriations:
To General Reserve 250.000 500.000
To Capital Redemption Reserve 77.500
Proposed Dividend:
Preference Shares 1.930 6.975
Equity Shares 150.331 240.689
Corporate Tax on Proposed
Dividend 25.877 37.881
Balance carried to the Balance Sheet 7,018.342 4,411.221
EPS - Basic - Rupees 31.84 52.20
EPS - Diluted - Rupees 31.40 52.20
Your Directors propose a Dividend on equity shares @ 15%.
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 (redeemed on July 11, 2007), for the period from
April 1, 2007 to July 10, 2007
CAPITAL
The Authorised Capital of your Company remained unchanged at
Rs.1,200,000,000 divided into 110,000,000 equity shares of Rs.10/- each
and 10,000,000 Preference Shares of Rs.10/- each
During the year under review, 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.1,001,632,560
divided into 100,163,256 equity shares of Rs.10/- each, upon conversion
of the entire US0,000,000 2% Convertible Bonds Due 2011, into
5,681,326 equity shares of Rs. 10/- each
The entire paid-up Preference Share Capital consisting of 7,750,000 9%
Non-Cumulative Non-Convertible Redeemable Preference shares of Rs.10/-
each had been redeemed on July 11, 2007
PERFORMANCE OF THE COMPANY
Brand Sales were up 11% while Sales Income at Rs.31,731 million grew
17%. This is a reflection of the increase in sales at the upper end of
the brand spectrum as a result of a concerted drive by the Company to
‘premiumise’ its portfolio with resultant increase in profits.
Operating profits at Rs.5,176 million were up 32% from the Rs.3,898
million in the previous year
While Cost of Goods has moved up a few notches as a result of the
step-up in the price of the Company’s 3 main ingredients, Spirit
(Molasses/Rectified Spirits/ Extra Neutral Alcohol), Malt Spirit and
Glass Containers, your Company, through a mix of strategic buying, use
of alternate packaging and flexing its large buying scale, is pulling
out all stops to contain this vital element of cost. Advertising and
Sales Promotion expenditure has seen the use of innovation and
cost-efficient methods of advertising including at the point of
sale/consumption which should help build brand equity in an environment
where product advertising as is commonly understood, is banned
AMALGAMATION
In terms of a Scheme of Amalgamation (“Scheme”), Shaw Wallace & Company
Limited and Primo Distributors Private Limited, both subsidiaries of
the Company, are proposed to be amalgamated with your Company with
effect from April 1, 2007, being the Appointed Date. While the Hon’ble
High Court of Karnataka at Bangalore and the Hon’ble High Court of
Judicature at Bombay have sanctioned the Scheme, similar sanction is
awaited from the Hon’ble High Court at Calcutta
Zelinka Limited, a wholly owned subsidiary of the Company in Cyprus, is
also proposed to be amalgamated with the Company with effect from April
1, 2007, being the Appointed Date. The required sanction for the
amalgamation from the Hon’ble High Court of Karnataka at Bangalore has
been received. The Amalgamation will become effective after compliance
by Zelinka Limited of the necessary and applicable laws of Cyprus
PROSPECTS
Demographic dividend of India in terms of young educated and discerning
population with higher disposable income would give your Company a
continued growth in its addressable consumer base. In view of this,
your Directors expect continued and profitable increase in demand for
the Company’s products. However, the unprecedented increase in input
costs and the general economic downturn could have some impact on the
profitability Through a combination of strategic buying, revenue
increases, cost paring and other cost mitigation measures, the Company
expects to show increased profits despite a recessionary economy. The
hardening of Scotch prices and the growing demand for good quality wine
are expected to improve the business prospects and profitability of
Whyte & Mackay and Bouvet Ladubay, respectively.
Profits for the first 6 months for the current year are 26% higher than
the corresponding period of the year under review.
SUBSIDIARIES
During the year under review, the following Companies became
subsidiaries of your Company:
Liquidity Inc.; 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 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; Invergordon Distillers Group
Limited; 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; WMB Realisations Limited; McDowell & Company Limited;
Jasmine Flavours & Fragrances Private Limited and Royal Challengers
Sports Private 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 Hon’ble High Courts of
Calcutta and Bombay, Shaw Wallace Financial Services Limited ceased to
be a Subsidiary of your Company in the year under review.
Subsequent to the Balance Sheet date, United Spirits (Shanghai) Trading
Company Limited became a wholly owned subsidiary of your Company
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, 2008 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, 2008 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 United Spirits Nepal Private Limited (USNPL)
(previously known as “McDowell Nepal Limited” which has been converted
into a Private Limited Company and renamed as United Spirits Nepal
Private Limited, during the year), your Company’s Subsidiary in Nepal
is from mid-July to mid-July every year. Accordingly, Accounting year
of 2006-07 of USNPL ended on July 16, 2007 and the Accounting Year
2007-08 ended on July 15, 2008, i.e., after the end of the close of the
financial year of the Company which ended on March 31, 2008. 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, 2008
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 94.51%
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. P.K. Kakodkar, who resigned as a Director on June 1, 2007, expired
on June 1, 2008. The Board of Directors express their profound grief
and sorrow on the demise of Mr. P.K. Kakodkar and place on record their
deep appreciation of his long association and valuable contribution
during his tenure as a Director of your Company.
Mr. M.R. Doraiswamy Iyengar and Mr. B.M. Labroo 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, 2008.
LISTING OF SHARES OF THE COMPANY
At the Annual General Meeting of your Company held on November 28,
2007, the Shareholders had approved delisting of your Company’s equity
Shares from the Stock Exchanges at Ahmedabad, Chennai, Delhi and
Kolkata. While the shares have been delisted from the Stock Exchanges
at Ahmedabad, Chennai and Kolkata, delisting approval is awaited from
The Delhi Stock Exchange Limited. The Equity Shares of your Company
will 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 2008-09 have been paid to all
these Stock Exchanges.
Your Directors have allotted 5,681,326 equity shares of Rs. 10/- each
during the year, upon conversion of Bonds in terms of the Offering
circular for issue of US0,000,000 2.00 per cent Convertible Bonds
due 2011 (Bonds). The equity shares so allotted have been listed on
Bangalore Stock Exchange Limited, Bombay Stock Exchange Limited and the
National Stock Exchange of India Limited. Listing approval for 227,550
equity shares from The Delhi Stock Exchange Limited is awaited
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 date, there is an outstanding of 41,462 GDSs representing 20,731
equity shares.
FOREIGN CURRENCY CONVERTIBLE BONDS
Your Company had issued US0,000,000 2% Convertible Bonds Due 2011
(Bonds) convertible into equity shares or GDSs (2 GDSs representing 1
equity share) and listed on the Singapore Exchange Securities Trading
Limited (SGX)
In terms of the Offering Circular dated March 24, 2006 (which included
Notice by the Company for Mandatory Conversion of outstanding Bonds),
your Company has allotted, during the year under review, 5,681,326
equity shares of Rs. 10/- each on conversion of the entire Bonds and as
such, there are no outstanding Bonds
CREDIT RATING
ICRA Limited (ICRA) has assigned “LA-” (pronounced LA minus) rating on
the long term scale to the Long Term Debt Programme of the Company
(Basel II) and also assigned “A1” (pronounced A One) rating on the
short term scale to the Short Term Debt Programme of the Company.
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, 2008 upto December 31, 2008.
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.564.41
million as at March 31, 2008. Matured deposits for which disposal
instructions had not been received from concerned depositors stood at
Rs.11.025 million as at March 31, 2008. Of this, a sum of Rs.2.761
million has since been paid as per instructions received subsequent to
the Balance Sheet date.
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.
SHIFTING OF REGISTERED OFFICE
The Registered Office of the Company has been shifted from 51, Richmond
Road, Bangalore - 560 025 to ‘UB Tower’, #24, Vittal Mallya Road,
Bangalore - 560 001 with effect from March 1, 2008.
HUMAN RESOURCES
Employee relations remained cordial at all Company’s locations.
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 2007-2008 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, 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 2007-08, 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, 2008;
- 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
Bangalore V.K. REKHI M.R. DORAISWAMY IYENGAR
November 29, 2008 Managing Director Director
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