you are here:

United Breweries Ltd.

BSE: 532478 | NSE: UBL |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE686F01025 | SECTOR: Breweries & Distilleries

BSE Live

Nov 30, 15:40
1507.00 -0.40 (-0.03%)
Volume
AVERAGE VOLUME
5-Day
20,986
10-Day
16,305
30-Day
23,609
9,570
  • Prev. Close

    1507.40

  • Open Price

    1514.00

  • Bid Price (Qty.)

    0.00 (0)

  • Offer Price (Qty.)

    0.00 (0)

NSE Live

Nov 30, 15:46
1504.35 0.45 (0.03%)
Volume
AVERAGE VOLUME
5-Day
356,421
10-Day
294,358
30-Day
413,514
425,253
  • Prev. Close

    1503.90

  • Open Price

    1505.40

  • Bid Price (Qty.)

    0.00 (0)

  • Offer Price (Qty.)

    1504.35 (5)

Annual Report

For Year :
2015 2014 2013 2012 2011 2010 2009 2007 2005

Chairman's Speech

Dear Shareholders, Since we last met a year ago, the global economic environment has changed in many different ways, several of which have had a positive rub-off on the Indian economy while yet others have added to a sense of uncertainty. Softening of commodity prices, in particular that of oil and minerals including gold has, in substantial measure, helped to improve the cost structures and deficits, on one hand, while easing core inflation on the other. This has opened up the possibility of the country moving to an extended period of low inflationary pressures which taken together with productivity improvements can result in sustained growth. The slowing down of the Chinese economy and the slow rate of growth experienced by most European economies, with the exception of Germany, has meant a more affordable energy basket which has a positive rub- off effect across the board for India which is largely still dependent on imported hydrocarbons. The recent re-approachment between the United States and Iran should auger further increase in oil supplies with resultant softening of prices. Simultaneously, the softening in the prices of gold, taken together with measures being initiated by the Government for monetization of the yellow metal, has also greatly helped in reducing the fiscal deficit. The monsoon this year which was expected to be very much below average has turned out to be, thus far, better than expected. Most parts of the country, barring some areas of the West, have received enough rainfall in the sowing period and consequently there are reports of 4% increase in acreage under cultivation. This too is resulting in an improved confidence in the rural sector leading to enhanced demand for goods and services. Despite very visible hurdles to governance arising from political rivalry between the Government and the Opposition Parties that has stalled Parliament and blocked the progress of several important legislations, most particularly the introduction of the Goods and Service Tax and Land Acquisition Bill, several initiatives by the newly formed Government to streamline processes, clamp down on corruption, etc. are beginning to take root. The most significant among these initiatives has been the move towards direct transfer of benefits and strenuous efforts to enhance banking outreach through universal coverage. To my mind, bringing millions of previously unbanked Indians into the formal financial sector is very likely to reap rich dividends in the years to come. Similarly, the replacement of subsidies by targeted direct benefit transfer not only dramatically reduces leakages but also empowers a new set of consumers. Turning to the operation of our company, United Breweries consistent with its record of many years, sustained growth at higher rates than industry and thereby accrued market share during the last financial year. In the backdrop of an industry that grew at about 7%, our company has recorded overall growth of 7%, accumulating volumes of 147 million cases (12 mio HL), accounting for 51% of the total market. Importantly, in the premium beer segment, within both strong and mild categories, which constitute the core of United Breweries'' business growth rate, has been significantly higher than the overall industry, reflecting higher willingness and ability to spend among target consumers. Despite the aggressive presence of all the major international brewers in the country, I am proud that we have been able to increase our share year-on-year and today our size is more than double of the nearest competitor. These growths have been made possible both by new launches and strong performance of star brands. Kingfisher Ultra has now become the most aspiratory premium mild beer in the country and Heineken is now the fastest growing brand in our company''s portfolio as a world-class super premium beer. Our company, of course, continues its recognized efforts to keep the Kingfisher brand in the forefront of the consumers mind through associations built up over many decades in areas such as Sports, Food, Music and Fashion. Association of our brands with premier events which capture the fancy of young Indians such as IPL Cricket, Kingfisher Derby, Formula 1 Motor Racing, Marathons in Mumbai, Delhi and Bangalore - all add to the demand pull. The Kingfisher Calendar remains one of the most sought after events in the country''s social calendar and the Great Indian Oktoberfest is a much loved opportunity for consumers to be part of a global cultural heritage. Much as our company is known for its marketing prowess, our profitability is sustained by tight cost controls and manufacturing innovations. Obviously, with the healthy volume growth on an already large base of over 147 million cases, it is incumbent upon our company to invest continuously both in capacity and technology. During the year the Greenfield brewery near Patna in Bihar has commenced operations and in Rajasthan we have expanded our supply base by the acquisition of brewing assets near Shahjahanpur, which will commence production later this year. United Breweries has been recognized within the Heineken''s global network for the consistent high quality of its products and this is a tribute to the unstinting efforts of our manufacturing team. In the brewing industry, packaging, particularly bottles, constitute a major cost. The strategy of introducing patented embossed bottles is a major driver of cost control which continues to reap dividends over the years. Long term contracts for new technology, light weight bottles and locally manufactured aluminum cans have helped also to lock in cost advantages in a highly inflationary environment. Total productivity management and focus for every aspect have also yielded advantages through energy savings and water savings. Our company has long recognized that the communities we operate in are, in fact, a part of our business and we have been doing much to improve quality of life, well long before the whole concept of Corporate Social Responsibility gained legal mandate. Not only do we continue to be involved deeply in Education and Healthcare, within the communities that we operate in but some of our initiatives on energy saving and use of water have received international acclaim and recognition. Several of our breweries have, during the year, received recognition and awards from State Governments as well as by international organizations. Human Resources are an important part of our business and I am pleased to record the very harmonious relationship that our company has both with management staff as well as the workers and continues to focus on a transparent manpower model that benefits all categories of employees on a continuous basis. While I have talked in the previous paragraphs about the positive underlying trends in the industry in general and the proactive steps taken by our company to take advantage of the same, it is also necessary to caution on several fronts. The single largest constraint to profitability remains the intrusive Government regulations and erratic, often unexplained changes to both regulations and taxation. In most parts of the world beer is the preferred beverage of choice particularly for young consumers and internationally ranks 3rd among all beverages after water and tea. In India, decades of perverse taxation policy that equates spirits and beer has resulted in beer being prohibitively expensive as a share of the consumer''s wallet. This has consistently led to the size of the beer market being much smaller than its corresponding shares in almost every other country in the world. It has driven and continues to drive our youngsters to prefer hard alcohol with attendant moral and social consequences in preference to beer which is a low alcohol social beverage. Our company and I in particular, have been in the forefront of efforts to educate the State Government on the need for a rational regulatory and taxation policy which will also bring long term benefits to our citizens. One of the land mark economic legislations which is expected to improve the ease of doing business in India and truly put in place a common market among Indian states is the planned Goods and Service Tax. This historic legislation has been caught up in political infighting. Even as I write this, this bill is stalled in Parliament, thus depriving the country of what most economists estimate would be a 1% boost to GDP It is particularly concerning for our industry that an effort appears to being made to exclude some industries most prominently the beverage alcohol industry form the ambit of GST. This will lead to the continued balkanization of Indian states in the industry and impose punitive costs on us. As a long standing advocate of a vibrant India, growing on the back of world class products and services, I end with a note of optimism both for the nation and for the business of our company. My personal appreciation to all who have striven to make us proud and trust that we have many more milestones to cross in the years ahead. Thank you. VIJAY MALLYA CHAIRMAN