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This Placement Document is dated October 20, 2009.

UNITED SPIRITS LIMITED

(Incorporated on March 31, 1999 in the Republic of India as a public company with limited liability under the Companies Act, 1956)

UNITED SPIRITS LIMITED (the “Company”) is issuing up to 17,681, 952 Equity Shares of Rs.10 each at a price of Rs.913.70 per Equity Share, including a premium of Rs.903.70 per Equity Share, aggregating Rs.16,155,999,542.40 (the “Issue”).

ISSUE IN RELIANCE UPON CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, AS

AMENDED

THIS ISSUE AND THE DISTRIBUTION OF THIS PLACEMENT DOCUMENT IS BEING DONE IN RELIANCE UPON CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, AS AMENDED (THE “SEBI REGULATIONS”). THIS PLACEMENT DOCUMENT IS PERSONAL TO EACH PROSPECTIVE INVESTOR AND DOES NOT CONSTITUTE AN OFFER OR INVITATION OR SOLICITATION OF AN OFFER TO THE PUBLIC OR TO ANY OTHER PERSON OR CLASS OF INVESTORS WITHIN OR OUTSIDE INDIA.

Invitations, offers and sales of Equity Shares shall only be made pursuant to this Placement Document, confirmation of allocation note (“CAN”) and the application form. See “Issue Procedure”. The distribution of this Placement Document or the disclosure of its contents without our prior consent, to any person, other than Qualified Institutional Buyers (as defined in the SEBI Regulations) and persons retained by Qualified Institutional Buyers to advise them with respect to their purchase of Equity Shares, is unauthorized and prohibited. Each prospective investor, by accepting delivery of this Placement Document agrees to observe the foregoing restrictions and to make no copies of this Placement Document or any documents referred to in this Placement Document.

This Placement Document has not been and will not be registered as a prospectus with the Registrar of Companies in India, and will not be circulated or distributed to the public in India or any other jurisdiction and will not constitute a public offer in India or any other jurisdiction.

Investments in Equity Shares involve a degree of risk and prospective investors should not invest any funds in this Issue unless they are prepared to take the risk of losing all or part of their investment. Prospective Investors are advised to read “Risk Factors” carefully before taking an investment decision in relation to this Issue. Each prospective investor is advised to consult its advisors about the particular consequences to it of an investment in the Equity Shares being issued pursuant to this Placement Document.

The information on our website or any website directly or indirectly linked to such website does not form part of this Placement Document and prospective investors should not rely on such information.

Our Equity Shares are listed on the Bombay Stock Exchange Limited (the “BSE”), the Bangalore Stock Exchange Limited (the “BgSE”) and the National Stock Exchange of India Limited (the “NSE” and, together with the BSE and the BgSE, the “Stock Exchanges”). On October 20, 2009, the closing price as reported on the BSE was Rs.1,043.70 and the closing price as reported on the NSE was Rs.1,042.65. Applications shall be made for the listing of the Equity Shares in this issue on the BSE, the BgSE and the NSE. The Stock Exchanges assume no responsibility for the correctness of any statements made, opinions expressed or reports contained herein. Admission of the Equity Shares to trading on the Stock Exchanges should not be taken as an indication of the merits of our Company or the Equity Shares.

THE FOLLOWING PLACEMENT DOCUMENT MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS PLACEMENT DOCUMENT IN WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), THE SEBI REGULATIONS OR OTHER APPLICABLE LAWS OF INDIA AND OTHER JURISDICTIONS.

A copy of this Placement Document has been delivered to the Stock Exchanges. A copy of this Placement Document will also be delivered to the Securities and Exchange Board of India (the “SEBI”) for record purposes.

This Placement Document has been prepared by us solely for providing information in connection with the proposed issue of the Equity Shares described in this Placement Document.

The Equity Shares have not, and will not be registered under the Securities Act and they may not be offered or sold within the United States (within the meaning of Regulation S under the Securities Act). Accordingly, the Equity Shares are being offered and sold outside the United States in reliance on Regulation S under the Securities Act. For a description of restrictions on transfer of the Equity Shares, see “Sale and Transfer Restrictions”.

Joint Global Coordinators

Serial Number: [●]

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NOTICE TO INVESTORS

We accept responsibility for the information contained in this Placement Document and, to the best of our knowledge and belief, having made all reasonable enquiries, confirm that this Placement Document contains all information with respect to our Company and the Equity Shares which is material in the context of this Issue. The statements contained in this Placement Document relating to us and the Equity Shares are, in every material respect, true and accurate and not misleading, and the opinions and intentions expressed in this Placement Document with regard to us and the Equity Shares are honestly held, have been reached after considering all relevant circumstances, are based on information presently available to us and are based on reasonable assumptions. There are no other facts in relation to us and the Equity Shares, the omission of which would, in the context of the Issue, make any statement in this Placement Document misleading in any material respect. Further, all reasonable enquiries have been made by us to ascertain such facts and to verify the accuracy of all such information and statements.

None of the Joint Global Coordinators have separately verified all of the information (financial, legal or otherwise) contained in this Placement Document. Accordingly, none of the Joint Global Coordinators nor any member, employee, counsel, officer, director, representative, agent or affiliate of the any of the Joint Global Coordinators makes any express or implied representation, warranty or undertaking, and no responsibility or liability is accepted by any of the Joint Global Coordinators as to the accuracy or completeness of the information contained in this Placement Document or any other information supplied in connection with the Equity Shares. Each person receiving this Placement Document acknowledges that such person has not relied on the any of the Joint Global Coordinators or on any person affiliated with the any of the Joint Global Coordinators in connection with its investigation of the accuracy of such information or its investment decision, and each such person must rely on its own examination of our Company and the merits and risks involved in investing in the Equity Shares. Prospective investors should not construe anything in this Placement Document as legal, business, tax, accounting or investment advice.

No person is authorized to give any information or to make any representation not contained in this Placement Document and any information or representation not so contained must not be relied upon as having been authorized by or on behalf of us or any of the Joint Global Coordinators. The delivery of this Placement Document at any time does not imply that the information contained in it is correct as at any time subsequent to its date.

The Equity Shares have not been approved, disapproved or recommended by the U.S. Securities and Exchange Commission, any State securities commission in the United States or the securities commission of any non-U.S. jurisdiction or any other U.S. or non-U.S. regulatory authority. None of these authorities has passed on or endorsed the merits of this Issue or the accuracy or adequacy of this Placement Document. Any representation to the contrary is a criminal offence in the United States and may be a criminal offence in other jurisdictions.

The distribution of this Placement Document and the issue of the Equity Shares in certain jurisdictions may be restricted by law. As such, this Placement Document does not constitute, and may not be used for or in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such offer or solicitation. In particular, no action has been taken by us or any of the Joint Global Coordinators which would permit an Issue of the Equity Shares or distribution of this Placement Document in any jurisdiction, other than India, where action for that purpose is required. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and neither this Placement Document nor any Issue materials in connection with the Equity Shares may be distributed or published, in or from any country or jurisdiction except under circumstances that will result in compliance with any applicable rules and regulations of any such country or jurisdiction.

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In making an investment decision, investors must rely on their own examination of our Company and the terms of this Issue, including the merits and risks involved. Investors should not construe the contents of this Placement Document as legal, tax, accounting or investment advice. Investors should consult their own counsel and advisors as to business, legal, tax, accounting and related matters concerning this Issue. In addition, neither we nor any of the Joint Global Coordinators are making any representation to any offeree or purchaser of the Equity Shares regarding the legality of an investment in the Equity Shares by such offeree or purchaser under applicable legal, investment or similar laws or regulations. Each purchaser of the Equity Shares in this Issue is deemed to have acknowledged, represented and agreed that it is eligible to invest in India and in our Company under Chapter VIII of the SEBI Regulations and that it is not prohibited by the SEBI from buying, selling or dealing in securities. Each purchaser of Equity Shares in this Issue also acknowledges that it has been afforded an opportunity to request from us and review information relating to us and the Equity Shares.

This Placement Document contains summaries of certain terms of certain documents, which summaries are qualified in their entirety by the terms and conditions of such documents.

Representations by Investors By purchasing any Equity Shares under this Issue, you are deemed to have acknowledged and agreed

as follows:

• you are a Qualified Institutional Buyer within the meaning of the SEBI Regulations (“QIB”) and undertake to acquire, hold, manage or dispose of any Equity Shares that are allocated to you for the purposes of your business in accordance with the SEBI Regulations;

• the Placement Document has not been verified or affirmed by the SEBI or the Stock Exchanges and will not be filed with the Registrar of Companies in India. The Placement Document will be filed with the Stock Exchanges and has been displayed on the websites of the Company and the Stock Exchanges;

• you are entitled to subscribe for and/or purchase the Equity Shares under the laws of all relevant jurisdictions which apply to you and that you have fully observed such laws and obtained all such governmental and other guarantees and other consents in either case which may be required thereunder and complied with all necessary formalities;

• you are entitled to acquire the Equity Shares under the laws of all relevant jurisdictions and that you have all necessary capacity and have all necessary consents and authorities to enable you to commit to this participation in this Issue and to perform your obligations in relation thereto (including, without limitation, in the case of any person on whose behalf you are acting, all necessary consents and authorities to agree to the terms set out or referred to in the Placement Document) and will honor such obligations;

• none of the Joint Global Coordinators are making any recommendations to you or advising you regarding the suitability of any transactions they may enter into in connection with this Issue and that participation in this Issue is on the basis that you are not and will not be a client of any of the Joint Global Coordinators and that such Joint Global Coordinators have duties or responsibilities to you for providing the protections afforded to their clients or customers or for providing advice in relation to this Issue;

• you are aware and understand that the Equity Shares are being offered only to QIBs and are not being offered to the general public and the allotment of the same shall be on a discretionary basis;

• you shall be provided a serially numbered copy of the Placement Document and have read the Placement Document in its entirety;

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• that in making your investment decision (i) you have relied on your own examination of the Company and the terms of this Issue, including the merits and risks involved, (ii) you have made your own assessment of the Company, the terms of this Issue based on such information as is publicly available, (iii) you have consulted your own independent counsel and advisors or otherwise have satisfied yourself concerning, without limitation, the effects of local laws and (iv) you have received all information that you believe is necessary or appropriate in order to make an investment decision in respect of the Company and the Equity Shares;

• you have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the investment in the Equity Shares and you and any accounts for which you are subscribing the Equity Shares (i) are each able to bear the economic risk of the investment in the Equity Shares, (ii) will not look to any of the Joint Global Coordinators, the Company and/or the officers of the Company for all or part of any such loss or losses that may be suffered, (iii) are able to sustain a complete loss on the investment in the Equity Shares, (iv) have no need for liquidity with respect to the investment in the Equity Shares and (v) have no reason to anticipate any change in your or their circumstances, financial or otherwise, which may cause or require any sale or distribution by you or them of all or any part of the Equity Shares;

• that where you are acquiring the Equity Shares for one or more managed accounts, you represent and warrant that you are authorized in writing by each such managed account to acquire the Equity Shares for each managed account;

• you are not a Promoter (as defined herein (see “Description of the Equity Shares — Our Principal Shareholders”)) or a person related to the Promoters of the Company, either directly or indirectly and your Bid does not, directly or indirectly, represent any Promoter or Promoter Group of Company;

• you have no rights under a shareholders agreement or voting agreement with the Promoters or persons related to the Promoters, no veto rights or right to appoint any nominee director on the Board of Directors of the Company other than that acquired in the capacity of a lender which shall not be deemed to be a person related to the Promoters;

• you will have no right to withdraw you Bid after the bid closing date;

• the Equity Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing shares of the Company including the right to receive all dividends and other distributions declared, made or paid in respect of such Equity Shares after the date of issue of the Equity Shares;

• if allotted Equity Shares pursuant to this Issue, you shall, for a period of one year from allotment, sell the Equity Shares so acquired only on the Stock Exchanges;

• you are eligible to bid and hold Equity Shares so allotted and together with any equity shares held by you prior to this Issue. You further confirm that your holding upon the issue of any of the Equity Shares shall not exceed the level permissible as per any applicable regulations;

• the Bids made by you would not eventually result in triggering a tender offer under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as amended (the “Takeover Code”);

• to the best of your knowledge and belief together with other QIBs in this Issue that belong to the same group or are under common control as you, the allotment under the Issue shall not exceed 50% of the size of this Issue. For the purposes of this statement:

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(a) the expression ‘belongs to the same group’ shall derive meaning from the concept of ‘companies under the same group’ as provided in sub-section (11) of Section 372 of the Companies Act, 1956; and

(b) “control” shall have the same meaning as is assigned to it by clause (c) of Regulation 2 of the Takeover Code;

• you shall not undertake any trade in the Equity Shares credited to your depository participant account until such time that the final listing and trading approval for the Equity Shares is issued by the Stock Exchanges;

• you are aware that applications have been made to the Stock Exchanges for in-principle approval for listing and admission of the Equity Shares to trading on the Stock Exchanges’ market for listed securities and such in-principle approval has been received;

• you are aware and understand that each of the Joint Global Coordinators have entered into an agreement with the Company whereby each of the Joint Global Coordinators have, subject to the satisfaction of certain conditions set out therein, undertaken to use their reasonable endeavors as agents of the Company to seek to procure purchasers for the Equity Shares;

• that the content of the Placement Document is exclusively the responsibility of the Company and that none of the Joint Global Coordinators nor any person acting on their behalf shall have any liability for any information, representation or statement contained in the Placement Document or any information previously published by or on behalf of the Company and will not be liable for your decision to participate in this Issue based on any information, representation or statement contained in the Placement Document or otherwise. By accepting a participation in this Issue, you agree to the same and confirm that you have neither received not relied on any other information, representation, warranty, or statement made by or on behalf of the Joint Global Coordinators or the Company or any other person and that none of the Joint Global Coordinators or the Company or any other person will be liable for your decision to participate in this Issue based on any other information, representation, warranty or statement which you may have obtained or received;

• that the only information you are entitled to rely on and on which you have relied in committing yourself to acquire the Equity Shares is contained in the Placement Document, such information being all that you deem necessary to make an investment decision in respect of the Equity Shares and that you have neither received nor relied on any other information given or representations, warranties or statements made by any of the Joint Global Coordinators or the Company and none of the Joint Global Coordinators or the Company will be liable for your decision to accept an invitation to participate in this Issue based on any other information, representation, warranty or statement;

• all statements other than statements of historical fact included in the Placement Document, including, without limitation, those regarding the Company’s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the Company’s products), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and the environment in which the Company will operate in the future. You should not place undue reliance on forward-looking statements, which speak only as at the date of the Placement Document. The Company assumes no responsibility to update any of the forward-looking statements contained in the Placement Document;

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• that you are eligible to invest in India under applicable law, including the Foreign Exchange Management (Transfer or Issue of Security by Person Resident Outside India) Regulations, 2000, as amended from time to time and have not been prohibited by the SEBI from buying, selling or dealing in securities;

• you agree to indemnify and hold the Company and each of the Joint Global Coordinators harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of your representations and warranties as contained herein. You agree that the indemnity set forth in this paragraph shall survive the resale of the Equity Shares including by or on behalf of the managed accounts; and

• that the Company, the Joint Global Coordinators and others will rely upon the truth and accuracy of your foregoing representations, warranties, acknowledgements and undertakings, each of which is given to (a) the Joint Global Coordinators on your own behalf and on behalf of the Company, and (b) to the Company, and each of which is irrevocable.

Off-Shore Derivative Instruments (P-Notes) Subject to compliance with all applicable Indian laws, rules, regulations and approvals in terms of

Regulation 15A(1) of the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995, as amended, foreign institutional investors as defined in the SEBI Regulations (together referred to as “FIIs”), including FII affiliates of the Joint Global Coordinators, may issue, or otherwise deal in off-shore derivative instruments such as participatory notes, equity-linked notes or any other similar instruments against Equity Shares allocated in the Issue (all such off-shore derivative instruments referred to herein as “P-Notes”), for which they may receive compensation from the purchasers of such instruments, P-Notes may only be issued to entities which are regulated by appropriate foreign regulatory authorities, subject to compliance with “know your client” requirements. An FII shall also ensure that no further issue or transfer of any instrument referred to above is made to any person other than such entities regulated by appropriate foreign regulatory authorities. P-Notes have not been and are not being offered or sold pursuant to this Placement Document. This Placement Document does not contain any information concerning any P-Notes or the issuer(s) of any P-Notes, including, without limitation, any information regarding any risk factors relating thereto.

Any P-Notes that may be issued are not securities of the Company and do not constitute any obligations of, claim on, or interests in the Company. The Company have not participated in any offer of any P-Notes, or in the establishment of the terms of any P-Notes, or in the preparation of any disclosure related to any P-Notes. Any P-Notes that may be offered are issued by, and are solely the obligations of, third parties that are unrelated to the Company. The Company do not make any recommendation as to any investment in P-Notes and does not accept any responsibility whatsoever in connection with any P-Notes. Any P-Notes that may be issued are not securities of any of the Joint Global Coordinators and do not constitute any obligations of, or claim on, any of the Joint Global Coordinators.

Prospective investors interested in purchasing any P-Notes have the responsibility to obtain adequate disclosure as to the issuer(s) of such P-Notes and the terms and conditions of any such P-Notes from the issuer(s) of such P-Notes. Neither the SEBI nor any other regulatory authority has reviewed or approved any P-Notes or any disclosure related thereto. Prospective investors are urged to consult with their own financial, legal, accounting and tax advisors regarding any contemplated investment in P-Notes, including whether P-Notes are issued in compliance with applicable laws and regulations.

Disclaimer Clause of the Stock Exchanges As required, a copy of this Placement Document has been submitted to the Stock Exchanges. The

Stock Exchanges do not in any manner:

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• warrant, certify or endorse the correctness or completeness of any of the contents of this Placement Document;

• warrant that the Equity Shares will be listed or will continue to be listed on the Stock Exchanges; or

• take any responsibility for the financial or other soundness of our Promoters, our Company, our management or any scheme or project of ours,

and it should not for any reason be deemed or construed to mean that this Placement Document has been cleared or approved by the Stock Exchanges. Every person who desires to apply for or otherwise acquires any Equity Shares may do so pursuant to an independent inquiry, investigation and analysis and shall not have any claim against the Stock Exchanges whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition, whether by reason of anything stated or omitted to be stated herein or for any other reason whatsoever.

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION AND CERTAIN CONVENTIONS

Our Company prepares its financial statements in accordance with Indian GAAP, which differs in certain respects from IFRS. Our most significant subsidiary, Whyte and Mackay, is incorporated in the United Kingdom and prepares its financial statements in accordance with accounting principles generally accepted in the United Kingdom (“U.K. GAAP”). This Placement Document contains certain financial information of Whyte and Mackay which is not directly comparable to the financial information of the Company due to the differences in applicable accounting standards. We have not provided a reconciliation of our financial statements to U.K. GAAP or to IFRS in this Placement Document. See “Risk Factors — Risks Associated with our Equity Shares and this Issue — Certain differences exist between Indian GAAP and other accounting principles, such as U.K. GAAP or IFRS, which may be material to investors’ assessments of our financial condition”.

Our financial year commences on April 1 of each year and ends on March 31 of the succeeding year, so all references to a particular fiscal year are to the one year period ended on March 31 of that year. The audited consolidated financial statements of the United Spirits Limited as of and for the years ended March 31, 2007, 2008 and 2009, which were prepared in accordance with Indian GAAP, are included in this Placement Document and are referred to herein as the “financial statements”.

This Placement Document also includes unaudited unconsolidated financial results of the Company as of and for the three months ended June 30, 2009, prepared by the Company as required under Clause 41 of the Listing Agreement which were subject to a limited review by the Auditors. The Company’s results of operations on an unconsolidated basis are not directly comparable to those of the Company’s results of operations on a consolidated basis. This information is included solely for illustrative purposes and, accordingly, does not necessarily reflect the combined financial position that the Company and its consolidated subsidiaries and associates could have recorded on the dates or for the periods indicated.

In addition, the unconsolidated financial results of the Company as of and for the three months ended June 30, 2009 include: (i) the results of operations of SWC and Primo pursuant to a scheme of amalgamation which became effective on July 6, 2009 and took effect from April 1, 2007; and (ii) the results of operations of Zelinka pursuant to a scheme of amalgamation which became effective from March 26, 2009 and took effect from April 1, 2007. Therefore the unconsolidated financial results of the Company as of and for the three months ended June 30, 2009 are not directly comparable to those of the Company’s unconsolidated financial results as of and for the three months ended June 30, 2008. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations ─ Acquisitions” and Note 2 to Schedule 18 of our consolidated financial statements as of and for the year ending March 31, 2009.

Our consolidated financial statements as of and for the financial year ended March 31, 2009 include the results of operations of SWC, Primo and Zelinka for all of the financial year and are not directly comparable to our consolidated financial statements as of and for the financial years ended March 31, 2007 and 2008 which have not been restated to take into account the effects of the mergers with SWC, Primo and Zelinka.

In this Placement Document, certain monetary thresholds have been subject to rounding adjustments. All discrepancies in the tables included herein between the amounts listed and the totals thereof are due to rounding.

In this Placement Document, unless otherwise indicated or the context otherwise requires, all references to “United Spirits Limited”, “USL”, the/our “Company”, “we”, “our”, “us” or similar terms are to United Spirits Limited or, as the context requires, United Spirits Limited and its subsidiaries and associates on a consolidated basis, and references to “you” are to the prospective investors in the Equity Shares. References in this Placement Document to “India” are to the Republic of India and to the “Government” or any “State”

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are to the Government of India or one of its States, respectively. All references to “Rupees” or “Rs.” are to the lawful currency of India. All references to “U.S. Dollars”, “Dollars”, “$” and “U.S.$” are to the lawful currency of the United States of America. All references to “£”, “U.K. pound sterling” and “GBP” are to the lawful currency of the United Kingdom. All references to “euro” and “€” are to the lawful currency of the member states of the European Union that adopted it as the single currency. All references to “RMB” or “renminbi” are to the lawful currency of the People’s Republic of China.

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INDUSTRY AND MARKET DATA

Information regarding markets, market size, market share, market position, growth rates and other industry data pertaining to our business contained in this Placement Document consists of estimates based on data reports compiled by professional organizations and analysts, on data from other external sources and on knowledge of our revenues and markets in which we compete. In particular, market data contained in this Placement Document has been sourced from Impact Databank, USA (“Impact Databank”) and Euromonitor International 2008. In addition, this Placement Document contains certain information on population projections for India which have been sourced from the Indian Office of the Registrar’s General & Census Commissioner’s Report of the Technical Group on Population Projections Constituted by the National Commission on Population, May 2006 (the “2006 Census Report”). In some cases, there is no readily available external information (whether from trade associations, government bodies or other organizations) to validate market-related analyses and estimates, requiring us to rely on internally developed estimates. While we have compiled, extracted and reproduced market or other industry data from external sources, including third parties or industry or general publications, we have not independently verified that data. We cannot assure potential investors of the accuracy and completeness of, and take no responsibility for, such data. We take responsibility for accurately reproducing such information but, subject to the next sentence, accept no further responsibility in respect of such information and data. We confirm that such information and data have been accurately reproduced and that as far as we are aware and are able to ascertain from information published by third parties, no facts have been omitted which would render the reproduced information inaccurate or misleading. Similarly, while we believe our internal estimates to be reasonable, such estimates have not been verified by any independent sources and we cannot assure potential investors as to their accuracy.

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FORWARD-LOOKING STATEMENTS

This Placement Document contains statements that are, or may be deemed to be, “forward-looking statements”. All statements regarding our expected financial condition and results of operations, business, plans and prospects are forward-looking statements. These forward-looking statements include statements as to our business strategy, revenue and profitability, proposed expansion plans and other matters discussed in this Placement Document regarding matters that are not historical facts. These forward-looking statements and any other projections contained in this Placement Document (whether made by us or any third party) are predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other projections. All forward-looking statements are subject to risks, uncertainties and assumptions about us that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ materially from our expectations include, among others:

• political, social and economic conditions in India and elsewhere;

• fluctuations in the exchange rate of the Rupee against the U.S. Dollar, the U.K. pound sterling, the Euro and the RMB;

• the effects of competition;

• the availability and price of raw materials;

• the effects of changes in our markets, including the regulations governing various aspects of our business which includes prohibition, labeling restrictions and a ban on direct advertising; and

• our success at managing risks that arise from these factors.

Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, those discussed under “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “The Liquor Industry in India” and “Our Business”.

Investors can generally identify forward-looking statements by terminology such as “may”, “will”, “could”, “should”, “would”, “expect”, “plan”, “propose”, “seek”, “target”, “intend”, “anticipate”, “aim”, “believe”, “can”, “contemplate”, “estimate”, “predict”, “potential”, “objective”, “project”, “pursue”, “shall” or “continue” and the negative of such terms or other comparable terminology. Except as required by law, we undertake no obligation to update or revise any forward-looking statements after the date of this Placement Document or to conform these statements to actual results or to changes in our expectations. Similarly, statements that describe our strategic objectives, plans or goals are also forward-looking statements.

The forward-looking statements contained in this Placement Document are based on our beliefs, as well as the assumptions made by and information currently available to us. Although we believe that the expectations reflected in such forward-looking statements are reasonable at this time, we cannot assure investors that such expectations will prove to be correct. Given these uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements. If any of these risks and uncertainties materialize or if any of our underlying assumptions prove to be incorrect, our actual results of operations or financial condition could differ materially from that described herein as anticipated, believed, estimated or expected. All subsequent written and oral forward-looking statements attributable to us are expressly qualified in their entirety by reference to these cautionary statements.

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ENFORCEMENT OF CIVIL LIABILITIES

We are a limited liability company incorporated under the laws of India. Most of our Directors and senior management are residents of India and a substantial portion of our assets and such persons’ assets is located in India. As a result, it may not be possible for investors to affect service of process upon us or such persons outside India, or to enforce judgments obtained against such parties outside India.

Recognition and enforcement of foreign judgments is provided for under Section 13 and Section 44A of the Code of Civil Procedure, 1908, as amended (“Civil Code”) on a statutory basis. Section 13 of the Civil Code provides that foreign judgments shall be conclusive regarding any matter directly adjudicated upon, except:

• where the judgment has not been pronounced by a court of competent jurisdiction;

• where the judgment has not been given on the merits of the case;

• where it appears on the face of the proceedings that the judgment is founded on an incorrect view of international law or a refusal to recognize the law of India in cases in which such law is applicable;

• where the proceedings in which the judgment was obtained were opposed to natural justice;

• where the judgment has been obtained by fraud; and

• where the judgment sustains a claim founded on a breach of any law then in force in India.

Under Section 14 of the Civil Code, a court in India shall, upon the production of any document purporting to be a certified copy of a foreign judgment, presume that the judgment was pronounced by a court of competent jurisdiction, unless the contrary appears on record.

India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments. Section 44A of the Civil Code provides that where a foreign judgment has been rendered by a superior court, within the meaning of such Section, in any country or territory outside India which the Indian Government has by notification declared to be a reciprocating territory, it may be enforced in India by proceedings in execution as if the judgment had been rendered by the relevant court in India. However, Section 44A of the Civil Code is applicable only to monetary decrees not being of the same nature as amounts payable in respect of taxes, other charges of a like nature or of a fine or other penalties and does not include arbitration awards.

The United Kingdom, Singapore, Hong Kong and other jurisdictions have been declared by the Central Government to be reciprocating territories for the purposes of Section 44A of the Civil Code, but the United States has not been so declared. A judgment of a court of a country which is not a reciprocating territory may be enforced only by a suit upon the judgment and not by proceedings in execution. Such a suit has to be filed in India within three years from the date of the foreign judgment in the same manner as any other suit filed to enforce a civil liability in India. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action was brought in India. Furthermore, it is unlikely that an Indian court would enforce foreign judgments if that court were of the view that the amount of damages awarded was excessive or inconsistent with public policy. A party seeking to enforce a foreign judgment in India is required to obtain approval from the Reserve Bank of India (the “RBI”) to repatriate outside India any amount recovered and any such amount may be subject to income tax in accordance with applicable laws. In addition, any judgement denominated in a foreign currency would be converted into Indian Rupees on the date of the judgement and not on the date of payment. See “Risk Factors — Risks Associated with India and Indian Companies — Investors may have difficulty enforcing foreign judgments against us or our management”.

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TABLE OF CONTENTS

Page

NOTICE TO INVESTORS ................................................................................................................................ 2

PRESENTATION OF FINANCIAL AND OTHER INFORMATION AND CERTAIN CONVENTIONS ...... 8

INDUSTRY AND MARKET DATA................................................................................................................ 10

FORWARD-LOOKING STATEMENTS ..........................................................................................................11

ENFORCEMENT OF CIVIL LIABILITIES ................................................................................................... 12

DEFINITIONS................................................................................................................................................. 15

SUMMARY ..................................................................................................................................................... 19

SUMMARY OF THE ISSUE........................................................................................................................... 24

RISK FACTORS .............................................................................................................................................. 27

MARKET PRICE INFORMATION AND OTHER INFORMATION CONCERNING THE EQUITY SHARES.................................................................................................................................................. 47

EXCHANGE RATES....................................................................................................................................... 50

USE OF PROCEEDS....................................................................................................................................... 51

CAPITALIZATION.......................................................................................................................................... 52

DIVIDEND POLICY....................................................................................................................................... 53

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION............................................ 55

RECENT DEVELOPMENTS.......................................................................................................................... 59

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS......................................................................................................................................... 60

THE LIQUOR INDUSTRY IN INDIA............................................................................................................ 82

THE UB GROUP............................................................................................................................................. 87

OUR BUSINESS.............................................................................................................................................. 89

THE BUSINESS OF WHYTE AND MACKAY ............................................................................................119

REGULATIONS AND POLICIES................................................................................................................. 121

BOARD OF DIRECTORS AND SENIOR MANAGEMENT ...................................................................... 129

OUR SUBSIDIARIES ................................................................................................................................... 137

ISSUE PROCEDURE .................................................................................................................................... 146

SALE AND TRANSFER RESTRICTIONS .................................................................................................. 155

INDIAN SECURITIES MARKET ................................................................................................................ 161

EXCHANGE CONTROLS............................................................................................................................ 172

DESCRIPTION OF THE EQUITY SHARES ............................................................................................... 173

TAXATION.................................................................................................................................................... 186

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LEGAL PROCEEDINGS .............................................................................................................................. 189

INDEPENDENT ACCOUNTANTS .............................................................................................................. 192

GENERAL INFORMATION......................................................................................................................... 193

INDEX TO FINANCIAL INFORMATION....................................................................................................F-1

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DEFINITIONS

The following list of certain capitalized terms used in this Placement Document is intended for the convenience of the reader/investor only and is not exhaustive.

Term or Abbreviation Description

AGM ................................................................ Annual general meeting of the Company

Allocated, Allocation ....................................... The determination of QIBs and number of Equity Shares to be allocated to each QIB after receipt and consideration of the Application Forms, done in consultation with the Joint Global Coordinators and in compliance with Chapter VIII of the SEBI Regulations

Allotment ......................................................... Unless the context otherwise requires, the allotment of Equity Shares to the successful Investors pursuant to the Issue in compliance with Chapter VIII of the SEBI Regulations

Application Form............................................. The form pursuant to which a QIB submits a Bid

Articles, Articles of Association....................... The articles of association of our Company, as amended

Auditors ........................................................... Price Waterhouse, Chartered Accountants, Bangalore, India

Balaji ................................................................ Balaji Distilleries Limited

BgSE ................................................................ Bangalore Stock Exchange Limited

Bid.................................................................... An indication of QIBs’ interest as provided in the Application Form to subscribe for a specified number of Equity Shares of our Company under this Issue

BL .................................................................... Bulk Liters

Board, Board of Directors ................................ Board of directors of our Company and any committee constituted thereof

Bouvet Ladubay ............................................... Bouvet Ladubay S.A., France

BSE .................................................................. Bombay Stock Exchange Limited

CAN................................................................. Confirmation of Allocation Notice. The note or advice or intimation to not more than 49 QIBs confirming the Allocation of Equity Shares to such QIBs after confirmation of the Issue price and requiring such QIBs to pay the entire Issue Price for all the Equity Shares allocated to such QIBs

CBU ................................................................. Contract bottling unit(s)

CDSL ............................................................... Central Depository Services (India) Limited

Central Government, Indian Government........ The Government of India

Chairman.......................................................... The chairman of the Board of our Company

Civil Code ........................................................ Code of Civil Procedure, 1908, as amended

Companies Act ................................................. The Companies Act, 1956 of India, as amended

Company.......................................................... United Spirits Limited and our consolidated subsidiaries, individually or collectively, as the case may be

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Corporate Office .............................................. The registered and corporate office of our Company, located at UB Tower, #24 Vittal Mallya Road, Bangalore 560 001, India

CSD.................................................................. Canteen Stores Department

Cut-Off Price.................................................... The Issue Price which shall be finalized by the Company in consultation with the Joint Global Coordinators

Director(s) ........................................................ Director(s) of our Company

EGM................................................................. Extraordinary general meeting of the Company

ENA ................................................................. Extra-neutral alcohol

Equity Shares ................................................... The equity shares of our Company of face value Rs.10 each, unless otherwise specified in the context thereof

FEMA .............................................................. The Foreign Exchange Management Act, 1999 of India, as amended

FII(s) ................................................................ Foreign institutional investor(s)

FIPB................................................................. Foreign Investment Promotion Board, Ministry of Finance, Government of India

Fiscal, fiscal ..................................................... Unless the context requires otherwise, refers to the financial year ended March 31 of the relevant year

Floor Price........................................................ Rs.913.70, which has been calculated in accordance with Regulation 85(1) of the SEBI Regulations

Government...................................................... The Government of India

Herbertsons ...................................................... Herbertsons Limited, a consolidated subsidiary of the Company, which merged with and into USL in 2006, with effect from April 1, 2005

IFRS................................................................. International Financial Reporting Standards issued by the International Accounting Standards Board

IMFL................................................................ Whisky, brandy, rum, gin and vodka produced in India, collectively referred to as Indian-made foreign liquor

India ................................................................. The Republic of India

Indian GAAP ................................................... Generally accepted accounting principles in India

Insider Trading Regulations ............................. SEBI (Prohibition of Insider Trading) Regulations, 1992, as amended

Issue ................................................................. The offer and sale of Equity Shares in offshore transactions in reliance on Regulation S under the Securities Act, including in India to Qualified Institutional Buyers, pursuant to Chapter VIII of the SEBI Regulations

Joint Global Coordinators ................................ CLSA India Limited Citigroup Global Markets India Private Limited UBS Securities India Pvt. Limited Morgan Stanley India Company Private Limited

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Listing Agreement............................................ The Equity Listing Agreements entered into between the Company and the Stock Exchanges where the Company’s shares are listed

Memorandum of Association ........................... The memorandum of association of our Company

ml ..................................................................... ` Milliliter

Molasses........................................................... Thick viscous by-product formed while manufacturing sugar

NSE.................................................................. National Stock Exchange of India Limited

Pay-in Date....................................................... The last date specified in the CAN sent to QIBs, as applicable

Payment Collection Bank................................. HDFC Bank Limited, whose office is at Salco Centre, 8/24, Richmond Road, Bangalore - 560 0025, India

Price Waterhouse.............................................. Price Waterhouse, Chartered Accountants, Bangalore, India

Primo................................................................ Primo Distributors Private Limited

Promoters, Promoter Group ............................. See “Description of the Equity Shares — Our Principal Shareholders” elsewhere in this Placement Document for further details

QIB, Qualified Institutional Buyer................... A qualified institutional buyer as defined under Regulation 2(1)(zd) of the SEBI Regulations

RBI................................................................... Reserve Bank of India

Registered Office ............................................. UB Tower, #24, Vittal Mallya Road, Bangalore, 560 - 001, India

Registrar of Companies.................................... Registrar of Companies, Bangalore

Regulation S..................................................... Regulation S under the Securities Act

RPCs ................................................................ Regional profit centers

Rupee, Rs. ........................................................ The currency of India

SCRA............................................................... Securities Contract (Regulation) Act, 1957, as amended

SCRR ............................................................... Securities Contract (Regulation) Rules, 1957, as amended

SEBI................................................................. The Securities and Exchange Board of India

SEBI Act .......................................................... The Securities and Exchange Board of India Act, 1992, as amended

SEBI Regulations............................................. SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended

SEBI Delisting Regulations ............................. SEBI (Delisting of Equity Shares) Regulations, 2009

Securities Act ................................................... U.S. Securities Act of 1933, as amended

State Governments ........................................... The governments of the various States of India

Stock Exchanges .............................................. BSE, BgSE and NSE

STT .................................................................. Securities Transaction Tax

Subsidiary ........................................................ See “Our Subsidiaries” for a complete list of our subsidiaries

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SWC................................................................. Shaw Wallace & Company Limited, which merged with and into USL , with effect from April 1, 2007

SWDL .............................................................. Shaw Wallace Distilleries Limited, which merged with and into USL in 2006, with effect from April 1, 2005

UB Group......................................................... The group of companies which comprises various affiliated entities of United Breweries (Holdings) Limited

UBHL............................................................... United Breweries (Holdings) Limited, the Promoter company of the UB Group

UBL ................................................................. United Breweries Limited

USL.................................................................. United Spirits Limited

Takeover Code ................................................. SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as amended

Triumph............................................................ Triumph Distillers & Vintners Private Limited, which merged with and into USL in 2006, with effect from April 1, 2005

Whyte and Mackay .......................................... Whyte and Mackay Group Limited, UK, and its consolidated subsidiaries, which we acquired in May 2007

Zelinka………………………………………. Zelinka Limited

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SUMMARY

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this Placement Document. In addition to this summary, we urge you to read the entire Placement Document carefully, especially the risks of investing in the Equity Shares discussed under “Risk Factors”, before deciding whether to buy our Equity Shares.

Overview

We are the flagship company for the spirits business of the UB Group in India. In terms of sales volume, we are the third largest distiller in the world and the largest in India according to Impact Databank. For the year ended March 31, 2009, we sold over 90 million cases of our liquor products worldwide, directly and through our CBUs, equivalent to a 20% volume growth over the 75 million cases sold the previous year. For the year ended March 31, 2009, we recorded total income of Rs.55,719.0 million and a loss after taxation and before share in profits of associates of Rs.4,084.6 million. For the three months ended June 30, 2009, our India and Nepal operations sold a total of 25.2 million cases, directly and through CBUs, equivalent to a volume growth of 17% over the corresponding period of the previous year. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

We believe that the combination of the strength of our brand and our pan-Indian distribution capabilities has helped us to attain a leadership position in the IMFL market across consumer categories and price points. We believe our product range covers all key flavors and price points in the Indian market, across all geographic markets and consumer groups. Our main products are Scotch and Indian whisky. Our other products include dark and light rums, brandy, gin, vodka and wine.

Our portfolio of approximately 80 active brands includes recognized Indian names as Black Dog Scotch Whisky, Signature Rare Whisky, Royal Challenge Whisky, Antiquity Whisky, McDowell’s No. 1 Whisky, Bagpiper Whisky, Director’s Special Whisky, Haywards Fine Whisky, McDowell’s Green Label Whisky, McDowell’s No. 1 Brandy, Celebration XXX Rum, Blue Riband Gin, Romanov Vodka and White Mischief Vodka. Our McDowell’s No. 1 family of brands, comprising whisky, brandy and dark and white rum, sold over 31.5 million cases in the year ended March 31, 2009 registering a growth of 15% over the previous year. For the three months ended June 30, 2009, the McDowell’s No. 1 brands sold over 7.8 million cases, registering a growth of 7% over the corresponding period of the previous year. According to Impact Databank, McDowell’s No.1 Celebration Rum was the third largest selling rum in the world with sales in excess of 10 million cases for the financial year ended March 31, 2009, registering a growth of over 24% over the previous year. McDowell’s No.1 Brandy is currently the world’s largest selling brandy with sales in excess of 7.8 million cases and in excess of 2.2 million cases for the year ended March 31, 2009 and three months ended June 30, 2009, respectively. Our premium whisky brand, Signature Rare Whisky, and our Blue Riband Gin brand each sold over a million cases in the financial year ended March 31, 2009, giving us a total of 19 “millionaire” brands.

Pursuant to our acquisitions of Whyte and Mackay, we have gained access to a stock of Scotch whisky which is a critical raw material for our production of spirits, as well as access to the established brands of Dalmore Single Highland Malt, Fettercairn, Glayva, Jura single-malt Scotch and Vladivar. Our acquisition of Bouvet Ladubay has also allowed us to expand into the wine market with such brands as Bouvet Tresor Blanc, Bouvet Brut, Bouvet Rubis Demi-Sec, Bouvet Brut Rosé and Anjou Rouge Nonpariels. Whyte and Mackay’s turnover, in accordance with U.K. GAAP, was GBP216.0 million, and its profit after taxation was GBP22.5 million for the year ended March 31, 2009, respectively. Our total income from operations for the financial year ended March 31, 2009 and in accordance with Indian GAAP includes Rs.11,751.4 million of

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United Spirits (Great Britain) Limited and its subsidiaries on a consolidated basis, net of intra-group eliminations. United Spirits (Great Britain) Limited is the parent holding company of Whyte and Mackay and is an indirect wholly owned subsidiary of the Company. See “Business Description of Whyte and Mackay”.

We operate production facilities in almost every State in India where it is legal to produce and sell liquor products. We also contract with CBUs pursuant to tie-up agreements under which they bottle and distribute our liquor products for sale to wholesale and retail customers. We believe that our diversified manufacturing base spread across different States in India allows us access to various local markets in an efficient manner providing a significant operational competitive advantage. As of June 30, 2009, we owned 26 production facilities in India and 1 in Nepal and contracted with another 46 facilities in India. As of June 30, 2009, Whyte and Mackay owned five production facilities and Bouvet Ladubay owned three production facilities. Our India and Nepal operations had an annual bottling capacity of 107.2 million cases per year as of March 31, 2009 and 108.2 million cases per year as of June 30, 2009. In November 2008, our board approved the merger of Balaji with our Company under which, upon approval from the relevant authorities, Balaji, with its distillery division only, will be merged into our Company pursuant to a scheme of amalgamation. Balaji has a distillery and a brewing facility in Tamil Nadu. This merger, when effective, will allow us to consolidate our position in Tamil Nadu, the only major State in terms of sales volumes where we do not own a production facility.

We maintain high quality standards across all manufacturing units and we have a robust system of internal controls which have been incorporated into the enterprise-wide SAP system. As of September 30, 2009, we had 9,499 employees.

Our Shares are listed in India on the BSE, the BgSE and the NSE. The BSE and NSE account for almost our entire trading volume. As of September 30, 2009, our market capitalization on the NSE was Rs.98,718 million.

Our registered and corporate office is located at UB Tower, #24 Vittal Mallya Road, Bangalore - 560 001, India.

Our Strengths and Competitive Advantages

In terms of sales volume, we are the third largest distiller in the world and the largest in India, according to Impact Databank, and we enjoy a leadership position in the Indian liquor industry. The liquor industry in India is subject to complex regulations and contains significant barriers to entry offering a competitive advantage to established players like us.

The Indian Constitution places the alcoholic beverages business within the regulatory and tax regime of individual States as opposed to being centrally regulated within the federal structure. As the liquor industry operates across multiple States, each with its own set of local regulations (both tariff and non-tariff), compliance with all applicable regulations poses its own challenges. In addition, as a consequence of the advertising ban on alcoholic spirits, long established brands, like ours, tend to dominate the market and we benefit from our understanding of consumer preferences. Raw materials, notably molasses and spirit, can be difficult to source given the extent of State Governmental control of both production and movement. As an agro-based product, prices can fluctuate cyclically as well as seasonally and in recent times, raw material costs have increased. As a result of these and other factors, the markets in which we compete have significant barriers to entry, requiring new competitors seeking to establish themselves, and current competitors intending to expand, to draw on substantial resources to enter the market or solidify their market position. We believe that our strengths, such as our strong brand portfolio, efficiency in production and distribution, as well as significant experience in understanding the regulatory aspects and customer preferences in this industry,

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amongst others, provide us with a strong competitive position and contribute to our position as a leader in the Indian liquor industry.

Leading brands with strong consumer recognition

We believe we have one of the best brand portfolios in the Indian liquor industry, with 19 of our brands classified as “millionaire” brands (those that sell more than a million cases per year), reflecting a deep market penetration and consumer popularity. No other Indian IMFL producer has as many millionaire brands. We believe our strong and long-standing brands ensure we are at the forefront of consumers’ minds when they make purchasing decisions. We further believe our strong brand recognition leads to customer loyalty which translates into repeat purchases from existing customers while simultaneously attracting new customers to our products.

Product offerings across multiple flavors, segments and price points

Our extensive brand portfolio of more than 80 active brands across different products such as Scotch, whisky, rum, brandy, gin, vodka and wine is, we believe, the widest in the Indian liquor industry. Over the past few decades, we have built this extensive portfolio of brands across varied flavors and price points targeted at multiple customer segments and made them available across all geographical markets for Indian liquor in India. We believe that our brand recognition, extensive product range, consistent product quality, varied pricing policies and responsiveness to changing consumer preferences allows us to offer a comprehensive solution to Indian alcoholic beverage trade as well as consumers. We further believe that by targeting multiple product segments we have been able to develop strong customer loyalty whereby consumers are able to remain within our brand offerings as their aspirations, tastes and spending habits evolve, enabling us to constantly extract higher value from those same customers.

Strong distribution network and point of sale presence

We believe that the Indian alcoholic beverage trade is small for the size of the Indian market. Nevertheless, because of our preeminent position in the IMFL market, we have achieved a strong presence across the distribution network in India. This market penetration, combined with the broad and diverse offering of our products, helps to ensure that our products are well represented amongst the retailer trade. We believe our products are sold in nearly all points of sale for liquor in India, including off-trade in retail stores and on-trade in restaurants and bars. Strong consumer demand for our brands ensures that retailers of IMFL carry our products, and this gives us a strong point-of-sales presence. Our vast distribution network and point-of-sales presence also allows us to introduce new brands and extensions of existing brands to the market quickly and efficiently, and to establish new product offerings on a cost-effective basis. Given our size and geographic presence across India, we are also able to achieve economies of scale in our negotiations with bottlers, suppliers, producers and the distribution trade.

Widespread Manufacturing Operations

We believe that our leading position in the Indian market coupled with the geographical spread of our manufacturing locations across India provides us significant operational competitive advantages. Substantially all of our products sold in India are sourced from production facilities located within the respective State of sale. As of June 30, 2009, we had production facilities in 26 States of India. This helps us to reduce the otherwise high costs associated with inter-state commerce by minimizing inter-state taxes and transportation costs applicable to the potable liquor industry in India. The geographic diversity of our production and distribution facilities across India reinforces our understanding of State regulations. Regulations can vary significantly from State to State and non-compliance with these regulations could adversely affect business. Having production and distribution facilities in most of the States in which we operate also allows us to better understand consumer preferences in that State and ensures that our time-to-markets new product offerings or

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extensions is very efficient. Additionally, local supply facilities are able to react quicker to sales orders, thereby offering our retail consumers greater flexibility in addition to reducing their overall spend on duties and taxes. The geographic diversity of our facilities helps us to source products and materials locally which enables us to keep costs down in local markets and offer an attractive proposition to suppliers and contract manufacturers of our liquor who are more likely to supply and work with large-scale buyers like us rather than smaller brand owners whose smaller volumes are less likely to allow suppliers and producers to scale up their operations.

Innovative product development and packaging

We take an innovative approach to our product development and packaging, which enables us to meet consumer expectations and preferences, and differentiate ourselves from our competitors while in certain cases it helps us to reduce packaging costs. For instance, we were the first in India to package our products in food-grade PET bottles, which eliminated the risk of breakages and made transportation easier. We were also the first to introduce smaller and easy-to-carry miniature bottles for the individual consumer, large-sized bottles of 1.5 to 2.5 liters for institutions and on-trade customers and paper-based tetra packs to replace glass “nip packs”. We also continue to introduce innovative product offerings as part of our endeavour to adapt to changing consumer preferences. For instance, we developed a “diet” whisky and a “diet” vodka to appeal to the younger, image and health-conscious consumers constantly seeking diet forms of food and drink. We did so by blending our whisky and vodka with an organic extract called Garcinia cambogia.

Our Strategy

Our philosophy is to be the leader in each product category that we offer in the Indian alcoholic beverage trade through well-designed strategies and their effective implementation in the market place. We aim to do this by offering the consumer a choice of quality products across flavors, segments and price categories. We have a leading position in the Indian liquor industry and we plan to maintain this leadership position by implementing the following strategies.

Move existing consumers up the value chain from our less expensive brands to our premium offerings

Our extensive brand portfolio of approximately 80 active brands consists of numerous brands with strong customer recognition and brand loyalty. These are positioned at various points on the flavor and price spectrum. Consequently, as the aspirations and needs of our consumers change and they move across flavors and up the price ladder, we are able to ensure that they still substantially remain within the extensive USL brand portfolio. Similarly, by positioning brand variants at different price points, we are able to offer consumers a value-added experience with brands that they are familiar with. For example, an aspirational Romanov Vodka consumer who, on occasion, wishes to try a higher priced product is able to graduate to a Red Romanov Vodka, a superior offering in the prestige vodka segment.

Capturing maximum new entrants into the IMFL market

The Indian growth story is a very favorable one with a significant portion of its large population in the sub-25 years age bracket. Such a ‘young’ economy with growing disposable incomes and greater exposure to western lifestyles is favourable for an aspirational product such as alcoholic spirits. According to the 2006 Census Report, there may be 100 million potential new customers of liquor between 2009 and 2014, as potential consumers of our products become of drinking age in India. This should create a considerable demand for alcoholic spirits and, as a company with the widest liquor brand portfolio in India across all flavors and price points, we believe that we are well placed to capture such demand and gain from this opportunity. Additionally, our deep and saturated market presence across the trade should ensure that a new entrant might choose a product from our portfolio. Additionally, we also seek to provide innovative product

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offerings to encourage new consumers into the market. For example, for the female consumers, we have offered a pink-colored vodka called Pinky. Similarly, to encourage consumers to try our products, we have introduced miniature packs of 90ml and 60ml. Also, to counter the ever prevalent fear of counterfeit products, we have introduced tamper-proof tetra packs in 180ml (in lieu of glass packs) and fitted our key brands with tamper-evident non-refillable caps. The tetra packs are also seen as a premium offering compared to the glass bottle. In a restrictive advertising environment, our whole brand-building activity is through high-end promotional platforms like horse racing, premium music events, golf contests, fashion shows and the Indian Premier League (Cricket).

Continue to focus on manufacturing efficiency and flexibility

We have constantly sought out the most efficient and flexible ways to produce our products and will endeavour to continue to do so. We use CBUs to achieve a more widespread manufacturing footprint as opposed to direct investments (other than in critical States) We have a real focus on quality and on reducing costs through innovative manufacturing and packaging technology. During 2008, the prices of our key raw material, molasses, rose sharply, materially adversely affecting our operational results for the year ended March 31, 2009. This continued into the current fiscal year adversely affecting our results for the quarter ended June 30, 2009 too. As most of production facilities use the molasses substrate to produce ENA, with only one facility capable of using grain as a substrate, our cost of production is vulnerable to increases in the price of molasses. In order to reduce this vulnerability in the future, we are looking to increase our in-house capacity for primary distillation using grain substrate. With improved business economics in Tamil Nadu, where we currently have no owned facilities, relying solely on CBUs, we have sought to acquire and merge with our current CBU, Balaji Distilleries, which should help to reduce some costs and de-risk our business in that state.

Continue to evaluate strategic acquisitions

In the past, we have shown our willingness to make strategic acquisitions in ventures that complement our growth and business strategies. An example is the acquisition of Bouvet Ladubay to make a foray into the wine sector where we had only a marginal domestic presence. At the same time, this marked our debut in the international alcoholic beverages space, while getting us in-house expertise in wine-making technology including that of sparkling wine. Similarly, the acquisition of Whyte and Mackay has allowed us access to bulk supplies of Scotch for blending with our IMFL products as also to expand our range of Scotch whiskies, both blended and single malts, for sale in the Indian market and internationally. The acquisition of a controlling stake in Liquidity Inc has helped to introduce an established premium and international vodka into the Indian market. Earlier, our acquisition of Shaw Wallace consolidated our position as the domestic market leader, expand our product range and gain substantial influence in the trade.

We will continue to evaluate acquisitions in furtherance of this strategy.

Our Offices

Our registered office is located at UB Tower, #24, Vittal Mallya Road, Bangalore – 560 001, India and our Regional Profit Centers are located in Mumbai, Bangalore, New Delhi, Calcutta and Hyderabad. The telephone number of our office in Bangalore is +91 80 3985 6500. Our website is located at www.unitedspirits.in. The information on our website or any website directly or indirectly linked to such website does not form part of this Placement Document and prospective investors should not rely on such information.

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SUMMARY OF THE ISSUE

The following is a general summary of the terms of the Issue:

Issuer United Spirits Limited

Issue The offer and sale of the Equity Shares to QIBs, pursuant to Chapter VIII of the SEBI Regulations

Issue Size Up to 17,681,952 Equity Shares of our Company of par value Rs.10 each aggregating up to Rs. 16,155,999,542.40

Issue Price Rs.913.70 per Equity Share

Eligible Investors QIBs as defined in Regulation 2(1)(zd) of the SEBI Regulations, excluding multilateral and bilateral development financial institutions as well as foreign venture capital investors who are not registered with the SEBI as an FII or a sub-account of any FII. See “Issue Procedure — Qualified Institutional Buyers”.

Equity Shares issued and outstanding immediately prior to and after the Issue

107,912,377 Equity Shares were issued and outstanding immediately prior to the Issue. Immediately following the Issue, 125,594,329 Equity Shares will be issued and outstanding.

Listing We have received in-principle approvals for the listing of the Equity Shares on the BSE, the BgSE and the NSE.

Lock-up We have agreed that, subject to certain exceptions, we will not and we will procure that none of our Subsidiaries will, without the prior written consent of each of the Joint Global Coordinators (which shall not be unreasonably withheld), during the period commencing on the date of the memorandum of understanding and ending 180 days after the Closing Date, (1) directly or indirectly, issue, offer, pledge, sell, contract to sell or issue, purchase any option or contract to sell or issue, grant or sell any option, right, contract or warrant to purchase, lend, make any short sale or otherwise transfer or dispose of any Equity Shares or any other securities of the Company substantially similar to the Equity Shares, including, but not limited to options, warrants or other securities that are convertible into, exercisable or exchangeable for, or that represent the right to receive, Equity Shares or any such substantially similar securities, (2) enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequences of ownership of the Equity Shares or any such substantially similar securities, (3) deposit Equity Shares or any securities convertible into or exercisable or exchangeable for Shares or which carry the right to subscribe for or purchase Equity Shares in depositary receipt facilities or enter into any transaction (including a transaction involving derivatives) having an economic effect similar to that of a sale or deposit of Equity Shares in any depositary receipt facility; whether any such transaction described in (1), (2) or (3) above is to be settled by delivery of Equity Shares or such other securities, in cash or otherwise, or (4) publicly announce our intention to enter into the transactions referred to in (1), (2) or

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(3) above. See “Description of the Equity Shares — Lock-up”.

In addition, the Promoters have agreed that, subject to certain exceptions, they will not, without the prior written consent of the Joint Global Coordinators, during the period commencing on the date of the memorandum of understanding and ending 180 days after the Closing Date, (1) directly or indirectly, offer, pledge, sell, contract to sell, purchase any option or contract to sell, grant or sell any option, right, contract or warrant to purchase, lend, make any short sale or otherwise transfer or dispose of any Equity Shares or any other securities of the Company substantially similar to the Equity Shares, including, but not limited to options, warrants or other securities that are convertible into, exercisable or exchangeable for, or that represent the right to receive, Equity Shares or any such substantially similar securities, (2) enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequences of ownership of the Equity Shares or any such substantially similar securities, (3) deposit Equity Shares or any securities convertible into or exercisable or exchangeable for Shares or which carry the right to subscribe for or purchase Equity Shares in depositary receipt facilities or enter into any transaction (including a transaction involving derivatives) having an economic effect similar to that of a sale or deposit of Equity Shares in any depositary receipt facility; whether any such transaction described in (1), (2) or (3) above is to be settled by delivery of Equity Shares or such other securities, in cash or otherwise, or (4) publicly announce their intention to enter into the transactions referred to in (1) or (2) above. See “Description of the Equity Shares — Lock-up”.

Transferability Restrictions The Equity Shares being allotted pursuant to this Issue shall not be sold for a period of one year from the date of Allotment except on the Stock Exchanges.

Closing The Allotment pursuant to this Issue is expected to be made on or about October 23, 2009 (the “Closing Date”).

Ranking The Equity Shares being issued pursuant to this Issue shall be subject to the provisions of our Memorandum and Articles of Association and shall rank pari passu in all respects with our existing ordinary shares, including rights in respect of dividends. Shareholders will be entitled to participate in dividends and other corporate benefits, if any, declared by us after the Closing Date, in compliance with the Companies Act. Shareholders may attend and vote at shareholder meetings in accordance with the provisions of the Companies Act. See “Description of the Equity Shares”.

Use of Proceeds The total proceeds of the Issue (before deduction of fees, commissions and expenses) are expected to total approximately Rs. 16,155,999,542.40 .

We plan to use the net proceeds of this Issue to repay a minimum of

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U.S.$250.0 million of debt incurred upon the acquisition of Whyte and Mackay, repay other debt, fund capital expenditure and for any other use as permitted by applicable law. See “Use of Proceeds” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Working Capital and Loan Funds – Description of Indebtedness”.

Risk Factors You should read “Risk Factors” for a discussion of factors you should consider before deciding whether to buy our Equity Shares.

Security Codes NSE Code McDOWELL-N BSE Code Dematerialized 532432/Physical 32432 BgSE Code McDowell ISIN: INE854D01016

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RISK FACTORS

Investing in the Equity Shares offered hereby involves a high degree of risk. You should carefully consider the following factors, as well as other information contained in this Placement Document, including the financial statements and related notes thereto included elsewhere in this Placement Document, before making an investment in the Equity Shares. The occurrence of any of the following events could have a material adverse effect on our business, financial condition, results of operations and prospects and cause the market price of the Equity Shares to fall significantly.

Risks Relating to Our Operations

Our business is subject to governmental regulation, and regulatory decisions and changes in the legal and regulatory environment could increase our costs and liabilities or limit our business activities.

The manufacture and distribution of liquor products is subject to regulation by the Central Government and the government of each State of India (a “State Government”) and is subject to a complex and diverse tax structure. We are subject to the regulatory systems of each of the 26 States in which we operate manufacturing facilities and any State/Territory where we sell our products, and these systems may vary greatly from one State to the next. Such regulations include licensing requirements, restrictions on and prescribed labelling of products, and restrictions on advertising.

Prohibition The directive principles of India’s constitution states that the Government should endeavor to

implement the prohibition of the manufacture and sale of liquor products across the country. Currently, the manufacture, sale and consumption of liquor products are regulated and, with the exception of four States, is permitted by each Indian State. Generally, each Indian State generates a significant amount of revenue from the sale of liquor products. While we believe that the likelihood of prohibition is low, prohibition by a State Government in any of the States in which we operate could happen. Any such prohibition would have a significant effect on the results of our operations and on our ability to operate our business in such State.

Labeling Restrictions The labelling of liquor products is strictly regulated in India. Each State Government prescribes the

information that must appear on the label of any liquor product manufactured and sold in that State. Accordingly, we are required to produce labels on a State-by-State basis, reducing our ability to take advantage of the economies of scale that would be created if we could produce similar labels for use in all jurisdictions.

Advertising In recent years, there has been increased social and political attention directed at the liquor industry in

India as a result of public concern over problems relating to alcohol abuse, including health consequences, driving under the influence of alcohol and underage drinking. This negative perception in India has led to a ban on the advertisement of liquor products in the media, which is not conducive to the business development of any business in the liquor industry in India, including ours.

Taxes Due to the relatively inelastic nature of demand, the liquor industry could be the first target for

increased taxation at the State level. A substantial increase in the profitability of liquor companies could cause the Indian State Governments to impose further indirect levies on industry participants.

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Environmental Regulation Our operations are subject to many environmental laws and regulations in each State in which we

operate. Such laws and regulations govern, among other things, air emissions, wastewater discharges, waste disposal and the investigation and remediation of soil groundwater contamination. The Central Government has adopted a “zero tolerance” policy regarding effluent, which results from the distillation of molasses into the extra neutral alcohol (“ENA”) we use as the base for the majority of our liquor products. As a result, we must make certain capital expenditures on treatment of effluent at the facilities in which we undertake such distillation of molasses, referred to as “primary” distillation. As of June 30, 2009, we had primary distillation capabilities at 18 facilities, including seven which we own (one of which is currently not being operated) and 11 third-party CBUs which we contract to use. As with other companies engaged in similar activities, a risk of environmental liability is inherent in our activities. Future additional environmental compliance or remediation obligations could adversely affect our business through increased capital expenditure costs to the extent that we would have to incur significant costs to upgrade our facilities to meet such obligations.

Any changes or additions to the above regulations could lead to a material adverse change in the results of our operations.

We have incurred a substantial amount of indebtedness in connection with the acquisition of Whyte and Mackay, and our proposed repayment of the U.S.$618 million syndicated loan facility may be delayed, any of which could adversely affect our future business performance and financial condition.

In May 2007, we acquired Whyte and Mackay for a cash consideration of U.S.$1.18 billion, on an enterprise value basis. In connection with the acquisition, USL Holdings (UK) Limited (“USL UK”) entered into a term loan facility agreement for a committed U.S.$618.9 million (the “U.S.$ Syndicated Facility”), which we and one of our subsidiaries, Shaw Wallace Breweries Limited, guaranteed. Also in connection with the acquisition, United Spirits (Great Britain) Limited (“USL GB”), our wholly owned subsidiary and holding company of Whyte and Mackay entered into a limited recourse GBP355.0 million financing (the “GBP Loan”) that was: (a) guaranteed by United Spirits (Great Britain) Limited, Whyte and Mackay Group Limited, Whyte and Mackay Warehousing Limited and Whyte and Mackay Limited, and (b) secured by assets of a number of the Whyte and Mackay group companies, United Spirits (Great Britain) Limited and United Spirits (UK) Limited, situated in England and Scotland. The terms of the U.S.$ Syndicated Facility were amended in September 2009 (the “September Amendment”). In connection with this September Amendment, we agreed, among other things, to deleverage the loans made under the U.S.$ Syndicated Facility by agreeing to make (i) a voluntary prepayment of US$30.0 million which has been paid, and (ii) one or more mandatory prepayments of at least U.S.$300.0 million in aggregate (the “Prepayment”) in full by November 30, 2009, at the latest (the “Prepayment Date”). The voluntary U.S.$30.0 million has been paid. Failure to make the Prepayment on or prior to the Prepayment Date will trigger an event of default under the U.S.$ Syndicated Facility. To date, we have paid U.S.$186.0 million towards the Prepayment, thus leaving an unpaid balance of U.S.$114.0 million (the “Balance”). Pursuant to the terms of the September Amendment, we are required to apply certain of the net proceeds of this Issue to repay of a portion of the U.S.$ Syndicated Facility and, as such, plan to repay a minimum of U.S.$250.0 million of debt incurred under the U.S.$ Syndicated Facility (of which U.S.$114.0 million will be applied in full prepayment of the Balance and the excess of U.S.$136.0 million will be applied to further prepay a portion of the outstanding balance of the U.S.$ Syndicated Facility). See “Use of Proceeds” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Working Capital and Loan Funds – Description of Indebtedness”.

As at March 31, 2009, we had Rs.73,604.8 million outstanding in secured and unsecured loans, including the entire principal amount of the U.S.$ Syndicated Facility and the entire principal amount of the GBP Loan. Our substantial level of indebtedness will increase the possibility that we may be unable to generate sufficient cash to pay when due principal interest or other amounts due in respect of our

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indebtedness. If we are unable to generate sufficient cash to make such payments, we would be required to dedicate a substantial portion of our cash flow from operations to meet our payment obligations in respect of our indebtedness which may, in turn, reduce the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes, and materially impact our ability to pay dividends in the future. This could also adversely affect our ability to raise additional financing and the interest rates and commercial terms on which such additional financing is available. Furthermore, interest rates on our domestic borrowings have been impacted due to certain monetary measures taken by RBI in order to curb inflationary pressures during the latter part of the year ended March 31, 2008 and early part of the year ended March 31, 2009, which has increased borrowing costs.

We cannot assure you that any of the conditions for our funding plans will be satisfied. If we or any other relevant parties are unable to satisfy any of the conditions for our funding plans within the time frame that we expect, we may not be able to repay the U.S.$ Syndicated Facility in the time frame that we expect, which could trigger an event of default under the U.S.$ Syndicated Facility. In addition, our costs of borrowing depend in part on our credit ratings by domestic rating agencies. As part of its annual review of our Company, in September 2009, ICRA downgraded our long-term debt rating from LA- to LBBB and our short-term rating from A1 to A3+. A further downgrade of our rating for foreign or local currency borrowings could adversely impact our ability to raise the amount proposed under our funding plans through the incurrence of debt and the interest rates at which such financing alternatives may be available to us.

Certain restrictive covenants in our financing agreements may limit our operational and financial flexibility and our future results of operations and financial condition may be adversely affected if we are not able to comply with certain covenants contained in our financing agreements.

Some of our financing agreements and debt arrangements set limits on and/or require us to obtain lender consent before, among other things, undertaking certain projects, incurring capital expenditures, effecting acquisitions, granting security, incurring financial indebtedness, making loans, effecting transactions relating to share capital, declaring dividends, effecting transactions on a non-arm’s length basis, issuing new securities, making changes in ownership, merging, consolidating, disposing of significant assets, creating subsidiaries, or making certain investments. In addition, certain financial covenants may limit our ability to borrow additional funds or to incur additional liens. In the past, we have been able to obtain required lender consents for such activities. However, there can be no assurance that we will be able to obtain such consents in the future. If our financial growth plans require such consents, and such consents are not obtained, we may be forced to forgo or alter our plans, which could adversely affect our results of operations and financial condition.

Certain of our financing arrangements also include covenants to maintain certain debt to equity ratios, debt to earnings ratios, liquidity ratios, limitations on capital expenditure, debt coverage ratios, leverage ratios, interest cover ratios, fixed charge ratios and minimum liquidity thresholds. We cannot assure prospective investors that such covenants will not hinder our business development and growth in the future.

Breach of certain of our covenants under our financing arrangements could cause cross-defaults on other indebtedness and could cause one or more of our financing arrangements to become immediately due and payable. Whyte and Mackay is currently in breach of one of its loan covenants.

In the event we breach any of our covenants under our financing arrangements, the outstanding amounts due under such financing agreements could come due and payable immediately. A default under one of these financing agreements may also result in cross-defaults under other financing agreements and result in the outstanding amounts under such other financing agreements becoming immediately due and payable. If our cash flows and capital resources are insufficient to meet these payment obligations, if they occur, we may be forced to sell assets, seek additional capital or restructure or refinance our indebtedness. Our ability to

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restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could restrict our business operations. In addition, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions or to obtain the proceeds that we could realize from them and these proceeds may not be adequate to meet any debt service obligations then due. These alternative measures may not be successful and may not permit us to meet our scheduled obligations.

In September 2009, we obtained an amendment of certain terms and waivers of certain breached obligations under the U.S.$ Syndicated Facility. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Working Capital and Loan Funds – Description of Indebtedness – U.S.$ Syndicated Facility”.

On or about June 2009, USL GB, our wholly owned subsidiary and holding company of Whyte and Mackay, announced that it had incurred capital expenditure of GBP8.3 million for the financial year ending March 31, 2009, in excess of the GBP5.0 million permitted maximum limit under the GBP Loan. This increase in capital expenditure was deemed necessary by USL GB in order to maintain compliance with local regulatory and similar requirements. As a result of this increased expenditure, USL GB breached the GBP Loan, which triggered an event of default under the GBP Loan and USL GBP has sought a waiver of this default from its lenders under the facility.

There are currently two lenders that have extended an equal portion of loans and/or provided overdrafts to USL GB under the GBP Loan. Any waiver of a default requires the consent of a two-thirds majority of the lenders, requiring both lenders to agree to grant the waiver in order for it to be effective. Similarly, any acceleration of the facility also requires the consent of a two-thirds majority of the lenders. Both of the lenders have indicated a willingness to provide a waiver of the default and, as such, the Company and USL GB believe it is extremely unlikely the GBP Loan will be accelerated. The Company and USL GB believe the default under this facility was a technical default arising solely from a necessary increase in capital expenditure and is not material to the lenders or the Company’s ability to service its debts. The default under the GBP Loan does not trigger a cross-default under the U.S.$ Syndicated Facility, as cross-defaults at the Whyte and Mackay group level are specifically excluded from the cross-default provisions of the U.S. Syndicated Facility. There are no cross-defaults under our local Indian facilities resulting from the breach in the GBP Loan, entered into by USL, as such local facilities do not contain cross-default provisions to the debt at the Whyte and Mackay group level.

Although the Company expects to obtain the requisite waivers under the GBP Loan, the failure to do so could allow the lenders to accelerate the loans under this facility. Should the loans be accelerated, it could prove to be very difficult, in the current environment, for USL GB to refinance its debt or obtain additional financing, thus affecting its ability to carry on its business as a going concern. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Working Capital and Loan Funds – Description of Indebtedness – GBP Loan”

Exchange rate fluctuations may affect our business.

Our financial statements are prepared in Indian rupees. Our most significant subsidiary, Whyte and Mackay, is incorporated in the United Kingdom and its financial statements are prepared in United Kingdom pound sterling. When preparing our consolidated financial statements, which are presented in Indian rupees, we must convert into Indian rupees the assets, liabilities, income and expenses of Whyte and Mackay. As a result, variations in exchange rates between the Indian rupee and the United Kingdom pound sterling affect the

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amount of the line items concerned in the consolidated financial statements even if their value remains unchanged in the original currency.

We have subsidiaries domiciled in various countries and certain subsidiaries have borrowings in their books. Our long term borrowings include borrowings for the purpose of acquisition of some subsidiaries as well as for the normal course of their business. Exchange differences arising on restatement of long term foreign currency monetary items are accumulated in a Foreign Currency Monetary Item Translation Difference Account and amortized over the balance period of the related long term asset/liability but not beyond March 31, 2011.

We accounted for a net exchange loss of Rs.3,809.3 million in the consolidated financial statements for the year ended March 31, 2009 which mainly include a portion of exchange differences on long term foreign currency borrowings amortized during the year ended March 31, 2009. The amount of Rs.5,597.5 million remaining to be amortized and retained in the Foreign Currency Monetary Item Translation Difference Account as at March 31, 2009 is required to be amortized over the balance period of related asset / liability, but not beyond March 31, 2011 or the time of repayment of the related foreign currency borrowings, whichever is earlier. All amounts accumulated in our Foreign Currency Monetary Item Translation Difference Account must be recognized in the Profit and Loss account from time to time, with all amounts to be charged on or prior to March 31, 2011 or the repayment, whichever is earlier. Upon any repayment, the amount accumulated in the Foreign Currency Monetary Item Translation Difference Account associated with the amount of any such repayment of borrowing will be recognized in the Profit and Loss Account in our consolidated financial statements at the time of such repayment.

We depend on our trademarks and proprietary rights, and any failure to protect our intellectual property rights may adversely affect our competitive position.

We own various intellectual property rights, in particular trademarks, which are considered to be of material importance to the success of our business since they have the effect of developing brand identification and maintaining consumer loyalty. The principal trademarks of the Company and its subsidiaries include McDowell’s No. 1 Whisky, Bagpiper Whisky, McDowell’s No. 1 Brandy, Celebration XXX Rum, Black Dog Whisky, Signature Whisky, Blue Riband Gin, Royal Challenge Whisky, Antiquity Whisky, Director’s Special Whisky, John Ex-Shaw Brandy, Romanov Vodka, White Mischief Vodka, Jura, Dalmore, Whyte and Mackay Special, Vladivar Vodka, Four Seasons, and Pinky Vodka. Our policy is to actively protect our intellectual property rights in India and the other markets in which we operate through the use of dedicated personnel and external trademark counsel, licenses and the registration of trademarks. Some of our trademarks, however, are not registered, and third parties (including other producers or distributors with which we have contractual licenses and tie-up arrangements) may not refrain from using our trademarks or trade names, which would dilute the value of our intellectual property rights and may harm the reputation of our brands. Any such actions may require us to become involved in litigation to protect such rights.

We also rely on trade secrets and proprietary know-how, which are not protected by trademarks, and continuing technological innovation that we seek to protect, in part through engaging in confidentiality agreements with licensees and certain high-level employees. There can be no assurances that our trade secrets and proprietary know-how will not be compromised as a result of breaches of trademarks or agreements or otherwise becoming known or independently developed by our competitors. Where trademarks are not issued in respect of products arising from research, we may not be able to maintain the confidentiality of information relating to such products.

Any claims, even those without merit, could be expensive and time-consuming to defend and could divert management’s attention and resources. There can be no assurances that changes in current or future

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laws or regulations or future governmental intervention in relation to intellectual property rights would not have a material adverse effect on us.

The production by third parties of counterfeit products under our brand name could result in a loss of sales and customers and harm our reputation.

We have developed measures to protect our products against counterfeiting through special packaging and the use of tamper-proof caps for our bottles. However, our products are at risk of being counterfeited by third parties re-using our bottles that carry the brand to package and sell their products. These products are of a lower quality and are produced using different formulas from our products. If third parties counterfeit our products, we could suffer a loss of sales and customers, and our reputation may suffer as the result of spurious products being sold under our brands.

Government regulation of the wholesale and retail markets in each State affects our trade and pricing practices, as well as relations with distributors, wholesalers and retailers.

The State Government controls the wholesale and/or retail distribution networks in many of the markets in which we operate. For the year ended March 31, 2009, nearly 70% of our total sales were to State-run wholesalers or retailers. The government wholesalers set prices and determine the manufacturers from which they will purchase IMFL. Government policies on pricing and purchasing can change from time to time and may not be consistent with past practices. In order to mitigate our exposure to the Government policies and decisions of any one State, we have operations in each State in India where it is legal to produce and sell liquor products. In doing so, we are unable to obtain the benefits that could have been achieved from any economies of scale from having centralized production or distribution facilities. In the event that any State Government wholesalers cease to acquire our products and we are unable to source an alternative channel to sell our products in such State in a reasonable period of time, our profitability could be adversely affected.

We are subject to growing competition, which could limit our ability to maintain or increase our market share and profitability.

Due to India’s commitments to the World Trade Organization (the “WTO”), the Central Government has been consistently reducing the import tariff on liquor products, thereby exposing the domestic liquor industry to competition from foreign players. As a result, the Indian liquor industry is witnessing increasing competition as non-Indian producers and distributors enter the market. Although we believe there are various barriers to entry in our market, including brand name acceptance, product range and quality, pricing, distribution capabilities and responsiveness to consumer preferences there are several Indian and international companies which compete with us. We believe that the strongest competition we have is in respect of our premium and super-premium brand whisky products from non-Indian companies with significant monetary resources joining forces with Indian liquor companies having established knowledge of processes related to the production of IMFL that appeals to local consumers.

Our costs of production may be adversely affected by increases in the cost or availability of raw materials and, in particular, molasses.

Like our competitors in the beverage industry, our operations are affected by the prices and availability of raw materials, and in particular, molasses, the primary ingredient in our line of products. The price of molasses has been subject to fluctuations in the past and may be subject to fluctuations in the future. We also use several other raw materials, such as grain, malt, flavorings and water. In addition, we purchase ready-made ENA from suppliers and re-distill the product. Any change in the prices or restrictions on availability of these raw materials could lead to an adverse impact on our costs of production and our profitability.

ENA forms the primary base of most of our liquor products, and the cost of ENA represents a significant portion of our costs of production. We believe that approximately 70% of our ENA is made from

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sugarcane molasses produced in India (with the remaining 30% from grain) and, consequently, the price of ENA is closely related to the price of molasses. The price of molasses has historically been subject to price fluctuations resulting from changes primarily in the domestic supply and demand position of sugarcane. These price fluctuations affect our costs for Indian molasses, despite ample domestic molasses supplies and substantial direct purchases of molasses by us from Indian producers. Price fluctuations can also result because the world price is established in U.S. Dollars and, as a result, depreciation of the value of the Rupee against the U.S. Dollar can cause the price of molasses produced in India to increase even if the world price remains stable. Increases in the prices of raw materials could have a material adverse effect on our business, results of operations, financial condition and prospects.

Because molasses is an agro-based product, harvests are subject to seasonality and the effects of weather and other environmental factors that are beyond our control. Failure of sugarcane crops due to adverse weather conditions led to a sudden increase in the cost of molasses in 2005 and the later part of 2008. Concurrently, the Central Government mandated increased levels of alcohol to be used in fuel, which led to a diversion of molasses away from the production of ENA and toward the production of ethanol, which also contributed to the shortage of molasses, driving prices of molasses even higher. Higher alternative crop prices have been influencing traditional sugarcane growers in India, causing a recent decrease in India’s sugarcane area. In 2008, the drop in the sugarcane acreage coupled with prolonged disputes between sugarcane farmers and sugar mills over arrear payments owed to farmers delayed the start of crushing operations by a few months to November 2008. In addition, contrary to normal practice, crushing stopped at the end of February 2009, a month earlier than usual. As a consequence, the prices of molasses rose sharply at the end of 2008, materially adversely affecting our results of operations for the year ended March 31, 2009. The average purchase cost of molasses for the Company was approximately Rs.3,635, Rs.2,600 and Rs.5,884 per metric ton for the years ended March 31, 2007, 2008 and 2009, respectively, and Rs.6,845 for the three months ended June 30, 2009. An ongoing shortage of molasses could drive up the cost of production even further, which could have an adverse effect on our results of operations.

In addition, there are imbalances between States as to the supply of molasses and Government limits on the free movement of molasses inter-state. For example, supply is abundant in Uttar Pradesh and Maharashtra, the source of approximately 61% of the sugarcane molasses produced in India. In Rajasthan, Madhya Pradesh and Orissa, however, production of molasses is minimal. State Molasses Control Orders in various States in effect control the pricing through levies and controls on inter-state movement of sugarcane molasses, rectified spirit and ENA. Therefore, it can be difficult for liquor companies with operations in various States of India to procure abundant supplies of this key raw material, particularly in areas that have historically experienced a shortage of sugarcane molasses. Such an imbalance of supply between the States could increase our production costs due to higher costs and excise taxes levied on goods transported from State to State, which could adversely affect the results of our operations.

We depend on third-party suppliers for the raw materials we require for production and fluctuations in the price and availability of such raw materials may increase our production costs and negatively impact our results of operations.

The primary raw materials we require in manufacturing our products are molasses, grain, malt, flavorings and water. We purchase the raw materials necessary to produce our brands from third-party suppliers, generally on a purchase order basis. We purchase most of the raw materials required for the production of our liquor products from a wide range of suppliers. Although most raw materials we purchase have more than one supplier and are for the most part widely available, there can be no guarantee that this will continue to be the case. Our operations may be interrupted or otherwise adversely affected by delays in the supply of these materials from third-party suppliers, or in the event that such materials become unavailable on commercially reasonable terms in the future.

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A significant portion of cost of production is for the procurement of glass bottles. We use a combination of recycled and new bottles to package our products. Approximately 27% of the total bottles required in our manufacturing process are recycled, which helps to reduce the cost of bottles. A ban on the use of recycled bottles by State Governments or the Central Government would increase our costs of production and could adversely affect our results of operations. A majority of the glass used to bottle our products from Hindustan National Glass Limited and its associated companies, which controls a substantial portion of the Indian market for glass. In addition, Guala India Ltd. is the single source in India for special tamper-proof caps that we use on our bottles, which we consider to be an essential component of our efforts to protect our products against counterfeiting. There can be no assurance that these companies will supply the glass and caps that we use for bottling our products at the time and in the quantity we require or on commercially reasonable terms.

We depend upon consumer preferences and spending habits and if consumer spending habits change, or if we are unable to respond effectively and timely to those changes, our profitability could be adversely affected.

The Indian liquor industry is subject to significant changes in consumer preferences and spending habits. Our success depends upon economic factors, which may affect the level and patterns of consumer spending primarily in India. Such factors include the general state of the economy, relevant tax rates, consumer preferences, confidence levels, income levels, consumer perception of alcohol-related health issues and social concerns. A general decline in the consumption of our products could happen at any time and could have a material adverse effect on our results of operations.

We believe that our future success will depend partly on our ability to anticipate or adapt to such changes and to offer, on a timely basis, products that meet customer demands. Such changes may result in reduced demand and lower prices for our products, limitations on our ability to pass through increased taxes and higher product costs to price-sensitive consumers, increased levels of selling and promotional expenses and decreased sales of our higher-priced premium brands. Consequently, changes in consumer spending could have a material adverse effect on our financial condition. Furthermore, if we fail to respond to competitive pressures or to introduce new products on a timely basis, or if new or enhanced products offered by us do not achieve a significant degree of market acceptance, we could lose customers and market share, which would have a material adverse effect on our results of operations.

Disruption or termination of our arrangements with contract bottling units for the distribution of our products could lower our sales and reduce our sales and operating income.

We rely on CBUs to bottle and distribute a number of our brands under contract manufacturing arrangements. Our products are also sold either directly or indirectly through CBUs to Government or independent wholesalers for resale to retail outlets, such as alcoholic beverage stores, bars, clubs and restaurants. As of June 30, 2009, approximately 49.9% of our products were produced through CBUs at 46 of the 73 facilities we operate. In addition, we rely entirely on CBUs for the distribution of our products in the State of Tamil Nadu, where we do not currently have any of our own facilities. CBUs in Tamil Nadu account for approximately 12.7% of our overall production volume and, in particular, Balaji accounted for over two million cases, or 9.7% of our overall production volume, as of June 30, 2009. In November 2008, our board of directors approved Balaji’s merger into our Company which remains, however, subject to regulatory approval. Our reliance on CBUs to perform these critical functions entails risks, including the risk of termination of these arrangements. A disruption or termination of our present arrangements with these third parties without suitable alternative arrangements in place, in particular in Tamil Nadu, where we are unable to sell our products, could have a material adverse effect on our business, results of operations, financial condition and prospects.

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The merger of Balaji into the Company is subject to regulatory approval that could result in the completion of the merger being delayed or not consummated, which could negatively impact stock price and future business and operations.

Consummation of the merger of Balaji (in Tamil Nadu) into the Company is conditional upon regulatory approval as required under applicable law. Such regulatory approval may not be granted in a timely manner, if at all. Tamil Nadu is currently the only major State in terms of sales volumes where we do not own a production facility. Any failure to consummate the merger could negatively impact our stock price, future business and operations, realization of expected synergies and financial condition. Any delay in the consummation of the merger or any uncertainty about the consummation of the merger may adversely affect the future business, growth, revenue and results of operations.

Disruption of operations at our manufacturing facilities, including that caused by natural disasters, could adversely affect our business and financial condition.

Our manufacturing facilities are subject to operational risks, including:

• equipment failure;

• failure to comply with applicable regulations and standards and to maintain necessary licenses;

• raw material and/or energy supply disruptions;

• failures or bottlenecks in production processes;

• labor force shortages or work stoppages; and

• natural disasters.

India has experienced natural calamities including earthquakes, floods and drought in the past few years, including the tsunami that struck the southern coast of India and other Asian countries on December 26, 2004 and the floods that affected regions in southwestern India in the summer of 2005. The extent and severity of these natural disasters determines their impact on the Indian economy. Prolonged spells of abnormal rainfall and other natural calamities could have a negative impact on the Indian economy, resulting in a loss of business confidence, damage to our production facilities and/or material shortage in the supply of raw materials, which would adversely affect our business. While our production facilities are insured against standard risks such as fire and other natural disasters, there can be no assurance that the proceeds available from the insurance policies would be sufficient to protect us from possible loss or damage. Our insurance policies do not cover loss of profits when business interruptions arise from such natural disasters. We may be able to cover a temporary shortage of raw materials or supplies caused by such a disruption to operations at one facility with raw materials or supplies from another of our facilities in India; however, a significant disruption in operations at any of our production facilities may adversely affect our business, results of operations and financial condition.

Accidents at our facilities could lead to property damage, production loss or claims being made against us. An accident in any of our production or bottling facilities could result in claims being brought against

us for damages. As a result, we could suffer reduced production, receive adverse publicity and/or experience diversion of management attention and resources to defend any such claims. An accident, if material, could have an adverse effect on our business, results of operations, financial condition and prospects.

The Indian liquor industry is affected by litigation and publicity concerning product quality, health and other issues, which could cause customers to avoid our products and result in liabilities.

Businesses in the liquor industry can be adversely affected by litigation and complaints from customers or Government authorities resulting from product quality, illness, injury or other health concerns or

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other issues stemming from one product or a limited number of products. Adverse publicity surrounding such allegations may negatively affect us, regardless of whether the allegations are true, by discouraging customers from buying our products. We could also incur significant liabilities and the diversion of management time if a lawsuit or claim results in a decision against us, or litigation costs regardless of the result. See “Legal Proceedings”.

We may not have adequate insurance coverage for claims against us. We face the risk of loss resulting from product liability, intellectual property, antitrust, contractual,

warranty, environmental, fraud and other lawsuits, whether or not such claims are valid. In addition, our insurance may not be adequate to cover such claims or may not be available to the extent we expect. Our insurance costs can be volatile and, at any time, can increase given changes in market supply and demand. We may not be able to obtain adequate insurance coverage in the future at acceptable costs. A successful claim that exceeds or is not covered by our policies could require us to pay substantial sums. The financial health of other insurers may deteriorate. In addition, we may not be able to obtain adequate insurance coverage for certain risk such as political risk, terrorism or war.

International market risks and trade barriers may affect our business. Any developments in tariffs and non-tariff barriers, quotas and other trade barriers by countries from

which we import raw materials or to which we export our products will have an effect on our profitability. There can be no assurance that Scotland, or countries in the Middle East, Southeast Asia, Africa or any other jurisdiction on which we rely for the supply of raw materials and/or in which we operate will not impose trade restrictions on us in the future. Any such imposition of trade barriers may have an adverse effect on our results of operations and financial condition.

The business of Whyte and Mackay is subject to certain risks.

Our acquisition of Whyte and Mackay in May 2007 has subjected us to certain risks inherent in the business of Whyte and Mackay. Whyte and Mackay faces competition from several international companies as well as local and regional companies in the countries in which it operates. This competition puts pressure on pricing and margins and ultimately market share, impacting overall results. In addition, the raw materials used by Whyte and Mackay for the production of spirits are largely commodities that are subject to price volatility caused by changes in global supply and demand, weather conditions, agricultural uncertainty or government controls. If commodity price changes result in unexpected increases in raw materials cost or the cost of packaging materials, we may not be able to increase the selling prices of Whyte and Mackay goods to completely offset these increased costs without possibly suffering reduced volume, revenue and operating profit.

Whyte and Mackay relies to a great extent on sales of Scotch in the international markets, which have been adversely affected by the global economic downtown, In addition, Whyte and Mackay is also exposed to the risk of non-renewal or renegotiation of its contracts to supply bulk scotch to other distillers, which forms a significant portion of its current sales. Current and past sales are no indication of future sales.

Whyte and Mackay also has a substantial inventory of aged stocks which mature over periods of up to 30 years. As at March 31, 2009, the historical cost of this stock amounted to GBP121.4 million (compared to GBP114.4 million as at March 31, 2008). The maturing inventory is stored in various locations across Scotland, and the loss through contamination, fire or other natural disaster of all or a portion of the stock could result in a significant reduction in supply of products and consequently consumer demand for these products would not be met, and revenue and profitability would be adversely affected. Finally, the Whyte and Mackay group carries a significant amount of debt finance. Net borrowings at March 31, 2009 amounted to GBP170.7 million (as compared to GBP170.5 million as at March 31, 2008) of which none was on a fixed rate. All Whyte and Mackay debt is variable and subject to the usual risk of U.K. interest rate fluctuations. See

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“The Business of Whyte and Mackay”. The operations of Whyte and Mackay are subject to laws and regulations in the U.K. and Scottish market. Any change in the regulatory environment in these markets could impact Whyte and Mackay’s operations.

Our recent acquisitions of Whyte and Mackay and Bouvet Ladubay as well as the recent incorporation of our Chinese subsidiary, United Spirits (Shanghai) Trading Company Limited, subject us to risks in geographic markets with which we are less familiar.

The majority of our business operations are in India. In early 2006, we acquired Bouvet Ladubay, the largest producer of sparkling wine in the Sammur region of France. In May 2007, we acquired Whyte and Mackay a leading whisky producer in Scotland. In early 2008, we incorporated United Spirits (Shanghai) Trading Company Limited in Shanghai, China to distribute our products. Because of our limited experience with manufacturing, production and distribution outside of India, we are subject to additional risks related to our international expansion strategy, including language barriers, cultural differences and other difficulties in staffing and managing overseas operations, inherent difficulties and delays in contract enforcement and the collection of receivables through the legal systems of some foreign countries, the risk of non-tariff barriers, other restrictions on foreign trade or investment sanctions, and the burdens of complying with a wide variety of foreign laws and regulations. In addition, we may face competition in other countries from companies that may have more experience with operations in such countries or with international operations generally. We may also face difficulties integrating new facilities in different countries into our existing operations. Our operations outside of India may not be successful and we may not be able to compete effectively in other countries.

Our business is seasonal by nature and will experience quarterly fluctuations in results of operations which could have an adverse impact on our business.

Like our competitors in the liquor industry, our operations are characterized by seasonal fluctuations in demand. Annual retail demand for most liquor products, for example, is highest during the months of November through January, resulting in peak sales during the third and fourth quarters and a build-up of inventory prior to that time. As a result, we plan our overall annual production levels based on predicted levels of demand for our products, which are derived from our own market assessments and sales targets from our distributors. We may not accurately predict annual and long-term demand in the future, and any errors in predicting future demand may have a material adverse effect on our business, results of operations, financial condition and prospects. In addition, a number of factors could cause distributors to delay or cancel orders already placed with us, such as general economic conditions, competitive factors and changes in Government regulations.

Contamination of our products could hurt our reputation and depress our turnover. Our business could be harmed in the event of actual or alleged contamination or deterioration of our

liquor products. A risk of contamination or deterioration exists at each stage of the production cycle, including the production and delivery of raw materials, the brewing and packaging of liquor products, the stocking and delivery of liquor products to distributors and retailers, and the storage and shelving of products at the points of final sale. Moreover, any incidents of this kind, even those involving only liquor manufactured by others, could also have a negative impact on our business, results of operations, financial condition and prospects.

Our results of operations depend heavily on maintaining good relations with our workforce. Our success depends upon maintaining good relations with our workforce. We believe that our

relations with our employees and unions are satisfactory. A substantial majority of our workforce in various of our operations is unionized. Any work stoppages or strikes could adversely affect our ability to operate our business. There can be no assurance that any increase in labor costs would not have a material adverse effect on our business, results of operations, financial condition and prospects.

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We are dependent on our senior management team and our Chairman for the current and future development of our business.

We are dependent on members of our senior management team and our Chairman, Dr. Vijay Mallya, who has significant experience with our Company and in the UB Group, and our ability to meet future business challenges depends on his continued association with our Company. Dr. Mallya took over the leadership of the UB Group following the death of his father in 1983 and has been responsible for consolidating the once diversified UB Group into a handful of key operating businesses. He is regarded as a strong leader in the UB Group, particularly in our Company, and in the Indian business community as a whole and was a member of Parliament (Rajya Sabha) from 2002 to 2008. Dr. Mallya has made significant contributions to our growth and success. The unexpected loss of his service to our Company could harm our reputation and our perception in India and could have an adverse effect on our operating results. Further, our senior management has substantial experience and expertise in our Company and in the liquor products industry in India in general, and our ability to effectively integrate businesses that we have acquired and may acquire in the future will depend on our ability to retain these key personnel. We do not maintain any key man insurance. The loss of senior personnel, or the inability to recruit sufficient, qualified personnel, could have a material adverse effect on our ability to run our business and, accordingly, on our financial condition and results of operations.

UBHL, some of our overseas wholly-owned subsidiaries and USL Benefit Trust have pledged some of our shares as collateral under certain loan agreements executed by one of our wholly-owned subsidiaries.

As collateral against loans for the acquisition of Whyte and Mackay in 2007 by one of our overseas wholly-owned subsidiaries, UBHL, some of our overseas wholly-owned subsidiaries and USL Benefit Trust have pledged some of our shares as security for our obligations under such loans. We cannot guarantee that we will never take any action that would cause us to be in default of such loan agreements or that, in the event of our default, our lenders will not exercise their enforcement rights in respect of such pledged shares. Therefore, in the event that we are ever in default of the terms and conditions of such loans, we may be forced to relinquish our ownership of such pledged shares to the relevant lender if such lender exercises its rights in respect of the pledge under the relevant loan agreement. Potential lenders may be reluctant to provide us with secured loans as a result of such pledge. As a result, if, in the future, we are only able to obtain unsecured loans, which typically bear a higher interest rate than secured loans, our business, results of operations, financial condition and prospects may be adversely affected.

We may not be sufficiently covered for liabilities arising out of litigation and tax claims pending against SWC, which have been passed to us as a result of our acquisition of SWC, which has since merged with us, and which could expose us to loss.

SWC, which has merged with us pursuant to a scheme of amalgamation, had substantial litigation and tax claims pending against it. These included certain original tax claims of Rs.2711.8 million, which were set aside by the tax authorities, but were pending before the Settlement Commission of the Income Tax Department. However, the Settlement Commission disposed of the matter and the demand was fully paid by SWC. Against the order of the Settlement Commission, the Income Tax Department filed a Special Leave Petition in the Supreme Court of India which was subsequently withdrawn by the Department. The Supreme Court while allowing the Department to withdraw the Special Leave Petition, has treated the claims as dismissed but has granted liberty to the Income Tax Department to file a Writ Petition. The Management understands that no writ has been filed by the Income Tax Department. Under the terms of the share purchase agreement entered into between certain of our subsidiary companies at the time and the then majority shareholder group of SWC, in March 2005 we acquired up to 54.54% of the equity share capital of SWC for Rs.325 per share (the “SWC Purchase Agreement”). Under the SWC Purchase Agreement, we did not receive an indemnity for liabilities arising out of litigation and tax claims pending against SWC. We are exposed to

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the risk of additional liability, depending on the final adjudication by the authorities. For further details on the SWC scheme of amalgamation, see Note 2 of Schedule 19 to our consolidated financial statements as of and for the year ended March 31, 2009 included elsewhere in this Placement Document.

Adverse determination of legal proceedings in which we are involved may harm our reputation and impose high financial liability on us.

We are currently party to several legal proceedings pending against us before various judicial and quasi-judicial bodies. These amounts include claims made against us by the Central Excise Department of India in the aggregate amount of Rs.354.6 million, with additional penalties on royalties received on the sale of IMFL and the value attributable to the addition of food flavor to some of our products. However, the Central Excise Service Tax Appellate Tribunal (CESTAT) has issued an order in favour of the Company. The Central Excise Department has filed a Special Leave Petition (SLP) before the Supreme Court.

Disputed claims against us not acknowledged as debts include income tax demands under appeal of Rs.1,437.0 million, sales tax demands under appeal in various states of Rs. 604.0 million and other miscellaneous claims of Rs. 244.3 million. See Note 1 of Schedule 19 to our consolidated financial statements as of and for the year ended March 31, 2009 included elsewhere in this Placement Document and “Legal Proceedings”.

Further, a criminal fraud case was initiated in 1984 against the officers of the former Carew & Co. Ltd., which has since been amalgamated with our Company, alleging the use of fake and forged import permits. As is typical in cases of this nature in India, the directors of Carew & Co. Ltd., including Dr. Vijay Mallya, our current chairman of the Board (“Chairman”), were impleaded as parties to the case. Dr. Mallya is the only director remaining from Carew & Co. Ltd. who is associated with our Company today. There is no specific allegation against Dr. Mallya in relation to any wrongdoing but he is named as a defendant. When this case was initiated, there was no statute of limitations on the length of time that the case can remain open. See “Legal Proceedings”.

An unfavorable decision in these litigations may harm our reputation and may impose high monetary liability on us, which could have an adverse effect on the financial condition of our business.

Our Promoters will continue to be the single largest shareholder in our Company after this Issue and they may take actions that are not in, or may conflict with, our shareholders’ best interests.

Following the completion of the Issue, the Promoters will continue to be the single largest shareholder and will have the power to control matters requiring the approval of our shareholders by Special Resolution. The interests of our Promoter shareholders may be different from the interests of our other investors and you may not agree with the actions the Promoter shareholders may take. Further, the Promoter shareholders’ interest in us may result in a delay to, or prevention of, a change of management or control of our Company, even if such a transaction may ultimately be beneficial to our other shareholders.

Our Promoters are involved in a number of businesses, in their personal capacities, which are independent of our Company and we may not be aware of events or circumstances related to the Promoters that could have a negative impact on our businesses or our investments.

Our Promoters are involved in various other businesses, which are independent of our Company, our Subsidiaries and our associate companies. We are not privy to any more information in relation to these independent business interests than the general public and we have not independently carried out any due diligence exercise in relation to these interests. To the extent that there is negative publicity or events regarding any Promoter in their personal capacity, or any of the independent activities and/or businesses conducted by them, we can give no assurance that such negative publicity or events will not have a material

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adverse effect on our business, results of operations, financial condition and prospects, or on the market price of our Equity Shares.

In addition, our Promoters have pledged 33,269,304 of their 36,628,260 Equity Shares in our Company in connection with indebtedness incurred for Group companies or personal ventures. In the event of a default on the indebtedness, the lenders may enforce the pledge resulting in a substantial reduction in the Promoters’ ownership levels in our Company. In addition, if the lenders obtain ownership of our Equity Shares, they may look to sell such Equity Shares in the market which could adversely affect the trading price of the Equity Shares.

The financial information contained in this Placement Document is not directly comparable. Due to our acquisitions of Whyte and Mackay in May 2007 and the amalgamations of SWC and Primo

in July 2009 and Zelinka in March 2009, our audited year end financial statements are not directly comparable. Our consolidated financial statements as of and for the financial year ended March 31, 2009 include the results of operations of Whyte and Mackay for all of the financial year and are not directly comparable to our consolidated financial statements as of and for the financial year ended March 31, 2008, which include the results of operations of Whyte and Mackay for over 10 months, or our consolidated financial statements as of and for the financial year ended March 31, 2007, which did not include any results of operations of Whyte and Mackay. In addition, our consolidated financial statements as of and for the financial year ended March 31, 2009 include the results of operations of SWC, Primo and Zelinka for all of the financial year and are not directly comparable to our consolidated financial statements as of and for the financial years ended March 31, 2007 and 2008 which have not been restated to take into account the effects of the mergers of SWC, Primo and Zelinka with us. See Note 2 to Schedule 19 of our financial statements as of and for the year ended March 31, 2009.

This Placement Document also includes unconsolidated financial results of the Company as of and for the three months ended June 30, 2009, which were subject to a limited review as required under Clause 41 of the Listing Agreement. The Company’s results of operations on an unconsolidated basis are not directly comparable to those of the Company’s results of operations on a consolidated basis. This information does not necessarily reflect the combined financial position that the Company and its consolidated subsidiaries and associates could have recorded on the dates or for the periods indicated. In addition, the unconsolidated financial results of the Company as of and for the three months ended June 30, 2009 include: (i) the results of operations of SWC and Primo pursuant to a scheme of amalgamation which became effective from July 6, 2009 and took effect from April 1, 2007; and (ii) the results of operations of Zelinka pursuant to a scheme of amalgamation which became effective from March 26, 2009 and took effect from April 1, 2007. Therefore the unconsolidated financial results of the Company as of and for the three months ended June 30, 2009 are not directly comparable to those of the Company’s unconsolidated financial results as of and for the three months ended June 30, 2008. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations ─ Acquisitions” and Note 2 to Schedule 18 of our financial statements as of and for the year ending March 31, 2009. The proposed effective date of the Balaji merger, if approved, is April 1, 2009. Therefore, if approved, the unconsolidated financial results for future quarterly periods will not be directly comparable to those of the Company’s unconsolidated financial results as of and for the three months ended June 30, 2008.

Any downgrading of India’s debt rating by an independent agency may harm our ability to raise financing.

Any adverse revisions to India’s credit ratings for domestic and international debt by international rating agencies may adversely affect our ability to raise additional financing and the interest rates and other commercial terms at which such additional financing is available. This could have an adverse effect on our ability to fund our growth on favourable terms or at all, and consequently adversely affect our business and financial performance and the price of our Equity Shares.

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Risks Associated with India and Indian Companies

Natural disasters and other disruptions could adversely affect the Indian economy and could cause our business and operations to suffer and the trading price of the Shares to decrease.

Our operations, including our distribution network, may be damaged or disrupted as a result of natural disasters such as earthquakes, floods, heavy rainfall, epidemics, tsunamis and cyclones and other events such as protests, riots and labour unrest. Such events may lead to the disruption of transportation systems and telecommunication services for sustained periods. They also may make it difficult or impossible for employees to reach our business locations. Damage or destruction that interrupts our provision of services could adversely affect our reputation, our senior management team's ability to administer and supervise our business or it may cause us to incur substantial additional expenditure to repair or replace damaged infrastructure. Our banker’s indemnity insurance coverage for such liability may not be sufficient. Any of the above factors may adversely affect our business and financial results, the quality of our customer service and the price of our Equity Shares.

A significant change in the Central and State Governments’ economic liberalization and deregulation policies and any instability in the Government of India could disrupt our business.

The Government of India has traditionally exercised, and continues to exercise, a significant influence over many aspects of the economy. Our business, and the market price and liquidity of our Equity Shares, may be affected by interest rates, changes in government policy, taxation, social and civil unrest and other political, economic or social developments in or affecting India.

Since 1991, successive Indian governments have pursued policies of economic liberalisation and financial sector reforms. The current coalition Government came into power in May 2009. The Government has announced its general intention to continue India’s current economic liberalization and deregulation policies. However, the rate of economic liberalization could change and there can be no assurance that such policies will be continued. A change in the Government or in the Government’s future policies could affect business and economic conditions in India and could adversely affect our business, prospects, financial condition and results of operations.

Any changes to Government policy or to law may affect our business and financial condition. The rate of economic liberalization could change, and specific laws and policies affecting foreign investment, currency exchange rates and other matters affecting investment in India could change as well. A significant change in India’s economic liberalization and deregulation policies could disrupt business and economic conditions in India generally and, as most of our assets are located in India, our business in particular.

Financial instability, including exchange rate instability, in other countries, particularly countries within emerging markets, could disrupt Indian markets and our business and cause the trading price of the Equity Shares to decrease.

The Indian financial markets and the Indian economy are influenced by economic and market conditions in other countries. Although economic conditions are different in each country, investors’ reactions to developments in one country can have adverse effects on the securities of companies in other countries, including India. A loss of investor confidence in the financial systems of other emerging markets may cause volatility in Indian financial markets and, indirectly, in the Indian economy in general. Any worldwide financial instability could also have a negative impact on the Indian economy. This, in turn, could negatively impact the movement of exchange rates and interest rates in India. In short, any significant financial disruption could have an adverse effect on our business, future financial performance and the trading price of the Equity Shares. A portion of our revenue is denominated in foreign currency. If exchange rates prove unfavorable and/or volatile in the future, our business, financial condition, results of operations and prospects may be negatively impacted.

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Terrorist attacks and other acts of violence in India could adversely affect our operations. Terrorist attacks, such as the attacks in November 2008 in the city of Mumbai, the commercial capital

of India, and other acts of violence or war may adversely affect worldwide financial markets and could potentially lead to economic recession, which could adversely affect our business and financial results. These events also pose significant risks to our employees and operations. Southern Asia has, from time to time, experienced instances of civil unrest and political tensions and hostilities among neighbouring countries. Political tensions could create a perception that there is a risk of disruption of operations, which could have an adverse effect on the market for our business. We generally do not have insurance for monetary losses and interruptions caused by terrorist attacks, military conflicts and wars. Additionally, any of these events could lower confidence in India’s economy and create a perception that investments in companies with Indian operations involve a high degree of risk, which could have a material adverse effect on the price of our Equity Shares.

Trade deficits could have a negative effect on our business and the trading price of the Equity Shares. India’s trade relationships with other countries can influence Indian economic conditions. For fiscal

year 2009, India experienced a trade deficit of U.S.$119 billion, an increase of U.S.$31 billion from fiscal year 2008. If India’s trade deficits increase or become unmanageable, the Indian economy, and therefore our business, future financial performance and the trading price of the Equity Shares, could be adversely affected.

Any downgrading of India’s debt rating by an independent agency may harm our ability, and the ability of our Indian Subsidiaries, to raise debt financing, and could also have a negative impact on our business and the trading price of the Equity Shares.

Any adverse revisions of India’s credit ratings for domestic and international debt by international rating agencies may adversely impact our ability, as well as the ability of our Subsidiaries, to raise additional financing, and may adversely impact the interest rates and other commercial terms at which such additional financing is available. This could have a material adverse effect on our business and financial performance, as well as the business and financial performance of our Subsidiaries, our and their ability to obtain financing for capital expenditures, and the price of our Equity Shares.

There may be less company information available in the Indian securities markets than in securities markets in more developed countries.

There may be differences between the level of regulation and monitoring of the Indian securities markets and the activities of investors, brokers and other participants and that of the markets in the United States and other more developed countries. The SEBI is responsible for approving and improving disclosure and other regulatory standards for the Indian securities markets. The SEBI has issued regulations and guidelines on disclosure requirements, insider trading and other matters. However, there may be less publicly available information about Indian companies than is regularly made available by public companies in more developed countries. As a result, you may have access to less information about our business, results of operations and financial condition, and those of our competitors that are listed on the Stock Exchanges, on an ongoing basis than you may have in the case of companies subject to the reporting requirements of other more developed countries.

Investors may have difficulty enforcing foreign judgments against us or our management. We are a limited liability company incorporated under the laws of India. Most of our directors and

executive officers are residents of India and all or a substantial portion of our assets and those of such persons are located in India. As a result, it may not be possible for investors to effect service of process upon us or such persons in jurisdictions outside India, or to enforce against us or such parties judgments obtained in courts outside India based upon the liability provisions of foreign countries, including the civil liability provisions of the federal securities laws of the United States.

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India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments. Instead, recognition and enforcement of foreign judgments is provided for under Section 13 and Section 44A of The Code of Civil Procedure, 1908 of India (as amended) (the “Civil Code”). Section 13 of the Civil Code provides that a foreign judgment shall be conclusive as to any matter directly adjudicated upon except: (i) where the judgment has not been pronounced by a court of competent jurisdiction; (ii) where the judgment has not been given on the merits of the case; (iii) where it appears on the face of the proceedings that the judgment is founded on an incorrect view of international law or a refusal to recognize the law of India in cases in which such law is applicable; (iv) where the proceedings in which the judgment was obtained were opposed to natural justice; (v) where the judgment has been obtained by fraud; and (vi) where the judgment sustains a claim founded on a breach of any law in force in India.

Section 44A of the Civil Code provides that where a foreign judgment has been rendered by a superior court in any country or territory outside India which the Central Government has by notification declared to be in a reciprocating territory, it may be enforced in India by proceedings in execution as if the judgment had been rendered by the relevant court in India. However, Section 44A of the Civil Code is applicable only to monetary decrees not being in the nature of any amounts payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty.

The United States has not been declared by the Central Government to be a reciprocating territory for the purpose of Section 44A of the Civil Code. However, the United Kingdom, Singapore and Hong Kong have been declared by the Central Government to be a reciprocating territory. Accordingly, a judgment of a court in the United States or another jurisdiction which is not a reciprocating territories may be enforced only by a fresh suit upon the judgment and not by proceedings in execution. The suit must be brought in India within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action is brought in India. Furthermore, it is unlikely that an Indian court would enforce a foreign judgment if it viewed the amount of damages awarded as excessive or inconsistent with public policy. A party seeking to enforce a foreign judgment in India is required to obtain approval from the RBI to execute such a judgment or to repatriate outside India any amount recovered.

Political instability, changes in the Government or other developments could adversely affect economic conditions in India generally, which could impact our financial results and prospects and those of our Subsidiaries.

Our performance and growth, and the performance and growth of our Subsidiaries, are dependent on the health of the Indian economy. The Indian economy could be adversely affected by various factors, such as political and regulatory action (including adverse changes in liberalization policies), social disturbances, terrorist attacks and other acts of violence or war, natural calamities, interest rates, commodity and energy prices and various other factors. Any slowdown in the Indian economy could adversely affect our customers and suppliers as well as those of our Subsidiaries, which in turn would adversely impact our business, results of operations, financial condition and prospects and the price of our Equity Shares.

Risks Associated with our Equity Shares and this Issue

After this Issue, our Equity Shares may experience price and volume fluctuations or an active trading market for our Equity Shares may not develop.

The prices of the Equity Shares on the Stock Exchanges may fluctuate after this Issue as a result of several factors, including: volatility in the Indian and global securities market; our operations and performance; the performance of our competitors, the Indian liquor industry, and the perception in the market about investments in the liquor sector; adverse media reports about us, the UB Group or the Indian liquor industry; changes in the estimates of our performance or recommendations by financial analysts; significant

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developments in India’s economic liberalization and deregulation policies; and significant developments in India’s fiscal regulations. There can be no assurance that an active trading market for the Equity Shares will develop or be sustained after this Issue, or that the prices at which the Equity Shares are initially traded will correspond to the prices at which the Equity Shares will trade in the market subsequent to this Issue.

Any further Issue of Equity Shares by us or significant sales of Equity Shares by any major shareholder may dilute your shareholding and affect the trading price of the Equity Shares.

Any future equity offerings by us may lead to the dilution of investors’ shareholdings in our Company or affect the market price of the Equity Shares and could affect our ability to raise capital through an offering of our securities. Additionally, sales of a large number of our Equity Shares by a principal shareholder could adversely affect the market price of our Equity Shares. In addition, any perception by investors that such issuances might occur could also affect the market price of our Equity Shares.

The market value of the Equity Shares may fluctuate due to the volatility of the Indian securities markets. The Indian securities markets are more volatile than and not comparable to the securities markets in

certain countries with more developed economies and capital markets than India. Indian stock exchanges have, in the past, experienced substantial fluctuations in the prices of listed securities. Indian stock exchanges have experienced problems which, if such or similar problems were to continue or recur, could affect the market price and liquidity of the securities of Indian companies, including the Equity Shares. These problems have included temporary exchange closures, broker defaults, settlement delays and strikes by brokers. In addition, the governing bodies of Indian stock exchanges have from time to time imposed restrictions on trading in certain securities, limitations on price movements and margin requirements. Any volatility in the Indian securities markets could have an adverse effect on the price of the Equity Shares.

An investor will not be able to sell any of the Equity Shares subscribed in the Issue other than through the Stock Exchanges for a period of one year from the date of the Issue of the Shares.

Pursuant to the SEBI Regulations, for a period of one year from the date of the issue of Equity Shares in the Issue, QIBs subscribing to Equity Shares in the Issue may only sell their Equity Shares on the BSE, the BgSE or the NSE and may not enter into any off-market trading in respect of these Equity Shares. The Company cannot be certain that these restrictions will not have an impact on the price of the Equity Shares.

You may be subject to Indian taxes arising from capital gains. Under current Indian tax laws and regulations, capital gains arising from the sale of shares in an Indian

company are generally taxable in India. Any gain realized on the sale of listed equity shares on a stock exchange held for more than one year will not be subject to capital gains tax in India if Securities Transaction Tax (“STT”) has been paid on the transaction. STT will be levied on and collected by a domestic stock exchange on which the equity shares are sold. Any gain realized on the sale of equity shares held for more than one year to an Indian resident, which are sold other than on a recognized stock exchange and on which no STT has been paid, will be subject to long-term capital gains tax in India. Further, any gain realized on the sale of listed equity shares held for a period of one year or less will be subject to short-term capital gains tax in India.

Certain differences exist between Indian GAAP and other accounting principles, such as U.K. GAAP or IFRS, which may be material to investors’ assessments of our financial condition.

We have prepared our financial statements and the financial information contained in this Placement Document in accordance with Indian GAAP. Indian GAAP requirements differ in certain respects from those of IFRS. We have not presented a reconciliation of our financial statements to IFRS in this Placement Document. As there are differences between Indian GAAP and IFRS, there may be substantial differences in our results of operations, cash flows and financial position if we were to prepare our financial statements in

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accordance with IFRS instead of Indian GAAP. You should consult your own professional advisors for an understanding of the differences between Indian GAAP and IFRS and how such differences might affect the financial information contained in this Placement Document.

There is no guarantee that the Equity Shares will be listed on the BSE, NSE or BgSE in a timely manner or at all, and any trading closures at the Stock Exchanges may adversely affect the trading price of our Equity Shares.

In accordance with Indian law and practice, permission for listing of the Equity Shares will not be granted until after those Equity Shares have been issued and allotted. Approval will require all other relevant documents authorizing the issuing of Equity Shares to be submitted. There could be a failure or a delay in listing the Equity Shares on the BSE, BgSE or NSE. Any failure or delay in obtaining the approval would restrict your ability to dispose of your Equity Shares.

The regulation and monitoring of Indian securities markets and the activities of investors, brokers and other participants differ, in some cases significantly, from those in Europe and the U.S. The BSE, NSE and BgSE have in the past experienced problems, including temporary exchange closures, broker defaults, settlements delays and strikes by brokerage firm employees, which, if continuing or recurring, could affect the market price and liquidity of the securities of Indian companies, including the Equity Shares, in both domestic and international markets. A closure of, or trading stoppage on, the BSE, NSE or BgSE could adversely affect the trading price of the Equity Shares. Historical trading prices, therefore, may not be indicative of the prices at which the Equity Shares will trade in the future.

A third party could be prevented from acquiring control of our Company because of anti-takeover provisions under Indian law.

There are provisions in Indian law that may discourage a third party from attempting to take control of our Company, even if a change in control would result in the purchase of the Equity Shares at a premium to the market price or would otherwise be beneficial to investors. The Takeover Code contains certain provisions that may delay, deter or prevent a future takeover or change in control of a company. Any person acquiring either “control” or an interest (either on its own or together with parties acting in concert with it) in 15% or more of the shares of a company must make an open offer to acquire at least another 20% of the outstanding shares of the company. A takeover offer to acquire at least another 20% of the outstanding shares of a company (or a lower percentage in certain circumstances) also must be made in the circumstances detailed in the section “Indian Securities Market” elsewhere in this Placement Document. These provisions may discourage or prevent certain types of transactions involving an actual or threatened change in control of our Company.

Foreign investors are subject to foreign investment restrictions under Indian law that limit our ability to attract foreign investors, which may adversely impact the market price of the Equity Shares.

Under the foreign exchange regulations currently in force in India, transfers of shares between non-residents and residents are freely permitted (subject to certain exceptions) if they comply with the pricing guidelines and reporting requirements specified by the RBI. As per the relevant regulations under the Foreign Exchange Management Act 1999, the total holdings of FIIs and sub-accounts of FIIs added together shall not exceed 24% of the paid up equity capital or paid up value of each series of convertible debentures. However, this limit of 24% may be increased up to the statutory ceiling as applicable by passing a special resolution of the shareholders of the Company. Pursuant to this, the Company has increased the FII limit of investment in the Company to 59%.

If the transfer of shares, which are sought to be transferred is not in compliance with such pricing guidelines or reporting requirements or fall under any of the exceptions referred to above, then the prior approval of the RBI will be required. Additionally, shareholders who seek to convert the Rupee proceeds from

46

a sale of shares in India into foreign currency and repatriate that foreign currency from India will require a no objection/tax clearance certificate from the income tax authority. We cannot assure investors that any required approval from the RBI or any other Government agency can be obtained on any particular terms or at all.

47

MARKET PRICE INFORMATION AND OTHER INFORMATION CONCERNING THE EQUITY SHARES

Our Equity Shares are listed on the BSE, the BgSE and the NSE. As the Equity Shares are actively traded on the BSE and NSE, the stock market data has been given separately for each of these stock exchanges. As of June 30, 2009, the Company had 100,163,256 issued, subscribed and paid-up Equity Shares outstanding.

The following tables set forth the reported high, low and average market prices of the Equity Shares on the NSE and the BSE and the number of Equity Shares traded on the days such high and low prices were recorded, for the years ended March 31, 2007, 2008 and 2009. The high, low and average prices shown are of the daily closing prices.

The BSE: Year ended March 31, Date of high High

Volume on date of high Date of low Low

Volume on date of low Average

(Rs.)

(No. of Equity Shares) (Rs.)


2007 ..................... Feb 05, 2007 952.40 179,171 Jun 14, 2006 379.10 64,886 694.60

2008 ..................... Jan 09, 2008 2,091.70 102,408 Apr 05, 2007 805.05 29,230 1,510.02

2009 ..................... Apr 17, 2008 1,824.05 25,937 Jan 23, 2009 478.25 2,156,325 1,092.15

(Source: www.bseindia.com)

The NSE: Year ended March 31, Date of high High

Volume on date of high Date of low Low

Volume on date of low Average

(Rs.)



2007 ..................... Feb 05, 2007 954.00 714,825 Jun 14, 2006 380.00 173,332 694.90

2008 ..................... Jan 09, 2008 2,098.30 426,111 Apr 05, 2007 805.10 71,010 1,511.00

2009 ..................... Apr 16, 2008 1,822.40 126,962 Jan 23, 2009 479.10 4,434,117 1,092.70

(Source: www.nseindia.com)

48

The following tables set forth the monthly high and low prices and trading volumes of the Equity Shares on the NSE and the BSE for the six months preceding the date of filing of this Placement Document. The high, low and average prices shown are of the daily closing prices.

The BSE:

(Source: www.bseindia.com)

The NSE:

Month Date of high High

Volume on date of

high Date of low Low

Volume on date of

low Average

(Rs.)



April 2009............ Apr 15, 2009 757.40 2,981,284 Apr 06, 2009 664.40 1,650,385 712.60

May 2009............. May 25, 2009 888.50 1,148,189 May 11, 2009 650.10 715,359 760.00

June 2009............. Jun 03, 2009 980.50 1,532,211 Jun 23, 2009 822.20 418,856 893.20

July 2009 ............. Jul 31, 2009 1,018.00 1,560,643 Jul 06, 2009 830.90 628,765 907.70

August 2009......... Aug 03, 2009 1,054.20 546,846 Aug 17, 2009 842.00 902,710 926.60

September 2009 ... Sep 01, 2009 947.10 646,257 Sep 14, 2009 865.00 557,003 905.20

(Source: www.nseindia.com)

Month Date of high High

Volume on date of

high Date of low Low

Volume on date of

low Average

(Rs.)



April 2009............ Apr 15, 2009 757.95 1,020,332 Apr 06, 2009 663.35 552,926 712.04

May 2009............. May 25, 2009 889.00 395,959 May 11, 2009 649.95 257,550 759.09

June 2009............. Jun 03, 2009 979.05 449,613 Jun 23, 2009 822.80 115,690 892.81

July 2009 ............. Jul 31, 2009 1,018.85 379,918 Jul 06, 2009 830.70 198,001 906.84

August 2009......... Aug 03, 2009 1,052.30 150,930 Aug 17, 2009 841.55 129,174 926.08

September 2009 ... Sep 01, 2009 947.95 168,673 Sep 14, 2009 865.10 123,585 905.12

49

The following tables set forth the details of the volume of business transacted during the last six months on the BSE and the NSE.

Period BSE NSE

(No. of Equity Shares)

April 2009.......................................................... 8,885,658 25,148,516

May 2009........................................................... 5,124,098 16,921579

June 2009........................................................... 12,584,473 25,695,584

July 2009............................................................ 3,986,080 15,051,904

August 2009....................................................... 4,874,467 16,996,051

September 2009 ................................................. 2,831,671 12,540,660

(Source: www.bseindia.com, www.nseindia.com)

Period BSE NSE

(in Rs. million)

April 2009.......................................................... 6,349.31 17,995.92

May 2009........................................................... 3,908.66 12,907.23

June 2009........................................................... 11,203.98 23,013.68

July 2009............................................................ 3,666.27 13,900.62

August 2009....................................................... 4,514.08 15,746.58

September 2009 ................................................. 2,577.31 11,413.65


The following table sets forth the market price of the Equity Shares on the BSE and the NSE on the first working day following the Board meeting approving the Issue.

Date BSE NSE

Open High Low Close Open High Low Close

July 30, 2009.................. 948.15 965.00 938.55 959.40 964.00 975.75 937.05 963.80


50

EXCHANGE RATES

Fluctuations in the exchange rate between the Rupee and the U.S. Dollar will affect the U.S. Dollar equivalent of the Rupee price of the Equity Shares on the Stock Exchanges. These fluctuations will also affect the conversion into U.S. Dollars of any cash dividends paid in Rupees on the Equity Shares.

The following table sets forth, for the periods indicated, information with respect to the exchange rate between the Rupee and the U.S. dollar (in Rupees per U.S. dollar) based on the reference rate released by the RBI. On an average annual basis, the Rupee consistently declined against the U.S. dollar from 1980 until 2002. In early July 1991, the Government adjusted the Rupee downward by an aggregate of approximately 20 per cent against the U.S. dollar as part of an economic package designed to overcome an external payment crisis. In 1994, the Rupee was permitted to float freely for the first time. The exchange rate based on the reference rate released by the RBI as at October 20, 2009 was Rs.46.04 = US$1.00. No representation is made that the Rupee amounts actually represent such U.S. dollar amounts or could have been or could be converted into U.S. dollars at the rates indicated, any other rate or at all.

Exchange Rate Rs./US$1

Calendar Year

Period end buying rate

Average

High

Low

2006 ............................................................. 44.23 45.33 46.95 44.07

2007 ............................................................. 39.41 41.29 44.61 39.27

2008 ............................................................. 48.45 43.42 50.52 39.27

Calendar Year 2009

First quarter ................................................. 50.95 49.76 52.06 48.37

Second quarter ............................................. 47.87 48.67 50.53 46.84

Third quarter ................................................ 48.04 48.42 49.40 47.54

Source: RBI website

51

USE OF PROCEEDS

The total proceeds of the Issue will be Rs.16,156.0 million. After deducting the Issue expenses of approximately Rs.604.7 million, the net proceeds of the Issue will be approximately Rs.15,551.3 million.

We plan to use the net proceeds of this Issue to repay a minimum of U.S.$250.0 million of debt incurred upon the acquisition of Whyte and Mackay, repay other debt, fund future capital expenditure and for any other corporate purposes, including working capital. In accordance with the decision of our Board, our management will have flexibility in deploying the proceeds received by us from the Issue. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Working Capital and Loan Funds – Description of Indebtedness”.

52

CAPITALIZATION

The following table and corresponding notes sets forth our consolidated capitalization and total indebtedness as of March 31, 2009 and as adjusted on an unaudited consolidated basis to give effect to the issuance of the Equity Shares. This table and the corresponding notes should be read in conjunction with our financial statements and the schedules thereto contained elsewhere in this Placement Document.

As of March 31, 2009

Actual As adjusted1

(Rs. millions)

Loan Funds

Secured loans(1)(2).................................................. 69,926.0 69,926.0

Unsecured loans.................................................... 3,678.8 3,678.8

Total Loan funds................................................... 73,604.8 73,604.8

Shareholders’ Funds

Issued share capital

(Including share capital suspense)(3) ..................... 1,029.9 1,206.7

Share premium(4)................................................... 9,893.9 25,873.1

Other reserves ....................................................... 12,932.2 12,932.2

Total shareholders’ funds .................................. 23,856.0 40,012.0

Total Capitalization ............................................ 97,460.8 113,616.8

Notes:

(1) Includes the U.S.$ Syndicated Facility and the GBP Loan. See “Management’s Discussion and Analysis of Financial Position and Results of Operations — Working Capital and Loan Funds - Description of Indebtedness”.

(2) The net Issue proceeds will be used in part to repay a minimum of U.S.$250.0 million of the U.S.$ Syndicated Facility. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Working Capital and Loan Funds – Description of Indebtedness”. This is not reflected in the table above.

(3) Since March 31, 2009, we have paid Rs.13,244.7 million to reduce our long-term debt, including prepayments under the U.S.$ Syndicated Facility of U.S.$186.0 million upon the sale of Equity Shares held by one of our subsidiaries and an additional prepayment of U.S.$30.0 million under our U.S.$ Syndicated Facility. Under the terms of the September Amendment, we have placed U.S.$28.9 million in escrow to be paid to the lenders under the U.S.$ Syndicated Facility in November 2009 as part of a scheduled repayment. None of these payments are reflected in the table above.

(4) As of March 31, 2009, we had an authorized share capital comprising 245,000,000 Equity Shares with a par value of Rs.10 each and 84,200,000 preference shares of Rs.10 each. As of March 31, 2009, we had 100,163,256 shares outstanding. From March 31, 2009, there has been no change to our authorized share capital. The number of Equity Shares outstanding since March 31, 2009, however, has increased to 107,912,377 Equity Shares through the issuance and allotment of 7,749,121 Equity Shares on July 24, 2009 pursuant to the merger of SWC with our Company. In addition, on June 30, 2009 we sold 10,282,553 treasury shares for approximately Rs.8,912.5 million which was used in full to repay a portion of the U.S.$ Syndicated Facility of the Company, as referred to in footnote (3) to this table. We expect to issue a total of 5,200,639 Equity Shares to shareholders of Balaji in exchange for Balaji shares, upon, and subject to, effectiveness of the scheme of arrangement.

53

DIVIDEND POLICY

Under the Companies Act, our Board recommends the payment of a dividend and the shareholders at a general meeting vote on a resolution that the dividend be paid. Under the terms of our Articles of Association, the shareholders at a general meeting may declare a lower, but not higher, dividend than that recommended by our Board. Dividends are generally declared as a percentage of the par value of the Shares. The dividend recommended by the Board and approved by the shareholders at a general meeting is distributed and paid to shareholders in proportion to the paid-up value of their Shares as on the record date for which such dividend is payable. In addition, as is permitted by our Articles of Association, the Board may announce and pay interim dividends. Under the Companies Act, dividends can only be paid in cash to shareholders listed on the register of shareholders on the date which is specified as the “record date” or “book closure date” or to those shareholders who are the beneficial owners of shares in dematerialized form.

Under the Companies Act, the Companies (Transfer of Profits to Reserves) Rules, 1975 and the Companies (Declaration of Dividend out of Reserves) Rules, 1975, we may pay a dividend in excess of 10% of paid-up capital in respect of any year out of the profits of that year only after we have transferred to our reserves a percentage of our profits for that year ranging between 2.5% and 10% depending on the rate of dividend proposed to be declared in that year. The Companies Act further provides that if the profit for a year is insufficient, the dividend for that year may be declared out of the accumulated profits earned in previous years and transferred to reserves, subject to the following conditions: (i) the rate of dividend to be declared shall not exceed the average of the rates at which dividends were declared in the five years immediately preceding the year, or 10% of paid-up capital, whichever is less; (ii) the total amount to be drawn from the accumulated profits from previous years and transferred to the reserves may not exceed an amount equivalent to one-tenth of the paid-up capital and free reserves, and the amount so drawn is first to be used to set off the losses incurred in the financial year before any dividend in respect of preference or equity shares is declared; and (iii) the balance of reserves after withdrawals must not be below 15% of paid-up share capital.

In the event that a dividend declared by us has not been paid or claimed within 30 days of the declaration thereof, the same shall be transferred to a special account opened by us with a predetermined bank for the benefit of the shareholder entitled to the dividend. In the event that the amount of the divided transferred to such special account remains unpaid or unclaimed for a period of seven years from the date of transfer, the same shall be transferred to the Investor Education and Protection Fund established by the Central Government and is not recoverable by either the shareholder or us thereafter.

We have proposed dividends as follows for the periods indicated:

For the year ended March 31,

Proposed dividend

Face valueper Share

Dividend per Share

Dividend per Share

(Rs. millions) (Rs.) (Rs.) (%)

2005 ............................................................. 103.44 10.0 2.0 20.0

2006 ............................................................. 188.96 10.0 2.0 20.0

2007 ............................................................. 240.68 10.0 2.5 25.0

2008 ............................................................. 150.33 10.0 1.5 15.0

2009 ............................................................. 215.83 10.0 2.0 20.0

For the year ended March 31, 2009, our Board recommended dividends equal to 20% of par value of our Shares payable to our shareholders of record at the close of business on September 23, 2009, for Shares

54

held in uncertificated form, and on September 30, 2009, for Shares held in certificated form. Such dividend was approved at the AGM of the shareholders held on September 30, 2009 and was paid on October 9, 2009.

Our current intention is to continue to declare and distribute a dividend in the future. There can be no assurance, however, that dividends for any year will be declared, or that, if declared or paid, the amount thereof will not decrease from dividends previously paid.

For a summary of certain Indian tax consequences of dividend distributions to shareholders, see “Taxation”. For a description of our regulation of dividends, see “Description of the Equity Shares ─ Dividends”.

55

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION

The selected consolidated financial information as of and for the three years ended March 31, 2007, 2008 and 2009 set forth below have been derived from our audited consolidated financial statements included elsewhere in this Placement Document. The financial information included in this Placement Document does not reflect our results of operations, financial position and cash flows for the future and our past operating results are no guarantee of our future operating performance. Our audited financial statements are prepared and presented in accordance with Indian GAAP. For a summary of our significant accounting policies and the basis of the presentation of our financial statements, refer to the notes to the audited consolidated financial statements included elsewhere in this Placement Document.

The selected consolidated financial information set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements included elsewhere in this Placement Document. Our consolidated financial statements as of and for the three fiscal years ended March 31, 2007, 2008 and 2009 were audited by our statutory auditors, Price Waterhouse.

As of and for the year ended March 31,

2007 2008 20091

(Rs. millions)

Balance Sheet

SOURCES OF FUNDS

Shareholders’ funds

Share capital ......................................................... 828.9 885.7 1,001.6

Share capital suspense .......................................... — — 28.2

Reserves and surplus............................................. 12,863.3 19,886.9 22,826.1

Minority interest ................................................. 1,712.3 1,992.2 62.9

Loan funds

Secured loans........................................................ 9,507.6 66,917.8 69,926.0

Unsecured loans.................................................... 5,294.1 771.2 3,678.8

Term Liability towards Franchise Rights ................................................. — — 4,431.4

Deferred tax liability (net).................................. 18.6 18.0 —

APPLICATION OF FUNDS

Fixed assets

Gross block........................................................... 6,821.7 16,985.2 22,919.5

Less: depreciation ................................................. 1,764.5 6,357.1 6,650.0

Net block .............................................................. 5,057.2 10,628.1 16,269.5

Capital work in progress ....................................... 133.2 534.4 288.4

Goodwill on consolidation .................................. 11,324.1 53,259.7 44,738.3

Deferred Tax Asset ............................................. — — 918.0

Foreign Currency Monetary Items Translation Difference — — 5,597.5

56


2007 2008 20091

(Rs. millions)

..............................................................................

Investments ......................................................... 2,044.1 2,119.1 9,501.5

Current assets, loans and advances

Inventories ............................................................ 3,552.9 14,850.0 17,458.0

Sundry debtors...................................................... 3,991.4 8,370.0 8,879.6

Cash and bank balances ........................................ 5,778.0 5,437.8 4,490.0

Other current assets............................................... 1,218.5 1,469.2 2,145.0

Loans and advances .............................................. 4,389.5 4,582.7 7,399.3

18,930.3 34,709.7 40,371.9

Less: Current liabilities and provisions

Liabilities.............................................................. 6,049.6 10,303.4 13,878.8

Provisions ............................................................. 1,214.5 1,210.5 2,584.5

7,264.1 11,513.9 16,463.3

Net current assets................................................ 11,666.2 23,195.8 23,908.6

Miscellaneous Expenditure to the extent not written off .................................... — 734.7 733.3

Note:

(1) Our consolidated financial statements as of and for the financial year ended March 31, 2009 include the results of operations of SWC, Primo and Zelinka for all of the financial year and are not directly comparable to our consolidated financial statements as of and for the financial years ended March 31, 2007 and 2008 which have not been restated to take into account the effects of the mergers with SWC, Primo and Zelinka. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Acquisitions”.


2007 2008 20091

(Rs. millions)

PROFIT AND LOSS

INCOME

Income from operations ........................................ 29,249.1 46,275.2 54,680.6

Other income ........................................................ 875.5 1,063.2 1,038.4

30,124.6 47,338.4 55,719.0

EXPENDITURE

Materials ............................................................... 16,047.0 20,905.9 26,909.5

57


2007 2008 20091

(Rs. millions)

Manufacturing and other expenses ....................... 8,844.5 14,751.5 20,067.6

Interest and finance charges.................................. 873.4 5,447.6 7,175.6

Exchange loss (net)............................................... – — 3,809.3

25,764.9 41,105.0 57,962.0

Profit/(Loss) before prior period, exceptional and other non-recurring items, depreciation and taxation................................... 4,359.7 6,233.4 (2,243.0)

Depreciation ......................................................... 337.9 741.4 925.8

Prior period, exceptional and other non-recurring items (net).............................................................................. 3,134.7 181.3 –

Profit/(Loss) before taxation and before share in profit/(loss) of associates..................................... 7,156.6 5,673.3 (3,168.9)

Provision for taxation:

Current tax........................ 1,077.6 1,841.3 1,815.3

Deferred tax...................... (65.9) 773.1 (949.7)

Fringe benefit tax.............. 37.6 46.8 50.1

Profit/(Loss) after taxation and before share in profits/(losses) of associates 6,107.3 3,012.1 (4,084.6)

Share in profits/(losses) of associates (0.3) (7.5) (1.3)

Minority interests in profit/(loss) (437.5) (284.0) (1.7)

Net profit / (Loss) for the year........................................................... 5,669.5 2,720.6 (4,084.2)

Profit brought forward from previous year ........... 932.3 5,822.3 8,036.9

Profit carried to balance sheet 5,822.3 8,036.9 3,188.7

Basic earnings per share (Rs.)............................... 68.4 31.6 (39.7)

Diluted earnings per share (Rs.) ...................................................................... 68.4 31.1 (39.7)

Note:


58


2007 2008 20091

(Rs. millions)

Cash flow

Net profit/(loss) before prior period, exceptional and other non-recurring items and taxation ................. 4,021.7 5,492.0 (3,168.9)

Net cash before prior period exceptional and other non-recurring items............ 2,294.2 2,673.2 2,353.7

Prior period, exceptional and other non-recurring items...................................... 3,007.2 — —

Cash flow after extraordinary items and Net Cash from operating activities 5,301.4 2,673.2 2,353.7

Net cash from/(used) in investing activities .......... (939.7) (38,628.1) 864.8

Net cash from/(used) in financing activities ......... (2,195.1) 35,614.7 (4,166.3)

Net increase in cash and cash equivalents............. 2,166.6 (340.2) (947.8)

Cash and cash equivalents at the beginning of the financial period.............................................................................. 3,611.4 5,778.0 5,437.8

Cash and cash equivalents at the end of the financial period 5,778.0 5,437.8 4,490.0

Note:


59

RECENT DEVELOPMENTS

On July 29, 2009, we announced the unaudited unconsolidated financial results of the Company, prepared by the Company as required under Clause 41 of the Listing Agreement and which were subject to a limited review by the Auditors. The Company’s results of operations on an unconsolidated basis are not directly comparable to those of the Company’s results of operations on a consolidated basis. This information does not necessarily reflect the combined financial position that the Company and its consolidated subsidiaries and associates could have recorded on the dates or for the periods indicated. In addition, the unconsolidated financial results of the Company as of and for the three months ended June 30, 2009 include: (i) the results of operations of SWC and Primo pursuant to a scheme of amalgamation which became effective from July 6, 2009 and took effect from April 1, 2007; and (ii) the results of operations of Zelinka pursuant to a scheme of amalgamation which became effective from March 26, 2009 and took effect from April 1, 2007. The unconsolidated financial results of the Company as of and for the three months ended June 30, 2008 have not been restated to take into account the effects of the mergers with SWC, Primo and Zelinka. Therefore the unconsolidated financial results of the Company as of and for the three months ended June 30, 2009 are not directly comparable to those of the Company’s unconsolidated financial results as of and for the three months ended June 30, 2008. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations ─ Acquisitions” and Note 2 to Schedule 18 of our financial statements as of and for the year ending March 31, 2009. The proposed effective date of the Balaji merger, if approved, is April 1, 2009. Therefore, following approval, the unconsolidated financial results for future quarterly periods will not be directly comparable to those of the Company’s unconsolidated financial results as of and for the three months ended June 30, 2008.

The number of our Equity Shares outstanding since March 31, 2009 has increased to 107,912,377 Equity Shares through the issuance and allotment of 7,749,121 Equity Shares on July 24, 2009 pursuant to the merger of SWC with our Company. In addition, on June 30, 2009 we sold 10,282,553 treasury shares for approximately U.S.$186.0 million which was used in full to repay a portion of the U.S.$ Syndicated Facility of the Company. Since March 31, 2009, we made an additional prepayment of U.S.$30.0 million under the U.S.$ Syndicated Facility and have placed U.S.$28.9 million in escrow to be paid to the lenders under the U.S.$ Syndicated Facility in November 2009 as part of a scheduled repayment.

Under the terms of September Amendment, we are required to pay U.S.$250.0 million of the net proceeds of the Issue to lenders under the U.S$ Syndicated Facility (of which U.S.$114.0 million will be applied in full prepayment of the Balance, and the excess, U.S.$136.0 million will be applied to further prepay such loans). In addition, prior to the Issue, we placed U.S.$28.9 million in escrow to be paid in November 2009 towards scheduled repayment. See “Management’s Discussion and Analysis of Results of Operations ─ Description of Indebtedness ─ U.S.$ Syndicated Facility”.

We expect to issue a total of 5,200,639 Equity Shares to shareholders of Balaji in exchange for Balaji shares, upon, and subject to, effectiveness of the scheme of arrangement.

In addition, the Company has increased its FII limit to 59% as approved by shareholders at the Annual General Meeting held on September 30, 2009.

60

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with our consolidated financial statements as of and for each of the years in the three year period ended March 31, 2009 and our unaudited unconsolidated financial results (as per Clause 41 of the Listing Agreement) as of and for the three months ended June 30, 2009, and the notes thereto as included elsewhere in this Placement Document. All of the financial statements contained herein have been prepared in accordance with Indian GAAP. Significant differences exist between Indian GAAP and other accounting principles such as U.K. GAAP or IFRS, which may be material to investors’ assessments of the financial condition of the Company.

Our consolidated financial statements as of and for the years ended March 31, 2007, 2008 and 2009 were audited by Price Waterhouse, as stated in their auditors’ reports appearing elsewhere in this Placement Document.

This Placement Document contains forward-looking statements that involve risks and uncertainties. We caution investors that our business and financial performance is subject to substantive risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including, without limitation, those set out in “Risk Factors”. In evaluating our business, investors should carefully consider all of the information included in “Risk Factors”.

Overview

We are the flagship company for the spirits business of the UB Group in India. In terms of sale volume, we are the third largest distiller in the world and the largest in India according to Impact Databank. For the year ended March 31, 2009, we sold over 90 million cases of our liquor products worldwide, directly and through our CBUs, equivalent to a 20% volume growth over the 75 million cases sold the previous year. For the year ended March 31, 2009, we recorded total income of Rs.55,719.0 million and a loss after taxation and before share in profits of associates of Rs.4,084.6 million. For the three months ended June 30, 2009, our India and Nepal operations sold a total of 25.2 million cases, directly and through CBUs, equivalent to a volume growth of 17% over the corresponding period of the previous year.


Our portfolio of approximately 80 active brands includes recognized Indian names as Black Dog Scotch Whisky, Signature Rare Whisky, Royal Challenge Whisky, Antiquity Whisky, McDowell’s No. 1 Whisky, Bagpiper Whisky, Director’s Special Whisky, Haywards Fine Whisky, McDowell’s Green Label Whisky, McDowell’s No. 1 Brandy, Celebration XXX Rum, Blue Riband Gin, Romanov Vodka and White Mischief Vodka. Our McDowell’s No. 1 family of brands, comprising whisky, brandy and dark and white rum, sold over 31.5 million cases in the year ended March 31, 2009 registering a growth of 15% over the previous year. For the three months ended June 30, 2009, the McDowell’s No. 1 brands sold over 7.8 million cases, registering a growth of 7% over the corresponding period of the previous year. According to Impact Databank, McDowell’s No.1 Celebration Rum was the third largest selling rum in the world with sales in excess of 10 million cases for the financial year ended March 31, 2009, registering a growth of over 24% over the previous year. McDowell’s No.1 Brandy is currently the world’s largest selling brandy with sales in excess of 7.8 million cases and sales in excess of 2.2 million cases for the three months ended June 30, 2009. Our premium whisky

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brand, Signature Rare Whisky, and our Blue Riband Gin brand each sold over a million cases in the financial year ended March 31, 2009, giving us a total of 19 “millionaire” brands.

Pursuant to our acquisitions of Whyte and Mackay we have gained access to a stock of Scotch whisky which is a critical raw material for our production of spirits, as well as access to the established brands of Dalmore Single Highland Malt, Fettercairn, Glayva, Jura single-malt Scotch and Vladivar. Our acquisition of Bouvet Ladubay has also allowed us to expand into the wine market with such brands as Bouvet Tresor Blanc, Bouvet Brut, Bouvet Rubis Demi-Sec, Bouvet Brut Rosé and Anjou Rouge Nonpariels. Whyte and Mackay’s turnover, in accordance with U.K. GAAP, was GBP216.0 million, and its profit after taxation was GBP22.5 million for the year ended March 31, 2009, respectively. Our total income from operations for the financial year ended March 31, 2009 and in accordance with Indian GAAP includes Rs. 11,751.4 million of United Spirits (Great Britain) Limited and its subsidiaries on a consolidated basis, net of intra-group eliminations. United Spirits (Great Britain) Limited is the parent holding company of Whyte and Mackay and is an indirect wholly owned subsidiary of the Company. See “Business Description of Whyte and Mackay”.

We operate production facilities in almost every State in India where it is legal to produce and sell liquor products. We also contract with CBUs pursuant to tie-up agreements under which they bottle and distribute our liquor products for sale to wholesale and retail customers. We believe that our diversified manufacturing base spread across different States in India allows us access to various local markets in an efficient manner providing a significant operational competitive advantage. As of June 30, 2009, we owned 26 production facilities in India and 1 in Nepal and contracted with another 46 facilities in India. As of June 30, 2009, Whyte and Mackay owned five production facilities and Bouvet Ladubay owned three production facilities. Our India and Nepal operations had an annual bottling capacity of 107.2 million cases per year as of March 31, 2009 and 108.2 million cases per year as of June 30, 2009. In November 2008, our board approved the merger of Balaji with our Company under which, upon approval from the relevant authorities, Balaji, with its distillery division only, will be merged into our Company pursuant to a scheme of amalgamation. Balaji has a distillery facility and a brewing facility in Tamil Nadu. This merger, when effective, will allow us to consolidate our position in Tamil Nadu, the only major State in terms of sales volumes where we do not own a production facility.

Acquisitions

In May 2007, we acquired through our subsidiary United Spirits (Great Britain) Limited, 100% of Whyte and Mackay for a cash consideration of U.S.$1.18 billion on an enterprise basis. In connection with the acquisition, USL Holdings (UK) Limited entered into a term loan facility agreement for a committed U.S.$618.9 million, which we guaranteed. Also in connection with the acquisition, Whyte and Mackay entered into a limited recourse GBP355 million financing, guaranteed by United Spirits (Great Britain) Limited, the Whyte and Mackay Group Limited, Whyte and Mackay Warehousing Limited and Whyte and Mackay Limited. For further information on these financing agreements, see “— Working Capital and Loan Funds — Description of Indebtedness”. The financial condition and results of operations of Whyte and Mackay are included in our results of operations from May 15, 2007. Our consolidated financial statements as of and for the financial year ended March 31, 2009 include the results of operations of Whyte and Mackay for all of the financial year and are not directly comparable to our consolidated financial statements as of and for the financial year ended March 31, 2008, which include the results of operations of Whyte and Mackay for 10 months, or our consolidated financial statements as of and for the financial year ended March 31, 2007, which did not include any results of operations of Whyte and Mackay. See “Business Description of Whyte and Mackay”.

The High Court of Karnataka, the High Court of judicature at Bombay and the High Court of Calcutta approved a Scheme of Amalgamation under the Companies Act for the merger of SWC, a 75% subsidiary of the Company, and Primo, a wholly owned subsidiary of the Company, with our Company with effect from

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April 1, 2007 and amalgamation became effective on July 6, 2009. In addition, the High Court of Karnataka approved a Scheme of Amalgamation under the Companies Act for the merger of Zelinka, a wholly owned subsidiary of the Company, with our Company with effect from April 1, 2007 and amalgamation became effective on March 26, 2009. Under the terms of both schemes of amalgamation, the entire business and undertaking of SWC, Primo and Zelinka, including all assets and liabilities, have been transferred to our Company. Our consolidated financial statements as of and for the financial year ended March 31, 2009 include the results of operations of SWC, Primo and Zelinka as merged entities and are not directly comparable to our consolidated financial statements as of and for the financial years ended March 31, 2007 and 2008 which have not been restated to take into account the effects of the merger of SWC, Primo and Zelinka with us. See Note 2 to Schedule 19 of our consolidated financial statements as of and for the year ended March 31, 2009.

On November 29, 2008, our board of directors approved Balaji’s merger with our Company with effect from April 1, 2009. The merger remains subject to regulatory approval. Balaji has incurred significant losses resulting in the erosion of its net worth and has, in consequence, been declared as a sick industrial undertaking under the Sick Industrial Companies (Special Provisions) Act, 1985. The draft rehabilitation scheme along with the scheme of arrangement between Balaji, Chennai Breweries Private Limited and our Company has been submitted to the Board for Industrial and Financial Reconstruction (the “BIFR”). The scheme of arrangement will become effective on receipt of necessary approval from the BIFR. Conditional upon the merger becoming effective, the results of operations of Balaji will be included in our consolidated results of operations for the financial year ended March 31, 2010. Under the scheme of arrangement, we expect to issue a total of 5,200,639 Equity Shares to shareholders of Balaji in exchange for Balaji shares upon, and subject to, effectiveness of the scheme of arrangement.

Contingencies

The Company is from time to time the subject of litigation and excise tax claims arising out of the normal conduct of its business. Claims could be made against the Company which may not be covered by existing provisions or insurance. Determining whether liabilities should be recorded for pending litigation or tax claims requires judgments and estimates on the part of the Company, including assessing the allegations made and the likelihood that the Company will successfully defend itself, and the Company makes provisions accordingly.

Critical Accounting Policies

Critical accounting policies are those that require application of our management’s most difficult, subjective or complex judgments often as a need to make estimates about the effects of matters that are inherently uncertain and that may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. Our significant accounting policies are more fully described under Schedule 18 of our consolidated financial statements as of and for the year ended March 31, 2009 included elsewhere in this Placement Document.

We have described below the critical accounting policies that our management believes are the most significant judgments and estimates used in the preparation of our financial statements.

Consolidation. The consolidated financial statements relate to United Spirits Limited and its subsidiaries and associates. The consolidated financial statements are prepared in accordance with Accounting Standard (AS) 21 on Consolidated Financial Statements and AS 23 on Accounting for Investments in Associates in Consolidated Financial Statements as specified in the Companies (Accounting Standard) Rules,

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2006, and the relevant provisions of the Companies Act. The consolidated financial statements are prepared by adopting uniform accounting policies for like transactions and other events in similar circumstances and are presented, to the extent possible, in the same manner as the Company’s separate financial statements. Accounting policies have been consistently applied except where a newly-issued accounting standard is adopted or a revision to an existing accounting standard requires a change in the accounting policy currently in use.

On occasion, a subsidiary company whose financial statements are consolidated may issue its shares to third parties as either a public offering or private placement at per share amounts in excess of or less than the Company’s average per share carrying value. With respect to such transactions, the resulting gains or losses arising from the dilution of interest are recorded as Capital Reserve/Goodwill. Gains or losses arising on the direct sale by the Company of its investment in its subsidiaries or associated companies to third parties are transferred to the profit and loss account. Such gains or losses are the difference between the sale proceeds and the net carrying value of the investments.

For a list of subsidiary and associate companies included in our consolidated financial statements, see Note 2 of Schedule 18 to our financial statements as of and for the year ended March 31, 2009.

Accounting for investments in associate companies has been carried out under the equity method of accounting prescribed under AS 23 wherein Goodwill/Capital Reserve arising at the time of acquisition and the Group’s share of profits or losses after the date of acquisition have been adjusted in the investment value.

Depreciation and Amortization. Depreciation is provided on the straight line method, including on assets revalued, at rates prescribed in Schedule XIV to the Companies Act except for the following, which are based on management’s estimate of useful life of the assets concerned:

• Computers and vehicles over a period of three and five years respectively, commencing from the beginning of the year in which these are acquired;

• In respect of certain items of Plant and Machinery eligible for triple shift allowance, depreciation is provided for the full year on a triple shift basis;

• In respect of fixed assets of the Whyte and Mackay Group, depreciation is provided based on management’s estimates of the useful lives of the assets concerned as follows: buildings (50 years); plant and machinery (10 to 20 years); vehicles (4 years); and computers (3 years).

Fixed assets acquired on amalgamation, over the remaining useful life computed based on rates prescribed in Schedule XIV to the Companies Act are as follows:

Buildings: Factory 1 to 30 years

Buildings: Non-factory 1 to 54 years

Plants & Machinery 1 to 20 years

Vehicles 1 to 4 years

Computers 1 to 2 years

Assets taken on finance lease are depreciated over their estimated useful life or the lease term, whichever is lower.

Leasehold land is not amortized.

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Goodwill arising on amalgamation is charged to the profit and loss account in the year of amalgamation. Goodwill arising on consolidation is not amortized.

Intangible assets are amortized, on a straight line basis, commencing from the date the asset is available for its use, over their respective individual useful lives as estimated by the management:

Trademark, formulae and license 10 years

Franchise rights in perpetuity 50 years

Fixed Assets. Fixed assets are stated at their original cost of acquisition and subsequent improvements thereto including taxes, duties, freight and other incidental expenses related to acquisition and installation of the assets concerned, except amount adjusted on revaluation/amalgamation. Interest on borrowings attributable to qualifying assets are capitalized and included in the cost of fixed assets as appropriate. The costs of fixed assets acquired in amalgamations are determined at their fair values, on the date of acquisition or nearer thereto, or as approved under the scheme of amalgamation. Assets held for disposal are stated at their net book value or estimated net realizable value, whichever is lower. Goodwill represents the difference between the Company’s share in the net worth of a subsidiary and cost of acquisition at each point of time of making the investment in the subsidiary. Negative goodwill is shown separately as Capital Reserve on consolidation. Intangible assets are stated at the consideration paid for acquisition less accumulated amortization.

Leases. Assets acquired under leases, where the Company has substantially all the risks and rewards of ownership, are classified as finance leases. Such leases are capitalized at the inception of the lease at lower of the fair value or the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period. Assets acquired on leases, where a significant portion of the risk and rewards of ownership are retained by the lessor, are classified as operating leases. Lease rentals are charged to the profit and loss account on an accrual basis. Income from operating leases is credit to the profit and loss account on a straight line basis over the lease term.

Impairment. Impairment loss, if any, is provided to the extent the carrying amounts of assets exceed their recoverable amounts. Recoverable amount is the higher of the net selling price of an asset and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal to the end of its useful life.

Inventories. Inventories are valued at lower of cost and net realizable value. The costs are, in general, ascertained under the weighted average method. Finished goods and work-in-progress include appropriate manufacturing overheads and borrowing costs, as applicable. Excise/customs duty payable on stocks in bond is added to the cost. Due allowance is made for obsolete and slow-moving items.

Investments. Long-term investments are stated at cost to the Company. Provision for diminution in the value is made to recognize a decline, other than temporary, in the value of long-term investments. Current investments are valued at cost or market value, whichever is less.

Revenue Recognition. Sales are recognized when goods are dispatched from our distilleries/warehouses in accordance with the terms of sale, except where such terms provide otherwise, where sales are recognised based on such terms. Gross sales are inclusive of excise duty but are net of trade discounts and sales tax, where applicable. Income arising from sales by manufacturers under “tie-up” agreements (tie-up units) and income from brand franchise are recognized in terms of respective contracts on sale of the products by the tie-up units and income from brand franchiees is net of service tax, where applicable. Dividend income on investments are recognized and accounted for when the right to receive the payment is established.

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Foreign Currency Transactions. Transactions in foreign currency are recognized at the rates of exchange prevailing on the dates of the transactions. Liabilities / assets in foreign currencies are reckoned in the accounts as per the following principles:

• Exchange differences arising on a monetary item that, in substance, forms part of an enterprise’s net investment in a non-integral foreign operation is accumulated in a foreign currency translation reserve in the enterprise’s financial statements until the disposal of the net investment.

• Exchange differences arising on reporting of long term foreign currency monetary items, with the exception of exchange differences arising on a monetary item that, in substance, forms part of an enterprise’s net investment in a non-integral foreign operation, at rates different from those at which they were initially recorded during the period or reported in previous financial statements are accounted as below:

• In so far as they relate to the acquisition of depreciable capital assets, are added to or deducted from the cost of the asset and are depreciated over the balance life of the asset; and

• In other cases, the exchange differences are accumulated in a “Foreign Currency Monetary Item Translation Difference Account” and amortized over the balance period of such long term asset / liability but not beyond March 31, 2011.

All other monetary assets and liabilities denominated in foreign currency are restated at the rates ruling at the year end and all exchange gains / losses arising therefrom are adjusted to the profit and loss account, except those covered by forward contracted rates where the premium or discount arising at the inception of such forward exchange contract is amortized as expense or income over the life of the contract.

Foreign Companies. In respect of overseas subsidiary companies, income and expenses are translated at average exchange rates for the year. Assets and liabilities, both monetary and non-monetary, are translated at the year-end exchange rates. The differences arising out of translation are included in the foreign currency translation reserve. Any goodwill or capital reserve arising on acquisition of non-integral operations is translated at closing rate.

Pension. Whyte and Mackay operates and contributes in a defined benefit pension scheme. Liability with regard to the defined benefit pension scheme is accrued based on actuarial valuation, based on the projected unit credit method at the balance sheet date, carried out by an independent actuary. Actuarial gains and losses comprise experience adjustments and the effect of changes in the actuarial assumptions and are recognized immediately in the profit and loss account as income or expense.

Taxes on Income. Provision for income tax comprises current taxes and deferred taxes. Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the balance sheet date. Deferred tax assets are recognized and carried forward to the extent that there is a reasonable/virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be released.

Provisions. A provision is recognized when an enterprise has a present obligation as the result of a past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions, other than employee benefits, are not discounted to present value and are determined based on management estimates required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect current management estimates.

Onerous Lease Provision. When a leasehold property ceases to be used in the business or a commitment is entered into which would cause this to occur, provision is made for the entire amount by

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which the recoverable amount of interest in the property is expected to be insufficient to cover future obligations relating to the lease.

Contingencies. Material liabilities, the future outcome of which cannot be ascertained with reasonable certainty, are treated as contingent and, to the extent they are not provided for, such liabilities are disclosed by way of notes on the accounts.

Miscellaneous Expenditure (to the extent not written off). Expenditure incurred for raising borrowed funds represents ancillary costs incurred in connection with the arrangement of borrowings and is amortized over the tenure of the respective borrowing. Amortization of such miscellaneous expenditure is included under interest and finance charges.

Significant Factors Affecting Our Results of Operations

Historically, our business has been dependent on the following internal and external factors:

Growth in the Indian Liquor Industry. Our financial results have been, and are expected to be, affected by the growth in the Indian liquor industry. See “The Liquor Industry in India”. We believe that the reasons for the increase in sales of liquor products were attributable to a shift in patterns of spending, away from saving and investment and toward consumption and spending on lifestyle and products and services, like eating out and entertainment. We believe that the demand for our liquor products in India will continue to increase in the foreseeable future as the liquor industry continues to grow. For the year ended March 31, 2009, the total IMFL industry grew 10.6% and stood at approximately 174 million cases, and according to Euromonitor International 2008, it is anticipated that double digit growth will continue in the industry for the near future. With 50% of India’s 1.2 billion population not having yet achieved legal drinking age, we believe the industry presents a demographic window of opportunity with a large number of first time consumers entering the markets.

Government Regulation and Policies. Our revenues are dependent in large part on the prices we are able to charge consumers for the liquor we sell. The State Government controls the wholesale and/or retail distribution networks in many of the markets in which we operate. The Government sets the price at which it is willing to purchase our products, normally on an annual basis, for which tender is to be submitted by the Company. We pay duties on top of that fixed price. The various Government entities operating in the Indian States do not regularly increase the prices we are able to charge, except, in certain instances, when we are able to persuade them that cost increases warrant such increases. We have been successful in the past in raising our prices in certain States when the cost of molasses materially increased as a result of a widespread shortages and when furnace fuel prices materially increased. The price increases were not always enough to fully offset our additional costs. See “Risk Factors — Risks Relating to Our Operations — Government regulation of the wholesale and retail markets in each State affects our trade and pricing practices, as well as relations with distributors, wholesalers and retailers”.

In addition, we are subject to excise and other taxes levied by the State Governments on the manufacture and sale of our products. These tax policies can vary greatly from one State to the next, which affects our ability to move our products inter-state. In our business, excise duty (normally a tax on production) is levied in the State of consumption, not in the State of production. Therefore, there can be no savings in excise duty brought about by rearranging production strategies. There are, however, other levies like export pass fees, import pass fees and central sales taxes, to name a few, that can be avoided through a planned sourcing strategy. For example, a product produced in Goa and sold in Karnataka is subject to the excise duty of Karnataka, the export fee of Goa, the import fee of Karnataka, central sales tax and freight charges involved in moving the goods from Goa to Karnataka. On the other hand, producing and selling in Karnataka will attract only the excise duty of Karnataka and local freight charges, thereby saving the Company the

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export fee of Goa, the import fee of Karnataka, central sales and the additional freight involved in inter-state movement of goods. Savings in levies means we are able to increase our realization proportionally, thereby increasing our profitability.

Finally, in most States, we are required to procure a license from the State Government, prescribing our annual production capacity prior to manufacturing or selling any liquor products in that State. Under a license, we are limited in the annual volume of liquor products that we are permitted to manufacture. In some States, the trade licenses for the distribution of liquor products are allotted through auction. Some States have undertaken the distribution of licenses at the wholesale and/or retail level, through State-owned and State-run corporations. In other States, distribution is controlled through the allotment of licenses, and the number of wholesalers and retailers is regulated. As a result, obtaining a new license for distribution can be difficult and depends on the number of distribution outlets authorized to operate in each State.

Raw Materials and Supplies Cost. The production cost of our liquor products is highly dependent upon the supply of molasses or sugarcane, as the key ingredients, and upon the cost of bottles used in packaging. The market price of molasses is determined principally by the supply and demand during a particular year and can be highly cyclical. The price of molasses rose sharply at the end of 2008 materially affecting our results of operations for the year ended March 31, 2009. The average purchase cost of molasses for the Company was approximately Rs.3,635, Rs.2,600 and Rs.5,884 per metric ton for the years ended March 31, 2007, 2008 and 2009, respectively, and Rs.6,845 for the three months ended June 30, 2009.

A majority of the glass we purchased to bottle our products came from Hindustan National Glass Limited and its associated companies, which controls a substantial portion of the Indian market for glass. Management believes, however, that the Company’s reliance on this one producer of glass is somewhat mitigated by the Company’s purchasing power as the largest domestic purchaser in the Indian glass bottle market and the strength of our business relationships with this major supplier. See “Risk Factors — Risks Relating to our Operations — We depend on third-party suppliers for the raw materials we require for production and fluctuations in the price and availability of such raw materials may increase our production costs and negatively impact our results of operations”.

Product Mix. Our sales and profitability are influenced by brand, product and sales territory. Sales of different brands and products within our portfolio carry different margins, depending on the nature of the product and its particular branding or packaging. For example, sales of premium brands and white liquor (white rum, vodka and gin) tend to result in a higher than average price per liter, and higher than average cash margins. Similarly, sales of high profile brands, such as Black Dog Scotch Whisky, carry higher margins than generic brands, such as Bagpiper Whisky, because we are able to charge more per case for high-end brands, which increases our margins on these products. Depending on our assessment of how a particular brand is selling in a free market, we periodically realign the position of certain brands in that market or extend existing brands into new price points, for example by moving a product in the premium to the super premium category, which in turn will impact our overall sales and profit margin. Our results may fluctuate from year to year depending on the proportion of sales volume represented by higher-margin products, and a key element of our strategy is to continue to grow sales of our higher-margin products, when management believes there is a market opportunity.

Changes in Exchange Rates. Our financial statements are prepared in Indian rupees. Our most significant subsidiary, Whyte and McKay, is incorporated in the United Kingdom and its financial statements are prepared in U.K. pound sterling. When preparing our consolidated financial statements, which are presented in Indian rupees, we must convert into Indian rupees the assets, liabilities, income and expenses of Whyte and Mackay. As a result, variations in exchange rates between the Indian rupee and the U.K. pound sterling affect the amount of the line items concerned in the consolidated financial statements even if their value remains unchanged in the original currency.

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We have subsidiaries domiciled in various countries and certain subsidiaries have borrowings in their books. Our long term borrowings include borrowings for the purpose of acquisition of some subsidiaries as well as for the normal course of its business. Exchange differences arising on restatement of long term foreign currency monetary items are accumulated in a Foreign Currency Monetary Item Translation Difference Account and amortized over the balance period of the related long term asset/liability but not beyond March 31, 2011.

We accounted net exchange loss of Rs.3,809.3 million in the consolidated financial statements for the year ended March 31, 2009 which mainly include a portion of exchange differences on long term foreign currency borrowings amortized during the year ended March 31, 2009. The amount of Rs.5,597.5 million remaining to be amortized and retained in the Foreign Currency Monetary Item Translation Difference Account as at March 31, 2009 is required to be amortized over the balance period of related asset / liability, but not beyond March 31, 2011 or the time of repayment of the related foreign currency borrowings, whichever is earlier. All amounts accumulated in our Foreign Currency Monetary Item Translation Difference Account must be recognized in the Profit and Loss account from time to time, with all amounts to be charged on or prior to March 31, 2011 or the repayment, whichever is earlier. Upon any repayment, the amount accumulated in the Foreign Currency Monetary Item Translation Difference Account associated with the amount of any such repayment of borrowing will be recognized in the Profit and Loss Account in our consolidated financial statements at the time of such repayment.

Other factors. Our results of operations for the year ended March 31, 2009 were adversely impacted by a couple of other factors associated with Whyte and Mackay.

• Pension deficit. Whyte and Mackay operates and contributes to a defined benefit pension scheme, under which assets are held in a separately administered fund. Liability with regard to the pension plan is accrued based on actuarial valuation, based on the projected unit credit method at the balance sheet date, carried out by an independent actuary. Actuarial gains and losses comprise experience adjustments and the effect of changes in the actuarial assumptions are recognized immediately in the profit and loss account as income or expense. For the year ended March 31, 2009, we incurred an actuarial loss on pension amounting to Rs.1,746.2 million relating to United Spirits (Great Britain) Limited, the parent holding company of Whyte and Mackay.

• Onerous lease. When a leasehold property ceases to be used in the business or a commitment is entered into which would cause this to occur, provision is made for the entire amount by which the recoverable amount of interest in the property is expected to be insufficient to cover future obligations relating to the lease. Whyte and Mackay have two such properties, which are either unoccupied or subleted out at a rent lower than the amount paid by Whyte and Mackay under their lease.

For the year ended March 31, 2009, we incurred a provision for onerous lease amounting to Rs.403.6 million relating to United Spirits (Great Britain) Limited, the parent holding company of Whyte and Mackay, calculated based on the most likely assumption regarding present and future occupancy of the related premises. Various factors considered are current negotiations with prospective tenants, current rental value of similar properties, condition of the premises, rent review dates and length of contract to arrive at the most likely scenario based on present reasonable assumptions.

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Principal Components of Results of Operations

Income from Operations. Income from operations comprises income from the sale of liquor by us, less excise duty, and income arising from the sale by manufacture under tie-up agreements with CBUs and brand franchise payments by such CBUs and from Indian Premier League (IPL) Franchisees.

Billing for the sale of our products originates with the CBU. The CBU either bills us directly or, when instructed by us, bills the customer. The CBU sells our products at a predetermined price. The CBU retains its cost of production plus a profit margin, which is typically a pre-determined per case amount, with the “economic surplus” paid to us. The economic surplus represents a brand franchise fee, based on the net sale revenue booked by the CBU on a per case basis, and the balance amount represents part of our income from the CBU. Our billing practices are based on the law prevailing in the relevant State and on economic considerations.

Other Income. Other income comprises income from investments, lease rent, profit on sale of fixed assets, profit on sale of investments, liabilities no longer required written back, scrap sales and miscellaneous income.

Materials. Materials includes raw materials consumed, purchase of finished goods, packaging materials consumed, inventory and difference in the opening and closing of work-in-progress and finished goods and other items.

Manufacturing and Other Expenses. Manufacturing and other expenses comprises employee costs, power and fuel, stores and spares consumed, repairs and maintenance, rent, rates and taxes, insurance, travelling and conveyance, freight outwards, advertising and promotion, commission on sales, cash discount and other items.

Depreciation. Depreciation comprises depreciation on all fixed assets except land, and is not less than the rates prescribed in the Companies Act.

Interest and Finance Charges. Interest and finance charges comprises interest charges on fixed and other loans and is net of interest income.

Consolidated Results of Operations for the Years Ended March 31, 2007, 2008 and 2009 The table below sets forth, for the periods indicated, certain income and expense items for our

consolidated operations, and expressed as a percentage of total income:

Year ended March 31,

2007 2008 2009

(Rs. millions) %

(Rs. millions) %

(Rs. millions) %

Income

Income from Operations ........................ 29,249.1 97.1 46,275.2 97.8 54,680.6 98.1

Other Income ......................................... 875.5 2.9 1,063.2 2.2 1.038.4 1.9

Total Income ........................................ 30,124.6 100.0 47.338.4 100.0 55,719.0 100.0

Expenditure

Materials ................................................ 16,047.0 53.3 20,905.9 44.2 26,909.5 48.3

Manufacturing and Other Expenses ....... 8,844.5 29.3 14,751.5 31.2 20,067.6 36.0

Interest and Finance Charges ................. 873.4 2.9 5,447.6 11.5 7,175.6 12.9

Exchange Loss (net) — — — — 3,809.3 6.8

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2007 2008 2009

(Rs. millions) %

(Rs. millions) %

(Rs. millions) %

Total Expenditure 25,764.9 85.5 41,105.0 86.8 57,962.0 104.0

Profit/(Loss) before Depreciation, exceptional and other non recurring items and Taxation .............................. 4,359.7 14.5 6,233.4 13.2 (2,243.0) (4.0)

Depreciation .......................................... 337.9 1.1 741.4 1.6 925.8 1.7

Exceptional and Other Non-Recurring Items (Net)............................................. 3,134.7 10.4 181.3 0.4 – –

Profit/(Loss) before Taxation and before Share in Profits/(Losses) of Associates.............................................. 7,156.5 23.8 5,673.3 12.0 (3,168.8) (5.7)

Provision for Taxation......................... 1,049.3 3.5 2,661.2 5.6 915.8 1.6

Profit/(Loss) after Taxation and before Share in Profits/(Losses) of Associates.............................................. 6,107.2 20.3 3,012.1 6.4 (4,084.6) (7.3)

Years Ended March 31, 2007 and 2008 Income from Operations. Our income from operations, including income attributable to sales from

CBUs, increased 58.2% from Rs.29,249.1 million in the year ended March 31, 2007 to Rs.46,275.2 million in the year ended March 31, 2008. This increase was primarily due to the inclusion in the financial year ended March 31, 2008 from May 16, 2007 of results of operations of Whyte and Mackay as well as an increase in sales volume from our own facilities from 33.8 million cases sold in the year ended March 31, 2007 to 36.9 million cases in the year ended March 31, 2008

Other Income. Our other income increased 38.1% from Rs.875.5 million in the year ended March 31, 2007 to Rs.1,063.2 million in the year ended March 31, 2008. This increase was primarily due to rental income from Whyte and Mackay and the write back of an onerous lease provision of Whyte and Mackay.

Materials. Our costs of materials increased 30.3% from Rs.16,047.0 million in the year ended March 31, 2007 to Rs.20,905.9 million in the year ended March 31, 2008. This increase was primarily due to an increase in sales volume from our own facilities from 33.8 million cases sold in the year ended March 31, 2007 to 36.9 million cases, sold in the year ended March 31, 2008 coupled with an increase in raw material prices, principally molasses and ENA as well as the inclusion of the cost of materials of Whyte and Mackay. Materials as a percentage of our total income decreased from 53.3% in the year ended March 31, 2007 to 44.2% in the year ended March 31, 2008.

Manufacturing and Other Expenses. Our manufacturing and other expenses increased 66.8% from Rs.8,844.5 million in the year ended March 31, 2007 to Rs.14,751.5 million in the year ended March 31, 2008. This increase was primarily due to an increase of Rs.1,838.9 million in advertisement and sales promotion, a Rs.1,280.2 million increase in employee costs, a Rs.334.4 million increase in power and fuel and stores and spares consumed, a Rs.376.2 million increase in rent, rates and taxes and a Rs.215.8 million increase in repairs and maintenance. These increases were a result of the growth in the Company’s business, including the manufacturing and other expenses of Whyte and Mackay since May 16, 2007.

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Interest and Finance Charges. Our interest and finance charges increased from Rs.873.4 million in the year ended March 31, 2007 to Rs.5,447.6 million in the year ended March 31, 2008. This increase was primarily due to a Rs.2,975.3 million increase in interest on fixed loans due to additional borrowings and a Rs.1405.8 million increase in interest on other loans. The Company’s outstanding borrowings increased from Rs.14,801.6 million as at March 31, 2007 to Rs.67,689.0 million as at March 31, 2008, primarily as a result of increased borrowings in connection with the acquisition of Whyte and Mackay.

Profit after Taxation and before Share in Profits/(Losses) of Associates. Our profit after taxation and before share in profits/(losses) of associates decreased 50.7% from Rs.6,107.3 million in the year ended March 31, 2007 to Rs.3,012.1 million in the year ended March 31, 2008.

Years Ended March 31, 2008 and 2009 Income from Operations. Our income from operations, including income attributable to sales from

CBUs, increased 18.2% from Rs.46,275.3 million in the year ended March 31, 2008 to Rs.54,680.6 million in the year ended March 31, 2009. This increase was primarily due to an increase in sales volumes from our own facilities from 36.9 million cases sold in the year ended March 31, 2008 to 45.8 million cases sold in the year ended March 31, 2009 and average sales realization. Income attributable to our own facilities increased by Rs.7,824.8 million and income attributable from CBUs increased by Rs.146.0 million. The increase in income from operations was also partly due to income from the franchise of IPL which commenced in the financial year ended March 31, 2008.

Other Income. Our other income decreased from Rs.1,063.2 million in the year ended March 31, 2008 to Rs.1,038.4 million in the year ended March 31, 2009.

Materials. Our costs of materials increased 28.7% from Rs.20,905.9 million in the year ended March 31, 2008 to Rs.26,909.5 million in the year ended March 31, 2009. This increase was primarily due to an increase in sales volume from our own facilities from 36.9 million cases sold in 2008 to 45.8 million cases sold in 2009 and a significant increase in the price of raw materials, principally molasses. Materials as a percentage of our total income increased from 44.2% in the year ended March 31, 2008 to 48.3% in the year ended March 31, 2009.

Manufacturing and Other Expenses. Our manufacturing and other expenses increased 36.0% from Rs.14,751.5 million in the year ended March 31, 2008 to Rs.20,067.6 million in the year ended March 31, 2009. This increase was primarily due to an increase in sales volumes. In addition, for the year ended March 31, 2009, we incurred an actuarial loss on the pension amounting to Rs.1,746.2 million, relating to United Spirits (Great Britain) Limited, the parent holding company of Whyte and Mackay as against an actuarial gain on the pension amounting to Rs.975.5 million for the year ended March 31, 2008. For the year ended March 31, 2009, we incurred a provision for onerous lease amounting to Rs.403.6 million relating to United Spirits (Great Britain) Limited, the parent holding company of Whyte and Mackay.

Interest and Finance Charges. Our interest and finance charges increased 31.7% from Rs.5,447.6 million in the year ended March 31, 2008 to Rs.7,175.6 million in the year ended March 31, 2009. This increase was primarily due to exchange translation of interest paid on foreign currency loans, the inclusion of Whyte and Mackay for a full year in 2009 and fluctuations in the value of an interest rate swap entered into by Whyte and Mackay.

Profit after Taxation and before Share in Profits/(Losses) of Associates. Our profit after taxation and before share in profits/(losses) of associates decreased from a profit of Rs.3,012.1 million in the year ended March 31, 2008 to a loss of Rs.4,084.6 million in the year ended March 31, 2009.

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Liquidity and Capital Resources

The Company’s primary source of liquidity has historically been funds generated from operations and from bank loans.

Cash Flows We need cash primarily to meet working capital needs. We fund these capital requirements through a

variety of sources, including cash from operations, short- and long-term lines of credit and capital contributions. These sources of funding, and our ability to fund our capital expenditure needs, could be adversely affected by an adverse change in business and consequent profitability, or an inability to obtain funds from external sources on acceptable terms or in a timely manner.

The following table sets forth certain information about our consolidated cash flows during the years ended March 31, 2007, 2008 and 2009:


2007 2008 2009

(Rs. millions)

Net profit/(loss) before prior period exceptional and other non-recurring items and taxation..................................................................................... 4,021.7 5,492.0 (3,168.9)

Net cash before prior period, exceptional and other non-recurring items . 2,294.2 2,673.2 2,353.7

Prior period, exceptional and other non-recurring items........................... 3,007.2 — —

Cash flow after extraordinary items and net cash from operating activities ................................................................................................... 5,301.4 2,673.2 2,353.7

Net cash from/(used) in investing activities .............................................. (939.7) (38,628.1) 864.8

Net cash from/(used) in financing activities ............................................. (2,195.1) 35,614.7 (4,166.3)

Net increase in cash and cash equivalents................................................. 2,166.6 (340.2) (947.8)

Cash and cash equivalents at the beginning of the financial period .......... 3,611.4 5,778.0 5,437.8

Cash and cash equivalents at the end of the financial period .................... 5,778.0 5,437.8 4,490.0

Operating Activities Cash flow after extraordinary items and net cash from operating activities amounted to Rs.5,301.4

million in the year ended March 31, 2007, Rs.2,673.2 million in the year ended March 31, 2008 and Rs.2,353.7 million in the year ended March 31, 2009. Net cash inflow from operating activities before prior period, exceptional and other non-recurring items increased by Rs.379.0 million, or 16.5%, in the year ended March 31, 2008 compared to the year ended March 31, 2007. During the year ended March 31, 2007, USL Benefit Trust, formed in terms of a scheme of arrangement under which eight companies merged into McDowell & Company Limited (now the Company), sold 3,500,000 Equity Shares. Being the sole beneficiary of the USL Benefit Trust, we received net sale proceeds from the Trust. The surplus of Rs.2,473.7 million, being the excess of net sale proceeds over corresponding carrying value of interest in the USL Benefit Trust has been shown under exception and other non-recurring items. Net cash inflow from operating activities decreased by Rs.319.5 million, or 12.0%, in the year ended March 31, 2009 compared to the year ended March 31, 2008, principally due to a reduction in operating profit.

Investing Activities Net cash used in investing activities amounted to Rs.939.7 million in the year ended March 31, 2007

and Rs.38,628.1 million in the year ended March 31, 2008. Net cash from investing activities amounted to

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Rs.864.8 million in the year ended March 31, 2009. Net cash used in investing activities increased by Rs.37,688.4 million in the year ended March 31, 2008 compared to the year ended March 31, 2007, principally due to consideration paid on the acquisition of shares in Whyte and Mackay and Liquidity Inc. Net cash from investing activities was positive in the year ended March 31, 2009 compared to the year ended March 31, 2008, principally due to the sale of a long term investment in SWC.

Financing Activities Net cash used in financing activities amounted to Rs.2,195.1 million in the year ended March 31,

2007, compared with net cash from financing activities of Rs.35,614.7 million for the year ended March 31, 2008 and net cash used in financing activities of Rs.4,166.3 million for the year ended March 31, 2009. Net cash used in financing activities over the periods under review was principally related to proceeds and repayment of debt, interest and finance charges paid. Net cash from financing activities in the year ended March 31, 2008 was principally related to proceeds from long-term loans borrowed in connection with the acquisition of Whyte and Mackay. Net cash used in financing activities was principally related to repayment of debt, as well as interest and finance charges paid in the year ended March 31, 2009.

Working Capital and Loan Funds

Our total loan funds were Rs.14,801.6 million as of March 31, 2007, Rs.67,689.0 million as of March 31, 2008 and Rs.73,604.9 million as of March 31, 2009. Our secured loans were Rs.9,507.6 million, Rs.66,917.8 million and Rs.69,926.0 million as of March 31, 2007, 2008 and 2009, respectively.

As of March 31, 2007, we had Rs.14,801.6 million in total debt obligations then outstanding consisting of secured term loans of Rs.6,192.3 million, working capital loan/cash credit from banks of Rs.3,238.2 million and outstanding 2% Convertible Bonds in Foreign Currency of Rs.4,423.6 million. As of March 31, 2008, we had Rs.67,689.0 million in total debt obligations then outstanding, consisting of secured term loans of Rs.59,638.1 million, and working capital loan/cash credit from banks of Rs.5,590.5 million. As of March 31, 2009, we had Rs.73,604.9 million in total debt obligations then outstanding, consisting of secured term loans of Rs.61,893.3 million, and working capital loan/cash credit from banks of Rs.8,006.0 million. Such term loans and working capital facilities were secured by certain of our assets.

Our ratio of total long-term borrowings (non-current borrowings and current portion of long-term borrowings) to shareholders’ equity was 0.83, 2.90 and 2.65 as of March 31, 2007, 2008 and 2009, respectively. We fund our short-term working capital requirements through cash flow from operations, overdraft facilities with commercial banks, short- and medium-term borrowings from banks and commercial financial institutions.

Description of Indebtedness

As of March 31, 2009, we had aggregate outstanding long-term debt (excluding current portion of long-term debt) of Rs.56,822.9 million under the following material borrowings:

U.S.$ Syndicated Facility

One of our subsidiaries, USL UK, entered into the U.S.$ Syndicated Facility arranged by Citigroup in May 2007 for a committed U.S.$618.9 million to fund, among other things, the acquisition by United Spirits (Great Britain) Limited of Whyte and Mackay. The U.S.$ Syndicated Facility is guaranteed by United Spirits Limited and Shaw Wallace Breweries Limited. In addition to these guarantees, UBHL and USL Benefit Trust pledged some of our shares as security in support of the U.S.$ Syndicated Facility. In addition, the facility is also secured by, among other things, an Indian law hypothecation over trademarks owned by United Spirits Limited, and a fixed and floating charge over the assets and undertaking of USL Holdings (UK) Limited.

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During the third quarter of the year ending on March 31, 2009, we witnessed a significant increase in the cost of raw materials, mainly molasses. This resulted in increased costs which we were not able to pass on in full to our customers, which adversely effected our profits. In addition, adverse currency movements saw the U.S. dollar strengthen against the Indian Rupee. As a result of our lower than expected profits, currency fluctuations and other events and activities, we breached certain covenants under the U.S. Syndicated Facility, including breaches of its provisions for required leverage and interest cover ratios. The lenders consented and agreed to waive such breaches and, accordingly, the U.S. Syndicated Facility was amended by the September Amendment to allow USL UK to deleverage the loans outstanding thereunder and address the issues raised above.

The U.S.$ Syndicated Facility was restructured to, among other things, facilitate a deleveraging of the loan by way of prepayment. The key features of this restructuring included: (i) the relaxation of certain financial covenants until the September 30, 2009 calculation date, (ii) the modification of capital expenditure limits up to the financial year ending March 31, 2010, (iii) the addition of new monthly minimum liquidity requirements from July 2009 up to December 2009, (iv) the addition of a cashflow for debt repayment covenant up to the financial quarter ended September 30, 2009, (v) the approval of the merger of Balaji Distilleries Limited into United Spirits Limited, subject to satisfaction of certain conditions, (vi) the approval of intra-group transfers of funds via USL Holdings Limited and Spring Valley Investments Holdings Inc., subject to, among other things, such funds channelling through a secured account, (vii) increasing the margin to 4.00% above LIBOR until November 30, 2009, (viii) permission to undertake a debt or equity issuance to facilitate a proposed capital raising up to U.S.$300.0 million or more provided that the purpose of such issuance is to facilitate the Prepayment, (ix) permission to incur certain new financial indebtedness, including with Punjab National Bank, and grant security in support thereof, and (x) a requirement to make the Prepayment by the Prepayment Date, failing which, in the latter case, an event of default will be triggered under the U.S.$ Syndicated Facility. To date, we have paid U.S.$186.0 million towards the Prepayment, thus leaving the Balance of U.S.$114.0 million unpaid.

The Company shall be obligated to apply the net proceeds of this Issue as follows: (a) the first U.S.$200.0 million in prepayment of the loans under the U.S.$ Syndicated Facility (of which U.S.$114.0 million will be applied in full prepayment of the Balance, and the excess, U.S.$86.0 million, will be applied to further prepay such loans), (b) the following U.S.$100.0 million may be retained by the Company and used by it for certain purposes, and (c) any amount in excess of U.S.$300.0 million in further prepayment of the loans under the U.S.$ Syndicated Facility. As such, we plan to repay a minimum of U.S.$250.0 million of debt incurred under the U.S.$ Syndicated Facility (of which U.S.$114.0 million will be applied in full prepayment of the Balance and the excess of U.S.$136.0 million will be applied to further prepay a portion of the outstanding balance of the U.S.$ Syndicated Facility). In addition, the Company is required to make a schedule repayment of the U.S.$ Syndicated Facility in November 2009 and has placed U.S.$28.9 million on deposit with an escrow agent to meet this repayment obligation. See “Use of Proceeds”.

USL UK has now implemented a hedging strategy which has been approved by the lenders. This strategy should help to mitigate the risks associated with US dollar/Indian Rupee currency movement going forward.

We are currently in compliance with all of our obligations under the U.S.$ Syndicated Facility.

Under the terms of the U.S.$ Syndicated Facility, we are required to comply with various financial covenants, governing the terms of the loan facilities, including meeting the ratios summarized below.

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Year Leverage Ratio (not to exceed)

Interest Coverage

Ratio (exceeds)

Debt Service Coverage

Ratio (exceeds)

Fixed Charge Ratio

March 31, 2010 4.00 3.00 1.25 1.00

March 31, 2011 2.50 4.50 1.25 1.05

March 31, 2012 2.50 4.50 1.25 1.05

GBP Loan

The Whyte and Mackay group, which is the group of companies acquired by United Spirits (Great Britain) Limited in 2007, entered into the limited recourse GBP Loan provided by ICICI Bank UK plc and Bank of Scotland plc. The credit agreement provides for two term loan facilities, a revolving loan facility and an overdraft facility and is guaranteed by United Spirits (Great Britain) Limited, the Whyte and Mackay Group Limited, Whyte and Mackay Warehousing Limited and Whyte and Mackay Limited. Security has been granted by a number of the Whyte and Mackay group companies, United Spirits (Great Britain) Limited and United Spirits (UK) Limited in England and Scotland. In particular, the security package includes English law governed fixed and floating charges over certain land, assets, investments, plant and machinery, accounts, contracts and intellectual property of United Spirits (Great Britain) Limited and United Spirits (UK) Limited, an English law governed fixed charge over material intellectual property owned by the Whyte and Mackay group companies and Scottish law security over certain properties, assignation of rentals, share pledges, bonds and floating charges over property and undertakings, and a pledge of consignments of whisky. This financing arrangement is limited recourse with the lenders having no ability to claim against the wider United Spirits group (other than a share pledge over the shares of the Whyte and Mackay parent company to facilitate any sale on enforcement of the Whyte and Mackay group as a whole).

On or about June 2009, USL GB, our wholly owned subsidiary and holding company of Whyte and Mackay, announced that it had incurred capital expenditure of GBP8.3 million for the financial year ending March 31, 2009, in excess of the GBP5.0 million permitted maximum limit under the GBP Loan. This increase in capital expenditure was deemed necessary by USL GB in order to maintain compliance with local regulatory and similar requirements. As a result of this increased expenditure, USL GB breached the GBP Loan, which triggered an event of default under the GBP Loan and USL GB has sought a waiver of this default from its lenders under the facility.

There are currently two lenders that have extended an equal portion of loans and/or provided overdrafts to USL GB under the GBP Loan. Any waiver of a default requires the consent of a two-thirds majority of the lenders, requiring both lenders to agree to grant the waiver in order for it to be effective. Similarly, any acceleration of the facility also requires the consent of a two-thirds majority of the lenders. Both of the lenders have indicated a willingness to provide a waiver of the default and, as such, the Company and USL GB believes it is extremely unlikely the GBP Loan will be accelerated. The Company and USL GB believe the default under this facility was a technical default arising solely from a necessary increase in capital expenditure and is not material to the lenders or the Company’s ability to service its debts. The default under the GBP Loan does not trigger a cross-default under the U.S.$ Syndicated Facility, as cross-defaults at the Whyte and Mackay group level are specifically excluded from the cross-default provisions of the U.S. Syndicated Facility. There are no cross-defaults under our local Indian facilities resulting from the breach in

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the GBP Loan entered into by USL, as such local facilities do not contain cross-default provisions to the debt at the Whyte and Mackay group level.

Although the Company expects to obtain the requisite waivers under the GBP Loan, the failure to do so could allow the lenders to accelerate the loans under this facility. Should the loans be accelerated, it could prove to be very difficult, in the current environment, for USL GB to refinance its debt or obtain additional financing, thus affecting its ability to carry on its business as a going concern.

Under the terms of the GBP Loan, we are required to comply with various financial covenants, governing the terms of the loan facilities, including meeting the ratios summarized below.

Year Leverage Ratio (not

to exceed) Interest Coverage Ratio

(exceeds) Debt Service Coverage

Ratio (exceeds)

March 30, 2010 6.50 1.50 1.20

March 30, 2011 4.75 1.50 1.20

March 30, 2012 3.50 1.50 1.20

Amounts owing under the credit agreement may be accelerated if an event of default is outstanding (meaning that it has not been remedied or waived). The credit agreement contains standard monetary and non-monetary events of default, including, without limitation, defaults in respect of: non-payment, breach of covenants, financial or otherwise, cross-default to other financial indebtedness, insolvency, change of control and material adverse change in some cases subject to certain materiality thresholds and grace periods. The occurrence of an event of default may prevent us from raising further resources and result in higher borrowing costs. We are currently in compliance with all covenants under the credit agreement.

Any adverse change to our business plan or any event which would trigger a breach of the financial covenants governing the terms of these loans may adversely impact our ability to raise resources and may decrease our cash flow, creating the possibility of a liquidity shortage and the inability to comply with certain covenants under our borrowings. If we are not able to comply with such covenants, we may have to apply for amendments to the financial covenants or seek waivers for such breaches and/or related events of default, including cross defaults arising from the breach of the covenants. We cannot assure you that we will be able to obtain such amendments or waivers on satisfactory terms, or at all. If our debt obligations are accelerated as described above, we will face significant liquidity constraints, and may be unable to pay all of our repayment obligations. In addition our borrowings are secured by certain of our assets, and the acceleration of loan repayments could result in foreclosure on the mortgages or security interests held in favour of the lenders over such assets.

Our ability to incur additional debt in the future is subject to a variety of uncertainties including, among other things, the amount of capital that other Indian entities may seek to raise in the domestic and foreign capital markets; economic and other conditions in India that may affect investor demand for our securities and those of other Indian entities; the liquidity of Indian capital markets; and our financial condition and results of operations. We intend to continue to utilize long-term debt.

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The following table sets forth a summary of the maturity profile for our outstanding long-term debt obligations as of March 31, 2009:


(Rs. millions)

Payments Due by Period

Repayment within one year................................................................................... 6,478.7

Repayment after one and up to two years ............................................................. 15,345.8

Repayment after two and up to five years ............................................................. 27,574.5

Repayment after five years.................................................................................... 13,902.6

Total ..................................................................................................................... 63,301.6

Note:

(1) Since March 31, 2009, we have paid Rs.13,244.7 million to reduce our long-term debt, including prepayments under our U.S.$ Syndicated Facility of U.S.$186.0 million upon the sale of Equity Shares held by one of our subsidiaries and an additional prepayment of U.S.$ 30.0 million. Under the terms of the September Amendment, we have placed U.S.$28.9 million in escrow to be paid to the lenders under the U.S.$ Syndicated Facility in November 2009 as part of a scheduled repayment. The net Issue proceeds will be utilized to repay a minimum of U.S.$250.0 million of the U.S.$ Syndicated Facility. None of these payments are reflected in the table above.

The following table sets forth our consolidated short-term and long-term debt as of the periods indicated.

As of March 31,

2007 2008 20091

(Rs. millions)

Short-term debt(2) .................................................. 3,489.0 7,455.9 10,303.3

Current portion of long-term debt......................... 920.2 1,971.7 6,478.7

Long-term debt ..................................................... 10,392.4 58,261.4 56,822.9

Total Debt............................................................ 14,801.6 67,689.0 73,604.9

Note:


(2) Includes working capital loans and cash credit from banks and excludes current portion of long-term debt.

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Contractual Commitments and Capital Expenditures

In addition to the payment obligations under our borrowings set forth above, we also have continuing obligations to make payments on contractual obligations such as for capital expenditure and rental and license agreements. We have made, and expect to continue to make, substantial capital expenditures in connection with quality improvement, energy conservation, modernization and upgrading of facilities and equipment, increased capacity and other statutory and administrative purposes. These expenditures are generally funded through term loans. Barring unforeseen circumstances, we have sufficient resources to meet these commitments. Additions to fixed assets amounted to Rs.320.1 million, Rs.2,268.3 million and Rs.6,133.0 million in the years ended March 31, 2007, 2008 and 2009, respectively.

Contingent Liabilities

As of March 31, 2009, we had quantifiable contingent liabilities of Rs.2,756.4 million.

The following table sets forth our quantifiable contingent liabilities as of March 31, 2009:


(Rs. millions)

Guarantees

Guarantee given on behalf of other bodies corporate (including performance guarantees)....................................................................................................... –

Guarantees given by the Group’s bankers for which counter guarantees have been given by the Group .......................................................................................... 172.2

Disputed claims against the Company not acknowledged as debts and currently under appeal .................................................................................................................... –

Excise demands for excess wastages and distillation losses............................ 238.4

Other miscellaneous claims ............................................................................. 244.3

Income tax demand (including interest) under appeal..................................... 1,437.0

Sales tax demands under appeal in various States................................................. 604.0

Co-accepted bills of tie-up units – since fully settled 15.0

Claims from suppliers not acknowledged as debts................................................ 45.5

Total...................................................................................................................... 2,756.4

Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of loss related to adverse changes in market prices, including interest rates and foreign exchange rates, of financial instruments. We are exposed to various types of market risk, including changes in interest rates and foreign exchange rates, in the ordinary course of business. We enter into forward foreign exchange contracts and cross-currency swaps with banks to hedge against interest rate and foreign exchange rate risks, the application of which is primarily for hedging purposes and not for speculative purposes.

We maintain our accounting records and prepare our financial statements in Indian Rupees.

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A significant portion of our borrowings are also denominated in foreign currencies. The following table sets forth certain information regarding our foreign currency debt exposure for the periods indicated.

As of March 31,

2007 2008 2009(1)

(Rs. millions, except percentages)

Total foreign currency denominated debt.......................... 6,625.2 56,606.0 58,341.9

Total foreign currency debt as percentage of total outstanding debt ................................................................ 44.8% 82.7% 79.3%

Note:


Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our long-term floating rate debt obligations. A substantial amount of our borrowings have historically been and currently are at floating interest rates. As of March 31, 2009, all of our then-outstanding debt, in the amount of Rs.73,604.9 million, bore interest at floating rates. Our long-term debt (including current portion) as of March 31, 2009 was Rs.63,301.6 million, a substantial portion of which bore floating interest rates.

As at March 31, 2009, we had the following derivative instruments outstanding:

• Interest and currency swap arrangement (U.S.$ to Indian Rupee) in connection with borrowings amounting to U.S.$35 million; and

• Interest rate swap arrangements in connection with borrowings amounting to GBP171.3 million.

Exchange Rate Risk

The primary foreign currencies to which we are exposed are the U.S. Dollar, U.K. pound sterling, euro and Nepal Rupee. Our exposure in each of these currencies as of March 31, 2009 was U.S.$653.9 million, GBP339.8 million, euro 6.9 million and Nepal Rs.74.7 million.

In respect of foreign currency loans, we take only a partial hedge, by way of forward contracts. In respect of ECBs raised overseas, we have not taken any hedge in view of the fact that any further resources raised will be in foreign currency and will be utilized for repayment of these debts. We do not hedge against foreign currency risk in respect of our export sales, as those sales are denominated in U.S. Dollars, and U.S. Dollar/Indian Rupee parity has been predominantly to the benefit of the exporter. The purpose of entering into such hedges is to minimize the impact of foreign currency fluctuations on the results of operations. Gains and losses on foreign currency contracts and foreign currency denominated liabilities are recorded in the period when the exchange rate changes, while gain and loss on foreign currency contracts that hedge foreign

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currency commitments are deferred until the commitments are recognized as income or expenses over the life of the contract.

Off-Balance Sheet Arrangements

We have a factoring arrangement by way of discounting receivables with banking institutions in India in respect of sales made to Government agencies and Government corporations. In these factoring arrangements, we realize the proceeds of sales immediately from these institutions while they realize the payment from customers only after the credit period.

Taxation

Corporate tax in India is levied by the Central Government on income earned by corporations. The current general rate of corporate income tax applicable to Indian companies is 30% plus a 10% surcharge (payable if income of the company exceeds Rs.10 million) and education cess of 3% thereon. However, if the income tax payable on the total income as computed under the Indian Income Tax Act, 1961 (43 of 1961) (the “Indian Income Tax Act”) is less than 10% of the book profit, such book profit is deemed to be the total income of the company and tax liability is determined under the minimum alternative tax regime at 15% of book profit plus surcharge and education cess as above.

In addition to income tax, there will be an impact on financials in respect of tax on distributed profits (“Dividend Tax”).

In addition to income tax, chargeable in respect of total income, any amount declared, distributed or paid by a domestic company by way of dividends (whether interim or otherwise), whether out of current or accumulated profits, shall be charged to additional income tax at the rate of 15% plus a 10% surcharge and education cess of 3% thereon.

Companies are also liable to wealth tax at the rate of 2% of the value of certain specified assets held by the company on the 31st day of March of each year, exceeding Rs.1.5 million.

Related party transactions

In the normal course of business, we enter into transactions with our related parties, mainly with associate companies, for sale and purchase of finished goods. These associate companies are Utkal Distilleries Limited (through July 2008), UB Distilleries Limited and Wine Society of India Private Limited.

The total purchase of goods with these related parties amounted to Rs.nil and Rs.0.3 million for the years ended March 31, 2007 and 2008, respectively. All these purchases with the related parties are part of CBU arrangements with them. There were no purchases of finished goods with related parties for the year ended March 31, 2009.

The sale of goods to these related parties amounted to Rs.nil, Rs.6.3 million and Rs.1.0 million for the years ended March 31, 2007, 2008 and 2009, respectively. All these sales with the related parties are part of CBU arrangements with them.

We also provide or obtain financial assistance including loans and equity contributions in cash or in kind to related parties in the normal course of business. We obtained financial assistance amounting to Rs.24.4 million, Rs.133.8 million and Rs.77.2 million for the years ended March 31, 2007, 2008 and 2009, respectively.

The other related party transactions are in the nature of sale/purchase of fixed assets, rental deposits, managing directors’ remuneration, rent and contributions to gratuity funds.

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The amounts due from related parties amounted to Rs.344.4 million, Rs.489.8 million and Rs.49.3 million at March 31, 2007, 2008 and 2009, respectively.

Related party transactions have been disclosed in respect of all transactions in Note 12 of Schedule 19 of our audited consolidated financial statements as of and for the year ended March 31, 2009, appearing elsewhere in this Placement Document.

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THE LIQUOR INDUSTRY IN INDIA

The information in this section has been extracted from publicly available documents from various sources, and has not been prepared or independently verified by us or by the Joint Lead Managers.

Introduction The Indian liquor industry was established by expatriates in the early 19th century to distill and bottle

liquor products for the British armed forces. The first distillery in the country was set up at Janjmow (Kanpur, Uttar Pradesh) in 1805 by Carew & Co. Ltd., to manufacture rum for the army. Alcohol in India is largely produced from sugarcane molasses although in recent years, grain has also become a source for alcohol. Molasses is a thick viscous by-product of the sugar manufacturing products.

The Indian liquor industry is classified into the following categories:

• Beer

• Indian Made Foreign Liquor (IMFL) comprising

o Whisky

o Brandy

o Rum – Dark & White

o Gin

o Vodka

• Country liquor – a range of cheap distilled spirits products normally produced from rectified spirit and flavoring agents.

• Wine

In addition to the above, the Indian market also consumes a range of spirits, beer and wines bottled in origin (“BIO”). Such BIO brands cover aged whiskies, wines, Cognac and niche products like Tequila.

According to Euromonitor International 2008, in terms of production volume, the Indian IMFL industry for 2008 has been estimated at approximately 1.4 billion liters or 157 million cases of 9 liters each. Contrary to international trends, in India, brown spirits capture significant market share with whisky, brandy and dark rum accounting for over 96% of the market. Of these, Whisky accounted for approximately 62% of total sales followed by brandy at 18% and rum at 14%. White spirits, including gin, white rum and vodka accounted for the remaining 6% of sales.

In addition to the IMFL segment, the Indian liquor industry has a home-grown sector of “country liquor”, which is a colored and flavored rectified spirit sold in rural parts of the country. The country liquor segment of the liquor industry is not organized and, therefore, accurate size statistics are not available. According to industry estimates, the country liquor market is estimated to be between 175 million and 200 million cases of 9 BL each, which would make it approximately the size of the IMFL industry in terms of volume although average realizations are far lower.

Demand for liquor products is seasonal in nature. Liquor consumption increases during the winter season, which extends from November to January across the country. Availability of molasses is also seasonal in nature, as it depends on the operations of sugar mills. Sugar mills operate for only approximately seven to eight months a year, depending upon the availability of sugarcane.

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Market Size and Growth Euromonitor International 2008 estimates the total size of the IMFL industry at approximately

Rs.885.9 billion.

The following table sets out the total sales value by product category from 2003 to 2008 (by calendar year) illustrating the growth in the IMFL industry.

2003 2004 2005 2006 2007 2008

(Rs. millions)

Whisky.................................................. 364,016.5 403,973.3 450,753.7 510,139.1 582,891.5 665,989.3

Single-malt Scotch whisky ............... - 257.0 329.9 433.0 554.5 703.0

Blended Scotch whisky..................... 4,514.4 5,537.8 7,140.8 9,067.7 11,578.6 14,912.8

Other whisky..................................... 359,475.1 398,178.5 443,283.1 500,638.5 570,758.4 650,373.6

Brandy and Cognac ............................. 68,180.1 75,567.4 82,698.7 87,449.6 95,047.5 102,980.1

White spirits ......................................... 11,493.1 13,791.2 16,984.8 21,699.2 26,968.6 34,642.9

Gin .................................................... 5,755.4 6,465.7 7,327.2 8,362.5 9,611.8 11,127.0

Vodka ............................................... 5,737.7 7,325.5 9,657.6 13,336.7 17,356.8 23,515.9

Rum ...................................................... 50,703.1 57,383.1 63,816.3 69,217.5 75,200.1 81,597.8

White rum......................................... 1,661.5 1,855.2 2,042.1 2,264.2 2,621.6 2,999.8

Dark rum........................................... 49,041.7 55,527.8 61,774.2 66,953.4 72,578.5 78,598.1

Liqueurs ............................................... 4.5 4.7 5.0 5.3 5.7

Synthetic Wine ..................................... 641.2 664.4 683.0 667.8 658.4 641.8

Total Spirits.......................................... 495,034.1 551,383.9 614,941.2 689,178.3 780,767.3 885,857.5

Leading Players in the Industry The major players in the IMFL segment are USL, Pernod Ricard India Ltd., Radico Khaitan Ltd.,

Allied Blenders and Distillers Pvt. Ltd., Mohan Meakin, Bacardi India Ltd. and Jagatjit Industries Ltd. According to last available data with the Euromonitor International 2008, USL accounts for nearly 50% of IMFL sales across India.

The following table sets forth market share information for leading spirits manufacturers for the calendar years 2004 to 2007, indicated in terms of percentages of total volumes:

2004 2005 2006 2007

(%)

UB Group ........................................................... 33.8 50.2 50.6 48.7

Radico Khaitan ................................................... 6 6.7 6.1 5.2

Pernod Ricard Groupe ........................................ 5.1 5.5 6.2 6.4

Jagatjit Industries ................................................ 3.7 3.1 3.4 4.9

Mohan Meakin.................................................... 5.2 5.0 4.5 3.9

BDA Distilleries ................................................. 4 3.8 3.6 -

Shiva Distilleries................................................. 3 2.8 3.2 4.3

Empee Distilleries............................................... 0.6 0.7 0.7 0.8

Diageo Plc .......................................................... 0.3 0.3 0.3 0.4

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2004 2005 2006 2007

(%)

Brihan Maharashtra Sugar Syn ........................... 0.2 0.2 0.2 0.2

Bacardi & Co...................................................... 0.1 0.1 0.1 0.2

SWC(1) ................................................................ 13.8 — — —

Allied Domecq Plc.............................................. 0.1 — — —

Seagram Co ........................................................ — — — —

Others ................................................................. 20.4 17.2 16.1 14.3

Source: Euromonitor International 2008

Note:

(1) In 2005, we acquired 75% of the equity shares of SWC. and, pursuant to a composite scheme of arrangement, we merged with effect from April 1, 2007. See “Our Business — History”.

Recent Developments The following developments in the past few years have changed the shape of the Indian IMFL

industry:

• Players in the industry have grown bigger through acquisition and consolidation, thereby increasing their bargaining power with the trade.

• The marked movement away from private monopoly trade structures to free/Government controlled distribution structures has led to greater expression of consumer choice. This has also improved margins for the industry in most cases.

• Smaller pack sizes have been allowed, thus increasing the availability and market penetration of spirits.

• The movement towards an oligopolistic structure for key inputs like glass has led to less bargaining capability for the industry in relation to this key input.

• Reduction in the acreage dedicated to sugarcane production resulted in an unprecedented rise in the price of molasses in 2008 and 2009, with prices reaching their highest ever in October and November 2008.

• In October 2008, in response to the rising sugar stocks in the country, the government of India doubled the mandatory amount of ethanol blended into gasoline from 5% to 10%. Subsequently this requirement was reversed to earlier levels which should lead to a position of greater availability of alcohol for potable purposes.

In addition, higher alternative crop prices have been influencing traditional sugarcane growers in India, causing a recent decrease in India’s sugarcane area. In 2008, the drop in the sugarcane acreage coupled with prolonged disputes between sugarcane farmers and sugar mills over arrear payments owed to farmers delayed the start of crushing operations by a few months to November 2008. In addition, contrary to normal practice, crushing stopped at the end of February 2009, a month earlier than usual. As a consequence, the prices of molasses rose sharply at the end of 2008, materially adversely affecting our results of operations for the year

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ended March 31, 2009. The average purchase cost of molasses for the Company was approximately Rs.3,635, Rs.2,600 and Rs.5,884 per metric ton for the years ended March 31, 2007, 2008 and 2009, respectively, and Rs.6,845 for the three months ended June 30, 2009.

Changing Trends in Production and Consumption According to Euromonitor International 2008, sales of spirits have been steadily increasing at a

compound annual growth rate of 11.8% in terms of volume (and 13% in terms of value) over the period from 2003 to 2008. Whisky accounts for over 62% of the spirits sales in India by volume (and over 75% by value).

The following tables set out the total sales volume and value by product category from 2003 to 2008 (by calendar year) illustrating the growth in the IMFL industry.

2003 2004 2005 2006 2007 2008

(In ‘000 liters)

Whisky.................................................. 545,625.8 583,320.6 635,358.3 703,856.4 796,482.6 897,770.6

Single-malt Scotch whisky ............... — 18.0 23.1 30.2 38.3 48.9

Blended Scotch whisky..................... 1,683.9 2,044.6 2,554.7 3,197.9 4,030.7 5,121.2

Other whisky..................................... 543,941.9 581,258.0 632,780.5 700,628.3 792,413.6 892,600.4

Brandy .................................................. 174,692.2 186,934.6 201,264.4 216,000.0 232,848.0 249,746.7

White spirits ......................................... 24,173.3 28,504.9 34,527.7 43,500.2 53,214.8 67,339.5

Gin .................................................... 12,607.0 13,818.7 15,285.7 172,918.6 186,592.2 201,043.0

Vodka ............................................... 11,565.4 14,686.3 19,241.9 26,465.5 34,085.9 45,662.3

Rum ...................................................... 133,023.0 144,780.0 158,988.2 172,918.6 186,592.2 201,043.3

White rum......................................... 2,363.6 2,541.4 2,710.0 2,917.9 3,331.5 3,751.2

Dark rum........................................... 130,659.4 142,238.6 156,278.2 170,000.6 183,260.7 197,292.2

Liqueurs ............................................... — 2.0 2.1 2.2 2.3 2.5

Synthetic Wine ..................................... 1,296.9 1,328.6 1,355.6 1,378.2 1,397.9 1,414.0

Total Spirits.......................................... 878,811.2 944,870.7 1,031,496.3 1,137,655.6 1,270,537.8 1,417,316.6

Source: Euromonitor International 2008

Regional sales data suggests that liquor consumption is highest in southern India, which accounts for over 38% of India’s total sales volume.

Growth Drivers The market size for the sale of liquor products in India is expected to expand in the next few years due

to the large number of minors coming into the permissible drinking age band, changes in lifestyle, higher disposable incomes and a related shift in patters in consumer expenditures in favour of personal consumption items such as food, drinks and entertainment, and exposure to global trends. With a large proportion of India’s population not having yet achieved legal drinking age, we believe the industry presents a demographic window of opportunity with a large number of first-time consumers entering the markets. We believe that growth is also fuelled by changing perceptions of the social acceptability of liquor consumption and

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consumers upgrading their consumption of low-end products such as country liquor to higher quality, higher priced branded products, all aided by progressive regulatory changes.

Wines The Indian commercial wine industry dates back to the 1990s and the market for wine is very much in

its nascent stage. According to Euromonitor International 2008, wines saw the highest growth within alcoholic drinks albeit on a small base, boosted by growing popularity among urban Indians. Wine production dramatically increased between 2001 and 2008, largely due to assistance from the State government of Maharashtra, resulting in a large number of new vineyards. Domestic wine producers improved the quality and the range of their portfolios during the same period, launching lower priced wine to appeal to a wider range of income groups and also focusing on wine that is suitable for pairing with Indian food. Indian wine consumption has also benefited from increasing media coverage of the health benefits of wine.

According to Euromonitor International 2008 reports, sales value of wine almost quadrupled from Rs.2.5 billion in 2003 to Rs.10.5 billion in 2008 while sales volumes more than quadrupled to 11 million litres from 2.6 million litres in 2003. There are an increasing number of domestic producers of wine in India are on the increase with start-up companies operating in the Nashik wine-growing region in Maharashtra in West India referred to in India as the ‘Napa Valley of India’.

The development of India’s wine industry has been supported by certain State Government initiatives. For example, the Maharashtra government has waived the excise duty on all wines produced in the State beginning in September 2001 for a period of 10 years. In addition, in September 2001 the Government of Maharashtra reclassified wine as a food product for taxation purposes, and there is a proposal to reduce the sales tax on wine from 20% to 4%. These developments benefit domestic producers in a State that accounts for more than half of the total wine production in the country. Nevertheless, imported brands are expected to continue their flow into India as the number of wine drinkers in the country grows.

According to Euromonitor International 2008, southern India led the country in total liquor sales but accounts for a lower share of sales of wine. The region centered in Bombay and Pune in Maharashtra accounts for approximately 42% of the total sales volume of wine in India, compared with a 32% share in alcoholic drinks as a whole. Production and consumption of wine is concentrated in the State of Maharashtra, which has a favorable climate and benefits from favorable Government policies outlined above. Apart from Maharashtra, the States of Delhi, Karnataka and Goa also account for a significant portion of wine consumption in India.

During 2008, one of the major markets for wine, Karnataka, imposed a Rs.300 levy per bottle on the import of wine from outside the State. This significantly increased the price of all domestic wines produced outside Karnataka, leading to a decrease in wine sales overall in the State. The change in the duty structure on imported wines in Maharashtra has also increased consumer prices of imported wines leading to a decrease in sales. In addition, factors like the November 2008 terror attacks and the economic slowdown have further impacted growth projections for the Indian wine industry for the coming year.

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THE UB GROUP

Overview

The UB Group is the third largest distiller in the world by sales volumes, according to Impact Databank, and the largest in India. The UB Group has a presence in many countries, with diverse interests in brewing, distilling, real estate, engineering, fertilizers, biotechnology, information technology, sports and aviation. It is also the largest Indian manufacturer of liquor products (beer and spirits), and owns the largest airline in India by market share. Dr. Vijay Mallya is the chairman of the Group.

The UB Group was established in 1947 when the late Mr. Vittal Mallya (Dr. Vijay Mallya’s father) acquired United Breweries Limited.

In the period 1950 to 1960, United Breweries expanded rapidly and made numerous acquisitions. It entered the spirits business by acquiring McDowell in 1951, and launched its flagship brand, Kingfisher Lager Beer, in 1955. Mr. Vittal Mallya started creating a global conglomerate by moving into agriculturally-based products and medicines by acquiring Kissan Products and forming a long-term relationship with Hoechst AG of Germany to promote a company today known as Aventis Pharma.

In the mid-1970s, when liquor prohibition seemed a possibility in India, the late Mr. Vittal Mallya acquired breweries and distilleries across the country. The significant amount of financial risk taken by Mr. Vittal Mallya in acquiring these breweries and distilleries enabled United Breweries to attain a market leadership position at the end of the prohibition threat.

The UB Group has continued making acquisitions and has diversified into aviation, fertilizers, engineering, infrastructure, media (through the “NDTV Good Times” channel) and international trading.

The UB Group Today USL, the flagship company for the spirits business of the UB Group in India, is among the largest

spirits players in the world. As of September 30, 2009, USL had a market capitalization of Rs.98,718 million on the NSE.

UBL, the flagship brewing company of the UB Group, is among the largest brewing companies in India. Its brands are currently widely available both within and outside of India. As of September 30, 2009, UBL had a market capitalization of Rs.35,479 million on the BSE.

In May 2005, the UB Group launched Kingfisher Airlines in India. Kingfisher Airlines has grown into India’s largest domestic carrier with its fleet of aircraft comprising, inter alia, A-330, A-321, A-320 and ATR 72-500 aeroplanes. In May 2007, the UB Group purchased a 26% interest in Deccan Airlines Limited, which was increased to 46% in October 2007. Under a Scheme of Arrangement, Kingfisher Airlines Limited demerged its commercial airlines business into Deccan Airlines Limited, which was renamed as “Kingfisher Airlines Limited”.

The UB Group has pioneered the construction of UB City, one of the largest mixed-use developments of real estate in the heart of Bangalore, and currently houses the headquarters of most companies in the UB Group. The construction of UB City was completed in 2007.

The UB Group also owns interests in Mangalore Chemicals & Fertilizers Limited, makers of the “Mangala” brand of fertilizer that is popular among farmers in South India.

The UB Group owns interests in UB Engineering Limited, which specializes in the installation of industrial plants. Its turnkey division has worked on projects in India and overseas in the areas of power,

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fertilizers, oil and gas, fire fighting, effluent treatment plants, agrotech and other sectors, from concept to commissioning, on-site fabrication, installation, overhauling and maintenance.

The UB Group’s International Presence Mendocino Brewing Company Inc., a subsidiary of UBHL and located in California, is a pioneer in the

American Craft Brewing, or “micro-brewing”, trend. It has two breweries, one north of San Francisco, California and the other at Saratoga Springs, New York. Red Tail Ale and Blue Heron Pale Ale are two of Mendocino’s popular brands.

UBSN Limited, based in Faversham, Kent (United Kingdom), is a wholly-owned subsidiary of Mendocino Brewing Co. Inc. UBSN Limited has an exclusive licensing arrangement with UBL for brewing and distributing Kingfisher in Europe and Canada. UBSN Limited predominantly sells Kingfisher in the United Kingdom, where it has a large share of the market for ethnic Indian restaurants and food and beverage outlets.

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OUR BUSINESS

Overview

We are the flagship company for the spirits business of the UB Group in India. In terms of sale volume, we are the third largest distiller in the world and the largest in India according to Impact Databank. For the year ended March 31, 2009, we sold over 90 million cases of our liquor products worldwide, directly and through our CBUs, equivalent to a 20% volume growth over the 75 million cases sold the previous year. For the year ended March 31, 2009, we recorded total income of Rs.55,719.0 million and a loss after taxation and before share in profits of associates of Rs.4,084.6 million. For the three months ended June 30, 2009, our India and Nepal operations sold a total of 25.2 million cases, directly and through CBUs, equivalent to a volume growth of 17% over the corresponding period of the previous year. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.


Our portfolio of approximately 80 active brands includes recognized Indian names as Black Dog Scotch Whisky, Signature Rare Whisky, Royal Challenge Whisky, Antiquity Whisky, McDowell’s No. 1 Whisky, Bagpiper Whisky, Director’s Special Whisky, Haywards Fine Whisky, McDowell’s Green Label Whisky, McDowell’s No. 1 Brandy, Celebration XXX Rum, Blue Riband Gin, Romanov Vodka and White Mischief Vodka. Our McDowell’s No. 1 family of brands, comprising whisky, brandy and dark and white rum, sold over 31.5 million cases in the year ended March 31, 2009 registering a growth of 15% over the previous year. For the three months ended June 30, 2009, the McDowell’s No. 1 brands sold over 7.8 million cases, registering a growth of 7% over the corresponding period of the previous year. According to Impact Databank, McDowell’s No.1 Celebration Rum was the third largest selling rum in the world with sales in excess of 10 million cases for the financial year ended March 31, 2009, registering a growth of over 24% over the previous year. McDowell’s No.1 Brandy is currently the world’s largest selling brandy with sales in excess of 7.8 million cases and sales in excess of 2.2 million cases for the three months ended June 30, 2009. Our premium whisky brand, Signature Rare Whisky, and our Blue Riband Gin brand each sold over a million cases in the financial year ended March 31, 2009, giving us a total of 19 “millionaire” brands.

Pursuant to our acquisitions of Whyte and Mackay we have gained access to a stock of Scotch whisky which is a critical raw material for our production of spirits, as well as access to the established brands of Dalmore Single Highland Malt, Fettercairn, Glayva, Jura single-malt Scotch and Vladivar. Our acquisition of Bouvet Ladubay has also allowed us to expand into the wine market with such brands as Bouvet Tresor Blanc, Bouvet Brut, Bouvet Rubis Demi-Sec, Bouvet Brut Rosé and Anjou Rouge Nonpariels. Whyte and Mackay’s turnover, in accordance with U.K. GAAP, was GBP216.0 million, and its profit after taxation was GBP22.5 million for the year ended March 31, 2009, respectively. Our total income from operations for the financial year ended March 31, 2009 and in accordance with Indian GAAP includes Rs. 11,751.4 million of United Spirits (Great Britain) Limited and its subsidiaries on a consolidated basis, net of intra-group eliminations. United Spirits (Great Britain) Limited is the parent holding company of Whyte and Mackay and is an indirect wholly owned subsidiary of the Company. See “Business Description of Whyte and Mackay”.

We operate production facilities in almost every State in India where it is legal to produce and sell liquor products. We also contract with CBUs pursuant to tie-up agreements under which they bottle and distribute our liquor products for sale to wholesale and retail customers. We believe that our diversified

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manufacturing base spread across different States in India allows us access to various local markets in an efficient manner providing a significant operational competitive advantage. As of June 30, 2009, we owned 26 production facilities in India and 1 in Nepal and contracted with another 46 facilities in India. As of June 30, 2009, Whyte and Mackay owned five production facilities and Bouvet Ladubay owned three production facilities. Our India and Nepal operations had an annual bottling capacity of 107.2 million cases per year as of March 31, 2009 and 108.2 million cases per year as of June 30, 2009. In November 2008, our board approved the merger of Balaji with our Company under which, upon approval from the relevant authorities, Balaji, with its distillery division only, will be merged into our Company pursuant to a scheme of amalgamation. Balaji has a distillery facility and a brewing facility in Tamil Nadu. This merger, when effective, will allow us to consolidate our position in Tamil Nadu, the only major State in terms of sales volumes where we do not own a production facility.

We maintain high quality standards across all manufacturing units and we have a robust system of internal controls which have been incorporated into the enterprise-wide SAP system. As of September 30, 2009, we had 9,499 employees.

Our Shares are listed in India on the BSE, the BgSE and the NSE. The BSE and NSE account for almost our entire trading volume. As of September 30, 2009, our market capitalization on the NSE was Rs.98,718 million.

Our registered and corporate office is located at UB Tower, #24 Vittal Mallya Road, Bangalore - 560 001, India.

History

The current form of our Company was incorporated as McDowell Spirits Limited on March 31, 1999 in Bangalore, Karnataka. McDowell & Co. Limited, a company incorporated in 1898 in Chennai, was amalgamated with McDowell Spirits Limited in April 2001, and renamed as McDowell & Company Limited and, thus, we inherited the 100-year old “McDowell” legacy.

Consequently, we can trace our origins to 1826, when a proprietary firm was established to carry out the business of general merchants in wine, spirits and tobacco. In 1898, McDowell & Co. Limited was incorporated as a public limited company, at which point it became involved in the import and distribution of liquor. In 1951, it became a subsidiary of United Breweries Limited (presently known as United Breweries (Holdings) Limited) and began the manufacture and marketing of IMFL in 1957.

In 1994, we established India’s first local Scotch bottling facility with United Distillers at Nashik. That year, Carew Phipson Limited & Consolidated Distilleries Limited (among others) merged with our Company in order to consolidate similar businesses.

With effect from April 2001, we adopted the name McDowell & Company Limited.

In 2002, we acquired an 85% shareholding in Triumph, which bought over the IMFL portion of Diageo PLC’s IMFL business.

We grew significantly in 2005 through several acquisitions. We acquired the remaining 15% shareholding in Triumph, making it a wholly-owned subsidiary; we acquired 75% of the equity shares of SWC, India’s second-largest producer of IMFL; and we acquired an additional 49.07% of the outstanding equity shares of Herbertsons, increasing our holdings, directly and through our subsidiary, Phipson Distillery Limited, to 61.01% and causing Herbertsons to become a consolidated subsidiary of the Company. Under the terms of a Composite Scheme of Arrangement in 2006, among other, Triumph, Herbertsons and Philson Distillery Limited merged with our Company with effect from April 1, 2005.

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In early 2006, we acquired 100% of Bouvet Ladubay, the largest producer of sparkling wine in the Saumur region of France, for €14.8 million. The acquisition of Bouvet Ladubay has allowed us to sell Bouvet Tresor Blanc, Bouvet Brut, Bouvet Rubis Demi-Sec, Bouvet Brut Rose, and Anjou Rouge Nonpareils, among others, which are the products of Bouvet Ladubay.

In 2006, we filed a composite scheme of arrangement in the High Courts of Judicature at Bombay and Karnataka (the “2006 Scheme”) to effect (a) the spin-off of all of our non-liquor related investments into McDowell India Spirits Limited, then a wholly-owned subsidiary of the company and (b) the consolidation and merger of Phipson Distillery Limited United Spirits Limited, Herbertsons Limited, Triumph, Baramati Grape Industries Limited, United Distillers India Limited, McDowell International Brands Limited and SWDL, which comprise UB Group’s liquor business (excluding the beer business), into our Company. Upon effectiveness of the 2006 Scheme on October 5, 2006, the merger was given effect as of April 1, 2005. The restructuring has resulted in operational cost savings, more centralized management of our spirits business and increased bargaining power in respect of procurement, marketing and overhead expenses.

Upon effectiveness of the 2006 Scheme, we changed our name to “United Spirits Limited”.

In May 2007, we acquired, through our subsidiary United Spirits (Great Britain) Limited, 100% of Whyte and Mackay for U.S.$1.18 billion. The acquisition of Whyte and Mackay has allowed us to sell Whyte and Mackay’s products, which include Dalmore Single Highland Malt, Vladivar vodka, Fettercairn, Glayva Liqueur and Isle of Jura Single-Malt Whisky.

Pursuant to a scheme of amalgamation filed with the High Courts of Judicature at Bangalore, Bombay and Calcutta, SWC, together with Primo, merged with our Company. Upon effectiveness of the 2007 Scheme on July 6, 2009, the merger was given effect as of April 1, 2007. In 2007, we acquired a majority stake in Liquidity Inc., a U.S.-based alcoholic beverage firm, through our 100% Cyprus subsidiary Zelinka.

Pursuant to a separate scheme of amalgamation (the “Zelinka Scheme”) approved by the Indian Court of Judicature at Bangalore, and following compliance with the procedure required to be followed under the local corporate laws of Cyprus, in March 2009, Zelinka merged with our Company. Upon effectiveness of the Zelinka Scheme on March 26, 2009, the merger was given effect as of April 1, 2007.

United Spirits (Shanghai) Trading Company Limited, a wholly owned subsidiary of the Company, was incorporated in Shanghai, China in early 2008 which has allowed us to distribute our products locally in China.

In November 2008, our board approved the merger of Balaji with our Company. Balaji has a distillery and brewery facility in Tamil Nadu and has been functioning as a contract manufacturing unit for our Company for the past 25 years. Balaji currently has a capacity to produce 10 million cases per year. Balaji has incurred significant losses resulting in the erosion of its net worth and has, in consequence, been declared as a sick industrial undertaking under the Sick Industrial Companies (Special Provisions) Act, 1985. The draft rehabilitation scheme along with the scheme of arrangement between Balaji, Chennai Breweries Private Limited and our Company has been submitted to the Board for Industrial and Financial Reconstruction. The scheme of arrangement will become effective on receipt of necessary approval from the BIFR.

Our Strengths and Competitive Advantages

In terms of sales volume, we are the third largest distiller in the world and the largest in India, according to Impact Databank, and we enjoy a leadership position in the Indian liquor industry. The liquor industry in India is subject to complex regulations and contains significant barriers to entry offering a competitive advantage to established players like us.

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The Indian Constitution places the alcoholic beverages business within the regulatory and tax regime of individual States as opposed to being centrally regulated within the federal structure. As the liquor industry operates across multiple States, each with its own set of local regulations (both tariff and non-tariff), compliance with all applicable regulations poses its own challenges. In addition, as a consequence of the advertising ban on alcoholic spirits, long established brands, like ours, tend to dominate the market and we benefit from our understanding of consumer preferences. Raw materials, notably molasses and spirit, can be difficult to source given the extent of State Governmental control of both production and movement. As an agro-based product, prices can fluctuate cyclically as well as seasonally and in recent times, raw material costs have in fact increased. As a result of these and other factors, the markets in which we compete have significant barriers to entry, requiring new competitors seeking to establish themselves, and current competitors intending to expand, to draw on substantial resources to enter the market or solidify their market position. We believe that our strengths, such as our strong brand portfolio, efficiency in production and distribution, as well as significant experience in understanding the regulatory aspects and customer preferences in this industry, amongst others, provide us with a strong competitive position and contribute to our position as a leader in the Indian liquor industry.

Leading brands with strong consumer recognition

We believe we have one of the best brand portfolios in the Indian liquor industry, with 19 of our brands classified as “millionaire” brands (those that sell more than a million cases per year), reflecting a deep market penetration and consumer popularity. No other Indian IMFL producer has as many millionaire brands. We believe our strong and long-standing brands ensure we are at the forefront of consumers’ minds when they make purchasing decisions. We further believe our strong brand recognition leads to customer loyalty which translates into repeat purchases from existing customers while simultaneously attracting new customers to our products.

Product offerings across multiple flavors, segments and price points

Our extensive brand portfolio of more than 80 active brands across different products such as Scotch, whisky, rum, brandy, gin, vodka and wine is, we believe, the widest in the Indian liquor industry. Over the past few decades, we have built this extensive portfolio of brands across varied flavors and price points targeted at multiple customer segments and made them available across all geographical markets for Indian liquor in India. We believe that our brand recognition, extensive product range, consistent product quality, varied pricing policies and responsiveness to changing consumer preferences allows us to offer a comprehensive solution to Indian alcoholic beverage trade as well as consumers. We further believe that by targeting multiple product segments we have been able to develop strong customer loyalty whereby consumers are able to remain within our brand offerings as their aspirations, tastes and spending habits evolve, enabling us to constantly extract higher value from those same customers.

Strong distribution network and point of sale presence

We believe that the Indian alcoholic beverage trade is small for the size of the Indian market. Nevertheless, because of our preeminent position in the IMFL market, we have achieved a strong presence across the distribution network in India. This market penetration, combined with the broad and diverse offering of our products, helps to ensure that our products are well represented amongst the retailer trade. We believe our products are sold in nearly all points of sale for liquor in India, including off-trade in retail stores and on-trade in restaurants and bars. Strong consumer demand for our brands ensures that retailers of IMFL carry our products, and this gives us a strong point-of-sales presence. Our vast distribution network and point-of-sales presence also allows us to introduce new brands and extensions of existing brands to the market quickly and efficiently, and to establish new product offerings on a cost-effective basis. Given our size and

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geographic presence across India, we are also able to achieve economies of scale in our negotiations with bottlers, suppliers, producers and the distribution trade.

Widespread Manufacturing Operations

We believe that our leading position in the Indian market coupled with the geographical spread of our manufacturing locations across India provides us significant operational competitive advantages. Substantially all of our products sold in India are sourced from production facilities located within the respective State of sale. As of June 30, 2009, we had production facilities in 26 States of India. This helps us to reduce the otherwise high costs associated with inter-state commerce by minimizing inter-state taxes and transportation costs applicable to the potable liquor industry in India. The geographic diversity of our production and distribution facilities across India reinforces our understanding of State regulations. Regulations can vary significantly from State to State and non-compliance with these regulations could adversely affect business. Having production and distribution facilities in most of the States in which we operate also allows us to better understand consumer preferences in that State and ensures that our time-to-markets new product offerings or extensions is very efficient. Additionally, local supply facilities are able to react quicker to sales orders, thereby offering our retail consumers greater flexibility in addition to reducing their overall spend on duties and taxes. The geographic diversity of our facilities helps us to source products and materials locally which enables us to keep costs down in local markets and offer an attractive proposition to suppliers and contract manufacturers of our liquor who are more likely to supply and work with large-scale buyers like us rather than smaller brand owners whose smaller volumes are less likely to allow suppliers and producers to scale up their operations.

Innovative product development and packaging

We take an innovative approach to our product development and packaging, which enables us to meet consumer expectations and preferences, and differentiate ourselves from our competitors while in certain cases it helps us to reduce packaging costs. For instance, we were the first in India to package our products in food-grade PET bottles, which eliminated the risk of breakages and made transportation easier. We were also the first to introduce smaller and easy-to-carry miniature bottles for the individual consumer, large-sized bottles of 1.5 to 2.5 liters for institutions and on-trade customers and paper-based tetra packs to replace glass “nip packs”. We also continue to introduce innovative product offerings as part of our endeavour to adapt to changing consumer preferences. For instance, we developed a “diet” whisky and a “diet” vodka to appeal to the younger, image and health-conscious consumers constantly seeking diet forms of food and drink. We did so by blending our whisky and vodka with an organic extract called Garcinia cambogia.

Our Strategy

Our philosophy is to be the leader in each product category that we offer in the Indian alcoholic beverage trade through well-designed strategies and their effective implementation in the market place. We aim to do this by offering the consumer a choice of quality products across flavors, segments and price categories. We have a leading position in the Indian liquor industry and we plan to maintain this leadership position by implementing the following strategies.

Move existing consumers up the value chain from our less expensive brands to our premium offerings

Our extensive brand portfolio of approximately 80 active brands consists of numerous brands with strong customer recognition and brand loyalty. These are positioned at various points on the flavor and price spectrum. Consequently, as the aspirations and needs of our consumers change and they move across flavors and up the price ladder, we are able to ensure that they still substantially remain within the extensive USL brand portfolio. Similarly, by positioning brand variants at different price points, we are able to offer

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consumers a value-added experience with brands that they are familiar with. For example, an aspirational Romanov Vodka consumer who, on occasion, wishes to try a higher priced product is able to graduate to a Red Romanov Vodka, a superior offering in the prestige vodka segment.

Capturing maximum new entrants into the IMFL market

The Indian growth story is a very favorable one with a significant portion of its large population in the sub-25 years age bracket. Such a ‘young’ economy with growing disposable incomes and greater exposure to western lifestyles is favourable for an aspirational product such as alcoholic spirits. According to the 2006 Census Report, there may be 100 million potential new customers of liquor between 2009 and 2014, as potential consumers of our products become of drinking age in India. This should create a considerable demand for alcoholic spirits and, as a company with the widest liquor brand portfolio in India across all flavors and price points, we believe that we are well placed to capture such demand and substantially gain from this opportunity. Additionally, our deep and saturated market presence across the trade should ensure that a new entrant might choose a product from our portfolio. Additionally, we also seek to provide innovative product offerings to encourage new consumers into the market. For example, for the female consumers, we have offered a pink-colored vodka called Pinky. Similarly, to encourage consumers to try our products, we have introduced miniature packs of 90ml and 60ml. Also, to counter the ever prevalent fear of counterfeit products, we have introduced tamper-proof tetra packs in 180ml (in lieu of glass packs) and fitted our key brands with tamper-evident non-refillable caps. The tetra packs are also seen as a premium offering compared to the glass bottle. In a restrictive advertising environment, our whole brand-building activity is through high-end promotional platforms like horse racing, premium music events, golf contests, fashion shows and the Indian Premier League (Cricket).

Continue to focus on manufacturing efficiency and flexibility

We have constantly sought out the most efficient and flexible ways to produce our products and will endeavour to continue to do so. We use CBUs to achieve a more widespread manufacturing footprint as opposed to direct investments (other than in critical States) We have a real focus on quality and on reducing costs through innovative manufacturing and packaging technology. During 2008, the prices of our key raw material, molasses, rose sharply, materially adversely affecting our operational results for the year ended March 31, 2009. This continued into the current fiscal year adversely affecting our results for the quarter ended June 30, 2009 too. As most of production facilities use the molasses substrate to produce ENA, with only one facility capable of using grain as a substrate, our cost of production is vulnerable to increases in the price of molasses. In order to reduce this vulnerability in the future, we are looking to increase our in-house capacity for primary distillation using grain substrate. With improved business economics in Tamil Nadu, where we currently have no owned facilities, relying solely on CBUs, we have sought to acquire and merge with our current CBU, Balaji Distilleries, which should help to reduce some costs and de-risk our business in that state.

Continue to evaluate strategic acquisitions

In the past, we have shown our willingness to make strategic acquisitions in ventures that complement our growth and business strategies. An example is the acquisition of Bouvet Ladubay to make a foray into the wine sector where we had only a marginal domestic presence. At the same time, this marked our debut in the international alcoholic beverages space, while getting us in-house expertise in wine-making technology including that of sparkling wine. Similarly, the acquisition of Whyte and Mackay has allowed us access to bulk supplies of Scotch for blending with our IMFL products as also to expand our range of Scotch whiskies, both blended and single malts, for sale in the Indian market and internationally. The acquisition of a controlling stake in Liquidity Inc has helped to introduce an established premium and international vodka into

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the Indian market. Earlier, our acquisition of Shaw Wallace consolidated our position as the domestic market leader, expand our product range and gain substantial influence in the trade.

We will continue to evaluate acquisitions in furtherance of this strategy.

Our Products and Brands Overview Our product portfolio principally comprises spirits, which include whisky, rum, brandy, gin and vodka,

under a total portfolio of over 140 brands, of which approximately 80 are active. We also produce table and fortified wines at our winery located in Hospet, Karnataka and sparkling wine at our winery in Saumur in the Loire Valley, France. We offer products across multiple flavors, price points and segments to our customers.

We have not entered the market for country liquor, which is an unbranded colored and flavored-rectified spirit that is generally produced by relatively unregulated local producers in rural parts of the country. In a few States, however, where the production and sale of country liquor is banned, we do produce and market a product called “cheap liquor” to meet demand in that segment of the market. In doing so, we are able to offer to consumers, who may otherwise purchase country liquor, a low-end product under a USL brand name in an effort to establish brand recognition and loyalty among that consumer group. Income generated from “cheap liquor” is relatively minimal.

We have local facilities for the production of most of our products in all major States of India where the production and sale of liquor products is permitted. We contract with CBUs pursuant to tie-up agreements to blend, bottle and distribute our products primarily in States where we do not own our own facilities. Our premium products are normally produced only in our own facilities.

The following chart sets forth our most significant brands in terms of revenue in each of our product categories and is organized by ownership of brands:

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The following table shows the total sales volume of each of our product categories, including sales through CBUs, for the years ended March 31, 2007, 2008 and 2009 and the three months ended June 30, 2009:

Year ended March 31, Three months ended

2007 2008 2009 June 30, 20091

(In cases) % (In cases) % (In cases) % (In cases) %

Premium Scotch............. 31,420 0.05 42,530 0.06 58,910 0.07 13,683 0.06

Regular Scotch............... 12,514 0.02 28,688 0.04 40,994 0.05 10,199 0.05

Super Premium Scotch .. 183,826 0.28 247,946 0.3 326,297 0.4 72,403 0.3

Premium Whisky ........... 1,798,016 2.7 2,071,402 2.8 2,470,400 2.8 588,165 2.7

Prestige Plus Whisky ..... 44,420 0.07 43,803 0.06 5,271 0.01 2,093 0.01

Prestige Whisky............. 10,825,809 16.3 13,978,558 18.9 16,035,721 18.2 4,078,799 19.0

Regular Plus Whisky ..... 2,181,641 3.3 2,102,437 2.9 2,199,866 2.5 617,462 2.9

Regular Whisky ............. 22,383,945 33.7 23,097,331 31.3 28,790,426 32.6 7,076,010 32.9

Medium/Cheap Whisky . 3,040,976 4.6 3,237,691 4.4 3,698,249 4.2 1,085,883 5.1

Total Whisky ................ 40,502,568 61.0 44,850,387 60.7 53,626,131 60.7 13,544,696 63.0

Rum ............................... 10,067,340 15.2 11,747,680 15.9 14,880,317 16.8 2,928,636 13.6

Brandy ........................... 12,107,668 18.2 13,214,573 17.9 14,999,501 17.0 3,511,708 16.3

Gin................................. 1,381,046 2.1 1,470,819 2.0 1,627,234 1.8 626,783 2.9

Vodka ............................ 2,172,052 3.3 2,442,350 3.3 2,983,468 3.4 857,459 4.0

RUM

Blue Riband Gin Blue Riband Tango Blue Riband Duet White Mischief

Paradise Gin

Dalmore Single Highland Malt Isle of Jura Single Malt Scotch

Whyte and Mackay Blended Scotch Whisky Glayva Liquer

Black Dog 12 year-old Scotch Whisky Whyte and Mackay Special Whisky

Antiquity Blue Whisky McDowell’s Single Malt Whisky

Signature Whisky Royal Challenge Bagpiper Whisky

Moghal Monarch Whisky No. 1 McDowell’s Whisky

DSP Black Whisky McDowell’s Green Label Whisky

Director’s Special Black Stallion

Old Tavern Whisky McDowell’s Diplomat Whisky

Gold Riband Whisky Haywards Fine Whisky

Celebration XXX Rum Old Cask Rum

Olde Adventurer Rum

Pinky Vladivar

Red Romanov Romanov Alcazar

White Mischief

Caesar No.1 McDowell’s

Honey Bee John Ex-Shaw

Golconda

Golconda Ruby Wine Bouvet Tresor Blanc

Bouvet Brut Bouvet Rubis Demi-Sec

Bouvet Brut Rosé Anjou Rouge Nonpariels

WHISKY GIN WINE

VODKA BRANDY

Our Products and Brands

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Year ended March 31, Three months ended

2007 2008 2009 June 30, 20091

(In cases) % (In cases) % (In cases) % (In cases) %

Wine/Ready-to-Drinks... 165,236 0.3 160,169 0.2 168,701 0.2 159,765 0.7

Total.............................. 66,395,910 100.0 73,885,977 100.0 88,318,155 100.0 21,514,031 100.0

Note:

(1) Above table of total sales volumes reflect sales in India and Nepal only and do not include sales of products from Whyte and Mackay and products from Bouvet Ladubay .

Our product portfolio encompasses all flavours and substantially all price points. Additionally, our brands have significant shares of each segment in which we operate. In most cases, at least two of the top three brands in each such segment, are USL brands.

The following list sets forth our main brands sold under particular product segments for each flavor:

Whisky • Premium Scotch

• Single Malt – Dalmore, Isle of Jura.

• Blended Scotch –

• Premium Scotch - Black Dog 12-year old, Whyte and Mackay 13 year old

• Value Scotch – Black Dog Centenary, Whyte and Mackay Special

• Super-premium – McDowell’s Single Malt, Antiquity Blue

• Premium – Signature; Royal Challenge, McDowell’s Vintage

• Prestige – No. 1 McDowell’s, DSP Black, Derby Special

• Regular – Bagpiper, Director’s Special, McDowell’s Green Label, Gold Riband, Old Tavern

• Medium – Hayward’s, Kerala Malt

• Cheap – Carew’s Imperial, various other state-specific brands

Brandy • Premium – Caesar’s, VSOP, Joie de Franc

• Regular – No.1 McDowell’s, Honey Bee

• Medium & Cheap – Numerous brands – mostly state-specific

Rum • Premium – No presence

• Regular – McDowell’s Celebration Rum, Old Cask Rum, Olde Adventurer Rum

• Medium & Cheap – Numerous brands – mostly state-specific

Vodka • Premium – Pinky

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• Prestige – Romanov Red

• Regular – White Mischief, Romanov, Alcazar, Red Czar

• Medium & Cheap – No presence

Gin • Premium – No presence

• Regular – Blue Riband, White Mischief Paradise

• Medium & Cheap – No presence

Wine • Bottled in Origin – Bouvet and a range of wines from New Zealand, Portugal, France, South Africa,

Australia

• Premium – Four Seasons

• Regular - Zinzi

Products

Whisky Sales of our whisky products accounted for 60.7% of our total sales volumes for the year ended March

31, 2009 and 62.4% of our total sales volumes in India and Nepal for the three months ended June 30, 2009.

Whiskies can be broadly classified as either pure malt whisky or blended whisky. Pure malt whisky is 100% malt whisky and does not contain any added flavors. Single malt whisky is a pure malt whisky that comes from a single distillery. Blended whisky contains added flavors and comes from different distilleries. Scotch whisky requires the use of Scottish water in the distilling process and a minimum of three years casking on the ground in Scotland.

ENA, an odorless and flavorless alcohol that is produced through the fermentation and distillation of molasses or grain, is generally the base of Indian-blended whiskies. In some Indian whiskies, flavorings are incorporated in order to enhance the aroma of the products to suit the preferences of local consumers.

We produce Scotch whisky and Indian whisky. Our Scotch whisky is categorized as premium/deluxe and our Indian whisky is categorized as super premium, premium, prestige, regular, medium and cheap.

Brands Our key whisky brands are McDowell’s No. 1 Whisky, Bagpiper Whisky and Royal Challenge Whisky.

McDowell’s No. 1 Whisky, Bagpiper Whisky, and Royal Challenge Whisky represented approximately 26%, 30% and 2% of our total sales volume from whiskies, respectively, for the year ended March 31, 2009, and 23%, 30% and 2% of our total sales volumes from whiskies, respectively, for the three months ended June 30, 2009.

Our top whiskies by brand sales are as follows:

McDowell’s No. 1 Whisky. One of the leaders in the prestige or semi-premium segment and among the fastest growing whiskies in the world, McDowell’s No. 1 is also exported to the Middle East, Africa and South East Asia. For the year ended March 31, 2009, and for the three months ended June 30, 2009 McDowell’s No. 1 sold over 13.7 million cases and over 3.6 million cases, respectively. According to Impact Databank the standard reference for market information in the liquor industry worldwide, in the calendar year 2008,

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McDowell’s No. 1 Whisky was the second largest selling non-Scotch whisky in the world and the third largest selling whisky in the world.

Bagpiper Whisky. We believe that Bagpiper Whisky is India’s largest selling IMFL brand. We had sales of 16.2 million cases for the year ended March 31, 2009 as compared to 13.8 million cases for the year ended March 31, 2008. For the three months ended June 30, 2009, we had sales of 4.7 million cases of Bagpiper Whisky. In 2004, we were able to identify a void in the whisky market at a particular price point whereby low priced products were priced out of the market due to the cost of raw material and we modified the marketing and reduced the pricing of Bagpiper Whisky to fill that void. Although our profit margins on this product decreased slightly, the volume of sales substantially increased. We expect that this growth will become more steady in the future. We have been able to maintain this momentum, albeit at a more steady pace.

Royal Challenge Whisky. For the year ended March 31, 2009 and for the three months ended June 30, 2009, we sold 1.3 million and 0.3 million cases of Royal Challenge Whisky, respectively.

Director’s Special Whisky. Director’s Special Whisky is produced and sold in the regular segment of the market. For the year ended March 31, 2009 and for the three months ended June 30, 2009, we had sales of 4.1 million and 1.2 million cases, respectively. A superior variant of this product is branded as DSP Black Whisky in the prestige segment, and sold 1.8 million cases in the year ended March 31, 2009, representing a 24% increase over the previous year. For the three months ended June 30, 2009, we had sold 0.5 million cases of DSP Black Whisky. We believe Director’s Special Whisky complements our other major brands in the regular whisky segment of the market, Bagpiper Whisky, Gold Riband Whisky, Old Tavern Whisky and McDowell’s Green Label Whisky.

Signature Rare Whisky. We believe that Signature Rare Whisky is one of the finest blended whiskies produced in the Asian sub-continent. A premium whisky, Signature Rare Whisky is one of the fastest growing brands in our portfolio. In the year ended March 31, 2009, we recorded a 27% growth in sales of Signature Rare Whisky with sales of over 1.04 million cases. For the three months ended June 30, 2009, we had sales of 0.3 million cases of Signature Rare Whisky.

Production Process

• Malting

Barley is first sifted to remove any foreign matter and then soaked for two to three days in water tanks. The barley is then spread out on a concrete floor known as the malting floor and allowed to germinate. Germination may take from 8 to 12 days depending on the season of the year, the quality of the barley used

Fermentation Blending

Dilution Water Rectified

Spirit

Heads Draw

Fuel Oil Draw Demineralised Water

Yeast Nutrients & Chemicals

Steam Food Flavor & Caramel

Bottle Caps, Labels and Cartons

Filtered Water

IMFL Molasses

Special Spirits

(Malt, Grape & Cane)

Bottling Distillation

Cooling Water

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and other variants. During germination the barley secretes the enzyme diastase, which makes the starch in the barley soluble, thus preparing it for conversion into sugar. Throughout this period, the barley must be turned at regular intervals to control the temperature and rate of germination.

At an appropriate time, the effect of drying the malted barley, or green malt, in the malt kiln stops it from germinating. Temperature is controlled by blowing air at regulated temperatures upwards through the germinating grain, which is turned mechanically.

• Mashing

Dried malt is ground in a mill and mixed with hot water in a large circular vessel called a mash tun. The soluble starch is thus converted into a sugary liquid known as wort.

• Fermentation

After cooling, the wort is passed into large vessels where it is fermented by the addition of yeast. The living yeast attacks the sugar in the wort and converts it into crude alcohol. Fermentation takes about 48 hours and produces a liquid known as wash which contains alcohol of low strength, unfermentable matter and by-products of fermentation.

• Distillation

Malt whisky is distilled twice in large copper pot stills. The liquid wash is heated to a point at which the alcohol becomes vapor. This rises up the still and is passed into the cooling plant where it is condensed into a liquid state. The cooling plant frequently takes the form of a coiled copper tube that is kept in continuously running cold water. Pot still distillation is a batch process.

• Maturation

As the fresh malt whisky is too harsh (with an original strength of about 60%), it is matured in wooden casks/vats. During maturation, the spirit is mellowed down and complex reactions take place, which impart the typical whisky flavor.

• Blending

Blended whisky: ENA, produced by fermentation followed by distillation of molasses, is generally the base for Indian blended whiskies. A certain percentage of Indian malt whisky and Scotch malt whisky is blended with ENA. Using a neutral alcohol base offers the unique advantage of retaining the characteristic aroma and taste of malt whisky. Some Indian whiskies have added flavors to enhance the characteristic aroma of the products.

Single malt whisky: To create single malt whisky, the matured malt whisky is diluted to bottling strength with demineralized water. Our Single Malt Whisky is the only single malt whisky available in India. It is 100% malt whisky and does not contain any flavorings.

• Packaging

The final stage in the production of whisky is packaging and dispatch.

Brandy Our brandy products accounted for 17.0% of our total sales volume for the year ended March 31, 2009

and 17.4% of out total sales volumes for India and Nepal for the three months ended June 30, 2009.

Brandy is a spirit resulting from distillation of a fermented, fruit-based liquid, typically grape wine. Brandy sales generally are particularly strong in the southern region of India, where it is a preferred spirit.

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Brands Our top brandies by brand sales are McDowell’s No. 1 Brandy, Honey Bee Brandy, John Ex-Shaw

Brandy and Golconda Brandy.

McDowell’s No. 1 Brandy. Our main brand in volume of sales is McDowell’s No. 1 Brandy, which was the largest selling brandy in the world in the calendar year 2008, according to Impact Databank. We sold in excess of 7.7 million cases in the year ended March 31, 2009, representing a growth of 3% over the previous fiscal year, despite lack of production capacity in our key market of Tamil Nadu in South India. For the three months ended June 30, 2009, we had sales of 2.2 million cases of McDowell’s No. 1 Brandy.

Honey Bee Brandy. In the year ended March 31, 2009 and in the three months ended June 30, 2009, we had sales of over 2.9 million and 0.9 million cases of Honey Bee Brandy, respectively.

Production Process Brandy is produced from distillation of a fermented, fruit-based liquid, typically grape wine. Newly

distilled brandy is aged in oak casks which colors it, mellows the palate and adds additional aroma and flavor. Caramel syrup is added to aged brandies to deepen their color. Indian brandies are blended with mature grape brandy and neutral alcohol. Flavorings are also incorporated to enhance the characteristic aroma of brandy.

Rum Our rum products accounted for 16.9% of our total sales volume for the year ended March 31, 2009

and 14.0% of our total sales volumes in India and Nepal for the three months ended June 30, 2009.

Brands Our key brands in this product division are Celebration XXX Rum, Old Cask Rum and Olde Adventurer

Rum, the sales for which represented approximately 68%, 13%, and 8%, respectively, of our sales volume of rums for the year ended March 31, 2009, and 58%, 16% and 10% of our total sales volumes from rums, respectively, for the three months ended June 30, 2009.

McDowell’s No. 1 Celebration XXX Rum sold over 10 million cases for the year ended March 31, 2009, an increase of nearly 24% in sales from the year ended March 31, 2008. For the three months ended June 30, 2009, we had sales of 2.0 million cases of Celebration XXX Rum. According to Impact Databank, the brand has achieved the highest growth rate of 27% in calendar year 2008 among the top five rum brands in the world and is enjoyed by consumers of rum in New Zealand, Japan and the Middle East.

Old Cask Rum is the second best selling rum in our portfolio of brands, selling nearly 1.9 million cases and 0.6 million cases for the year ended March 31, 2009 and the three months ended June 30, 2009, respectively. Old Cask Rum has typically been popular in the armed forces sector of the Indian market and for the year ended March 31, 2009; approximately 15% of total sales of Old Cask Rum were through the CSD.

Production Process Rum is produced from the fermentation of sugarcane. After the cane is pressed, the cane juice is boiled

and eventually crystallizes into sucrose and the by-product, molasses. Rum is the spirit derived from distilling fermented molasses.

Molasses is either continuously distilled or, for specialty products, double distilled in a pot still. Commercial white rums are rectified and bottled immediately, whereas colored rums are cask-aged, sometimes for decades, before they are bottled. Indian rums are blended with matured rum spirit and ENA. Flavorings are also incorporated to enhance the characteristic aroma of rum according to the tastes of local consumers.

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Vodka Our vodka products accounted for over 3.4% of our total sales volume for the year ended March 31,

2009 and 3.7% of our total sales volumes in India and Nepal for the three months ended June 30, 2009.

Brands White Mischief. We believe that White Mischief is the leading brand in the regular vodka category. It

has a wide consumer franchise across both metropolitan and suburban areas. For the year ended March 31, 2009 and the three months ended June 30, 2009, we sold 1.67 million and 0.6 million cases, respectively. Sales of White Mischief registered a growth of 29% for the year ended March 31, 2009 over the year ended March 31, 2008 and a growth of 23% for the three months ended June 30, 2009 over the corresponding period of the previous year.

Romanov. We consider Romanov to be a fast-paced growth product due to its popularity among younger consumers. We sold over 1.1 million cases and 0.3 million cases of Romanov vodka for the year ended March 31, 2009 and the three months ended June 30, 2009. We have received an encouraging response to this product in some of our overseas markets, such as China.

Romanov Red. In 2008, we introduced a new prestige vodka under the brand name Romanov Red. We sold over 85,000 cases of Romanov Red for the year ended March 31, 2009, the first year of sales for this brand. For the three months ended June 30, 2009, we had sales of 32,647 cases of Romanov Red, a higher price variant in the prestige vodka segment.

Pinky. Our acquisition in 2007 of U.S.-based alcoholic beverage firm Liquidity Inc. has added Pinky to our range of vodka brands. Targeted at our female customers, we believe Pinky to be another fast-paced growth product. We sold approximately 10,000 cases and 4,000 cases of Pinky vodka for the year ended March 31, 2009 and the three months ended June 30, 2009, respectively.

Production Process and Bottling Vodka is made exclusively of ENA produced from molasses or grains. Vodka undergoes a very

stringent process of distillation, which removes impurities and all natural flavor. In the case of flavored vodka, certain flavorings such as lime, lemon and orange are added during the blending stage of production.

Gin Our gin products accounted for 1.8% of our total sales volume for the year ended March 31, 2009 and

2.6% of our total sales volumes in India and Nepal for the three months ended June 30, 2009.

Brands Blue Riband Gin. Launched in 1959, our key brand in this product division is Blue Riband Gin, the

sales for which represented approximately 63% of our total sales volume of gins for the year ended March 31, 2009 and approximately 56% of our total sales volumes of gins for the three months ended June 30, 2009. Blue Riband Gin is made from ENA and botanical extracts.

Production Process Gin is prepared either by the distillation of spirit with the botanicals extracts or by the addition of

botanical extract or flavorings to the distilled spirit. The second process is more commonly used. The characteristic strong aroma of gin is derived from juniper berries.

Wine Our wine products accounted for 0.01% of our total sales volume for the year ended March 31, 2009

and 0.02% of our total sales volumes in India and Nepal for the three months ended June 30, 2009. Our sales

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of wine are small compared to the sales of our other liquor products, totalling just over 200,000 cases for the year ended March 31, 2009 and just over 46,000 cases for the three months ended June 30, 2009.

At a time when wine consumption in India is growing at a rapid pace, we have strengthened our presence in the wine business through the formation of two subsidiaries: United Vintners Limited (“UVL”) and Four Seasons Wines Limited (“FSWL”).

UVL imports wines from all over the world to offer a portfolio of wines of different origin, varietals, styles and price points with the aim of ensuring a wide choice for the consumer and initiating interest and awareness in the existing consumer base. The current portfolio comprises a selection of wines from New Zealand, Australia, Portugal, South Africa and France.

FSWL produces wines from grapes grown around Sahyadri valley in Maharashtra, India and at our new state-of-the-art Four Seasons winery near Baramati, around 65 kilometers from Pune. The company aims to drive interest in wines and wine consumption by offering quality wines at reasonable price points with various packaging options. The wines are marketed under the brand names Zinzi & Four Seasons. FSWL is in the process of planting 300 hundred acres of its own vineyards around the winery. For its annual production requirement, the company has already entered into a long-term contractual agreement with local farmers for 500 acres and will seek to enter into further contractual agreements for additional acreage for vineyards. This project aims to act as a catalyst in the socio-economic development of the local community by generating direct and indirect job opportunities to the people of Baramati while promoting wine tourism at its winery and vineyards. The winery is designed with a spa offering vinotherapy treatments, a swimming pool, 14 suites, an elevated wine tasting and merchandize room, as well as restaurant facilities to develop wine tourism.

In addition, we continue to have our existing wine production centers at our combined winery/distillery in Hospet, Karnataka India, as well as at Saumur in the Loire Valley, France, which we acquired as part of the Bouvet Ladubay acquisition.

Brands Four Seasons. This is our flagship wine brand. During the year ended March 31, 2009 we launched

five wine varietals – two reds (Cabernet Sauvignon and Shiraz); two whites (Sauvignon Blanc and Chenin Blanc); and a rosé (Blush). We also plan to launch oak-barrelled reserve wines by the end of 2009 as well as sparkling wines in 2010.

Zinzi. This brand has been created and launched to target the young and novice wine drinker. Zinzi has been launched with a unique and unconventional packaging, and is supported by marketing aimed at younger potential consumers.

Both Zinzi and Four Seasons have been rolled out in all major markets across India.

Bouvet-Ladubay. Bouvet Tresor Blanc, Bouvet Brut, Bouvet Rubis Demi-Sec, Bouvet Brut Rosé and Anjou Rouge Nonpareils are the French brand wines which form part of our wine brand portfolio. We sell these wines in India as well as in the European Union and the Americas. A select range of these wines are sold in the main metropolitan markets of India. In the year ended March 31, 2009, we sold approximately 378,000 cases of our French brand wines, representing an 11% increase over the year ended March 31, 2008. For the three months ended June 30, 2009, we sold approximately 82,322 cases. Given the strong worldwide demand for Bouvet wines, the winery’s production capacity has been significantly increased with the establishment of a new facility in Saumur, more than doubling our annual production capacity to 8 million bottles.

UVL Wine Brands. UVL has under its portfolio a range of wines from New Zealand, Australia, France (Burgundy), Portugal and South Africa. These wines were introduced during the year ended March 31, 2009. In the year ended March 31, 2009, we sold approximately 23,344 bottles (equivalent to 1,945 cases) of UVL

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Wine Brands. For the three months ended June 30, 2009, we sold approximately 5,945 bottles (equivalent to 500 cases) in India and Nepal.

Golconda Ruby Wine. Golconda Ruby Wine is our highest selling brand of fortified wine. In the year ended March 31, 2009, we sold approximately 190,000 cases of Golconda Ruby Wine, representing a growth of 21% over the year ended March 31, 2008. For the three months ended June 30, 2009, we sold approximately 40,560 cases in India and Nepal.

Production, Bottling and Facilities

Our operations are managed through six regional profit centers (“RPCs”) generally divided geographically by the north, south, east and west regions of India, with Andhra Pradesh being classified as a separate RPC. We have also created a separate RPC to handle supplies to defence and paramilitary personnel in India through the CSD. Each RPC is headed by a Chief Operating Officer responsible for generating growth, market share, profits and cash flows for our Company. Each Chief Operating Officer coordinates with the functional heads of our marketing, manufacturing, personnel and finance departments on a Company level to achieve such growth and profitability.

As is customary in the beverage industry, our products are manufactured both at our facilities and under arrangements with CBUs. As of June 30, 2009, we had production facilities in 26 States of India and one production facility in Nepal owned by our subsidiary United Spirits Nepal Private Limited (in which we have an 82% stake).

We are subject to complex regulatory and licensing requirements that vary from State to State, including the levy of excise and other taxes. We have established operations in each State in order to mitigate our exposure to the government policies of any one State and the tax consequences of inter-state movement of goods. See “Regulation”. Further, under a license, we are limited in the annual volume of liquor products that we are permitted to manufacture. Our relationships with our network of CBUs allow us to meet any demand for our products that surpasses our licensed capacity. Currently, our licensed capacity is 49 million cases, but through arrangements with CBUs, our capacity is increased to 108.2 million cases per year. CBUs operate only one shift of production each working day, and are not permitted to operate a second shift without explicit permission from the State excise tax regulator. In this way, we believe we are able to ensure that we operate within the licensed capacity of each facility.

For our facilities in India and Nepal, approximately 50.1% of our products were manufactured, bottled in and distributed from our own facilities and approximately 49.9% were manufactured in, bottled and distributed through arrangements with CBUs as of June 30, 2009. Our total production, including that through CBUs, was 88.5 million cases for the year ended March 31, 2009 and 24.7 million cases for the three months ended June 30, 2009.

Our Owned Production Facilities Our headquarters are located in Bangalore. As of the June 30, 2009, we owned 26 production facilities

in India (although two of the facilities at Alwar, Rajasthan and at Bhopal-2 are held by the Company on long term lease basis) and one in Nepal. We own an additional facility in Zuarinagar, Goa which is not currently in use. Of these 27 facilities, seven have capacity for primary distillation of molasses into ENA, the principal base used to make ENA (although the facility at Meerut is currently not being operated as a primary distillation unit and is only being utilized for bottling purposes), 10 are redistillation plants with facilities to carry out the secondary distillation of rectified spirit into ENA and 10 are bottling plants. Five of our secondary distillation plants also have the facilities to distill malt barley used in the production of our whiskies.

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Contract Bottling Units As of June 30, 2009, we had arrangements with 46 CBUs to bottle and distribute our products on our

behalf across India. Due to excise regulations requiring the manufacture of IMFL only by a distillery having a requisite license, we have arrangements with CBUs in those States where we do not own production facilities.

Our arrangements with CBUs generally involve bottling and distribution activities. Company representatives and quality control teams are stationed at the CBUs for blending and quality control and the workers are employed by the CBUs. We also carry out periodic audits on our CBUs to ensure our standards of quality in bottling and distribution are met. In an effort to protect our brand and trade secrets, the flavorings mixed and added to our products are prepared at our facilities by our own personnel and passed on to a chemist who is a member of our staff on location at the CBU facility, who prepares and completes the blending process. The CBU’s activities are limited to bottling the product and preparing it for distribution. While not explicitly prohibited from doing so in all cases, CBUs do not produce their own products at these facilities.

Our billing practices are based on the law prevailing in the relevant State and on economic considerations. Billing for the sale of products originates with the CBU. The CBU either bills us directly or, when instructed by us, bills the customer. The CBU sells our products at a predetermined price. The CBU retains an amount equal to the cost of production plus a profit margin, which is typically a pre-determined per case amount, with the “economic surplus” paid to USL. The economic surplus represents a brand franchise fee, based on the net sale revenue booked by the CBU on a per case basis, and the balance amount represents part of our income from the CBU.

Contracts with CBUs are generally renewable every three years. We believe that we have good relations with these CBUs.

The following table sets forth certain information about the facilities we operated and facilities operated by CBUs under tie-up arrangements reflecting cases produced, as of March 31, 2009 and June 30, 2009:

Facility Location Production volume of cases Activities at facility1

Year ended

March 31, 2009

Three months ended June 30,

2009

Owned

USL ............................

Baramati, Maharashtra 2,448,808 611,084

Secondary distillation, grape spirit production and blending / bottling

USL ............................

Alwar, Rajasthan 1,862,255 458,606

Secondary distillation, malt spirit production and blending / bottling

USL ............................

Rosa, Uttar Pradesh 3,310,837 735,742 Primary distillation and

blending / bottling

USL2 ..........................

Udaipur, Rajasthan 1,640,742 461,984 Primary distillation and

blending / bottling

USL ............................

Hathidah, Bihar 1,507,801 399,563

Primary distillation, malt spirit production and blending / bottling

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USL .............................

Asansol, West Bengal 1,165,798 303,317 Secondary distillation

and blending / bottling

USL .............................

Serampore, West Bengal 534,408 115,352 Secondary distillation


USL ............................. Bhopal, Madhya Pradesh 1,271,902 347,943 Blending / bottling

USL ............................. Bhopal 2, Madhya

Pradesh — 7,269

Blending / bottling

USL .............................

Cherthala, Kerala 1,847,155 497,747 Primary distillation and

blending / bottling

USL .............................

Kumbalgodu, Karnataka 1,778,851 612,355 Secondary distillation


USL ............................ Pondicherry, Pondicherry 672,077 158,367 Blending / bottling

USL .............................

Ponda, Goa 1,509,703 298,533


USL .............................

Nasik, Maharashtra 2,962,169 855,393 Secondary distillation


USL .............................

Hyderabad, Andhra Pradesh 3,368,000 878,475


United Spirits Nepal Private Limited ............

Biratnagar, Nepal 304,234 93,871

Secondary distillation and blending / bottling

USL ............................. Hyderabad, Andhra

Pradesh 4,117,289 1,167,170 Secondary distillation


USL .............................

Aurangabad, Maharashtra 2,431,291 584,834

Primary distillation, malt spirit production and blending / bottling

USL ............................. Nasik II, Maharashtra 103,004 32,157 Blending / bottling

USL ............................. Baddi, Himachal Pradesh 693,198 216,313 Blending / bottling

USL ............................. Bhadrakali, West Bengal 691,665 195,315 Blending / bottling

USL .............................

Meerut, Uttar Pradesh 2,600,336 723,944 Primary distillation and

blending / bottling

USL ............................. Palakkad, Kerala 1,723,606 558,637 Blending / bottling

USL ............................. Palwal, Haryana 1,508,085 417,532 Blending / bottling

USL .............................

Hospet, Karnataka 3,234,548 1,045,425

Primary distillation, grape spirit production and blending / bottling

USL ............................. Behrampur, Orissa 362,768 102,633 Blending / bottling

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USL ............................. Pathankot, Punjab 1,816,132 481,077 Blending / bottling

Sub-total ..................... 45,466,662 12,360,638

CBUs

AB Sugars ...................

Gurdaspur, Punjab 153,512 56,653 Primary distillation and

blending / bottling

ABPL........................... Pune, Maharashtra 1,329,418 348,935 Blending / bottling

Aegis Beverages .......... Bilaspur, Chattisgarh 624,011 158,080 Blending / bottling

Ajanta Bottlers............. Ranchi, Jharkhand 484,653 198,231 Blending / bottling

Ajanta .......................... Nagpur, Maharashtra 48,468 — Blending / bottling

Balaji Distilleries3........

Chennai, Tamil Nadu 9,604,027 2,393,431 Secondary distillation


BBDL .......................... Chandigarh, Chandigarh 548,667 63,103 Blending / bottling

Chitwan Bottlers & Blenders Pvt. Ltd.........

Patna, Bihar 601,166 204,124

Blending / bottling

CDBL ..........................

Bannur, Punjab 2,363,463 578,996 Primary distillation and

blending / bottling

CDPL........................... Guwahati, Assam 1,410,584 356,515 Blending / bottling

Continental Wines ....... Vijayawada, Andhra

Pradesh 1,419,003 416,340

Blending / bottling

DC Sriram ...................

Daurala, U.P. 93,991 70,717 Primary distillation &

blending / bottling

Devicolam Distilleries Ltd. ..............................

Kochi, Kerala 179,085 324,856

Blending / bottling

Elite Distilleries........... Trichur, Kerala 485,497 162,335 Blending / bottling

Empire Alcobev Pvt. Ltd. ..............................

Chandigarh 287,499 102,019

Blending / bottling

Esveear Distilleries...... Tirupati, Andhra

Pradesh 1,584,324 484,256

Blending / bottling

Heritage ....................... Orissa — 58,411 Blending / bottling

Gemini Distilleries ...... Tripura, Tripura 195,038 14,235 Blending / bottling

KBDL..........................

Nelamangala, Karnataka 2,254,284 604,562 Secondary distillation


Khemani Distilleries....

Daman, Daman 459,343 101,000 Primary distillation and

blending / bottling

Mandovi Distilleries .... Madkaim, Goa 480,572 130,263 Blending / bottling

Madhusala Distilleries Pvt. Ltd ........................

Calcutta, West Bengal 935,939 211,740

Belding / bottling

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MDH Beverages Pvt. Ltd. ..............................

Shillong, Meghalaya 171,925 40,718

Blending / bottling

Midas Golden Distilleries ...................

Chennai, Tamil Nadu 583,630 121,168

Secondary distillation and blending / bottling

Milestone Beverages ... Meghalaya, Meghalaya 532,581 126,390 Blending / bottling

Mount Distilleries........ Sikkim, Sikkim 103,753 23,106 Blending / bottling

MTM Wines ................ Bhalukpong, Arunachal

Pradesh 395,492 139,003

Blending / bottling

Nilachal Distilleries Pvt. Ltd ........................

Guwahati, Assam 68,525 96,902

Blending / bottling

NEDPL........................ Guwahati, Assam 1,435,106 405,430 Blending / bottling

Pearl Distilleries ..........

Ongole, Andhra Pradesh 4,156,950 1,219,131 Primary distillation &

blending / bottling

Pilkhani Distilleries & Chemical Works ..........

Pilkhani, U.P. 321,503 234,794

Primary distillation & blending / bottling

Picadilly Agro Industries Ltd...............

Haryana 27,019 128,852


Rajaram Bapu Sahakar Sakhar Karkhana .........

Walva, Maharashtra 175,322 81,399


Rainbow Distilleries .... Nagpur, Maharashtra 395,345 131,758 Blending / bottling

Ravikumar Distilleries. Pondicherry, Pondicherry 47,188 14,197 Blending / bottling

SAFL ...........................

Villipuram, Tamil Nadu 1,908,477 487,501 Primary distillation and

blending / bottling

SKE (on lease by USL) ...........................

Chittoor, AP. 2,274,600 607,795

Blending / bottling

Salson Liquors............. Patna, Bihar 136,786 105,475 Blending / bottling

Saraya Industries ......... Gorakhpur, Uttar

Pradesh 242,371 103,422 Primary distillation and

blending / bottling

Seven Seas Distillery... Thrissur, Kerala 1,219,080 332,587 Blending / bottling

Shiva Distilleries .........

Coimbatore, Tamil Nadu 465,458 138,272 Secondary distillation


Sir Shadilal Distilleries ...................

Muzaffarnagar, Uttar Pradesh 1,073,794 376,787

Primary distillation and blending / bottling

Surma Distilleries ........ Silchar, Assam 108,087 33,925 Blending / bottling

Trishul Distilleries ....... Jammu & Kashmir 110,336 31,474 Blending / bottling

Utkal Distilleries Ltd. .

Utkal, Orissa 1,025,606 252,650 Secondary distillation


Vandana Distilleries..... Nagpur, Maharashtra 360,214 18,951 Blending / bottling

Vinbros ........................ Pondicherry, Pondicherry 124,303 40,368 Blending / bottling

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Sub-total ..................... 43,005,695 12,330,857

Total production volume .......................

88,472,357 24,691,495

Note:

(1) Primary distillation is the distillation of molasses or grain to rectified spirit. Secondary distillation is the distillation of rectified spirit to ENA.

(2) Grain production facility

(3) In November 2008, our board of directors approved Balaji’s merger with our Company which remains, however, subject to regulatory approval.

Bottling and Packaging The bottling process involves washing, filling, sealing, inspecting, labelling and packaging. Within our

overall bottling capacity, including that of CBUs, approximately half of all bottling is performed at our own facilities and half by CBUs as of June 30, 2009.

The following table shows our production for the years ended March 31, 2007, 2008 and 2009 and, in India and Nepal, for the three months ended June 30, 2009:


Three months ended June 30,

2007 2008 2009 2009

(millions of cases)

Owned ....................................................... 35.16 39.07 45.83 12.36

CBUs ......................................................... 31.02 35.27 42.65 12.33

Total .......................................................... 66.18 74.34 88.48 24.69

Our products are packaged primarily in glass and PET bottles, which are manufactured by various domestic suppliers. Glass bottles and PET containers accounted for approximately 64% of expenditures on packaging materials for the year ended March 31, 2009 as well as for the three months ended June 30, 2009 in India and Nepal. A majority of the glass that we purchase to bottle our products came from Hindustan National Glass Limited and their associated companies which controls a substantial portion of the Indian market for glass. See “Risk Factors — Risks Relating to Our Operations — We depend on third-party suppliers for the raw materials we require for production and fluctuations in the price and availability of such raw materials may increase our production costs and negatively impact our results of operations”.

The State regulates the size of packages that we are permitted to use to bottle our liquor products. The standard pack sizes allowed by the excise departments in each State include 180 ml, 375 ml, 500 ml, 750 ml and one liter bottles. We have recently introduced paper-based tetra cartons for the packaging of some of our whisky and rum brands in the 180 ml packages in Maharashtra and Karnataka. We have also successfully gained permission from a few States to bottle our products in 60 ml and 90 ml miniatures. Individual outer cartons, called mono cartons, made of cardboard or foil paper are used as outer packaging primarily for our whisky products in the “regular” to “super premium” segments.

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Our cost of production is managed in part by using a combination of new and recycled bottles to package our products, and we maintain a network of numerous regional second-hand bottle dealers across the nation who retrieve the bottles from the market place, rewash and sell them to us. Approximately 27% of the bottles required in our manufacturing process are recycled. The cost of procuring used bottles is 25 to 30% lower than the cost of purchasing new bottles.

Competition, Marketing and Customers

Competition We believe that we have the widest and deepest portfolio of products in the Indian alcohol industry.

The principal competitive factors with respect to our products include brand name acceptance, product range and quality, pricing, distribution capabilities and responsiveness to consumer preferences, with varying emphasis on these factors depending on the market and the product. We believe that our major competitors in the Indian liquor market are Radico Khaitan Limited, Pernod Ricard India Ltd., Diageo India Ltd., BDA Limited, Mohan Meakin Ltd., Bacardi India Limited and Jagatjit Industries Ltd.

For the year ended March 31, 2009, we produced more than 88 million cases of liquor products, reinforcing our position as the largest distiller in India and making us the third largest distiller in the world by sales volume, according to Impact Databank. For the three months ended June 30, 2009, we produced 24.7 million cases of liquor products. We believe that the strongest competition is to our premium and super-premium brand whisky products from non-Indian companies with significant monetary resources joining forces with Indian liquor companies having established knowledge of processes related to the production of IMFL that appeals to local consumers.

We conduct periodic market research to keep attuned to the markets we serve. Each month we gather sales volume data from a variety of resources, including Central and State Government agencies, distributors and retail outlets located throughout the country, which provides us with production, distribution, sales and market share and information about the markets in which we sell our products. We believe that the production and sales data that we collect from various Government agencies is particularly accurate and relevant given how closely State and Central Governments regulate liquor companies through licensing requirements and excise duties.

Marketing In an effort to remain at the forefront of India’s liquor industry, we have adopted a strong, innovative

approach to our marketing and packaging strategies and to the development of new products. Advertisement of alcohol is heavily regulated in India and we seek to promote our brand awareness through creative channels.

Creative Marketing Currently, direct advertising is prohibited in the Indian liquor industry. We build our brands by

sponsoring various sporting and lifestyle events. We consider our brand portfolio to be our key asset. Brand image is a critical factor in a consumer’s choice of beverage and we believe that brand promotion and advertising are essential tools in building our image, market share and sales. We strive to grow and maintain our market share by positioning and promoting our brands clearly and consistently across all markets. Brand cycles are very long and brands are built over the course of many years, as it takes time to build up brand awareness and preference among consumers. For example, the brands McDowell’s No. 1 Brandy, McDowell’s No. 1 Whisky and Bagpiper have been in existence since the mid 1970s. We incurred Rs.5,378.5 million on advertisement and sales promotion for the year ended March 31, 2009, as compared with Rs.4,781.1 million in fiscal year 2008. The Company spent Rs.882.8 million on marketing and advertising promotion in the three months ended June 30, 2009 on an unconsolidated basis. It is our intention to keep the pricing of our liquor

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products at reasonable levels in the foreseeable future in order to stay competitive and maintain product demand.

Marketing programs for our brands are planned and executed at both the national and local levels by marketing directors at our corporate headquarters and by marketing managers in each RPC. These personnel work together to identify, review and define marketing issues and strategies which are supported and carried out at a national level to promote our brands in a consistent way throughout the country, and at a local level by the regional managers to appeal to local taste and customers.

We use a variety of methods to promote our products, including sporting and event sponsorships, such as the McDowell’s Signature Celebrity Golf Tournament, the McDowell Indian Derby horse race, through the franchise of the Royal Challengers IPL cricket team and through concerts by Indian and internationally-recognized musicians and artists.

Innovation We believe that adopting an innovative approach to product development and packaging will help us to

meet consumer expectations and preferences, differentiate ourselves from our competitors and reduce our costs of packaging. For example, we recently developed a “diet” whisky and “diet” vodka to appeal to the younger, image-conscious consumers constantly seeking “diet” forms of food and drinks. Our “diet” whisky and vodka is blended with an organic extract called Garcinia cambogia, which has been shown to increase metabolism. We have developed a soluble version of Garcinia cambogia so that it does not affect the taste or color of the spirit, a process we have patented.

We believe that innovative packaging is also important in protecting our products against counterfeiting, which we believe will help us to maintain our market leadership position. For certain medium-priced brands, we have produced packaging solutions that are easy to carry without detracting from the appeal of the brand. For example, we have developed a non-resealable paper tetra nip pack for some of our whisky and brandy products that are sold in a 180 ml size container in areas with a high consumption rate that can easily be collapsed for transport. Based on the initial success of the sale of Bagpiper Whisky in the 180 ml nip packs, we have extended this packaging to include other products, such as Celebration XXX Rum and McDowell’s Green Label Whisky. Currently, the tetra nip pack is sold only in the States of Maharashtra and Karnataka, due to the equipment cost for producing these packages. In 2008, we launched Celebration XXX Rum in a 90- ml pack and Bagpiper whisky in a 60- ml pack. We have also developed the first-ever “Smart Pack” for our McDowell’s No. 1 Reserve Whisky that is tamper-proof and easy to carry, and has resulted in a 30% reduction in the costs of packaging of that particular product. The Smart Pack was the winner of the Du Pont Packaging Innovation Award in 2005.

Customers Our principal target customer base for our liquor products are individuals of legal drinking age in

India, those who are approximately 20 to 59 years of age. With 50% of India’s 1.2 billion population not having yet achieved legal drinking age, we believe the industry presents a demographic window of opportunity with a large number of first time consumers entering the market. We believe that the increase in sales of liquor products was caused by a shift in patterns of spending, away from saving and investment and toward consumption and spending on lifestyle and products and services, such as eating out and entertainment. Additionally, the general attitude towards drinking is gradually changing in India so that it is now more socially acceptable for both men and women to drink. We believe that these societal changes will help boost the demand for our products.

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Sales and Distribution The sale and distribution of liquor products in both the wholesale and retail sectors in India is

controlled by each State in which we operate our business. The level of control varies from State to State, depending on whether the market is a Government-controlled, hybrid, auction or a free market. This affects not only our level of production, but also the price at which we are able to sell our products and the level and type of taxation levied on our products. The following table sets out the type of market and level of control for the wholesale and retail sectors in each of the States in which we conduct our business:

Type of market and jurisdiction Wholesale sector Retail sector

Government Controlled Markets(1)

Andhra Pradesh .................................. Government-controlled Free Market

Bihar…............................................... Government-controlled Free Market

Canteen Stores Dept (5) ....................... Government-controlled Government-controlled

Chattisgarh ......................................... Government-controlled Free Market

Karnataka ........................................... Government-controlled Free Market

Kerala ................................................. Government-controlled Government-controlled

Orissa.................................................. Government-controlled Free Market

Rajasthan ............................................ Government-controlled Free Market

Tamil Nadu......................................... Government-controlled Government-controlled

Uttaranchal ......................................... Government-controlled Free Market

Hybrid Markets(2)

Delhi................................................... Free Market Government-controlled

Madhya Pradesh ................................. Government-controlled Free Market

Oligopolistic Markets(3)

Chandigarh ......................................... Private Oligopoly Private Oligopoly

Haryana .............................................. Private Oligopoly Private Monopoly

Himachal Pradesh............................... Private Oligopoly Private Monopoly

Punjab................................................. Private Oligopoly Private Oligopoly

Uttar Pradesh.. .................................... Private Oligopoly Private Oligopoly

Free Markets(4)

Assam................................................. Free Market Free Market

Bihar................................................... Government-controlled Free Market

Daman ................................................ Free Market Free Market

Goa ..................................................... Free Market Free Market

Jharkhand… ....................................... Free Market Free Market

Maharashtra........................................ Free Market Free Market

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Type of market and jurisdiction Wholesale sector Retail sector

Pondicherry ........................................ Free Market Free Market

Tripura................................................ Free Market Free Market

West Bengal........................................ Free Market Free Market

Notes:

(1) Government-controlled markets — In a Government-controlled market, the State Government, through its agencies and Government corporations, generally controls the wholesale segment of the market (although the State Governments in Kerala and Tamil Nadu also control the retail segment of the market). State agencies or corporations purchase liquor products directly from liquor companies at a price set by that State. Excise tax is paid either by the liquor company or by the State agency upon the terms of the agreement between the distilleries and the Government-owned or run buyer corporation. Pricing is determined and fixed by the State agency, normally for a period of one year.

(2) Hybrid markets — In a hybrid market, the extent of Government control over the wholesale and retail segments of the market vary. In some States, pricing is fixed by the State excise department; in others, pricing is set by retail trade.

(3) Oligopolistic markets — These markets are those in which large traders operate within a syndicate, participating in an auction/lottery system on an annual basis. These distributors establish their own retail network and are responsible for sourcing products directly from liquor companies. Once a distributor “wins” the market in the license allocation system, that distributor controls a large part of the wholesale market for one year. Pricing is determined by the syndicate, which can result in limited growth potential of industry participants. Private Oligopoly is a situation where there are a few large players who have considerable influence in the trade, as opposed to a single buyer in a market. While all Government corporations and CSDs are in effect monopoly buyers, a private oligopoly is one where these large players are private individuals / groups.

(4) Free markets — In free markets, the State Government exercises no price control over the wholesale or retail sectors. Through licensing, however, the State Government controls the number of wholesalers and retailers permitted to operate in the market. Licenses are granted to liquor producers for a predefined price and time period. In a free market, liquor companies are free to find distributors, who, in turn, sell to retailers at prices that are set and driven by the market.

(5) Canteen Stores Department is a nodal buying and distribution agency for the Armed Forces for all materials including alcoholic spirits.

Government regulation has a significant effect on our profitability, particularly in those States where the Government controls the pricing in the wholesale and/or the retail markets. In order to mitigate our exposure to the Government policies of any one State, we have operations in all of the States of India where it is legal to produce and sell liquor products. In doing so, we lose all benefits that could have been achieved from any economies of scale from having centralized production or distribution facilities, which in turn impacts our profitability. See “Risk Factors — Risks Relating to Our Operations — Government regulation of the wholesale and retail markets in each State affects our trade and pricing practices, as well as relations with distributors, wholesalers and retailers”.

For the year ended March 31, 2009, we sold over 90 million cases. In the three months ended June 30, 2009, our India and Nepal operations sold over 25.2 million cases. In India we have a total sales force of approximately 530 employees who work regionally in our RPCs. We sell our products through a variety of Government and private sector wholesale and retail channels, through our own facilities as well as through our tie-up arrangements with CBUs pursuant to bottling and distribution agreements, and through the CSD, to

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approximately 67,000 consumer outlets, including retailers and on-premises consumption points such as bars, clubs and hotels across India.

The activities of our sales force vary depending on the type of market in which they operate; however, in all cases they work at generating orders from the retail trade for our products, including planning local activities to promote our products. In an auction market their additional task is to negotiate pricing with the distributor who controls the market for that year. In a Government market, their task is to ensure adequate product availability and generate orders from the retail trade. In a free market, they need to ensure breadth and depth of distribution and generate orders for our products. In all cases, they are responsible for tracking the activities of the competition.

Sales through the CSD represented 6% of our total Indian sales for the year ended March 31, 2009 and 5% of our total Indian sales in India for the three months ended June 30, 2009. The armed forces are the single largest buyer of IMFL. Our contracts with Government customers contain established rates, and supply orders and payments are made by them upon the depletion of stock.

Export Business Although our business is primarily focused on production and sales in India, we have a niche market

for our products among primarily Indian communities living in the Middle East, Africa, South East Asia, New Zealand and Japan. Our export business is managed through UB Global, one of the UBHL’s operating divisions. We sell our products to UB Global on terms negotiated on an arm’s length basis, which exports our products for sale.

Raw Materials The principal raw materials that we use in the production of our spirits are molasses, grain, malt, food

flavors, select herbs, caramel, coloring agents, and water. The essences necessary to produce the food flavors, herbs, caramel and coloring agents are generally available in the open market and through contracts with domestic suppliers and, in the case of Scotch whisky, from suppliers in Scotland. Prices and sources of raw materials are determined by, among other factors, levels of sugarcane and malt barley crop production, weather conditions, export demand and Government regulations.

We endeavor to purchase raw materials from numerous and diverse suppliers in the Indian domestic market.

We have not experienced difficulties in obtaining sufficient amounts of raw materials in recent years and we do not anticipate any difficulties in the future. The price of raw materials normally follows a five-year cycle and is related to the sugarcane harvest. Depending on the sugarcane crop, prices may vary in the future. See “Risk Factors — Risks Relating to Our Operations — We depend upon third-party suppliers for the raw materials we require for production and fluctuations in the price and availability of such raw materials may increase our production costs and negatively impact our results of operations”.

Traditionally, our spirits are made from three sources:

• molasses-based ENA;

• grain-based ENA for high- and medium-price-range products (to the ENA from both of these ingredients we add imported vatted malt spirit and matured malt spirit for whiskies, matured grape spirit for brandies, matured rum spirit for rums and herbs for gins and vodkas); and

• molasses-based rectified spirit for low-price range products.

Based upon current levels of production, we require approximately 420 million liters of liquor in the form of ENA or rectified spirit per year.

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Molasses The liquor used in our products is traditionally distilled from molasses produced from sugarcane

grown and milled in India. In the year ended March 31, 2009, we purchased approximately 112,000 metric tons of molasses, and 221.2 million BL of spirit either in the form of ENA or rectified spirit. For the three months ended June 30, 2009, we purchased approximately 30,500 metric tons of molasses, and 67.4 million BL of spirit. Generally, we purchase molasses and arrange for delivery to our distilleries for distillation into liquor which is then delivered to our production facilities. We have seven primary distillation units, six capable of distilling molasses and one of distilling grain.

Malt Barley In the year ended March 31, 2009, we purchased approximately 15,409 metric tons of malt barley

(4,722 metric tons for the three months ended June 30, 2009) from local sources for the distillation into grain-based malt spirit used in the production of certain high-end range whisky products. Generally, we purchase malt barley and arrange for delivery to our five distilleries capable of malt distilling which is then aged in special wooden barrels and vats under controlled conditions for blending with other ingredients and delivered to our production facilities for use in whiskies. For the year ended March 31, 2009 and the three months ended June 30, 2009, 100% of the malt barley used in production was purchased from Indian domestic suppliers.

Water Our bottling plants use significant amounts of water for blending liquor products and cleaning bottles.

Each of the plants has our own water storage and demineralization facilities at the plant site.

Research and Development Our research and development activities are carried out at our technical center in Bangalore, which

was established in 1989 to monitor the quality of each product manufactured and is, in our opinion, comparable to laboratories of the major international liquor companies. The technical center has been recognized by the Department of Science and Technology of the Government of India and approved by various State Governments for quality certification of liquor products.

For the year ended March 31, 2009, we incurred expenditure of Rs.30.5 million on research and development. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

The major activities of the technical center are to establish quality assurance standards, to carry out our research and development activities for existing and new products and blend testing.

As part of our ongoing quality assurance activities, we have established standard specifications for our raw materials and finished products and continually look at ways to develop anti-tampering packages for our products. The technical center monitors the quality of random batch samples from each of our manufacturing units and across all the markets to assure uniformity and high standards of quality of our products. We conduct sensory and comprehensive chemical analysis of random samples from each of our manufacturing units across all of our markets and for quality mapping, authenticity analysis and to address consumer complaints. We believe that these stringent quality control and process parameters ensure that the quality complaints are rare.

We believe that our manufacturing units have adequate facilities and personnel to ensure compliance with the quality specifications and process parameters we have established. We provide the requisite training periodically to our quality and process control personnel. Additionally, quality and technical audits are conducted for continuous quality improvement. Each of our distilleries has received ISO 9001 certification.

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Our research and development activities include new product development to meet and exceed ever-changing consumers’ expectations and to achieve larger market share. Consumer preferences are incorporated into our products by our quality function deployment process and through comprehensive sensory profiling exercises. In addition, the shelf life of the products is tested and various packaging compatibility studies are carried out.

In addition, we periodically undertake a comprehensive review of various regulatory issues concerning the beverage liquor industry and provide input to various industry associations for representations made to the regulatory authorities.

The technical center also conducts studies on the various processes in liquor manufacturing such as fermentation, distillation, maturation and blending. Constant efforts are made to improve the process for better efficiency and quality, which consequently reduces the production cost and increases profitability.

Intellectual Property Our policy is to actively protect our intellectual property rights in India and abroad through the use of

dedicated personnel and external trademark counsel, licenses, the registration of trademarks and the use of anti-counterfeit packaging devices. In order to combat counterfeiting, as well as the buying and selling of spurious liquor in India, we have started to sell 23 million cases of our 90 million cases by way of using non-refillable caps, Tetra packs and “Smart Packs”. The major advantage of using non-refillable caps is that once the cap is twisted and the bottle opened the cap cannot be subsequently sealed or filled. Further, we are currently in the stage of using a hologram on our labels. Duplication of the hologram is very expensive, which makes it hard to counterfeit. These two measures to combat the buying and selling of spurious liquor and combating counterfeiting are used only for selling alcoholic beverages in small bottles, as it is not feasible to be used in connection with selling bottles in large volumes. This is because alcoholic beverages sold in large bottles are consumed over a longer duration of time and therefore the bottle would have to be re-sealable.

See “Risk Factors — Risks Relating to Our Operations — We depend on our trademarks and proprietary rights, and any failure to protect our intellectual property rights may adversely affect our competitive position”.

Our Brands We own intellectual property rights primarily in our trademarks, which are considered to be of material

importance to the success of the business since they have the effect of developing brand identification and maintaining consumer loyalty. Our principal trademarks include the McDowell logo, McDowell’s No.1 Whisky, McDowell’s No.1 Celebration XXX Rum, McDowell’s No. 1 Brandy, McDowell’s Signature Rare Whisky, McDowell’s Single Malt Whisky, Derby Special Premium Whisky, Kerala Malted Whisky, Carew’s Imperial Fine Whisky, Bonus Fine Whisky, Moghul Monarch Whisky, Royal Mist Whisky, Gold Medal, McDowell’s Blue Riband Gin, McDowell’s Gold Riband Whisky, McDowell’s Vintage Premium Whisky, McDowell’s Diplomat Fine Whisky, McDowell’s Old Cask XXX Rum, Black Dog Scotch Whisky, Bagpiper Whisky, Bagpiper Gold Whisky, Honey Bee Brandy, Joie-de-Franc Brandy, Caesar Genuine Grape Brandy, Romanov Vodka, Alcazar, Men’s Club, Louis XI, Royal Challenge Whisky, Antiquity Whisky, Director’s Special Whisky, DSP Black Whisky, Old Tavern Whisky, Golconda Brandy, John Ex-Shaw Brandy, White Mischief Vodka, White Mischief Paradise Gin, Forbes London Dry Gin, Carew’s Dry Gin, Forbes Two-in-one Gin, Four Seasons Wine, Zinzi Wine, Olde Adventurer Rum, Kissan Rum, Tiger Rum and India’s Pride Rum. The Green Label trademark has been licensed to USL by its subsidiary, Asian Opportunities and Investments Limited (AOIL).

The John Ex-Shaw trademark in India is owned by Shaw Wallace, which has since merged with us. However, Chateau de Cognac (“CDC”) opposed the registration of our trademark, John Ex-Shaw. Subsequent to the matter being settled in court with CDC whereby we acquired the global rights in respect of the

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trademark John Ex-Shaw, CDC has filed an application before the Trade Marks Registry, Calcutta for withdrawal of its opposition. The Joint Registrar of Trade Marks passed an order on April 11, 2008 treating the opposition filed by CDC as withdrawn and allowed the application for registration filed by SWCL.

Bouvet Ladubay Brands We hold the following trade marks, amongst others, as a result of our acquisition of Bouvet Ladubay:

Bouvet Trésor Blanc, Bouvet Brut, Bouvet Rubis Demi-Sec, and Bouvet Brut Rosé.

Whyte and Mackay Brands We hold the following trademarks, amongst others, as a result of our acquisition of Whyte and Mackay

in May 2007, for U.S.$1.18 billion 100%: Dalmore Single Highland Malt, Vladivar vodka, Fettercairn, Glayva and Jura single-malt Scotch.

Liquidity Inc. Brands In September 2007, we acquired for U.S.$3 million 51% of U.S.-based alcoholic beverage firm

Liquidity Inc. through our wholly-owned subsidiary, Zelinka., which has merged with our Company. We hold the Pinky Vodka trademark as a result.

Subsidiaries We have 76 subsidiaries as of the date of this Placement Document. For a list of our subsidiaries, see

“Our Subsidiaries”.

Employees As of March 31, 2007, 2008, 2009 and as of September 30, 2009, we had 6,098, 9,371, 9,082 and

9,499 employees, respectively in India.

We are party to collective bargaining agreements with labor unions at every plant, which are negotiated at the local level between the management and labor unions. The agreements are generally re-negotiated every three years. There has not been any strike or disruption at any of the plants in recent years and we believe that our relations with our employees and with the labor unions are good.

For the year ending March 31, 2001, we formulated an employee stock option scheme (the “McD ESOP Scheme”) and options for 193,750 shares were offered to eligible key employees under the McD ESOP Scheme. As of June 30, 2009, options for a total of 190,900 shares have been exercised. We have not offered any stock options to employees under the McD ESOP Scheme since 2001.

All options granted to directors of the Company (the “Directors”) or executive officers under the McD ESOP Scheme have been exercised. As of the date of this Placement Document, none of the Directors nor executive officers have any options on our Shares.

In the year ending March 31, 2003, we also introduced a stock option scheme (the “McD Employee Stock Option Scheme — 2002”). As of the date of this Placement Document, the Company had not offered any options under the McD Employee Stock Option Scheme — 2002.

Insurance We maintain annually renewable insurance policies covering a variety of risks including property

damage insurance on our manufacturing facilities against risk of fire and natural disasters such as storms, cyclones or hurricanes, including coverage of all of the fixed assets and entire inventories, but excluding duties payable, at each location; employee fidelity insurance; employees’ group personal accident and illness insurance and workman’s compensation and director and officer insurance covering liability of all of our directors and officers. We are not insured against losses due to an interruption of our business. We believe that

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our insurance policies are of the types and in the amounts customarily carried by Indian companies conducting businesses similar to ours and that our insurance policies are consistent with Indian industry standards.

Legal Proceedings We are involved in legal proceedings in the ordinary course of business, both as plaintiff and as

defendant, before various judicial and quasi-judicial bodies. In respect of the claims against us, the majority of cases pertain to disputes regarding payment of excise duties and income tax. We believe that none of these claims or actions, individually or in the aggregate, will have a material adverse effect on our business or financial condition.

We believe that we have well-founded defences to the claims made against us. However, as in most legal cases, no assurance can be given as to the outcome thereof. See “Risk Factors – Risks Associated with Our Operations — Adverse determination of legal proceedings in which we are involved may harm our reputation and impose high financial liability on us” and “Legal Proceedings”.

Information Technology We believe we have optimized our operational efficiency and management information systems with

the implementation of SAP across all of our locations, including RPCs, manufacturing units, branch offices and depots. Production Planning, Material Management, Sales Distribution and Financial Accounting and Control modules of SAP version 4.6c have been included in the implementation.

SAP was implemented in the centralized server. We have an IBM i-Series Server as its hardware platform, which has an OS/400 operating system and a DB2 database. This server is capable of running other operating systems such as Linux and Microsoft Windows, along with OS/400. This feature has helped us to consolidate its other application servers into one server.

To connect all of our locations, we have implemented a Wide Area Network using VSAT and terrestrial lines. To ensure business continuity, we implemented a disaster recovery system by installing another identical server at a different location. We have received the IBM award for the best implementation of SAP in Spirits Companies in the Association of South East Asian Nations.

Our implementation of SAP has resulted in significant business benefits in terms of improved production efficiency, reduction in inventories, better operational control and access to accurate and timely information.

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THE BUSINESS OF WHYTE AND MACKAY

In May 2007, we acquired through our subsidiary United Spirits (Great Britain) Limited, 100% of Whyte and Mackay for a cash consideration of U.S.$1.18 billion, on an enterprise value basis. In connection with the acquisition, USL Holdings (UK) Limited entered into a term loan facility agreement for a committed U.S.$618.9 million, which we guaranteed. Also in connection with the acquisition, Whyte and Mackay entered into a limited recourse GBP355 million financing that was: (a) guaranteed by United Spirits (Great Britain) Limited, the Whyte and Mackay Group Limited, Whyte and Mackay Warehousing Limited and Whyte and Mackay Limited and (b) secured by assets of a number of the Whyte and Mackay group companies, United Spirits (Great Britain) Limited and United Spirits (UK) Limited, situated in England and Scotland. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations ─ Acquisitions”. There are various risks associated with the Whyte and Mackay business. See “Risk Factors ─ Risks Relating to Our Operations - The business of Whyte and Mackay is subject to certain risks”.

Whyte and Mackay is a leading player in the production, marketing and distribution of Scotch whisky, vodka, gin, liqueurs and other alcoholic drinks. Its main brands include Whyte and Mackay Scotch whisky, Dalmore single malt, Isle of Jura single malt, Vladivar vodka and Glayva liqueur.

Whyte and Mackay’s origins trace back to Charles Mackay and James Whyte who started a company as whisky merchants and bonded warehousemen in Glasgow in 1882. Whyte and Mackay Special was their first blended whisky and it was successful in the United Kingdom and other English speaking countries such as Australia, Canada, New Zealand and the United States. Whyte and Mackay was incorporated in 1927 under the name of Mackenzie Brothers Dalmore Limited and the ownership and name has changed several times since then. It was converted to a public limited company in 1996 but upon a management buyout became a private limited company. The company renamed itself Whyte and Mackay Limited in September 2003.

Our acquisition of Whyte and Mackay enables us to make further inroads into the global spirits market, access new markets for cross-selling our existing product range and introduce leading global Scotch whisky brands in India, a high-growth emerging market. Whyte and Mackay also provides us consistent access to the bulk supply of scotch whisky for our whisky product line in India, primarily the Black Dog brands. We also believe that Whyte and Mackay will be able to realize some synergies and cost savings through consolidating our resources in the purchasing of raw materials and combining our marketing efforts.

Whyte and Mackay owns four malt distilleries, one grain distillery and one bottling facility at various locations throughout Scotland. In addition, Whyte and Mackay’s inventory is held at a number of warehouses throughout Scotland. Its head office is in Glasgow, Scotland. We believe having our own grain distillery is a competitive advantage, as we are less susceptible to supply constraints and can better manage our costs of manufacturing spirit. The capacity of our grain distillery exceeds our required supply produced at such facility.

Whyte and Mackay is active in the branded market, the unlabeled market (referred to as “own label”) and bulk markets. In the branded market, Whyte and Mackay produces, bottles and sells its own brand name spirits with a product portfolio comprised principally of Scotch whisky as well as vodka, gin, liqueurs and other alcoholic drinks. In the own label market, Whyte and Mackay supplies alcoholic drinks to major retailers who market the product under their own label, principally in the United Kingdom. In the bulk market, Whyte and Mackay supplies scotch to third parties who mix the scotch with other product to create their own blended whiskies. Own label and bulk whisky sales are expected to represent a significant proportion of Whyte and Mackay’s business for the foreseeable future. Whyte and Mackay expects to see the major growth in its business coming from its branded labels and in its continued focus on the international markets.

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Whyte and Mackay generally experiences better profit margins from its branded products, than it does from its own label products and bulk whisky sales. Whyte and Mackay sells its branded products through retail channels in the U.K. markets and internationally. Distribution and sales efforts of these products are increasingly focused on the Jura and Dalmore brands and on international distribution, including the duty free markets in airports and in the United States and some Asian markets. In addition, an increasing push of its branded products into the Indian market has occurred since the acquisition of Whyte and Mackay by the Company. Bulk sales of whisky are generally made locally in the U.K. and in Europe after three years of aging in Scotland. Greater aged bulk whisky is sold in smaller quantities in niche markets, such as Korea. Sales of own label products are to top supermarket and retail distributers, primarily in the United Kingdom.

Whyte and Mackay faces competition from several international companies as well as local and regional companies in the countries in which it operates. While the scotch malt whisky market is more accepting of variety and open to competition, the spirits market has very high barriers to entry and relies heavily on the strength of brands. Whyte and Mackay has a strong presence in the bulk whisky and own label markets.

Contracts for bulk whisky are usually long-term as customers seek to ensure an ongoing supply of product. Own label contracts are generally for a term of one to two years, with expectations that they will be rolled over upon completion.

Whyte and Mackay has focused in recent years on cost control and has recently engaged a third part consultant to identify ways in which further costs can be removed from the business. No significant areas for cost saving have been identified as a result of such review.

As of September 30, 2009, Whyte and Mackay had 470 employees.

The following table sets forth, for the year ended March 31, 2009, and the eighteen-month period ended March 31, 2008, certain financial information of Whyte and Mackay as prepared under U.K. GAAP:

For the period ended March 31,

2008 2009

(U.K. pound sterling, millions)

Fixed assets ............................................................................................................... 94.4 92.2

Capital and reserve/Net assets .................................................................................. 55.5 62.0

Turnover ................................................................................................................... 348.1 216.0

Profit before taxation ................................................................................................ 25.6 31.7

Provision for taxation ............................................................................................... (7.2 ) (9.3)

Profit after taxation ................................................................................................... 18.3 22.5

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REGULATIONS AND POLICIES

The following description is a summary of the relevant regulations and policies as prescribed by the Indian Government that are applicable to us. The regulations set out below are not exhaustive, and are only intended to provide general information to the investors and are neither designed nor intended to be a substitute for professional legal advice.

Regulation of Foreign Investment in India

Foreign investment in India is primarily governed by the provisions of the Foreign Exchange Management Act, 1999 (“FEMA”) and the rules and regulations promulgated thereunder. The RBI, in exercise of its powers under FEMA, has issued the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 (the “FEMA Regulations”), which prohibit, restrict and regulate the transfer or issue of securities to a person resident outside India. Pursuant to the FEMA Regulations, no prior consent or approval is required from the RBI for foreign direct investment under the “automatic route” within the specified sectoral caps prescribed for various industrial sectors. In respect of all industries not specified under the automatic route, and in respect of investments in excess of the specified sectoral limits under the automatic route, approval for such investment may be required from the FIPB and/or the RBI.

Further, FIIs may purchase shares and convertible debentures of an Indian company under the portfolio investment scheme through registered brokers on recognized stock exchanges in India. Regulation 1(4) of Schedule II of the FEMA Regulations provides that the total holding by each FII or SEBI approved sub-account of an FII shall not exceed 10% of the total paid-up equity capital of an Indian company or 10% of the paid-up value of each series of convertible debentures issued by an Indian company and the total holdings of all FIIs and sub-accounts of FIIs added together shall not exceed 24% of the paid-up equity capital or paid-up value of each series of convertible debentures. However, this limit of 24% may be increased up to the statutory ceiling as applicable, by the Indian company concerned passing a resolution by its board of directors followed by the passing of a special resolution to the same effect by its shareholders. The Company has increased its FII limit to 59% as approved by its shareholders at the Annual General Meeting held on September 30, 2009.

Spirits Industry

Regulation and Taxes We sell our products primarily in the Indian market and accordingly the regulations in force in India

affect the business operations of both companies. At the outset it may be noted that the constitution of India gives exclusive power to the State Governments to make laws regulating the production, manufacture, possession, transport, purchase and sale of intoxicating liquor and the levy of excise duties thereon. We are also governed by the general laws framed by the Central and State Governments regarding the setting up of factories, pollution control and the maintenance of quality standards, packaging and protection of labor. We are also subject to various duties levied by the Central and State Governments (other than excise duties which are levied exclusively by the State Governments).

We believe that we are in compliance in all material respects with all presently applicable Governmental laws and regulations and that the cost of administration of compliance with such laws and regulations does not have, and is not expected to have, a material adverse impact on their businesses.

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Laws Governing Production The production of liquor products requires manufacturers to obtain licenses from the respective State

Governments under the local State laws. These licenses also determine the production capacity of each facility.

Food Sanitation Laws The food sanitation and packaging laws in India that regulate our business include the Food Safety and

Standards Act (FSSA). The FSSA provides for the prevention of adulteration of food and food articles and provides that food articles, labelling and packaging of foods are required to meet the sanitary standards.

Taxation Laws Pertaining to Sale of Alcohol Local laws in various States regulate the levy of excise duty on any alcoholic liquor for human

consumption; The Customs Act, 1962 and the Customs Tariff Act, 1975 regulate the custom duties leviable on import of goods to India. The Income Tax Act, 1961 also deals with profits and gains from the business of trading in alcoholic liquor and provides that ever seller, while selling alcoholic beverages for human consumption, shall collect from the buyer an amount equal to 1% of the total amount sold as income tax. Local laws in various states levy “octroi duty” on the entry of certain products, including liquor for the consumption, use or sale in each respective State. In the State of Maharashtra, the Bombay Municipal Corporation Act, 1888 together with the Bombay Municipal Corporation (Levy of) Octroi Rules, 1965 govern the levy of octroi duty in Maharashtra. Similar acts in various states levy octroi duty on liquor.

Other Legislations

Environmental Legislations

Environment (Protection) Act, 1986 The Environment (Protection) Act, 1986 was enacted as a general legislation to safeguard the

environment from all sources of pollution by enabling coordination of the activities of the various regulatory agencies concerned, to enable creation of an authority with powers over such areas as environmental protection and regulation of discharge of environmental pollutants. The purpose of the Environmental (Protection) Act, 1986 is to act as an “umbrella” legislation designed to provide a framework for Central Government co-ordination of the activities of various central and State authorities established under previous laws, such as the Water Act and the Air Act, defined below. It includes water, air and land and the inter-relationships which exist among water, air and land, and human beings and other living creatures, plants, micro-organisms and property.

Consent for Operation of the Plant under the Air (Prevention and Control of Pollution) Act, 1981 The Air (Prevention and Control of Pollution) Act, 1981 (the “Air Act”) has been enacted to provide

for the prevention, control and abatement of air pollution. The statute was enacted with a view to protect the environment and surroundings from any adverse effects of the pollutants that may emanate from any factory or manufacturing operation or activity. It lays down the limits with regard to emissions and pollutants that are a direct result of any operation or activity. Periodic checks on the factories are mandated in the form of yearly approvals and consents from the corresponding Pollution Control Boards in the State.

Consent for Operation of the Plant under the Water (Prevention and Control of Pollution) Act, 1974 The Water (Prevention and Control of Pollution) Act, 1974 (the “Water Act”) was enacted in 1974 to

provide for the prevention and control of water pollution by factories and manufacturing industries and for maintaining or restoring the wholesomeness of water. The Water Act regulates the, (i) occupier (the owner and

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management of the undertaking); (ii) outlet; (iii) pollution; and (iv) trade effluents. The Water Act requires that approvals be obtained from the corresponding State’s Pollution Control Boards.

Water (Prevention and Control of Pollution) Cess Act, 1977 The Water Cess (Prevention and Control of Pollution) Act, 1977 (the “Water Cess Act”) provides for

the levy and collection of cess on local authorities and industries based on the consumption of water by such local authorities and industries to enable implementation of the Water Act by regulatory agencies.

Hazardous Waste (Management & Handling) Rules, 1989 These rules regulate the disposal of hazardous wastes. The occupier generating hazardous wastes must

apply to the State Pollution Control Board to obtain authorization for storing, collecting, treating and disposing of hazardous wastes. It shall be the duty of the occupier and operator of a facility to take adequate steps while handling hazardous wastes to contain contaminants and prevent accidents and limit their consequences on humans and the environment. These rules do not apply to waste water and exhaust gases regulated under the Water Act and the Air Act. Accidents occurring at a facility must be reported to the State Pollution Control Board.

Environmental Impact Assessment Regulations under Notification Dated January 27, 1994

These regulations have been framed under the provisions of the Environmental (Protection) Act and provide that expansion or modernization of certain activities, including distilleries, shall not be undertaken in any part of India unless environmental clearance has been obtained from the central Government.

Laws Related to Other Industries

Industrial (Development and Regulation) Act, 1951 The Industrial (Development and Regulation) Act, 1951 has been liberalized under the New Industrial

Policy dated July 24, 1991, and all industrial undertakings are exempt from licensing with the exception of certain industries such as distillation and brewing of alcoholic drinks, cigars and cigarettes of tobacco and manufactured tobacco substitutes, all types of electronic aerospace and defence equipment, industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and matches and hazardous chemicals, drugs and pharmaceuticals and those reserved for the small-scale sector. An industrial undertaking which is exempt from licensing is required to file an Industrial Entrepreneurs Memorandum with the Secretariat for Industrial Assistance, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India, and no further approvals are required.

Indian Boilers Act, 1923 The Indian Boilers Act, 1923 was enacted with the objective of ensuring the safety of public life and

property by administering and enforcing the provisions of the Act with respect to steam boilers and steam pipes, which produce steam, which is used for re-distillation of alcohol and liquor. As per the provisions of the Act, the Chief Inspector of Boilers or an Inspector appointed under the Act periodically reviews the administration of the regulations by (a) approval of manufacturers, (b) inspection of designs relating to boilers and inspection of the manufacturing of boilers and boiler components, (c) approval of boiler repairers and boiler erectors, (d) authorization and inspection of boiler repairs and (e) certification of boiler operating engineers, boiler operators and welders.

Approvals from Local Authorities Planning approvals must be obtained from the relevant Local Panchayat(s) (outside the city limits) and

the appropriate Metropolitan Development Authority (within the city limits) to set up a factory or a manufacturing or housing unit. Consents from the State Pollution Control Board(s), the relevant State

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Electricity Board(s) and the State Excise Authorities (Sales Tax) are required to be obtained before commencing construction of a factory or manufacturing operations.

Labor Legislations

The Factories Act, 1948 The Factories Act, 1948 (the “Factories Act”) was enacted primarily with the object of protecting

workers from industrial and occupational hazards. The Factories Act defines a factory as any premises which employs ten or more workers in which a manufacturing process is carried on with the aid of power, and any premises employing at least 20 workers regardless of whether an electricity-aided manufacturing process is being carried on.

Under the Factories Act, an occupier of a factory is the person who has ultimate control over the affairs of the factory. In case of a company, any of the directors shall be the occupier and such director must ensure the health, safety, welfare, working hours, leave and other benefits of all workers. Under the statute, approval must be granted prior to establishment of a factory, an operating license must be granted thereafter and the factory must be registered by the Chief Inspector of Factories or the State Government. In case of contravention of any provision of the Factories Act or rules thereunder, the occupier and the manager of a factory may be subject to imprisonment or a fine or both.

The Contract Labour (Regulation and Abolition) Act, 1970 The Contract Labour (Regulation and Abolition) Act, 1970 applies to any establishment (not including

an establishment where work performed is of intermittent or seasonal nature)where 20 or more workmen are employed or were employed on any day of the preceding one year as contract laborers; and to every contractor or sub-contractor who employs or had employed 20 or more workmen on any day of the preceding one year, provided they were not employed in certain “core” activities. This legislation regulates the working conditions of contract laborers and provides that any employer of contract laborers must register his establishment with the appropriate authority of the particular State.

A principal employer and a contractor as defined under the Contract Labour (Regulation and Abolition) Act, 1970, must apply for a license and for registration of each establishment under the provisions of the Act

The Employees’ State Insurance Act, 1948 The Employee’s State Insurance Act, 1948 is applicable to all factories including a factory belonging

to the Government other than seasonal factories and any other establishment as the appropriate Government may determine. Employers of factories and establishments covered under the Employees’ State Insurance Act, 1948 are required to pay contributions to the Employees State Insurance Corporation, in respect of each employee at the rate prescribed by the Central Government. Companies which are controlled by the Government are exempt from this requirement if employees receive benefits similar or superior to the benefits prescribed under the Employees’ State Insurance Act, 1948.

Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 Under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, compulsory

provident fund, family pension fund and deposit linked insurance are payable to employees in factories and other establishments. The legislation provides that an establishment employing more than 20 persons, either directly or indirectly, in any capacity whatsoever, is either required to constitute its own provident fund or subscribe to the statutory employee’s provident fund. The employer of such establishment is required to make a monthly contribution to the provident fund equivalent to the amount of the employee’s contribution to the provident fund.

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Payment of Bonus Act, 1965 The Payment of Bonus Act, 1965 applies to every factory and to every other establishment in which 20

or more persons are employed. An employee in a factory who has worked for at least 30 days in a year is eligible to be paid a bonus in accordance with the provisions of such law. Contravention of provision of the Payment of Bonus Act, 1965 is punishable by imprisonment up to six months or a fine up to Rs.1,000 or both.

Payment of Gratuity Act, 1972 Under the Payment of Gratuity Act, 1972, an employee, on his death, or who becomes disabled due to

accident or disease, or who, after having completed at least five continuous years of service in an establishment resigns or retires, is eligible to receive gratuity in accordance with the provisions of the law. To meet this liability, employers of all establishments to which the legislation applies are required to contribute towards gratuity.

Payment of Wages Act, 1936 The Payment of Wages Act, 1936 (the “Wages Act”) applies to persons employed in factories,

industrial or other establishments where monthly wages are less than Rs.10,000. The Wages Act obliges employers to maintain registers and records as required under this Act and display the abstracts of the Wages Act and the rules thereunder.

The Minimum Wages Act, 1948 The Minimum Wages Act, 1948 was enacted to establish minimum wages for certain categories of

employees. Under this Act, the Central and the State Governments stipulate the scheduled industries and fix minimum wages. The Act lists Agricultural and Non Agricultural employment where a prescribed minimum rate of wages is to be paid to employees.

Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 and Employment Exchanges (Compulsory Notification of Vacancies) Rules, 1960

The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 provides for compulsory notification of vacancies to the Employment Exchanges and for the rendition of returns relating to the Employment situation by the employers. All establishments in the public sector and establishments in the private sector excluding agriculture, where 25 or more persons are employed fall within the purview of the Act. These establishments are required to notify all vacancies (other than certain exempted vacancies) to the appropriate Employment Exchange as notified in the official Gazette by the State Government.

Industrial Employment (Standing Orders) Act, 1946 The Industrial Employment (Standing Orders) Act, 1946 requires employers in industrial

establishments to formally define conditions of employment. It applies to every industrial establishment with 100 or more employees (may be reduced by the Central Government in respect of certain States by notification in the official gazette). The Industrial Employment (Standing Orders) Act, 1946 calls for the submission of such work conditions to the relevant authorities for their approval.

The Equal Remuneration Act, 1976 The Constitution of India requires each State to secure equal pay for equal work for both men and

women. To give effect to this provision, the Equal Remuneration Act, 1976 was implemented. The Equal Remuneration Act, 1976 provides that no discrimination shall be shown on the basis of sex for performing similar duties and that equal remuneration shall be paid to both men and women when the same work is being done. The Equal Remuneration Act, 1976 aims to fight discrimination against the recruitment of women and provides for the setting up of an advisory committee to promote employment opportunities for women.

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The Maternity Benefit Act, 1961 The purpose of the Maternity Benefit Act, 1961 is to regulate the employment of pregnant women in

certain establishments for certain periods and to ensure paid leave for a specified period before and after childbirth, or miscarriage or medical termination of pregnancy. It provides for payment of maternity benefits and medical bonus, and prohibits the dismissal of and the reduction of wages paid to pregnant women.

The Public Liability Insurance Act, 1991

The Public Liability Insurance Act, 1991 was enacted to provide immediate relief to victims of an accident involving a hazardous substance. This Act imposes a “no fault” liability upon the owner of the hazardous substance and requires the owner to compensate the victims irrespective of any neglect or default on the part of the owner. This Act stipulates a maximum compensation of Rs.25,000 in the case of injury or death and limits the compensation to Rs.6,000 in case of damage to private property. The Act makes it obligatory for every owner to take an insurance policy covering potential liability from an accident. Along with insurance premium, every owner requires to contribute to the Environmental Relief Fund established by the Central Government. The Rules laid down in 1991 limit the potential liability of an insurer at Rs.450 million.

Various Regulations Governing Shops and Establishments

There are several State regulations governing the employment of workers in shops and commercial establishments. These regulations provide for the opening and closing hours of shops and establishment and the provision of weekly holiday with wages. The officials of the Labour Department who are notified as inspectors under such regulations are generally competent to initiate prosecution proceedings against the employers who violate the provisions of such laws. These acts provide for the compounding of offences committed thereunder.

Fiscal Legislations

Service Tax Chapter V of the Finance Act, 1994 as amended, provides for the levy of a service tax in respect of

certain categories of services. Every person who is liable to pay this service tax must register himself with the appropriate authorities.

Central Excise Excise duty imposes a liability on a manufacturer to pay excise duty on production or manufacture of

goods in India. The Central Excise Act, 1944 provides for the levy and collection of excise and prescribes procedures for clearances from a factory once the goods have been manufactured.

Value Added Tax Value Added Tax (“VAT”) is a system of multi-point levies on each of the purchases in the supply

chain with the facility of set-off input tax on sales whereby tax is paid at the stage of purchase of goods by a trader and on purchase of raw materials by a manufacturer. VAT is based on the value addition of goods, and the related VAT liability of the dealer is calculated by deducting input tax credit for tax collected on the sales during a particular period.

VAT is a consumption tax applicable to all commercial activities involving the production and distribution of goods and the provisions of services, and each State that has introduced VAT has its own VAT Act under which persons liable to pay VAT must register and obtain a registration number from the Excise Tax Officer of the respective State.

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Sales Tax The tax on sale of moveable goods within India is governed by the provisions of the Central Sales Tax

Act, 1956 or the relevant State law depending upon the movement of goods pursuant to the relevant sale. If the goods move between States pursuant to a sale arrangement, then the taxability of such sale is determined by the Central Sales Tax Act, 1956. On the other hand, the taxability of a sale of movable goods which does not contemplate movement of goods outside the State where the sale is taking place is determined as per the local sales tax/VAT legislation in place within such State.

Income Tax The Income Tax Act (the “IT Act”) relates to taxes on income in India. The IT Act provides for the

taxation of persons resident in India on global income and persons not resident in India on income received, accruing or arising in India or deemed to have been received, accrued or arising in India.

In accordance with the IT Act, any income earned by way of profits by a company incorporated in India is subject to tax levied on it in accordance with the rates as declared as part of the annual Finance Bill. Companies can also avail certain benefits under the IT Act, if eligible.

State Laws Governing Entry Tax Entry Tax provides for the levy and collection of tax on the entry of goods into a State for

consumption, use or sale therein. It is levied at such rate as may be specified by the State Government and different rates may be specified for different goods. The tax leviable under this Act shall be paid by every dealer in scheduled goods or any other person who brings or causes to be brought into a local area such scheduled goods whether on his own account or on account of his principal or customer or takes delivery or is entitled to take delivery of such goods on such entry.

Foreign Trade Regulations

Foreign Trade (Development and Regulation) Act, 1992 This statute seeks to increase foreign trade by regulating the imports and exports to and from India.

This legislation, read with the Indian Foreign Trade Policy, provides that no export or import can be made by a person or company without an importer-exporter code number unless such person or company is specifically exempt. An application for an importer-exporter code number has to be made to the office of the Joint Director General of Foreign Trade, Ministry of Commerce. An importer-exporter code number allotted to an applicant is valid for all its branches, divisions, units and factories.

Miscellaneous Legislation

Trade Marks Act, 1999 Under the Trade Marks Act, 1999 a trademark is a mark capable of being represented graphically and

which is capable of distinguishing the goods or services of one person from those of others used in relation to goods and services to indicate a connection in the course of trade between the goods and some person having the right as proprietor to use the mark. A ‘mark’ may consist of a device, brand, heading, label, ticket, name signature, word, letter, numeral, shape of goods, packaging or combination of colors or any combination thereof. The trademark, once applied for and which is accepted by the Registrar of Trademarks, is to be advertised in the trademarks journal by the Registrar. Oppositions, if any, are invited and, after satisfactory adjudications of the same, a certificate of registration is issued by the Registrar. The right to use the mark can be exercised either by the registered proprietor or a registered user. The present term of registration of a trademark is 10 years, which may be renewed for similar periods on payment of a prescribed renewal fee.

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Patents Act, 1970 as amended by the Patents (Amendment) Act 2005 In India, patents are granted under the Patents Act, 1970 (“Patents Act”). India is a signatory to the

Trade Related Agreement on Intellectual Property Rights (TRIPS) which requires India to recognize product and process patents. Product patents are therefore now recognized under the Patents Act and patent protection is given for a period of 20 years from the date of filing of the application for a patent. The Patents Act also provides protection to those Indian enterprises which have made a significant investment and have been producing and marketing a product prior to January 1, 2005 for which a patent has been granted through an application made under the Patents Act and have continued to manufacture the product covered by the patent on the date of the grant of the patent. In such a case, the patent holder shall only be entitled to receive a reasonable royalty from such enterprises and cannot institute infringement proceedings against such enterprises.

Copyright Act, 1957 The Copyright Act, 1957 (“Copyright Act”) sets out that copyright shall subsist throughout India in

certain classes of works namely, original literary, dramatic, musical and artistic works, cinematographic films and sound recordings. A copyright board has been constituted under the Copyright Act, which ordinarily hears all proceedings instituted before it under the Copyright Act. Licensing and assignment of copyright is permitted in accordance with the provisions of the Copyright Act. Infringement of copyright may amount to either a civil or criminal offence, depending on the circumstances in which the offence was committed.

Standards of Weights and Measures Act, 1976 This legislation applies to any packaged commodity that is sold, distributed or delivered. It provides

for standardization of packages in specified quantities or numbers in which the manufacturer, packer or distributor shall sell, distribute or deliver such specified commodity to avoid undue proliferation of weights, measures or number in which such commodities may be packed. Any person intending to pre-pack or import any commodity for sale, distribution or delivery must make an application to the Director of Legal Metrology for registration.

The Companies Act, 1956

The Companies Act, 1956 deals with laws relating to companies and certain other associations. It was enacted by the parliament in 1956. The Companies Act primarily regulates the formation, financing, functioning and winding up of companies. The Act prescribes regulatory mechanism regarding all relevant aspects, including organizational, financial and managerial aspects of companies. Regulation of the financial and management aspects constitutes the main focus of the Companies Act. In the functioning of the corporate sector, although freedom of companies is important, protection of the investors and shareholders, on whose funds they flourish, is equally important. The Companies Act plays the balancing role between these two competing factors, namely, management autonomy and investor protection.

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BOARD OF DIRECTORS AND SENIOR MANAGEMENT

Board of Directors We are a professionally-managed company having a Board headed by a non-executive Chairman. Our

Vice-Chairman also holds a non-executive position. The Board has the ultimate responsibility for the overall management and administration of the affairs of the Company. Day-to-day affairs are managed by the Managing Director, who is assisted by a team of executive officers and other key personnel in each functional area. Under our Articles of Association, the number of Directors cannot be less than three nor more than 18. However, this number excludes those Directors who have been nominated to the Board by certain institutional lenders, whose respective appointments under relevant Indian law are not required to be taken into account for this purpose. The Company may, subject to the provisions of the Articles of Association and the applicable Indian laws and regulations, increase or reduce the number of Directors by special resolution in a general meeting.

Pursuant to the Companies Act, the Directors may be appointed by the Board or by a general meeting of the shareholders. The Board may appoint any person as an additional Director, but such a Director must vacate his office at the next AGM unless re-elected by the shareholders after complying with the provisions of the Companies Act. A casual vacancy on the Board due to the death or resignation of a sitting member can be filled by the Board, but such a person can remain in office only for the unexpired term of the person in whose place he was appointed and he will retire on the expiry of the term unless elected by the shareholders. The Board may appoint an alternate Director to act for a Director during his physical absence from the State in which meetings of the Board are ordinarily held for a period of not less than three months in accordance with the provisions of the Companies Act.

No less than two-thirds of the total number of Directors are subject to retirement by rotation and of such Directors, one-third must retire every year. The Directors to retire are those who have been the longest in office. The Directors are not required to hold any qualification Shares.

The following table sets forth the details of our Board of Directors as of the date of this Placement Document.

Name

Position

Age Year appointed

as Director

Dr. Vijay Mallya Chairman (Non-executive) 53 2000

Mr. S. R. Gupte Vice Chairman (Non-executive)

70 2001

Mr. V. K. Rekhi Managing Director (Executive)

64 1999

Mr. M. R. Doraiswamy Iyengar Independent Non-Executive Director

74 2001

Mr. B. M. Labroo Independent Non-Executive Director

78 2001

Mr. Sreedhara Menon Independent Non-Executive Director

72 2006

Mr. Sudhindar Khanna Independent Non-Executive Director

56 2007

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Four of our seven Directors are independent directors. Except for the Managing Director, the remaining six of our Directors are subject to retirement by rotation.

Dr. Vijay Mallya. Dr. Mallya, who holds a Ph.D in Business Administration, is a well-known industrialist and the Chairman of the Board of Directors of the Company. He took over reins of UB Group in 1983 at the age of 28 and has been instrumental in developing it into a multinational business conglomerate. Dr. Mallya is the chairman of several other public companies in India and overseas. Dr. Mallya has won wide recognition from distinguished institutions throughout the span of his career. Dr. Mallya was a member of the Parliament (Rajya Sabha) from 2002 to 2008.

Mr. S. R. Gupte. Mr. Gupte is a chartered accountant. He has worked with Caltex India Limited for 5½ in various capacities. He has also worked with Air India for 24 years and took over as Acting Chairman and Managing Director from July 17, 1990. He was also Chairman of Hotel Corporation of India till November 1991. He has been with the UB Group for the last 17 years. He has varied experience in financials, administration and personnel fields as he was heading these fields in Air India. He is on the Board of Directors of various UB Group Companies.

Mr. V. K. Rekhi. Mr. Vijay Rekhi has wide experience in both operational and policy-making positions within and outside the UB Group, including its overseas operations. He has had vast experience in manufacturing, marketing and general management, particularly in the liquor industry. He is President and Managing Director of the Company and has been with the Group since 1972. He has a post graduate degree in Economics and a Masters in Business Administration from the Indian Institute of Management, Ahmedabad. Mr. Rekhi successfully completed a 16-week program on export management from the International Trade Centre, Geneva, Switzerland, a 12-week Advanced Management Program (ISMP) of the Harvard Business School and a seminar on Leading Organizational Change at the Wharton School of Business in the United States.

Mr. M. R. Doraiswamy Iyengar. Mr. Iyengar is a Fellow of the Institute of Chartered Accountants of India and a graduate in Law. He was a Senior Partner in M/s. K.V. Narasimhan & Co., Chartered Accountants in Bangalore. He has been in practice since 1965, having wide experience in audit and taxation.

Mr. B. M. Labroo. Mr. Labroo is an Industrialist and has wide experience in marketing, finance and Corporate Governance. Mr. Labroo is a M.A. in Political Science in Punjab University and is the Promoter and Chairman of Asahi India Glass Ltd.

Mr. Sreedhara Menon. Mr. Menon is the Chairman of the Board and Strategic Advisor of VITEOS Capital Market Services Limited, a business process outsourcing company in India with a sister company located at Piscataway, New Jersey, United States. Mr. Menon has previously held senior positions as Deputy President and Member of the Board of Directors of American Express Bank Limited, Chairman of the Board of Directors of American Express Bank International, Managing Director, Emerging Markets Group at Lehman Brothers Inc., New York and General Partner and Vice Chairman of RRE Ventures, LLC. Mr. Menon holds a Masters Degree in Economics from Maharaja’s College of the University of Kerala, India.

Mr. Sudhindar Krishan Khanna. Mr. Khanna is a chartered accountant. Mr. Khanna joined Accenture, London as a senior consultant in 1977 and was promoted to partner in 1986. Mr. Khanna possesses a large range of experience in advising clients in strategy, reengineering and technology across a range of industries at the Chairman/CEO level in approximately 20 countries. Mr. Khanna was responsible for setting up the Accenture business in India and was country managing partner for India at the Middle East. Prior to retirement his last position at Accenture was as global managing partner, based in London. Presently, he is the chairman of IEP Advisors Private Limited, Mumbai, a private equity firm.

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Set out below are the outside directorships held by the Directors of the Company as at September 30, 2009:

Name Company Location

Dr. Vijay Mallya........................... Aventis Pharma Ltd. Bombay Mumbai

Bayer CropScience Limited Mumbai

Deccan Charters Limited Mumbai

Four Seasons Wines Limited Bangalore

Kamsco Industries Private Limited Calcutta

Kingfisher Airlines Limited Bangalore

Mallya Private Limited Calcutta

Mangalore Chemicals and Fertilizers Ltd. Bangalore

McDowell Holdings Limited Bangalore

Millennium Alcobev Private Limited Chennai

Pharma Trading Company Private Limited Bangalore

Royal Challengers Sports Private Limited Bangalore

Shaw Wallace & Company Limited Kolkata

Shaw Wallace Breweries Limited Mumbai

SWEW Benefit Company Calcutta

The Gem Investment & Trading Company Private Limited Calcutta

United Breweries Ltd. Bangalore

United Breweries (Holdings) Ltd. Bangalore

United East Bengal Football Team Private Limited Calcutta

United Mohun Bagan Football Team Private Limited Calcutta

United Racing and Bloodstock Breeders Ltd. Bangalore

VJM Investments Private Limited Bangalore

Motor Sports Association of India Mumbai

Bouvet Ladubay, S.A. France

Connectics Pte Ltd. Singapore

Jenson & Nicholson (Singapore) Pte. Ltd. Singapore

Kingfisher America Inc. USA

Kingfisher International Airlines Inc, USA

Liquidity Inc. USA

Imbali Holdings (Pty) Ltd. South Africa

Lake Kyle Holdings (Pty) Ltd. South Africa

Mabula Game Reserve (Pty) Ltd. South Africa

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Mabula Investments (Pty) Ltd. South Africa

Marinscope Inc. USA

United Spirits Nepal Private Limited Nepal

Mendocino Brewing Company USA

Orange India Holdings S.A.R.L. Luxembourg

The Cape Milner SA (Pty) Ltd. South Africa

UB Emirates LLC Dubai

UB Gulf FZE Dubai

UB Holdings SA (Pty) Ltd. South Africa

UB Resorts Holdings (SA) (Pty) Ltd. South Africa

UB Resorts Investments (SA) (Pty) Ltd. South Africa

UB Resorts Management SA (Pty) Ltd. South Africa

UBICS Inc. USA

UBSN Limited U.K.

United Breweries of America Inc. USA

United Breweries & Distilleries (Pacific) Pte. Ltd. Singapore

United National Breweries (SA) (Pty) Ltd. South Africa

United Spirits (Shangai) Trading Company Limited China

United Wineries of America Inc. USA

Vantage Investments Pte. Ltd. Singapore

Whyte and Mackay Limited Scotland

Whyte and Mackay Group Limited Scotland

Whyte and Mackay Warehousing Limited Scotland

Wotan Pte Ltd. Singapore

DCL Holdings Private Limited Bangalore

Mr. S. R. Gupte ............................ Aventis Pharma Ltd. Mumbai

Associated Breweries & Distilleries Ltd. Mumbai

Kingfisher Airlines Limited Bangalore

Mangalore Chemicals & Fertilizers Ltd. Bangalore

Millennium Beer Industries Limited New Delhi

Shaw Wallace & Company Limited Calcutta

Shaw Wallace Breweries Limited Mumbai

SWEW Benefit Company Calcutta

VJM Media Pvt. Ltd. Mumbai

UB Electronic Instruments Limited Secunderabad

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United Helicharters Private Limited Mumbai

Federation of Indian Chambers of Commerce & Industry New Delhi

Mr. V. K. Rekhi ............................ Four Seasons Wines Ltd Bangalore

Royal Challengers Sports Private Limited Bangalore

Bouvet Ladubay S.A. France

United Spirits Nepal Private Limited Nepal




Liquidity Inc. USA

United Spirits (Shangai) Trading Company Limited China

Wine Society of India Private Limited Mumbai

The Associated Chambers of Commerce & Industry of India New Delhi

Mr. M. R. Doraiswamy Iyengar ... Vittal Investments Private Limited Chennai

McDowell Holding Limited Bangalore

Dirak (India) Panel Fittings Private Limited Bangalore

K.L. Koh Enterprises India Private Limited Bangalore

Sand Profiles India Private Limited Bangalore

Mr. B. M. Labroo ......................... Asahi India Glass Limited Delhi

Allied Fincap Services Pvt. Ltd. Delhi

Flavors & Food (India) Pvt. Ltd. Delhi

Maltex Malsters Ltd. Punjab

North-West Distilleries Pvt. Ltd. Punjab

Samir Paging Systems Ltd. Jammu/Kashmir

Shield Autoglass Ltd. Delhi

Nishi Electronics Pvt. Ltd. Delhi

Mr. Sreedhara Menon................... Viteos Mauritius Limited Mauritius

Viteos Capital Market Services Limited Bangalore

Viteos Fund Services Limited Bangalore




Mr. Sudhindar Krishan Khanna.... IEP Advisors Private Ltd. Mumbai

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Executive Officers Set out below are our current executive officers as of the date of this Placement Document:

Name Position Date of joining the Company

S. D. Lalla .................................... Joint President Overall Operations April 1994

Ravi Nedungadi............................ President and CFO, The UB Group January 1990

Ashok Capoor .............................. Deputy President May 1992

P. A. Murali .................................. Deputy President and Chief Financial Officer July 1993

Ajay B Baliga............................... Executive Vice President (Manufacturing and QC) November 2008

Kedar Vivekananda Ulman Executive Vice President (Sourcing and Business Development)

April 2009

Amrit Thomas .............................. Executive Vice President (Marketing) June 2007

Sanjay Raina ................................ Executive Vice President (Human Resources) November 2008

P. S. Gill ....................................... Chief Operating Officer (RPC – North) December 2007

N. R. Rajsekher ............................ Chief Operating Officer (RPC – West) April 1982

Philip Sargunar............................. Chief Operating Officer (RPC – South) November 2002

Kaushik Chatterjee ....................... Chief Operating Officer (RPC – East) April 2007

I.P. Suresh Menon ....................... Senior Vice President (Planning and Control) April 1985

K Laxmi Narasimhan. .................. Chief Operating Officer (RPC – Andhra Pradesh) December 2003

Vivek Prakash .............................. Chief Operating Officer (CSD Sales) June 1998

V.. S. Venkataraman ..................... Company Secretary and Senior Vice President August 1982

The address of our Directors and executive officers is that of our registered office at UB Tower, #24, Vittal Mallya Road, Bangalore 560 001, India.

Compensation and Share Ownership Compensation for our Directors is determined by the Compensation Committee and our Board and

approved by our shareholders. The Compensation Committee is empowered to set guidelines for salary, performance pay and perquisites for the senior employees from the level of Executive Vice President and above. During the year ended March 31, 2009, we paid sitting fees of Rs.1.18 million to our Directors in their capacity as such, and we paid aggregate remuneration and granted benefits of Rs.192.3 million to our executive officers.

None of the Company’s Directors or executive officers have or had any interest in any transactions effected by it during the year ended March 31, 2009 and the six months ended September 30, 2009, that are or

135

were unusual in their nature or conditions, or in any such transactions that were effected during an earlier fiscal year and have not been concluded.

The following table sets forth certain information with respect to the beneficial ownership of our Shares, as of September 30, 2009, by each of our Directors:

Name

Number of Shares

% of total outstanding

Share capital

Dr. Vijay Mallya............................................................................................ 10 0.000

Mr. S. R. Gupte ............................................................................................. — —

Mr. V. K. Rekhi ............................................................................................. 6,100 0.006

Mr. M. R. Doraiswamy Iyengar .................................................................... 21 0.000

Mr. B. M. Labroo .......................................................................................... 136,200 0.124

Mr. Sreedhara Menon.................................................................................... — —

Mr. Sudhindar Krishan Khanna..................................................................... 4,489 0.004

The following table sets forth certain information with respect to the beneficial ownership of our Shares, as of September 30, 2009, by each of our executive officers:

As of September 30, 2009

Name

Number of Shares


Share capital

S. D. Lalla ..................................................................................................... — —

Ravi Nedungadi............................................................................................. 1,200 0.001

Ashok Capoor ............................................................................................... 1,000 0.001

P. A. Murali ................................................................................................... — —

Ajay B Baliga................................................................................................ 702 0.001

Kedar Vivekananda Ulman ........................................................................... 1,200 0.001

Amrit Thomas ............................................................................................... 2,400 0.002

Sanjay Raina ................................................................................................. 3,600 0.003

P. S. Gill ........................................................................................................ — —

N. R. Rajsekher ............................................................................................. — —

Philip A. B. Sargunar .................................................................................... 1,500 0.001

Kaushik Chatterjee ........................................................................................ — —

I.P. Suresh Menon ......................................................................................... 2,030 0.001

K. Laxmi Narasimhan ................................................................................... — —

Vivek Prakash ............................................................................................... — —

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As of September 30, 2009

Name

Number of Shares


Share capital

V. S. Venkataraman ....................................................................................... — —

Total.............................................................................................................. 13,632 0.012

As of the date of this Placement Document, none of our Directors or executive officers have any options on our Shares. See “Our Business – Employees”.

Committees

The Audit Committee was constituted on April 19, 2001 and currently comprises Mr. M.R. Doraiswamy Iyengar, Mr. B. M. Labroo, Mr. S. R. Gupte and Mr. Sreedhara Menon. Mr. M. R. Doraiswamy Iyengar is the chairman of the Committee. The constitution of the Committee also meets the requirements of Section 292A of the Companies Act. The broad terms of reference of the Audit Committee are:

• reviewing with the management the internal control systems, observations of the auditors, semi-annual and annual financial statements before submission to the Board;

• recommending matters relating to financial management and auditors’ reports; and

• investigating matters referred / delegated to it by the Board; for this purpose, the Committee has full access to information / records of the Company including seeking external professional support, if necessary.

The Compensation Committee was constituted on April 19, 2001. The Committee is authorized, inter alia, to handle matters relating to compensation by way of salary, perquisites and benefits etc. to the managing / full-time Directors of the Company and to set guidelines for salary, performance pay and perquisites for the other senior employees from the level of Executive Vice President and above. The Committee is also empowered to formulate and implement the scheme for granting stock options to employees. Currently, it comprises Mr. M R. Doraiswamy Iyengar, Mr. S. R. Gupte and Mr. B. M. Labroo. Mr. B. M. Labroo is the chairman of the Committee.

The Shareholders’ / Investors’ Grievance Committee was constituted on April 19, 2001 to oversee the redress of shareholders’ and investors’ complaints such as transfer of shares and non-receipt of dividends and perform other related duties as set out in the listing agreements with the relevant stock exchange and as may be prescribed in this regard in the Companies Act. Currently it comprises Mr. M. R. Doraiswamy Iyengar and Mr. B. M. Labroo. Mr. M. R. Doraiswamy Iyengar is the chairman of the Committee. Mr. V. S. Venkataraman is the Compliance Officer.

The Company has also a Committee of Directors with authority delegated by the Board of Directors, to, among other things, approve, transfer and transmit shares, issue new share certificates on account of certificates lost and to perform other routine operations. The Committee comprises of Mr. S. R. Gupte, Mr. M. R. Doraiswamy Iyenger, Mr. V. K. Rekhi and Mr. B. M. Labroo.

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OUR SUBSIDIARIES

The following is a list of our subsidiaries as of September 30, 2009:

Name of subsidiary Registered address Issued share

capital

Proportion of owner interest

Percentage of voting rights,

directly or indirectly,

owned by the Company

(%) (%)

Asian Opportunities and Investments Limited.........................

IFS Court 28 Cybercity Ebene Mauritius

$4.999 million 100 100

Bouvet Ladubay S.A........................ 11 rue Jean Ackerman,Saint Hilaire, Saubt Florent 49426, Saumur Cedex, France

€10.800 million 100 100

Chapin Landias S.A.S. ..................... 11 rue Jean Ackerman, Saint Hilaire, Saubt Florent 49426, Saumur Cedex, France

€0.100 million 100 100

Daffodils Flavours and Fragrances Private Limited ................................

51, Richmond Road, Bangalore – 560 025, India

Rs.0.100 million 100 100

Four Seasons Wines Limited ........... 51, Richmond Road, Bangalore – 560 025, India

Rs.50.500 million 100 100

Herbertsons Limited......................... 51, Richmond Road, Bangalore – 560 025, India

Rs.0.600 million 100 100

Jasmine Flavours & Fragrances Private Limited ................................

UB Tower, #24 Vittal Mallya Road, Bangalore – 560 001,India

Rs.0.100 million 100 100

JIHL Nominees Limited................... 22 Greenville Street St. Helier Jersey JE4 8PX Channel Islands

U.S.$10 100 100

Liquidity Inc. ................................... 4235 Redwood Avenue Los Angeles, CA 90066 USA

U.S.$1,000 51 51

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capital





McDowell & Co. (Scotland) Limited.............................................

Keillour Castle, Methvan, Perthshire, PH1 3R4, Scotland

£1.575 million 100 100

McDowell & Company Limited ...... 51, Richmond Road, Bangalore – 560 025, India

Rs.0.500 million 100 100

McDowell Beverages Limited ......... 51, Richmond Road, Bangalore – 560 025, India

Rs.0.500 million 100 100

Montrose International S.A.............. Edificio Vallarino Top Floor Calle 52 y Elvira Mendez Panama

U.S.$0.500million

100 100

Palmer Investment Group Ltd.......... SeaMeadowHouse Blackbourne HighwayP.O. Box No. 116 Road Town, Tortola British Virgin Islands

U.S.$15.000 million

100 100

RG Shaw & Company Ltd. .............. Sussex House 8-10 Homesdale RoadBromley Kent BR2 9LZ United Kingdom

£0.077 million 100 100

Ramanreti Investments & Trading Company Ltd ...................................

Udyog Bhavan 2nd Floor 29 Walchand Hirachand Marg, Ballard Estate Mumbai – 400 038 India

Rs.0.500 million 100 100

Royal Challengers Sports Private Limited.............................................

UB Tower #24, Vittal Mallya Road, Bangalore – 560 001,India

Rs.0.100 million 100 100

Shaw Wallace Breweries Ltd…….. Udyog Bhavan 29 Walchand Hirachand Marg, Ballard Estate Mumbai – 400 038 India

Rs.1,645.850 million

100 100

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capital





Shaw Wallace Overseas Limited ..... Sussex House 8-10 Homesdale Road Bromley Kent BR2 9LZ United Kingdom

£0.358 million 100 100

Shaw Darby & Company Ltd........... Sussex House 8-10 Homesdale Road Bromley Kent BR2 9LZ United Kingdom

£0.131 million 100 100

Shaw Scott & Company Ltd. ........... Sussex House 8-10 Homesdale Road Bromley Kent BR2 9LZ United Kingdom

£0.106 million 100 100

Spring Valley Investments Holdings Inc. ...................................................

Geneva Place, 333 Waterfront Drive Road Town, Torola, British Virgin Islands

U.S.$0.050 million

100 100

Thames Rice Milling Company Limited.............................................

Sussex House 8-10 Homesdale RoadBromley Kent BR2 9LZ United Kingdom

£0.090 million 100 100

United Alcobev Limited................... 51, Richmond Road, Bangalore – 560 025, India

Rs. 0.500 million 100 100

United Spirits (Great Britain) Limited.............................................

c/o McClure Naismith, 4th Floor, Equitable House, 47 King William Street, London EC4R 24F, United Kingdom

£1.00 100 100

United Spirits (UK) Limited ............ c/o McClure Naismith, 4th Floor, Equitable House, 47 King William Street, London EC4R 24F, United Kingdom

£1.00 100 100

United Spirits Nepal Private Limited.............................................

Kamaladi P.O. Box 1882 Katmandu Nepal

NRS.8.212 million 82.47 82.47

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capital





United Vintners Limited .................. 51, Richmond Road, Bangalore – 560 025, India

Rs.0.500 million 100 100

United Spirits (Shanghai) Trading Company Limited ............................

Unit 1212-1213 No 1388 North Shan XI Road Shanghai, China 200060

RMB 5.000 million

100 100

USL Holdings (UK) Limited ........... c/o McClure Naismith, 4th Floor, Equitable House, 47 King William Street, London EC4R 24F, United Kingdom

£1,000 100 100

USL Holdings Limited..................... Geneva Place 333 Waterfront Drive Road Town Torola British Virgin Islands

U.S.$0.500 million

100 100

Whyte and Mackay Group

Bruce & Company (Leith) Limited.. Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£50 100 100

Charles Mackinlay & Company Limited.............................................

Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£177,110 100 100

Dalmore Distillers Limited .............. Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£2.00 100 100

Dalmore Whyte and Mackay Limited.............................................


£2.00 100 100

Edinburgh Scotch Whisky Company Limited ............................


£10,000 100 100

141


capital





Ewen & Company Limited .............. c/o McClure Naismith 4th floor – Equitable House 47 King William Street, London, EC4R 9AF, U.K.

£510 100 100

Fettercairn Distillery Limited........... c/o McClure Naismith 4th floor – Equitable House 47 King William Street, London, EC4R 9AF, U.K.

£25,000 100 100

Findlater Scotch Whisky Limited .... Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£100 100 100

Glayva Liqueur Limited................... Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£87,410 100 100

Glentalla Limited ............................. Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£25,000 100 100

GPS Realisations Limited ................ Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£6,100 100 100

Grey Rogers & Company Limited ... Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£704,204 100 100

Hay & Macleod Limited .................. Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£2.00 100 100

Invergordon Distillers (Holdings) Limited.............................................

c/o McClure Naismith 4th floor – Equitable House 47 King William Street, London, EC4R 9AF U.K.

£5,749,968 100 100

142


capital





Invergordon Distillers Group Limited.............................................


£12,752,510.30 100 100

Invergordon Distillers Limited......... Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£1.00 100 100

Invergordon Gin Limited ................. c/o McClure Naismith 4th floor – Equitable House 47 King William Street, London, EC4R 9AF, U.K.

£2.00 100 100

Isle of Jura Distillery Company Limited.............................................


£227,000 100 100

Jarvis Halliday & Company Limited c/o McClure Naismith 4th floor – Equitable House 47 King William Street, London, EC4R 9AF, U.K.

£35,000 100 100

John E McPherson & Sons Limited . c/o McClure Naismith 4th floor – Equitable House 47 King William Street, London, EC4R 9AF, U.K.

£43,112 100 100

Kensington Distillers Limited.......... c/o McClure Naismith 4th floor – Equitable House 47 King William Street, London, EC4R 9AF, U.K.

£1,002 100 100

KI Trustees Limited ......................... Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£100 100 100

Kyndal Spirits Limited..................... Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£200,000 100 100

143


capital





Leith Distillers Limited.................... Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£110 100 100

Loch Glass Distilling Company Limited.............................................


£100 100 100

Longman Distillers Limited ............. Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£51 100 100

Lycidas (437) Limited...................... Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£1.00 100 100

Pentland Bonding Company Limited.............................................


£25,000 100 100

Ronald Morrison & Company Limited.............................................


£100,000 100 100

St Vincent Street (437) Limited ....... Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£200,000 100 100

Tamnavulin-Glenlivet Distillery Company Limited ............................


£100 100 100

TDL Realisations Limited................ Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£17,140 100 100

The Sheep Dip Whisky Company Limited.............................................


£100 100 100

144


capital





W&S Strong Limited ....................... Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£122,950 100 100

Watson & Middleton Limited .......... Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£10,000 100 100

Whyte and Mackay Distillers Limited.............................................


£2.00 100 100

Whyte and Mackay Group Limited.. Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£46,003,497.28 100 100

William Muir Limited...................... Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£356,020 100 100

WMB Realisations Limited ............. Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£10,000 100 100

Whyte and Mackay Property Limited.............................................


£100 100 100

Whyte and Mackay de Venezuela CA....................................................

Caracas £250 100 100

Wauchope Moodie & Company Limited.............................................


£15 100 100

Whyte and Mackay Limited............. Dalmore House 310 St. Vincent Street, Glasgow, G2 5RG, U.K.

£178,973,000 100 100

Whyte and Mackay Warehousing Limited.............................................


£100 100 100

145


capital





Whyte and Mackay Holdings Limited.............................................


£1.00 100 100

Our holding in certain of our subsidiaries represented at least 10% of our consolidated net profit or loss or 10% of consolidated net assets as of and for the year ended March 31, 2009. The following table sets forth additional information regarding these holdings as of and for the year ended March 31, 2009:

Name of subsidiary Field of activity

Proportion of capital

held Reserves

Profit after tax

Net assets value

Value of shares held

as per Company’s

books

Amount still to be paid on shares held

Dividend received by the

Company on shares

held

Debt owed to

Company

(%) (Rs. millions)

Bouvet Laudubay ........ Wines 100 162.1 18.3 891.4 1.379.3 – – 46.5

United Spirits Nepal Pvt. Ltd ........................

Alcohol Beverages 82.46 62.9 38.8 68.1 65.6 – 40.2 82.9

USL Holdings BVL..... Investment 100 1561.4 477.6 – 22.2 – – 7.451.5

USL Holdings UK Ltd Investment 100 (14.423.0) (6402.7) (14,422.9) 0.0 – – 8597.2

United Spirits (Great Britain) Ltd .................. Investment 100 (2.215.7) (1.251.4) (2,215.6) 0.00 – – 25.981.7

Whyte and Mackay Group Ltd .................... Investment 100 179.3 257.704 4,690.9 36.691.9 – – –

Shaw Wallace Breweries Limited ....... Investment 100 3,355.5 227.3 5,001.3 3,240.2 – – –

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ISSUE PROCEDURE

Below is a summary intended to present a general outline of the procedure relating to the bidding, payment, allocation and allotment of Equity Shares. The procedure followed in the Issue may differ from the one mentioned below and the investors are assumed to have appraised themselves of the same from us or the Joint Global Coordinators. Prospective investors are advised to inform themselves of any restrictions or limitations that may be applicable to them.

Qualified Institutions Placements

The Issue is being made in reliance upon Chapter VIII of the SEBI Regulations through the mechanism of Qualified Institutions Placements (“QIPs”), pursuant to which an Indian listed company may issue and allot equity shares, non-convertible debt instruments along with warrants or convertible securities other than warrants, on a private placement basis to QIBs as defined in 2(1)(zd) of the SEBI Regulations and below, provided that:

• a special resolution approving the QIP has been passed by its shareholders;

• the equity shares of the same class of such issuer have been listed on a recognized stock exchange in India that has nationwide trading terminals for a period of at least one year prior to the date of issuance of notice to its shareholders for convening the meeting to pass the special resolution; and

• such issuer complies with the minimum public shareholding requirements set out in the listing agreement with the stock exchange referred to above.

Additionally, there is a minimum pricing requirement under the SEBI Regulations. The issue price of the securities shall not be less than the average of the weekly high and low of the closing prices of the equity shares of the same class quoted on the stock exchange during the two weeks preceding the relevant date.

The “relevant date” refers to the date of the meeting at which the board of directors or the committee of directors duly authorised by the board of the issuer decides to open the proposed issue and “stock exchange” means any of the recognized stock exchanges in which the equity shares of the issuer of the same class are listed and on which the highest trading volume in such equity shares has been recorded during the two weeks immediately preceding the relevant date.

Securities must be allotted within 12 months from the date of the shareholders resolution approving the QIP. The securities issued pursuant to the QIP must be issued on the basis of a placement document that shall contain all material information, including the information specified in Schedule XVIII of the SEBI Regulations. The placement document is a private document provided to less than 49 investors through serially numbered copies and is required to be placed on the website of the concerned stock exchange and of the issuer with a disclaimer to the effect that it is in connection with an issue to QIBs and no offer is being made to the public or to any other category of investors. A copy of the placement document is required to be filed with the SEBI for record purposes within 30 days of the allotment of the securities.

Pursuant to the provisions of Section 67 of the Companies Act, for a transaction that is not a public offering, an invitation or offer may not be made to more than 49 persons.

The minimum number of allottees for each qualified institutional placement shall not be less than:

• two, where the issue size is less than or equal to Rs.2.5 billion; and

• five, where the issue size is greater than Rs.2.5 billion.

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No single allottee shall be allotted more than 50% of the issue size.

QIBs that belong to the same group or that are under common control shall be deemed to be a single allottee.

The aggregate of the proposed QIP and all previous QIPs made in the same financial year shall not exceed five times the net worth of the issuer as per its audited balance sheet of the previous financial year. The issuer shall furnish a copy of the placement document to each stock exchange on which its equity shares are listed.

Securities allotted to a QIB pursuant to a QIP shall not be sold for a period of one year from the date of allotment except on a recognised stock exchange in India.

We have obtained in-principle approvals for the listing of the Equity Shares on the BSE, the BgSE and the NSE. We have also filed a copy of the Preliminary Placement Document with the BSE, NSE and the BgSE.

Issue Procedure

1. We and the Joint Global Coordinators are required to circulate serially numbered copies of the Preliminary Placement Document and an application form (each an “Application Form”) either in electronic form or physical form to not more than 49 QIBs.

2. The list of QIBs to whom the Application Form is delivered shall be determined by the Joint Global Coordinators in consultation with the Company. The Joint Global Coordinators shall deliver to the QIBs determined by the Joint Global Coordinators an Application Form for the submission of their respective bids and application of the QIBs. Unless the Preliminary Placement Document and Application Form is numbered serially and addressed to a particular QIB, no invitation to subscribe shall be deemed to have been made to such QIB. Even if such documentation were to come into the possession of any person other than the intended recipient, no offer or invitation to offer shall be deemed to have been made to such person.

3. QIBs may submit their Bids/applications through the Application Form, including any revisions thereof, during the bidding period to the Joint Global Coordinators.

4. Once the Application Form is submitted by a QIB, such Application Form constitutes an irrevocable offer and it cannot be withdrawn after the Bid Closing Date.

5. QIBs must indicate the following in the Application Form:

(a) the full official name of the QIB to whom Equity Shares are to be allotted;

(b) the number of Equity Shares bid for;

(c) the price at which they are willing to subscribe to the Equity Shares, provided that QIBs may also indicate that they are willing to submit a bid at “Cut-off Price”, which shall be any price that may be determined by us in consultation with the Joint Global Coordinators at or above the minimum price calculated in accordance with Regulation 85(1) of the SEBI Regulations (the “Floor Price”) which for this Issue, is Rs.913.70); and

(d) the details of the dematerialized account(s) to which the Equity Shares should be credited.

Note: Each sub-account of an FII will be considered as an individual QIB and a separate Application Form would be required from each sub-account for submitting Bids.

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6. The Bid Closing Date shall be notified to the Stock Exchanges and the QIBs shall be deemed to have been given notice of such date after the receipt of the Bid cum Application Form.

7. Based on the Application Forms received from the QIBs who have received a serially numbered copy of the Preliminary Placement Document either in electronic form or physical form, we shall decide: (i) the price at which the Equity Shares will be offered (the “Offer Price”), which shall be at or above the Floor Price; and (ii) the number of Equity Shares to be issued, in each case, in consultation with the Joint Global Coordinators. We shall notify the BSE, NSE and the BgSE of the Offer Price. On determination of the Offer Price, each QIB to whom an Allocation shall be made shall be sent a confirmation of allocation note (each, a “CAN”). The dispatch of the CAN shall be deemed a valid, binding and irrevocable contract for the QIBs to pay the entire Offer Price for all the Equity Shares Allocated to such QIB. Each CAN shall contain details of the number of Equity Shares allocated to the QIB, the payment instructions, including details of the amounts payable by the QIB for the Allotment of Equity Shares in its name, and the date applicable to the respective QIB on which payment of the application monies is required to be made in respect of the Equity Shares. Our decision and that of the Joint Global Coordinators in this regard shall be at our and their sole and absolute discretion.

8. After the receipt of the Application Forms, the Bid Closing Date shall be notified to the BSE, NSE and BgSE and the QIBs shall be deemed to have been given notice of the same. Pursuant to receiving a CAN, each QIB shall be required to make the payment of the entire application monies for the Equity Shares indicated in the CAN at the Offer Price, through electronic transfer only to our designated bank account by the Pay-In Date as specified in the CAN sent to the respective QIBs. We shall not allot Equity Shares to more than 49 QIBs to whom an invitation or offer has been made. Upon receipt of the application monies from the QIBs, our Board will approve the Allotment of Equity Shares pursuant to a Board Resolution and the Equity Shares shall be issued and Allotted to those QIBs as per the details provided for in their respective CANs. We shall inform the BSE, NSE and the BgSE of the details of such allotment.

9. After adopting the Allotment resolution and prior to crediting the Equity Shares into the depository participant accounts of the QIBs, we have received in-principle approval of the Stock Exchanges for listing of the Equity Shares.

10. After receipt of the in-principle approval of the BSE, NSE and BgSE, the Equity Shares shall be credited to the depository participant accounts of the respective QIBs.

11. We shall then apply for the final trading and listing permissions from the BSE, NSE and BgSE.

12. The Equity Shares that have been so Allotted and credited to the depository participant accounts of the QIBs shall be eligible for trading on the BSE, NSE and BgSE only upon the receipt of final trading and listing approvals from the BSE, NSE and BgSE.

13. Subsequent to receipt of the notification of the final trading and listing approvals from the BSE, NSE and BgSE, we shall communicate the receipt thereof to those QIBs to whom the Equity Shares have been Allotted. We shall not be responsible for any delay or non-receipt of the communication of the final trading and listing permissions from the BSE, NSE and BgSE or any loss arising from such delay or non-receipt. Final listing and trading approvals granted by the Stock Exchanges are also placed on their respective websites. QIBs are advised to appraise themselves of the status of the receipt of the permissions from us or the BSE, NSE and BgSE.

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Qualified Institutional Buyers

Only QIBs as defined in Regulation 2(1)(zd) of the SEBI Regulations and not otherwise excluded pursuant to Regulation 86 of the SEBI Regulations are eligible to invest. Currently a QIB means:

• public financial institutions as defined in Section 4A of the Companies Act, 1956;

• scheduled commercial banks;

• mutual funds registered with the SEBI (“Mutual Funds”);

• a foreign institutional investor and sub-accounts registered with SEBI, other than sub-accounts which are foreign corporates or foreign individuals;

• multilateral and bilateral development financial institutions;

• venture capital funds registered with the SEBI;

• foreign venture capital investors registered with the SEBI;

• state industrial development corporations;

• insurance companies registered with the Insurance Regulatory and Development Authority;

• provident funds with a minimum corpus of Rs.250 million;

• pension funds with a minimum corpus of Rs.250 million; and

• the National Investment Fund set up by resolution No. 2/3/2005-DDII dated November 23, 2005 of the Government of India published in the Gazette of India.

Please note that pursuant to amendments to the SEBI regulations, a sub-account that is a foreign corporate or foreign individual is no longer included under the definition of a QIB.

FIIs are permitted to participate in the Issue through the portfolio investment scheme. FIIs are permitted to participate in the Issue, subject to compliance with all applicable laws and such that the shareholding of the FIIs does not exceed the specified limits as prescribed under the applicable laws in this regard.

FIIs can hold up to a maximum of 59% of the paid-up equity share capital of the Company.

The issue of Equity Shares to a single FII should not exceed 10% of our post-Issue, issued capital. In respect of an FII investing in the Equity Shares on behalf of its sub-accounts, the investment on behalf of each sub-account must not exceed 10% of our total issued capital, or 5% of our total issued capital in the case where such sub-account is a foreign corporate or an individual. As of September 30, 2009, FIIs held 34.99% of our total issued capital.

No Allotment shall be made pursuant to the Issue, either directly or indirectly, to any QIB which is a Promoter or any person related to the Promoters. QIBs which have all or any of the following rights shall be deemed to be persons related to the Promoters:

• rights under a shareholders’ agreement or voting agreement entered into with a Promoter or persons related to a Promoter;

• veto rights; or

• a right to appoint any nominee director on our Boards;

150

provided, however, that a QIB which does not hold any of our Equity Shares and which has acquired the aforesaid rights in the capacity of a lender shall not be deemed to be related to the Promoters.

We, and the Joint Global Coordinators, are not liable for any amendments or modifications or changes in applicable laws or regulations, which may occur after the Placement Document is filed with the BSE, NSE and BgSE. QIBs are advised to make their own independent investigations and satisfy themselves that they are eligible to bid. QIBs are advised to ensure that any single Bid from them does not exceed the investment limits or maximum number of Equity Shares that may be held by them under applicable laws or regulation or as specified in this Placement Document. Further, QIBs are required to satisfy themselves that any requisite compliances pursuant to this allotment such as public disclosures under applicable laws are complied with. QIBs are advised to consult their advisors in this regard. Further, QIBs are required to satisfy themselves that their Bids would not eventually result in triggering a tender offer under the Takeover Code.

A minimum of 10% of the Equity Shares in this Issue shall be Allotted to Mutual Funds. If no Mutual Fund is agreeable to take up the minimum portion as specified above, such minimum portion or part thereof may be Allotted to other QIBs.

Note: Affiliates or associates of the Joint Global Coordinators who are QIBs may participate in the Issue in compliance with applicable laws.

Application and Bidding

Application Form QIBs shall only use the serially numbered Application Form supplied by the Joint Global Coordinators

in either electronic form or by physical delivery for the purpose of making a bid (including revision of a Bid) in accordance with the terms of the Preliminary Placement Document and this Placement Document.

By making a Bid (including any revision thereof) for Equity Shares pursuant to the terms of this Placement Document, each QIB will be deemed to have given the following representations and warranties and the representations, warranties and agreements made under the sections and paragraphs “Notice to Investors – Representation by Investors” and “Sale and Transfer Restrictions”, namely:

(a) the QIB confirms that it is a Qualified Institutional Buyer in terms of Regulation 2(1)(zd) of SEBI Regulations and is eligible to participate in the Issue;

(b) the QIB confirms that it is not a Promoter and is not a person related to the Promoters, either directly or indirectly, and its Application Form does not directly or indirectly represent the Promoters or Promoter Group or a person related to the Promoters;

(c) the QIB confirms that it has no rights under a shareholders agreement or voting agreement with us or the Promoters or the persons related to the Promoters, no veto rights or right to appoint any nominee director on our Board other than that acquired in the capacity of a lender;

(d) the QIB has no right to withdraw its Bid after the Bid Closing Date;

(e) the QIB confirms that if allotted Equity Shares pursuant to this Placement Document, it shall, for a period of one year from allotment, sell the Equity Shares so acquired only on the floor of the BSE, NSE and BgSE;

(f) the QIB confirms that it is eligible to bid for and hold Equity Shares so allotted and together with any Equity Shares held by the QIB prior to the Issue and the QIB further confirms that the holdings of the QIB do not, and shall not, exceed the level permissible as per any regulations applicable to the QIB;

(g) the QIB confirms that the bid would not eventually result in triggering an open offer under the Takeover Code; and

151

(h) the QIB confirms that, to the best of its knowledge and belief, together with other QIBs in the Issue that belong to the same group or are under common control, the allotment to the QIB or such group of QIBs shall not exceed 50% of the aggregate amount of the Issue.

For the purposes of this statement:

(i) the expression “belongs to the same group” shall derive meaning from the concept of “companies under the same group” as provided in sub-section (11) of Section 372 of the Companies Act; and

(ii) “Control” shall have the same meaning as is assigned to it by Clause (c) of Regulation 2 of the Takeover Code.

The QIB shall not undertake any trade in the Equity Shares credited to its depository participant account until such time that the final listing and trading approvals for the Equity Shares are issued by the BSE, BgSE and NSE.

Submission of Application Form All Application Forms shall be duly completed including price and the number of Equity Shares bid.

All Application Forms duly completed, along with a copy of the PAN card or the PAN allotment letter, shall be submitted to the Joint Global Coordinators. The Application Form shall be submitted within the Bidding Period to the Joint Global Coordinators either in electronic form or through physical delivery at the following address:

Name: CLSA India Limited

Address: 8/F Dalamal House, Nariman Point, Mumbai – 400021

Contact Person: Anurag Agarwal

Fax: Email:

+ (91) 22 2285 6524 [email protected]

Name: Citigroup Global Markets India Private Limited

Address: 8/F Bakthawar, Nariman Point, Mumbai – 400021

Contact Person: Ashish Kaushal

Fax: Email:

+ (91) 22 6631 9897 [email protected]

Name: UBS Securities India Private Limited

Address: 2/F 2 North Avenue, Maker Maxity, Bandra Kurla Complex, Bandra East, Mumbai – 400051

Contact Person: Ashish Mukkirwar

Fax: Email:

+ (91) 22 6155 6292 [email protected]

152

Name: Morgan Stanley India Company Private Limited

Address: Forbes Building, Charanjit Rai Marg, Fort, Mumbai – 400021

Contact Person: Jayesh Jamsandekar

Fax: Email:

+ (91) 22 2209 7017 [email protected]

The Joint Global Coordinators shall not be required to provide any written acknowledgement of the same.

Pricing and Allocation

Build-up of the Book The QIBs shall submit their Bids through the Application Forms within the Bidding Period to the Joint

Global Coordinators who shall maintain the Book. The Joint Global Coordinators shall not be required to provide any written acknowledgement to the investors.

Price Discovery and Allocation We, in consultation with the Joint Global Coordinators, are required to finalize the Offer Price, which

shall be at or above the Floor Price.

Method of Allocation We shall determine the allocation in consultation with the Joint Global Coordinators in compliance

with Chapter VIII of the SEBI Regulations.

Bids received from QIBs at or above the Offer Price shall be grouped together to determine the total demand. Any allocation to all such QIBs will be made at the Offer Price. Allocation shall be decided by us in consultation with the Joint Global Coordinators on a discretionary basis for a maximum of 49 investors.

Allocation to Mutual Funds for up to a minimum of 10% of the aggregate amount of the Issue is required to be undertaken subject to valid Bids being received at or above the Offer Price.

OUR DECISION AND THAT OF THE JOINT GLOBAL COORDINATORS IN RESPECT OF ALLOCATION SHALL BE BINDING ON ALL QIBS. QIBS MAY NOTE THAT ALLOCATION OF EQUITY SHARES IS AT OUR SOLE AND ABSOLUTE DISCRETION AND QIBS MAY NOT RECEIVE ANY ALLOCATION, EVEN IF THEY HAVE SUBMITTED VALID BIDS AT OR ABOVE THE OFFER PRICE. NEITHER WE NOR THE JOINT GLOBAL COORDINATORS ARE OBLIGED TO ASSIGN ANY REASONS FOR SUCH NON-ALLOCATION.

OUR DECISION AND THAT OF THE JOINT GLOBAL COORDINATORS IN RESPECT OF ALLOTMENT SHALL BE FINAL AND BINDING ON ALL QIBS.

The maximum number of allottees of Equity Shares shall not be greater than 49 allottees. Further the Equity Shares will be allotted within 12 months from the date of the shareholders resolution approving the Issue.

CAN Based on the Application Forms received, we and the Joint Global Coordinators shall decide the list of

QIBs to whom the serially numbered CAN shall be sent, pursuant to which the details of the Equity Shares Allocated to them and the details of the amounts payable for Allotment of the Equity Shares in their

153

respective names shall be notified to such Investors. Additionally, the CAN would include details of the bank account(s) for electronic transfer of funds and the Pay-In Date as well as the probable designated date (“Designated Date”), being the date of credit of the Equity Shares to the respective QIB’s account.

The eligible QIBs would also be sent a serially numbered Placement Document either in electronic form or by physical delivery along with the serially numbered CAN.

The dispatch of the serially numbered Placement Document and the CAN by the QIB shall be deemed to be a valid, binding and irrevocable contract for the QIB to furnish all details that may be required by the Joint Global Coordinators and to pay the entire Offer Price for all the Equity Shares allocated to such QIB.

QIBS WOULD NEED TO PROVIDE THEIR DEPOSITORY ACCOUNT DETAILS, THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE APPLICATION FORM. QIBS MUST ENSURE THAT THE NAME GIVEN IN THE APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. FOR THIS PURPOSE, EACH SUB-ACCOUNT OF AN FII WOULD BE CONSIDERED AS AN INDEPENDENT QIB.

By submitting the Application Form, the QIB will be deemed to have made the representations and warranties as specified under the section “Notice to Investors” and further that such QIB shall not undertake any trade in the Equity Shares credited to its depository participant account until such time as the final listing and trading approval for the Equity Shares is issued by the BSE, NSE and the BgSE.

QIBS ARE ADVISED TO INSTRUCT THEIR DEPOSITORY PARTICIPANT TO ACCEPT THE EQUITY SHARES THAT MAY BE ALLOCATED/ALLOTTED TO THEM PURSUANT TO THIS ISSUE.

Bank Account for Payment of Application Money We have opened a special bank account (the “Account”) with HDFC Bank Ltd, in terms of the

arrangement between us and the Bank. Each QIB will be required to deposit the entire amount payable for the Shares allocated to it by the Pay-In Date as mentioned in the CAN. If the payment is not made in favor of the Account within the time stipulated in the CAN, the CAN of the concerned QIBs is liable to be cancelled. In the case of cancellations or default by the QIBs, we and the Joint Global Coordinators have the right to reallocate the Equity Shares at the Offer Price among existing or new QIBs at our and their sole and absolute discretion.

Payment Instructions The payment of the application money shall be made by the QIBs in the name of “USL QIP

ACCOUNT” as per the payment instructions provided in the CAN. QIBs may make payment only through electronic fund transfer.

Designated Date and Allotment of Equity Shares (a) The Equity Shares will not be allotted unless the QIBs pay the Offer Price to the Account as stated

above.

(b) In accordance with the SEBI Regulations, Equity Shares will be issued and allotment shall be made only in dematerialized form to QIBs. Allottees will have the option to re-materialize the Equity Shares, if they so desire, as per the provisions of the Companies Act and the Depositories Act, 1996.

(c) We, at our sole discretion, reserve the right to cancel the Issue at any time up to Allotment without assigning any reasons whatsoever.

154

(d) After the Allotment and credit of Equity Shares into the QIBs’ depositories accounts, we will apply for final trading/listing approvals from the BSE, NSE and BgSE.

(e) The Payment Collection Bank shall not release the monies lying to the credit of the Account to us until such time as we deliver to the Payment Collection Bank the approval of the BSE, NSE and BgSE for the final listing and trading of the Equity Shares offered in this Issue.

(f) In the unlikely event of any delay in the allotment or credit of the Equity Shares, or receipt of trading or listing approvals or cancellation of the Issue, no interest or penalty will be payable by us.

Submissions to the SEBI We are required to submit this Placement Document to the SEBI within 30 days of the date of

allotment for record purposes.

Other Instructions

Permanent Account Number The copy of the Permanent Account Number (“PAN”) card or PAN allotment letter is required to be

submitted along with the Application form. Without this information, the CAN will be liable to be rejected / cancelled. It is to be specifically noted that the applicant should not submit the General Index Registrar (“GIR”) number or any other identification number instead of the PAN as the bids are liable to be rejected on this ground.

Our Right to Reject Bids We, in consultation with the Joint Global Coordinators, may reject Bids, in part or in full, without

assigning any reasons whatsoever. Our decision and that of the Joint Global Coordinators in relation to a Bid shall be final and binding.

Shares in Dematerialized Form with NSDL or CDSL As per the provisions of Section 68B of the Companies Act, the allotment of Equity Shares pursuant to

the Issue shall be only in a dematerialized form (i.e. not in the form of physical certificates but to be fungible and to be represented by the statement issued electronically).

(a) A QIB applying for Equity Shares must have at least one beneficiary account with either of the depository participants of either NSDL or CDSL prior to making the Bid.

(b) Allotment to a successful QIB will be credited in electronic form directly to the beneficiary account (with the Depository Participant) of the QIB.

(c) Equity Shares in electronic form can be traded only on those stock exchanges which have electronic connectivity with NSDL and CDSL. All the stock exchanges where the Equity Shares are proposed to be listed have electronic connectivity with NSDL and CDSL.

(d) The trading of the Equity Shares will be in dematerialized form only for all QIBs in the dematerialized segment of the respective stock exchanges.

(e) We will not be responsible or liable for the delay in the credit of Equity Shares due to errors in the Application Form on part of the QIBs.

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SALE AND TRANSFER RESTRICTIONS

The distribution of this Placement Document and the offer, sale or delivery of the Equity Shares is restricted by law in certain jurisdictions. Persons who come into possession of this Placement Document are advised to take legal advice with regard to any restrictions which may be applicable to them and to observe such restrictions. This Placement Document may not be used for the purpose of an offer or sale in any circumstances in which such offer or sale is not authorized or permitted.

Certain Distribution and Solicitation Restrictions

General No action has been taken or will be taken that would permit a public offering of the Equity Shares to

occur in any jurisdiction, or the possession, circulation or distribution of this Placement Document or any other material relating to the Company or the Equity Shares in any jurisdiction where action for such purpose is required. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and neither this Placement Document nor any offering materials or advertisements in connection with the Equity Shares may be distributed or published in or from any country or jurisdiction except under circumstances that will result in compliance with any applicable rules and regulations of any such country or jurisdiction. The Issue will be made in compliance with the applicable SEBI Regulations. Each purchaser of the Equity Shares in the Issue will be required to make, or be deemed to have made, as applicable, the acknowledgments and agreements as described under “Sale and Transfer Restrictions” of this Placement Document.

European Economic Area In relation to each Member State of the European Economic Area which has implemented the

Prospectus Directive 2003/71/EC (each, a “Relevant Member State”), each of the Joint Global Coordinators has jointly and severally represented and warranted that it has not made and will not make an offer of any Equity Shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the Equity Shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in the Relevant Member State, all in accordance with the Prospectus Directive, other than the offers contemplated in a prospectus in a Relevant Member State after the date of such publication or notification, and except that it may make an offer of any Equity Shares to the public in that Relevant Member State at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity which has two or more of: (i) an average of at least 250 employees during the last financial year; (ii) a total balance sheet of more than €43,000,000; and (iii) an annual turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;

(c) to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the Joint Global Coordinators for any such offer; or

(d) in any other circumstances falling within Article 3(2) of the Prospectus Directive, subject to obtaining the prior consent of the Joint Global Coordinators for any such offer, provided that no such offer of Equity Shares shall result in a requirement for the publication by us or any of the Joint Global Coordinators of a prospectus pursuant to Article 3 of the Prospectus Directive.

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For the purposes of this provision, the expression “an offer of any Equity Shares to the public” in relation to any Equity Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any Equity Shares to be offered so as to enable an investor to decide to acquire any Equity Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State.

In the case of any Equity Shares being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, each of the Joint Global Coordinators has agreed to use its reasonable endeavors, by the inclusion of appropriate language in relevant offer documents, to procure that such financial intermediary will be deemed to have represented, acknowledged and agreed that the Equity Shares acquired by it in the offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any Equity Shares to the public other than their offer or resale in a Relevant Member State to qualified investors as so defined who are not financial intermediaries or in circumstances in which the prior consent of the Joint Global Coordinators has been obtained to each such proposed offer or resale.

Hong Kong None of the Joint Global Coordinators:

(a) has offered or sold, or will offer or sell, in Hong Kong, by means of any document, any Equity Shares other than (i) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) (“SFO”) and any rules made under the SFO, or (ii) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) or which do not constitute an offer to the public within the meaning of that Ordinance; and

(b) has issued, or had in its possession for the purposes of issue, or will issue, or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Equity Shares, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Equity Shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the SFO and any rules made under the SFO.

Singapore This Placement Document has not been registered as a prospectus with the Monetary Authority of

Singapore under the Securities and Futures Act, Chapter 289 of Singapore (the “Securities and Futures Act”). The Equity Shares may not be offered or sold or made the subject of an invitation for subscription or purchase nor may this Placement Document or any other document or material in connection with the offer or sale or invitation for subscription or purchase of any Equity Shares be circulated or distributed, whether directly or indirectly, to the public or any member of the public in Singapore other than (a) to an institutional investor or other person falling within Section 274 of the Securities and Futures Act, (b) to a relevant person, or any person pursuant to Section 275(1A) of the Securities and Futures Act, and in accordance with the conditions specified in Section 275 of the Securities and Futures Act, or (c) otherwise than pursuant to, and in accordance with the conditions of, any other applicable provision of the Securities and Futures Act.

Each of the following relevant persons specified in Section 275 of the Securities and Futures Act which has subscribed or purchased Equity Shares, namely a person who is: (a) a corporate (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, should note that shares, debentures and units of shares and debentures of that corporation or the

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beneficiaries’ rights and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the Equity Shares under Section 275 of the Securities and Futures Act except: (1) to an institutional investor under Section 274 of the Securities and Futures Act or to a relevant person, or any person pursuant to Section 275(1A) of the Securities and Futures Act, and in accordance with the conditions specified in Section 275 of the Securities and Futures Act; (2) where no consideration is given for the transfer; or (3) by operation of law.

United Kingdom Each of the Joint Global Coordinators has represented, warranted and undertaken to us that:

(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated in the United Kingdom any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (“FSMA”)) received by it in connection with the issue or sale of the Equity Shares in circumstances in which section 21(1) of FSMA does not apply to our Company; and

(b) it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Equity Shares in, from or otherwise involving the United Kingdom.

United States

The Equity Shares have not been and will not be registered under the Securities Act and, may not be offered or sold within the United States. Each of the Joint Global Coordinators has acknowledged and agreed that it will only offer or sell the Equity Shares in offshore transactions in reliance on Regulation S under the Securities Act. Resales of the Equity Shares are restricted as described under “— Certain Transfer Restrictions”. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act.Australia

This Placement Document is not a disclosure document under Chapter 6D of the Corporations Act 2001 (Cth) (the “Australian Corporations Act”) and has not been lodged with the Australian Securities & Investments Commission and does not purport to include the information required of a disclosure document under the Australian Corporations Act. (i) The offer of the Equity Shares under this Placement Document is only made to persons to whom it is lawful to offer the Equity Shares without disclosure to investors under Chapter 6D of the Australian Corporations Act under one or more exemptions set out in Section 708 of the Australian Corporations Act; (ii) this Placement Document is made available in Australia to persons as set forth in clause (i) above; and (iii) by accepting this offer, the offeree represents that the offeree is such a person as set forth in clause (ii) above and agrees not to sell or offer for sale within Australia any Equity Share sold to the offeree within 12 months after their transfer to the offeree under this Placement Document.

France Each of the Joint Global Coordinators has represented and agreed that they have not offered or sold

and will not offer or sell, directly or indirectly, any Equity Shares to the public in France and they have not distributed or caused to be distributed and will not distribute or cause to be distributed to the public in France, this Placement Document, the final placement document or any other offering material relating to the Equity Shares and such offers, sales and distributions have been and will be made in France only to (a) persons providing investment services relating to portfolio management for the account of third parties, and/or (b) qualified investors (investisseurs qualifiés), as defined in, and in accordance with, Articles L.411-1, L.411-2 and D.411-1 to D.411-3 of the French Code monétaire et financier.

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Republic of Italy The offering of the Equity Shares has not been registered with the Commissione Nazionale per le

Società e la Borsa (“CONSOB”) pursuant to Italian securities legislation and, accordingly, each Joint Global Coordinator has represented that it has not offered, sold or distributed, and will not offer, sell or distribute any Equity Shares or any copy of this Placement Document or any other offer document in the Republic of Italy (“Italy”) except:

(a) to qualified investors (investitori qualificati), pursuant to Article 100 of Legislative Decree no. 58 of 24 February 1998 (the “Consolidated Financial Services Act”) and Article 34-ter, paragraph 1, letter (b) of CONSOB regulation No. 11971 of 14 May 1999 (the “CONSOB Regulation”), all as amended; or

(b) in any other circumstances where an express exemption from compliance with the restrictions on offers to the public applies, as provided under Article 100 of the Consolidated Financial Services Act and Article 34-ter of the CONSOB Regulation.

Moreover, and subject to the foregoing, any offer, sale or delivery of the Equity Shares or distribution of copies of this Placement Document or any other document relating to the Equity Shares in Italy under (a) or (b) above must be:

(i) made by an investment firm, bank or financial intermediary permitted to conduct such activities in Italy in accordance with the Consolidated Financial Services Act, Legislative Decree No. 385 of 1 September 1993 (the “Banking Act”), CONSOB Regulation No. 16190 of 29 October 2007, all as amended;

(ii) in compliance with Article 129 of the Banking Act and the implementing guidelines, pursuant to which the Bank of Italy may request information on the offering or issue of securities in Italy; and

(iii) in compliance with any securities, tax, exchange control and any other applicable laws and regulations, including any limitation or requirement which may be imposed from time to time, inter alia, by CONSOB or the Bank of Italy.

Any investor purchasing the Equity Shares in this offering is solely responsible for ensuring that any offer or resale of the Equity Shares it purchased in this offering occurs in compliance with applicable laws and regulations.

Article 100-bis of the Consolidated Financial Services Act affects the transferability of the Equity Shares in Italy to the extent that any placing of the Equity Shares is made solely with qualified investors and such Equity Shares are then systematically resold to non-qualified investors on the secondary market at any time in the 12 months following such placing. Where this occurs, if a prospectus compliant with the Prospectus Directive has not been published, purchasers of Equity Shares who are acting outside of the course of their business or profession may in certain circumstances be entitled to declare such purchase void and to claim damages from any authorised person at whose premises the Equity Shares were purchased, unless an exemption provided for under the Consolidated Financial Services Act applies.

This Placement Document and the information contained herein are intended only for the use of its recipient and are not to be distributed to any third-party resident or located in Italy for any reason. No person resident or located in Italy other than the original recipients of this document may rely on it or its contents.

Japan The Equity Shares offered hereby have not been and will not be registered under the Financial

Instruments and Exchange Act of Japan (the “Financial Instruments and Exchange Act”). Accordingly, each

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Joint Global Coordinator has represented, warranted and agreed that the Equity Shares which it subscribes will be subscribed by it as principal and that, in connection with the offering made hereby, it will not, directly or indirectly, offer or sell any Equity Shares in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organised under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and other relevant laws and regulations of Japan.

Luxembourg The Equity Shares are not offered to the public in or from Luxembourg and each Joint Global

Coordinator has represented and agreed that it will not offer the Equity Shares or cause the offering of the Equity Shares or contribute to the offering of the Equity Shares to the public in or from Luxembourg, unless all the relevant legal and regulatory requirements concerning a public offer in or from Luxembourg have been complied with. In particular, this offer has not been and may not be announced to the public and offering material may not be made available to the public.

The United Arab Emirates Each Joint Global Coordinator has represented and agreed that:

(a) the Equity Shares have not been and will not be offered, sold or publicly promoted or advertised by it in the United Arab Emirates other than in compliance with any laws applicable in the United Arab Emirates governing the issue, offering or the sale of securities; and

(b) the Equity Shares have not been and will not be offered, sold or publicly promoted or advertised by it in the Dubai International Financial Centre other than in compliance with any laws applicable in the Dubai International Financial Centre governing the issue, offering or the sale of securities.

Certain Transfer Restrictions

Due to the following restrictions, purchasers are advised to consult legal counsel prior to making any resale, pledge or other transfer of the Equity Shares.

Pursuant to SEBI Regulations, the allottees of the Equity Shares are not permitted to sell the Equity Shares for a period of one year from the date of allotment except through the NSE, BSE and BgSE.

Each purchaser of our Equity Shares will, by its acceptance thereof, be deemed to have acknowledged, represented to and agreed with us and the Joint Global Coordinators that:

(1) It understands that the Equity Shares have not been, and will not be, registered under the Securities Act or with any securities regulatory authority of any State of the United States, and are subject to restrictions on transfer.

(2) It is purchasing the Equity Shares in an offshore transaction pursuant to, and in accordance with, Regulation S under the Securities Act.

(3) It is and the person, if any, for whose account or benefit the purchaser is acquiring the Equity Shares issued pursuant to this Placement Document, was located outside the United States at the time the buy order for such Equity Shares was originated and continues to be located outside the United States and has not purchased such Equity Shares for the account or benefit of any person in the United States or

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entered into any arrangement for the transfer of such Equity Shares or any economic interest therein to any person in the United States.

(4) It is not an affiliate of us or a person acting on behalf of an affiliate.

(5) We, the Joint Global Coordinators and our respective affiliates will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements.

(6) Any resale or other transfer, or attempted resale or other transfer, of any of the Equity Shares, or any interest therein, made other than in compliance with the above-stated restrictions, will not be recognized by us.

(7) It certifies (or if it is a broker-dealer acting as an agent on behalf of a customer, its customer has confirmed to it that such customer certifies) that it is authorized to consummate the purchase of such Equity Shares in compliance with all applicable laws and regulations.

(8) It acknowledges and agrees (or if it is a broker-dealer acting on behalf of a customer, its customer has confirmed to it that such customer acknowledges) that such Equity Shares have not been and will not be registered under the U.S. Securities Act or any state securities laws in the United States.

(9) It certifies that either (a) it is, or at the time such Equity Shares are purchased will be, the beneficial owner of the Equity Shares and it is, and at the times the offer of Equity Shares was made to it and its buy order for Equity Shares was originated it was, located outside the United States (within the meaning of Regulation S) or (b) it is a broker-dealer acting on behalf of its customer and its customer has confirmed to it that (i) such customer is, or at the time such Equity Shares are purchased will be, the beneficial owner of the Equity Shares, and (ii) such customer is, and at the times the offer of Equity Shares was made to it and its buy order for Equity Shares was originated it was, located outside the United States (within the meaning of Regulation S).

(10) It agrees (or if it is a broker-dealer acting on behalf of a customer, its customer has confirmed to it that such customer agrees) that it will not offer, sell, pledge or otherwise transfer such Equity Shares except in an offshore transaction complying with Rule 903 or Rule 904 of Regulation S or pursuant to any other available exemption from registration under the U.S. Securities Act and in accordance with all applicable securities laws of the States of the United States and any other jurisdiction, including India.

(11) It acknowledges and agrees (or if it is a broker-dealer acting on behalf of a customer, its customer has confirmed to it that such customer acknowledges and agrees) that we and the Joint Global Coordinators and Book Running Lead Managers, our respective affiliates and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and agrees that if any of such acknowledgements, representations or agreements deemed to have been made by virtue of its purchase of the Equity Shares are no longer accurate, it will promptly notify us; and if it is acquiring any of our Equity Shares as a fiduciary or agent for one or more accounts, it represents that it has sole investment discretion with respect to each such account and that it has full power to make, and does make, the foregoing representations and agreements on behalf of each such account.

Any resale or other transfer or attempted resale or other transfer, made other than in compliance with the above-stated restrictions, will not be recognized by us.

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INDIAN SECURITIES MARKET

The information in this section has been extracted from publicly available documents from various sources, and has not been prepared or independently verified by us or the Joint Global Coordinators or any of their respective affiliates or advisors.

The Indian Securities Market

India has a long history of organized securities trading. In 1875, the first stock exchange was established in Mumbai.

Stock Exchange Regulation

India’s stock exchanges are regulated primarily by the SEBI, as well as by the Indian Government acting through the Ministry of Finance, Capital Markets Division, under the Securities Contracts (Regulation) Act, 1956, as amended (“SCRA”) and the Securities Contracts (Regulation) Rules, 1957, as amended (“SCRR”) along with the rules, by-laws and regulations of the respective stock exchanges, which regulate the recognition of stock exchanges, the qualifications for membership and the manner in which contracts are entered into and enforced between members.

The Securities and Exchange Board of India Act, 1992, as amended (the “SEBI Act”) granted powers to the SEBI to regulate the Indian securities markets, including stock exchanges and other financial intermediaries, to promote and monitor self-regulatory organizations, to prohibit fraudulent and unfair trade practices and insider trading; and to regulate substantial acquisitions of shares and takeovers of companies. The SEBI has also issued guidelines and regulations concerning minimum disclosure requirements by public companies, rules and regulations concerning investor protection, insider trading, substantial acquisition of shares and takeovers of companies, buy-back of securities, delisting of securities, employee stock option schemes, stockbrokers, underwriters, mutual funds, foreign institutional investors, credit rating agencies and other capital market participants. The SEBI has the power to amend the listing agreements and bye-laws of stock exchanges in India. Any amendment of the bye-laws of the stock exchanges requires the prior approval of the SEBI.

The SEBI has also set up a committee for the review of Indian securities laws, which has proposed a draft Securities Bill. The draft Securities Bill, if enacted in its present form, may result in a substantial revision in the laws relating to securities transactions in India. The Companies Bill 2008 was originally introduced in the Fourteenth Lok Sabha on October 23, 2008, however, it has been re-introduced in the Fifteenth Lok Sabha on August 3, 2009 with certain modifications since the Companies Bill, 2009 and the Companies Bill, 2008 had lapsed due to the dissolution of the Fourteenth Lok Sabha.

Listing of Securities The listing of securities on recognized Indian stock exchanges is regulated by the SCRR, the

Companies Act, the SCRA, the SEBI Act, various guidelines, rules and regulations issued by the SEBI and the Listing Agreement of the respective stock exchanges. Under the SCRR, the governing body of each stock exchange is empowered to suspend trading of or dealing in a listed security for breach of our Company’s obligations under such agreement, subject to our Company receiving prior notice in writing of the intent of the exchange. In the event that a suspension of a company’s securities continues for a period in excess of three months, the company may appeal to the Securities Appellate Tribunal established under the SEBI Act to set aside the suspension. The SEBI has the power to set aside the decision of the stock exchange in this regard.

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The SEBI also has the power to amend such listing agreements and the bye-laws of the stock exchanges in India.

The Listing Agreement requires that all listed companies are required to ensure a minimum level of public shareholding at 25% of the total number of issued shares of a class or kind for the purpose of continuous listing. However, in the case of companies which (i) are offering or have offered shares to the extent of at least 10% of the issue size in terms of Rule 19(2)(b) of the SCRR; (ii) have 20 million or more outstanding shares; or (iii) have a market capitalisation of Rs.10,000 million or more and the minimum public shareholding to be maintained by such companies is 10%. Consequently, a listed company may be delisted from the stock exchanges for not complying with the above-mentioned requirements.

Pursuant to a circular dated April 8, 2008, the SEBI has amended Clause 49 of the Listing Agreement to state that if the non-executive chairman of a listed company is a promoter or is related to promoters of the company or persons occupying management positions at the board level or at one level below the board, at least one-half of the board of the company should consist of independent directors.

In the context of the expression “related to any promoter” of the company, the SEBI, vide its circular dated October 23, 2008, has specified that:

(a) where the promoter is a listed entity, its directors, other than the independent directors, its employees or its nominees shall be deemed to be related to it; and

(b) where the promoter is an unlisted entity, its directors, its employees or its nominees shall be deemed to be related to it.

Index-Based Market-Wide Circuit Breaker System In order to restrict abnormal price volatility in any particular stock, an index based market-wide

(equity and equity derivatives) circuit breaker system has been implemented. The Indian stock exchanges can also exercise the power to suspend trading during periods of market volatility. Margin requirements are imposed by stock exchanges that are required to be paid by stockbrokers.

The market-wide circuit breakers are triggered by movement of either the SENSEX of the BSE or NIFTY of the NSE, whichever is breached earlier.

Delisting of Securities The SEBI has recently, pursuant to a notification dated June 10, 2009, issued the SEBI (Delisting of

Equity Shares) Regulations, 2009 (“Delisting Regulations”).

The Delisting Regulations are applicable to: (i) voluntary delisting of securities by promoters of a company; (ii) any acquisition of shares of a company (either by a promoter or by any other person) or a scheme or arrangement, consequent to which the public shareholding in such company falls below the minimum limits specified in the listing conditions or listing agreement that may result in delisting of securities; (iii) promoters of companies who voluntarily seek to delist their securities from some or all stock exchanges on which the security is listed; (iv) cases where a person in control of the management is seeking to consolidate his holdings in a company in a manner that would result in the public shareholding in the company falling below the limit specified in the listing conditions or in the listing agreement that may have the effect of company being delisted; and (v) companies which may be compulsorily delisted by the stock exchanges on account of, among other things, violation of stock exchange by-laws. Following a compulsory delisting, a company, its full-time directors, its promoters and the firms promoted by any of them cannot directly or indirectly access the securities market or seek listing of any equity shares for a period of 10 years from the date of such delisting.

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A company, whose securities have been listed for a minimum period of three years on any stock exchange, may delist its securities from the stock exchanges, after obtaining in-principle approval from the stock exchange, by providing an exit opportunity to the public shareholders (i.e., shareholders other than the promoters and parties acting in concert with the promoters) (“Delisting Offer”). This exit opportunity involves a price discovery process known as the “book-building process”. A Delisting Offer can be launched by any promoter or acquirer desirous of delisting the securities of a company. The Delisting Offer, however, needs to be supported by a resolution passed by the board of directors of the company. Further, a resolution must be approved by three-fourths of the shareholders of the listed company through a postal ballot. However, the special resolution should be acted upon, if and only if, the votes cast by public shareholders in favour of the proposal are at least two times the number of votes cast by public shareholders against it. The concerned promoters or acquirer can also vote on the delisting proposal. Further, the above-mentioned in-principal approval has to be obtained after the shareholders’ approval.

Following the approval of the shareholders, the promoter or acquirer will issue a public announcement (i.e., a public notice) in relation to the Delisting Offer. This typically contains a the date on which the Delisting Offer is launched. The offer price shall have a floor price which shall be determined by calculating the average of the weekly high and low of the closing prices during the last 26 weeks or two weeks preceding the date on which the recognized stock exchange was notified of the board meeting in which the delisting proposal was considered. The promoter has a right to accept or reject the price determined by the book building process. For the delisting offer to be successful, the shareholder of the promoter (along with persons acting in concert) together with the shares accepted in the offer should reach the higher of: (a) 90% of the total issued equity capital; (b) the aggregate percentage of pre-offer promoter shareholding (along with persons acting in concert) and (c): 50% of the offer size.

A company may also be compulsorily delisted by the stock exchange due to any acquisition of shares of the company or other arrangement or consolidation of holdings which results in the public shareholding of the company falling below the minimum level specified in the listing conditions or in the listing agreements.

The SEBI Delisting Guidelines permit stock exchanges to delist the securities of companies that have not complied with the relevant provisions of the Securities Contract (Regulation) Act, 1956 after giving the company a reasonable opportunity of being heard. The SEBI Delisting Guidelines also prove that in the event that the securities of a company are delisted by a stock exchange, the fair value of securities shall be determined by persons appointed by the stock exchange out of a panel of experts, which shall also be selected by the stock exchange. If a listed company is delisted by the stock exchange, the listed company may file an appeal before the Securities Appellate Tribunal against the stock exchange’s decision.

Further, on June 10, 2009, the Ministry of Finance proposed certain amendments to SCRR (“MoF Notification”) in relation to voluntary and compulsory delisting, to bring them into line with the Delisting Regulations. The MoF Notification shall become effective from the date that it is published in the Official Gazette. Due to their recent issuance, the applicability of the Delisting Regulations and MoF Notification have not been tested in any manner and hence it is possible that some of the clauses may be amended to make either the Delisting Regulations or the MoF Notification more effective or clarify any ambiguities contained therein. Investors are also requested to consult their advisors before taking any steps under the Delisting Regulations.

Disclosures under the Companies Act and Securities Regulations Under the Companies Act, a public offering of securities in India must be made by means of a

prospectus, which must contain information specified in the Companies Act and the SEBI Regulations as amended, and be filed with the Registrar of Companies having jurisdiction over the place where a company’s registered office is situated, which, in the case of our Company, is currently the Registrar of Companies located at Bangalore, Karnataka. A company’s directors and promoters may be subject to civil and criminal

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liability for misrepresentation in a prospectus. The Companies Act also sets forth procedures for the acceptance of subscriptions and the allotment of securities among subscribers and establishes maximum commission rates for the sale of securities. The SEBI has issued detailed guidelines concerning disclosure by public companies in relation to capital issues.

Public limited companies are required under the Companies Act and the SEBI Regulations to prepare, file with the Registrar of Companies and circulate to their shareholders audited annual accounts which comply with the Companies Act’s disclosure requirements and regulations governing their manner of presentation and which include sections pertaining to corporate governance, related party transactions and the management’s discussion and analysis as required under the listing agreement. In addition, a listed company is subject to continuing disclosure requirements pursuant to the terms of its listing agreement with the relevant stock exchange. Accordingly, companies are now required to publish unaudited financial statements, although subject to a limited review by our Company’s auditors, on a quarterly basis and are required to inform stock exchanges immediately regarding any stock price-sensitive information.

The Companies Act further requires mandatory compliance with accounting standards issued by the ICAI. The ICAI and the SEBI have implemented changes which require Indian companies to account for deferred taxation, consolidate their accounts (subsidiaries only), and provide segment-wise reporting and disclosure of related party transactions from April 1, 2001 and accounting for investments in affiliated companies and joint ventures in consolidated accounts from April 1, 2002.

As at April 1, 2003, accounting of intangible assets is also regulated by accounting standards set by the ICAI and, as at April 1, 2004,accounting standards set by the ICAI will regulate accounting for impairment of assets. The ICAI has recently announced that all listed companies and public interest entities have to comply with International Financial Reporting Standards from April 1, 2011.

Indian Stock Exchanges

There are now 23 stock exchanges in India. Most of the stock exchanges have their own governing board for self-regulation. The BSE and the NSE together hold a dominant position among the stock exchanges in terms of number of listed companies, market capitalization and trading activity.

With effect from April 1, 2003, the stock exchanges in India operate on a trading day plus two, or T+2, rolling settlement system. At the end of the T+2 period, obligations are settled with buyers of securities paying for and receiving securities, while sellers transfer and receive payment for securities. For example, trades executed on a Monday would typically be settled on a Wednesday. In order to contain the risk arising out of the transactions entered into by the members of various stock exchanges either on their own account or on behalf of their clients, the stock exchanges have designed risk management procedures, which include compulsory prescribed margins on the individual broker members, based on their outstanding exposure in the market, as well as stock-specific margins from the members.

To restrict abnormal price volatility, the SEBI has instructed stock exchanges to apply the fol1owing price bands calculated at the previous day’s closing price (there are no restrictions on price movements of index stocks):

Market Wide Circuit Breakers. In order to restrict abnormal price volatility in any particular stock, the SEBI has instructed the stock exchanges to apply daily circuit breakers, which do not allow transactions beyond certain price volatility. An index based market-wide (equity and equity derivatives) circuit breaker system has been implemented and the circuit breakers are applied to the market for movement by 10%, 15% and 20% for two prescribed market indices: the BSE Sensex for the BSE and the Nifty for the NSE (the “NSE Nifty”), whichever is breached earlier. If any of these circuit breaker thresholds are reached, trading in al1 equity and equity derivatives markets nationwide is halted.

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Price Bands. In addition to the market-wide index based circuit breakers, there are currently in place varying individual scrip wise bands (except for scrips on which derivative products are available or scrips included in indices on which derivative products are available) of 20% either ways for all other scrips.

BSE The BSE, the oldest stock exchange in India, was established in 1875. The BSE switched over to on-

line trading from May 1995. Only members of the BSE have the right to trade in the stocks listed on the BSE.

As of August 2009, the BSE had 1,001 members comprising 173 individual members, 805 Indian companies and 23 foreign institutional investors. As of August 31, 2009, there were 4,942 companies trading on the BSE and the estimated market capitalization of stocks trading on the BSE was Rs.52,857 billion. The average daily turnover on the BSE as of August 31, 2009 was Rs.58.25 billion. The BSE has obtained SEBI approval to expand its BSE on line trading network to more than 400 cities. (Source: BSE)

Derivatives trading commenced on the BSE in 2000. The BSE has also wholesale and retail debt trading segments. The retail trading in government securities commenced in January 2003.

NSE The NSE serves as a national exchange, providing nationwide online satellite-linked screen-based

trading facilities with market makers and electronic clearing and settlement for securities, including government securities, debentures, public sector bonds and units. The principal aim of the NSE is to enable investors to buy or sell securities from anywhere in India, serving as a national market for securities. Deliveries for trades executed “on-market” are exchanged through the National Securities Clearing Corporation Limited. The NSE does not categorize shares into groups as in the case of BSE, except in respect of the trade-to-trade category. Screen-based paperless trading and settlement is possible through the NSE from more than 354 cities in India. The NSE commenced operations in the wholesale debt market in June 1994, in capital markets in November 1994 and in derivatives in June 2000.

As of August 31, 2009, there were 1,431 companies trading on the NSE and the estimated market capitalisation of stocks trading on the NSE was Rs.49,758 billion. The average daily turnover on the NSE as of August 31, 2009 was Rs.173.79 billion. The NSE launched the NSE 50 Index, now known as S&P CNX NIFTY, on April 22, 1996 and the Mid-cap index on January 1, 1996. The securities in the NSE 50 Index are highly liquid. (Source: NSE)

Derivatives trading commenced on the NSE in June 2000. The NSE also has wholesale and retail debt trading segments.

BgSE

Established in 1963, the BgSE is a self-regulatory organization located in Bangalore and is managed by the Governing Board consisting of members nominated by the SEBI, public representatives, elected members and an executive director. The BgSE launched its online trading system - BEST (Bangalore Electronic Securities Trading), on July 29, 1996. The BgSE has 241 members and, as of May 31, 2009, there were 340 companies listed on the BgSE consisting of 158 regional and 182 non-regional companies.

Stock Market Indices There are a number of indices of stock prices on the NSE, the most popular being the S&P CNX Nifty,

CNX Nifty Junior, S&P CNX Defts, S&P CNX 500, CNX Midcap and CNX 100

The following two indices are generally used in tracking the aggregate price movements on the BSE:

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• The BSE Sensitive Index, or Sensex, consists of listed shares of 30 large market capitalization companies. The companies are selected on the basis of market capitalization, liquidity and industry representation. Sensex was first complied in 1986 with the fiscal year ended March 31, 1979 as its base year. This is the most commonly used index in India.

• The BSE 100 Index (formerly the BSE National Index) contains listed shares of 100 companies including the 30 in Sensex. The BSE Index was introduced in January 1989 with the fiscal year ended March 31, 1984 as its base year.

Internet-Based Securities Trading and Services SEBI approved Internet trading in January 2000. Internet trading takes place through order routing

systems, which route client orders to exchange trading systems for execution. Stockbrokers interested in providing this service are required to apply for permission to the relevant stock exchange and also have to comply with certain minimum conditions stipulated by the SEBI. The NSE became the first exchange to grant approval to its members for providing Internet-based trading services. Internet trading is possible on both the “equities” as well as the “derivatives” segments of the NSE.

Trading Hours Trading on the BSE, the BgSE and the NSE occurs from Monday through Friday, between 9:55 a.m.

and 3:30 p.m. The BSE, the BgSE and NSE are closed on public holidays.

Trading Procedure In order to facilitate smooth transactions, in 1995, the BSE replaced its open outcry system with the

BSE On-line Trading (“BOLT”) facility in 1995. This totally automated screen-based trading in securities was put into practice nationwide.

This has enhanced transparency in dealings and has assisted considerably in smoothing settlement cycles and improving efficiency in back-office work. Electronic trading was introduced in India by NSE, which developed its technology in-house. The NSE introduced for the first time in India, fully automated screen based trading, which uses a modern, fully computerised trading system designed to offer investors across the length and breadth of the country a safe and easy way to invest. The NSE trading system called “National Exchange for Automated Trading” (NEAT) is a fully automated screen based trading system, which adopts the principle of an order driven market. The derivatives turnover on the NSE has surpassed the equity market turnover. The turnover of derivatives on the NSE increased from Rs.23,654 million in the fiscal year ended March 31, 2001 to Rs.130,904,779 million in the fiscal year ended March 31, 2008.

The NSE faired very well in 2007 in terms of traded volumes in futures and options taken together, improving its worldwide ranking from 15th in 2006 to 9th in 2007. The traded volumes in the derivatives segment of the NSE saw an increase of 95% in 2007 over 2006.

Takeover Code

Disclosure and mandatory bid obligations for listed Indian companies under Indian law are governed by the Takeover Code which prescribes certain thresholds or trigger points that give rise to certain obligations thereunder. Certain provisions of the Takeover Code are discussed below.

Any acquirer (meaning a person who, directly or indirectly, acquires or agrees to acquire equity shares or voting rights in a company, either by himself or with any person acting in concert) who acquires equity shares or voting rights that would entitle him to more than 5%, 10%, 14%, 54% or 74% of the equity shares or voting rights in a company (together with the company’s equity shares or voting rights, if any, already held by such acquirer) is required to disclose the aggregate of his equity shareholding or voting rights in that company

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to the company (which in turn is required to disclose such shareholding to each of the stock exchanges on which the company’s equity shares are listed) and to each of the stock exchanges on which the company’s equity shares are listed within two days of (a) the receipt of allotment information; or (b) the acquisition of equity shares or voting rights, as the case may be. The term “shares” has been defined under the Takeover Code to shares in the share capital of a company carrying voting rights and includes any other security which entitles a person to acquire shares with voting rights but does not include preference shares.

A person who, together with persons acting in concert with him, holds 15% or more but less than 55% of the equity shares or voting rights in any company is required to disclose any purchase or sale representing 2% or more of the equity shares or voting rights of that company (together with the aggregate shareholding after such acquisition or sale) to that company and the stock exchanges on which the company’s equity shares are listed within two days of the purchase or sale and is also required to make annual disclosure of his holdings to that company (which in turn is required to disclose such shareholding to each of the stock exchanges on which the company’s equity shares are listed).

Promoters or persons in control of a company are also required to make annual disclosure of their holding in a specified manner. The company is also required to make annual disclosure of holdings of its promoters or persons in control as on March 31 of the respective year to each of the stock exchanges on which its equity shares are listed.

The SEBI has recently amended the Takeover Code to make it mandatory for the promoters and promoter group of listed companies to disclose the creation and enforcement of a pledge on the equity shares held by such persons.

An acquirer cannot acquire equity shares or voting rights which (taken together with the existing equity shares or voting rights, if any, held by him or by persons acting in concert with him) would entitle such acquirer to exercise 15% or more of the voting rights in a company, unless such acquirer makes a public announcement offering to acquire a further minimum of 20% of the equity shares of the company at a price not lower than the price determined in accordance with the Takeover Code. A copy of the public announcement is required to be delivered, on the date on which such announcement is published, to SEBI, the company and the stock exchanges on which the company’s equity shares are listed.

No acquirer who, together with persons acting in concert with him, has acquired, in accordance with law, 15% or more but less than 55% of the shares or voting rights in a company, shall acquire, either by himself or through or with persons acting in concert with him, additional shares or voting rights that would entitle him to exercise more than 5% of the voting rights in any financial year ending March 31, unless such acquirer makes a public announcement offering to acquire a further minimum of 20% of the equity shares of the target company at a price not lower than the price determined in accordance with the Takeover Code.

An acquirer who, together with persons acting in concert with him, has acquired, in accordance with law, 55% or more but less than 75% of the equity shares or voting rights in a company (or, where the company concerned had obtained the initial listing of its shares by making an offer of at least 10% of the issue size to the public pursuant to Rule 19(2)(b) of the SCRR, less than 90% of the shares or voting rights in the company) may not, either by itself or through persons acting in concert with it, acquire any additional equity shares or voting rights in the company, unless such acquirer makes an open offer to acquire a minimum of 20% of the shares or voting rights which it does not already own in the company, provided that an acquirer together with persons acting in concert may acquire additional shares or voting rights entitling him to up to 5% voting rights in a company without making a public announcement if (i) the acquisition is made through open market purchase on the stock exchanges or the increase in the shares or voting rights is pursuant to a buy-back of shares by the target company and (ii) the post acquisition shareholding of the acquirer and persons acting in concert does not exceed 75%.

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Where an acquirer who (together with persons acting in concert) holds 55% or more, but less than 75% of the shares or voting rights in a target company (or, where the concerned company had obtained the initial listing of its shares by making an offer of at least 10% of the issue size to the public pursuant to Rule 19(2)(b) of the SCRR, less than 90% of the shares or voting rights in the company), intends to consolidate its holdings while ensuring that the public shareholding in the target company does not fall below the minimum level permitted by the listing agreement with the stock exchanges, the acquirer may do so by making an open offer in accordance with the Takeover Code. Such open offer would be required to be made for the lesser of (i) 20% of the voting capital of the company, or (ii) such other lesser percentage of the voting capital of the company as would, assuming full subscription to the open offer, enable the acquirer (together with persons acting in concert), to increase the holding to the maximum level possible, which is consistent with the target company meeting the requirements of minimum public shareholding specified in the listing agreement with the stock exchanges.

In addition, regardless of whether there has been any acquisition of equity shares or voting rights in a company, an acquirer cannot directly or indirectly acquire control over a company (for example, by way of acquiring the right to appoint a majority of the directors or to control the management or the policy decisions of the company) unless such acquirer makes a public announcement offering to acquire a minimum of 20% of the voting equity shares of the company. In addition, the Takeover Code introduces the “chain principle” by which the acquisition of a holding company will obligate the acquirer to make a public offer to the shareholders of each subsidiary company which is listed.

Further, if an acquisition made pursuant to an open offer results in the public shareholding in the target company being reduced below the minimum level required under the listing agreement with the stock exchanges, the acquirer would be required to take steps to facilitate compliance by the target company with the relevant provisions of the listing agreement with the stock exchanges, within the time period prescribed therein.

The Takeover Code sets out the contents of the required public announcements as well as the minimum offer price. The minimum offer price depends on whether the shares of the company are “frequently” or “infrequently” traded (as defined in the Takeover Code). In case the shares of the company are frequently traded, the offer price shall be the higher of:

• the negotiated price under the agreement for the acquisition of shares in the company;

• the highest price paid by the acquirer or persons acting in concert with him for any acquisitions, including through an allotment in a public, preferential or rights issue, during the 26-week period prior to the date of public announcement; and

• the average of the weekly high and low of the closing prices of the shares of the company quoted on the stock exchange where the shares of the company are most frequently traded during the 26-week period prior to the date of public announcement, or the average of the daily high and low of the prices of the shares as quoted on the stock exchange where the shares of the company are most frequently traded during the two weeks preceding the date of public announcement, whichever is higher.

The Takeover Code permits conditional offers as well as an acquisition and consequent delisting of the shares of a company and provides specific guidelines for the gradual acquisition of shares or voting rights. Specific obligations of the acquirer and the board of directors of the target company in the offer process have also been specified. Acquirers making a public offer are also required to deposit in an escrow account a percentage of the total consideration which amount will be forfeited in the event that the acquirer does not fulfil his obligations.

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The general requirements to make such a public announcement do not, however, apply entirely to bailout takeovers when a promoter (i.e. a person or persons in control of the company, persons named in any offer document as promoters and certain specified corporate bodies and individuals) is taking over a financially weak company but not a “sick industrial company” pursuant to a rehabilitation scheme approved by a public financial institution or a scheduled bank. A “financially weak company” is a company which has at the end of the previous financial year accumulated losses which have resulted in the erosion of more than 50% but less than 100% of the total sum of its paid up capital and free reserves as at the beginning of the previous financial year. A “sick industrial company” is a company registered for more than five years which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth. Certain general requirements are also excluded from application to companies where the board of directors of the company has been removed and replaced by the government, subject to various other conditions specified therein being fulfilled.

The Takeover Code, subject to certain conditions specified in the Takeover Code, exempts certain specified acquisitions from the requirement of making a public offer, including, among others, the acquisition of shares (1) by allotment in a public issue or a rights issue, (2) pursuant to an underwriting agreement, (3) by registered stockbrokers in the ordinary course of business on behalf of clients, (4) in unlisted companies, (5) pursuant to a scheme of reconstruction or amalgamation, (6) pursuant to a scheme under Section 18 of the SICA, (7) resulting from transfers between companies belonging to the same group of companies or between promoters of a publicly listed company and relatives, (8) by way of transmission through inheritance or succession, (9) resulting from transfers by Indian venture capital funds or foreign venture capital investors registered with SEBI, to promoters of a venture capital undertaking or venture capital undertaking pursuant to an agreement between such venture capital funds or foreign venture capital investors with such promoters or venture capital undertaking, (10) by the Government of India controlled companies, unless such acquisition is made pursuant to a disinvestment process undertaken by the Government of India or a State Government, (11) change in control by takeover/restoration of the management of the borrower company by the secured creditor in terms of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (12) acquisition of shares by a person in exchange of equity shares received under a public offer made under the Takeover Code and (13) in terms of guidelines and regulations relating to delisting of securities as specified by SEBI. The Takeover Code does not apply to acquisitions in the ordinary course of business by public financial institutions either on their own account or as a pledgee. An application may also be filed with the takeover panel seeking exemption from the open offer requirements of the Takeover Code. Pursuant to a recent amendment, a listed company can apply to the SEBI to waive requirements under the Takeover Code in relation to an acquisition of a listed company in circumstances where the board of the listed company has been taken over by the Government of India and there is a plan for a transparent and competitive process for the operations of the listed company.

In addition, Chapter III of the Takeover Code, including the requirement to make a tender offer, does not apply to the acquisition of GDRs or ADRs so long as they are not converted into equity shares carrying voting rights. SEBI has announced that it proposes to amend this exemption by excluding cases where the holders of the ADRs or GDRs exercise voting rights in respect of the underlying shares.

It has been clarified by the SEBI on August 6, 2009 that the acquisition of 5% by a person holding between 55% and 75% of the share capital of a company is permitted subject to: (i) such shares may be acquired in one or more tranches, without any restriction on the time-frame within which the same can be acquired; (ii) shall be calculated by aggregating all purchases, without netting the sales; and (iii) consequent to such acquisition, the percentage of shareholding / voting rights of the acquirer, together with persons acting in concert with him, shall not increase beyond 75% irrespective of the level of minimum public shareholding required to be maintained by the target company in terms of Clause 40A of the Listing Agreement.

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Insider Trading Regulations The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, as

amended (“Insider Trading Regulations”), have been notified by SEBI to prevent insider trading in India by prohibiting and penalising insider trading in India. The Insider Trading Regulations prohibit an “insider” from dealing, either on his own behalf or on behalf of any other person, in the securities of a company listed on any stock exchange when in possession of unpublished price-sensitive information. The terms “unpublished” and “price sensitive information” are defined by the Insider Trading Regulations. The Insider Trading Regulations define an insider to mean any person who (i) is or was connected with the company or is deemed to have been connected with the company and who is reasonably expected to have access to unpublished price sensitive information in respect of securities of a company or (ii) has received or has had access to such unpublished price sensitive information.

Unpublished means information which is not published by the Company or its agents and is not specific in nature. The Insider Trading Regulations clarify that speculative reports in print or electronic media shall not be considered as published information. Price sensitive information means any information which relates directly or indirectly to a company and which if published is likely to materially affect the price of securities of the company, such as the periodical financial results of the company, intended declaration of dividends (both interim and final), issue of securities or buy-back of securities. Under the Insider Trading Regulations, no insider shall communicate or counsel or procure, directly or indirectly, any unpublished price-sensitive information to any other person who while in possession of such unpublished price-sensitive information shall not deal in securities.

The Insider Trading Regulations make it compulsory for listed companies and certain other entities associated with the securities market to establish an internal code of conduct to prevent insider trading and also to regulate disclosure of unpublished price-sensitive information within such entities so as to minimize misuse of such information. To this end, the Insider Trading Regulations provide a model code of conduct. Further, the Insider Trading Regulations specify a model code of corporate disclosure practices to prevent insider trading which must be implemented by all listed companies.

The Insider Trading Regulations require any person who holds more than 5% of the outstanding shares or voting rights in any listed company to disclose to the company the number of shares or voting rights held by such person on becoming such holder within two working days of:

• the receipt of intimation of allotment of shares; or

• the acquisition of the shares or voting rights, as the case may be.

On a continuing basis, under the Insider Trading Regulations, any person who holds more than 5% of the shares or of the voting rights in any listed company is required to disclose to the company, the number of shares or voting rights held by him and any change in shareholding or voting rights, (even if such change results in the shareholding falling below 5%) if there has been change in such holdings from the last disclosure made, provided such change exceeds 2% of the total shareholding or voting rights in the company. Such disclosure is required to be made within two working days of:

• the receipt of intimation of allotment of the shares; or

• the acquisition or the sale of the shares or voting rights, as the case may be.

Furthermore, all directors and officers of a listed company are required to disclose to the company the number of shares or voting rights held and positions taken by such person in such company within two working days of becoming a director or officer of such company. All directors and officers of a listed company are also required to make periodic disclosures of their shareholding in the company as specified in the Insider Trading Regulations.

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Depositories

In August 1996, the Indian Parliament enacted the Depositories Act 1996 (the “Depositories Act”) which provides a legal framework for the establishment of depositories to record ownership details and effect transfers in electronic book-entry form. SEBI has framed the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, as amended which provide for the formation of such depositories, the registration of participants as well as the rights and obligations of the depositories, participants, the company, the beneficial owners and the issuers. The depository system has significantly improved the operations of the Indian securities markets.

Trading of securities in book-entry form commenced in December 1996. In January 1998, SEBI notified scripts of various companies for compulsory dematerialized trading by certain categories of investors such as foreign institutional investors and other institutional investors and has also notified compulsory dematerialized trading in specified scrips for all retail investors. SEBI has subsequently significantly increased the number of scrips in which dematerialized trading is compulsory for all investors. However, even in the case of scrips notified for compulsory dematerialized trading, investors, other than institutional investors, may trade in and deliver physical shares on transactions outside the stock exchange where there are no requirements to report such transactions to the stock exchange and on transactions on the stock exchange involving lots of less than 500 securities.

SEBI has also provided that the issue and allotment of shares in initial public offerings and/or the trading of shares shall only be in electronic form, and the company gives an option to subscribers, shareholders or investors either to receive the security certificates or to hold the securities in book-entry form with a depository.

Under the Depositories Act, every person subscribing to securities offered by an issuer has an option to either receive the security certificates or hold the securities with a depository

Transfers of shares in book-entry form require both the seller and the purchaser of the equity shares to establish accounts with Depository Participants registered with the depositaries established under the Depositories Act. Upon delivery, the shares shall be registered in the name of the relevant depositary in the Company’s books and this depositary shall enter the name of the investor in its records as the beneficial owner, thus effecting the transfer of beneficial ownership. The beneficial owner shall be entitled to all rights and benefits of a shareholder and be subject to all liabilities in respect of his shares held by a depositary. Every person holding equity shares of the company and whose name is entered as a beneficial owner in the records of the depository is deemed to be a member of the concerned company.

The Companies Act compulsorily provides that Indian companies making any initial public offerings of securities for or in excess of Rs.100 million should issue the securities in dematerialized form.

Derivatives (Futures and Options)

Trading in derivatives is governed by the SCRA, the SCRR and the SEBI Act. The SCRA was amended in February 2000 and derivative contracts were included within the term “securities”, as defined by the SCRA. Trading in derivatives in India takes place either on separate and independent derivatives exchanges or on a separate segment of an existing stock exchange. The derivative exchange or derivative segment of a stock exchange functions as a self-regulatory organization under the supervision of the SEBI. Derivative products have been introduced in a phased manner in India.

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EXCHANGE CONTROLS

Restrictions on Conversion of Indian Rupees

Effective July 1995, the process of current account convertibility was advanced by relaxing restrictions on foreign exchange for various purposes, such as foreign travel and medical treatment. The RBI has also relaxed restrictions on capital account transactions by resident Indians since 1999. For example, resident Indians are now permitted to remit up to U.S.$200,000 per year for any permissible capital or current account transaction or a combination of both without any prior approval.

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DESCRIPTION OF THE EQUITY SHARES

Set forth below is certain information relating to the share capital of our Company, including a brief summary of some of the provisions of the Memorandum and Articles of Association of our Company (the “Articles”) and the Companies Act relating to the rights attached to the Equity Shares.

Capital Structure

As of March 31, 2009, our capital structure was as indicated in the following table:

Amount

(Rs. millions)

Authorized Share Capital: Equity Shares of Rs.10 each...............................................................................Preference Shares of Rs.10 each.........................................................................

2,450.0842.0

Total......................................................................................................................... 3,292.0

Subscribed and Paid-Up Share Capital: Equity Shares of Rs.10 each............................................................................ 1,001.6

Preference shares of Rs.10 each ...................................................................... ... —

Share Capital Suspense1 ........................................................................................... 77.5

Total......................................................................................................................... 1,079.1 Note:

(1) Equity Shares to be issued to the equity shareholders of SWC pursuant to the scheme of amalgamation.

Our capital structure has changed since March 31, 2009 to Rs.1,079.1 million by issue / allotment of Equity Shares for Rs.77.5 million on July 24, 2009.

Issued Share Capital History

The Company was incorporated on March 31, 1999, with a paid-up share capital of Rs.700, divided into 70 equity shares of Rs.10 each.

On July 9, 2001, the Company allotted 51,719,958 Equity Shares of Rs.10 each to the shareholders of the former McDowell & Co. Ltd. in the ratio of one fully paid-up Equity Share of Rs.10 of the Company for every one fully paid-up equity share of Rs.10 held by them in McDowell & Co. Ltd., pursuant to the amalgamation of McDowell & Co. Ltd. with the Company.

The paid-up Equity Share capital of the Company as of December 31, 2005 was Rs.517,200,280, consisting of 51,720,028 Equity Shares of Rs.10 each. On March 29, 2006, the Company issued 17,502,762 Global Depository Shares (“GDSs”) representing 8,751,381 Equity Shares with two GDSs representing one Equity Share of par value Rs.10 each. These GDSs are listed on the Luxembourg Stock Exchange. As of July 24, 2009, there were 689,900 GDSs outstanding, representing 344,950 Equity Shares.

On November 6, 2006, the Company allotted 34,010,521 Equity Shares of Rs.10 each to the shareholders of Herbertsons Limited, Triumph Distillers & Vintners Private Limited, Baramati Grape

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Industries Limited, United Distillers India Limited and Shaw Wallace Distilleries Limited pursuant to the amalgamation of such companies with the Company.

In 2007, the issued, subscribed and paid-up Equity Share capital of the Company increased from Rs.994,819,300 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 U.S.$100,000,000 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 was redeemed on July 11, 2007.

In July 2009, 7,749,121 Equity Shares of Rs.10 each were allotted to the shareholders of SWC pursuant to the amalgamation of such companies with the Company.

Consequently, the issued, subscribed and paid-up Equity Share capital of the Company increased from Rs.1,001,632,560 divided into 100,163,256 Equity Shares of Rs.10 each to Rs.1,079,123,770 divided into 107,912,377 Equity Shares of Rs.10 each.

Our Principal Shareholders

As at the date of this Placement Document, approximately 33.94% of our equity share capital is held by our Promoters and the Promoter Group.

The shareholding pattern of our Company as of September 30, 2009 is set out in the table below:

Category code Category of shareholder

No. of shareholders

Total no. of shares

No. of shares held in de-

materialized form

Total shareholding as a % of total no. of shares

As a % of (A+B)

As a % of (A+B+C)

(A) Shareholding of Promoter and Promoter Group ....................................

1 Indian ....................................................

(a) Individuals/Hindu Undivided Family .... 1 10 0 0

(b) Central Government/State Government(s) ......................................

(c) Bodies Corporate................................... 6 36,628,250 36,561,868 34.05 33.94

(d) Financial Institutions/Banks ..................

(e) Any Other (specify)...............................

Sub-total (A)(1)..................................... 7 36,628,260 36,561,868 34.05 33.94

2 Foreign ..................................................

(a) Individuals (Non-Resident Individuals/Foreign Individuals) ...........

(b) Bodies Corporate...................................

(c) Institutions.............................................

(d) Any Other (specify)...............................

Sub-Total (A)(2).................................... 0 0 0 0 0

Total Shareholding of Promoter and Promoter Group 7 36,628,260 36,561,868 34.05 33.94

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Category code Category of shareholder

No. of shareholders

Total no. of shares

No. of shares held in de-

materialized form

Total shareholding as a % of total no. of shares

As a % of (A+B)

As a % of (A+B+C)

(A) = (A)(1)+(A)(2) ..............................

(B) Public shareholding...............................

1 Institutions.............................................

(a) Mutual Funds/UTI................................. 88 10,468,301 10,464,918 9.73 9.70

(b) Financial Institutions/Banks .................. 46 30,852 10,378 0.03 0.03

(c) Central Government/State Government(s) ...................................... 1 7,521 0 0.01 0.01

(d) Venture Capital Funds........................... 0 0 0 0 0

(e) Insurance Companies ............................ 4 194,751 194,376 0.18 0.18

(f) Foreign Institutional Investors............... 276 37,762,026 37,760,079 35.11 34.99

(g) Foreign Venture Capital Investors ................................................ 0 0 0 0 0

(h) Any Other (specify)...............................

Sub-Total (B)(1).................................... 415 48,463,451 48,429,751 45.06 44.91

2 Non-institutions.....................................

(a) Bodies Corporate................................... 1,519 5,192,444 2,972,227 4.83 4.81

(b) Individuals

i. ............................................................ 84,195 8,348,151 5,716,082 7.76 7.74

ii. ........................................................... 39 2,350,939 2,252,548 2.19 2.18

(c) Any Other (specify)

i. ............................................................ 5,450 1,026,656 376,215 0.95 0.95

ii. ........................................................... 2 4,048 0 0.00 0.00

iii ........................................................... 3 64,984 64,984 0.06 0.06

iv. .......................................................... 434 376,796 376,796 0.35 0.35

v. Foreign Corporate Bodies 13 5,070,094 5,070,094 4.71 4.70

v. Foreign Nationals .............................. 38 31,396 0 0.03 0.03

Sub-Total (B)(2) 91,693 22,465,508 16,828,946 20.89 20.82

Total Public Shareholding (B) = (B)(1)+(B)(2) 92,108 70,928,959 65,258,697 65.95 65.73

TOTAL (A)+(B) 92,115 107,557,219 101,820,565 100.00 99.67

(C)

Shares held by Custodians and against which Depository Receipts have been issued .................................................... 1 355,158 355,158 0.00 0.33

GRAND TOTAL (A)+(B)+(C) 92,116 107,912,377 102,175,723 100.00 100.00

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The shareholding pattern of persons belonging to the category of “Promoters and promoter group” as of September 30, 2009 is set out in the table below:

Name of shareholder

Number of shares

Percentage holding

%

Dr. Vijay Mallya........................................................................................... 10 0.00

United Breweries (Holdings) Limited.......................................................... 23,881,821 22.13

Kingfisher Finvest India Limited. ................................................................ 12,676,342 11.75

Mallya Private Limited ................................................................................ 1,005 0.00

Devi Investments Private Limited……........................................................ 2,700 0.00

Vittal Investments Private Limited…........................................................... 31,270 0.03

Rossi and Associates Private Limited .......................................................... 35,112 0.03

Total............................................................................................................. 36,628,260 33.94

The shareholding pattern as of September 30, 2009 of persons belonging to the category “Public” holding more than 1% of the total number of our issued and paid-up share capital is set out in the table below:

Name of the shareholder Number of

shares Percentage holding %

Foreign Institutional Investors

HSBC Global Investment Funds A/C HSBC Global Investment Funds Mauritius .................................................

5,802,437 5.38

HSBC Bank (Mauritius) Limited.......................................... 2,478,006 2.30

T Rowe Price International Funds, INC New Asia Fund...... 1,221,579 1.13

T Rowe Price International INC A/C T Rowe Price ............. 1,158,540 1.07

Emerging Markets Growth Fund Inc. 2,447,400 2.27

Sloane Robinson LLP A/c SR Global (Mauritius) Limited (CLASS G - EMERGI ..........................................................

1,379,300 1.28

Capital International Emerging Markets Fund...................... 1,214,100 1.13

Mutual Fund

Reliance Capital Trustee Company Limited – A/c Reliance Growth Fund

1,153,177

1.07

Bodies Corporate

USL Benefit Trust ................................................................. 3,459,090 3.21

Foreign Corporate Bodies

RG Shaw & Company Limited 2,507,282 2.32

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Lock-up

Lock-up of the Company

The Company has agreed that, it will not and it will procure that none of its Subsidiaries will, without the prior written consent of each of the Joint Global Coordinators (which shall not be unreasonably withheld), during the period commencing on the date of the memorandum of understanding and ending 180 days after the Closing Date, (1) directly or indirectly, issue, offer, pledge, sell, contract to sell or issue, purchase any option or contract to sell or issue, grant or sell any option, right, contract or warrant to purchase, lend, make any short sale or otherwise transfer or dispose of any Equity Shares or any other securities of the Company substantially similar to the Equity Shares, including, but not limited to options, warrants or other securities that are convertible into, exercisable or exchangeable for, or that represent the right to receive, Equity Shares or any such substantially similar securities, (2) enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequences of ownership of the Equity Shares or any such substantially similar securities, (3) deposit Equity Shares or any securities convertible into or exercisable or exchangeable for Shares or which carry the right to subscribe for or purchase Equity Shares in depositary receipt facilities or enter into any transaction (including a transaction involving derivatives) having an economic effect similar to that of a sale or deposit of Equity Shares in any depositary receipt facility; whether any such transaction described in (1), (2) or (3) above is to be settled by delivery of Equity Shares or such other securities, in cash or otherwise, or (4) publicly announce its intention to enter into the transactions referred to in (1), (2) or (3) above.

The restriction on pledging any Equity Shares contained in the memorandum of understanding will not be applicable to (a) the pledge of 4,925,231 Equity Shares which are currently pledged in favour of commercial banks and/or financial institutions in connection with certain existing financing arrangements and (b) the re-pledge of any Equity Shares initially pledged as specified or contemplated in (a) above; provided, that, any such re-pledge is made in favour of commercial banks and/or financial institutions in connection with bona-fide financial requirements for the business conducted and investments made by the Company; provided, further, however that that (x) the aggregate number of Equity Shares pledged and/or re-pledged shall not at any point of time exceed 4,925,231 Equity Shares and (y) the Company shall have provided written notice of any such proposed re-pledge to the Joint Global Coordinators at least seven business days prior to such re-pledge being effected.

Lock-up of the Promoters

The Promoters have agreed that, without the prior written consent of the Joint Global Coordinators, they will not, during the period commencing on the date of the memorandum of understanding and ending 180 days after the Closing Date, (1) directly or indirectly, offer, pledge, sell, contract to sell, purchase any option or contract to sell, grant or sell any option, right, contract or warrant to purchase, lend, make any short sale or otherwise transfer or dispose of any Equity Shares or any other securities of the Company substantially similar to the Equity Shares, including, but not limited to options, warrants or other securities that are convertible into, exercisable or exchangeable for, or that represent the right to receive, Equity Shares or any such substantially similar securities, (2) enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequences of ownership of the Equity Shares or any such substantially similar securities, (3) deposit Equity Shares or any securities convertible into or exercisable or exchangeable for Shares or which carry the right to subscribe for or purchase Equity Shares in depositary receipt facilities or enter into any transaction (including a transaction involving derivatives) having an economic effect similar to that of a sale or deposit of Equity Shares in any depositary receipt facility; whether any such transaction described in (1), (2) or (3) above is to be settled by delivery of Equity

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Shares or such other securities, in cash or otherwise, or (4) publicly announce their intention to enter into the transactions referred to in (1) or (2) above.

Notwithstanding anything to the contrary, the restrictions set out above shall not apply to (A) the issue and allotment of the Issue Shares, (B) the issue of Equity Shares or options pursuant to and under the terms of the employee stock option scheme of the Company or (C) (a) the pledge of 36,628,260 Equity Shares which are either currently pledged or committed to be pledged in favor of commercial banks and/or financial institutions in connection with certain existing financing arrangements and (b) the re-pledge of any Equity Shares initially pledged as specified or contemplated in (a) above; provided, that, any such pledge or re-pledge is made in favor of commercial banks and/or financial institutions in connection with bona-fide financial requirements for the business conducted and investments made by the Company or the UB Group; provided, further, however that that (x) the aggregate number of Equity Shares pledged and/or re-pledged shall not at any point of time exceed 36,628,260 Equity Shares and (y) the Company shall have provided written notice of any such proposed re-pledge to the Joint Global Coordinators at least seven business days prior to such re-pledge being effected.

Memorandum of Association

Under the provisions of our Memorandum of Association, the Company is entitled to carry on the business of an alcoholic beverages company and to manufacture, brew, distill, blend, compound, prepare, process and render potable or marketable all sorts of liquors, wine, spirits and beers. Further, the Company is also entitled to carry on all or any business of malt factors, general wine and spirits merchants either as exporters or importers and distillers, commission agents, warehousemen, bottlers, bottle makers, bottle stopper makers, potters, manufacturers of and dealers in aerated and mineral waters and other drinks, licensed victuallers, beer house keepers and yeast dealers.

Dividends

Under the Companies Act, unless the board recommends the payment of a dividend, the shareholders at a general meeting have no power to declare any dividend. Subject to certain conditions specified in the Companies Act, no dividend can be declared or paid by a company for any financial year except out of the profits of the company determined in accordance with the provisions of the Companies Act or out of the undistributed profits or reserves of previous fiscal years or out of both, arrived at in accordance with the provision of the Companies Act. Under the Articles of Association, the shareholders at a general meeting may declare a lower, but not higher, dividend than that recommended by the Board. Pursuant to the Listing Agreement, listed companies are required to declare and disclose their dividends on a per share basis only. The dividend recommended by the Board and approved by the shareholders at a general meeting is distributed and paid to shareholders in proportion to the paid-up value of their shares as at the record date for which such dividend is payable. In addition, the board may declare and pay interim dividends. Under the Companies Act, dividends can only be paid in cash to shareholders listed on the register of shareholders on the date which is specified as the “record date” or “book closure date”. No shareholder is entitled to a dividend while unpaid calls on any of his shares are outstanding/

Under the Companies Act, together with the Companies (Transfer of Profits to Reserves) Rules, 1975 and the Companies (Declaration of Dividend out of Reserves) Rules, 1975, the Company may pay a dividend in excess of 10% of paid-up capital in respect of any year out of the profits of that year only after it has transferred to the reserves of the Company a percentage of its profits for that year ranging between 2.5% and 10% depending on the rate of dividend proposed to be declared in that year. The Companies Act further provides that if the profit for a year is insufficient, the dividend for that year may be declared out of the accumulated profits earned in previous years and transferred to reserves, subject to the following conditions:

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(i) the rate of dividend to be declared may not exceed the lesser of the average of the rates at which dividends were declared in the five years immediately preceding the year, or 10% of paid-up capital, whichever is less; (ii) the total amount to be drawn from the accumulated profits from previous years and transferred to the reserves may not exceed an amount equivalent to one-tenth of the paid-up capital and free reserves, and the amount so drawn is first to be used to set off the losses incurred in the financial year before any dividend in respect of preference or equity shares is declared; and (iii) the balance of reserves after withdrawals must not be below 15% of paid-up capital.

In the event that a dividend declared by the Company has not been paid or claimed within 30 days of the declaration thereof, the same shall be transferred to a special account opened by the Company with a predetermined bank for the benefit of the shareholder entitled to the dividend. In the event that the amount of the dividend transferred to such special account remains unpaid or unclaimed for a period of seven years from the date of transfer, the same shall be transferred to the Investor Education and Protection Fund established by the Central Government and is not recoverable by either the shareholder or the Company thereafter.

Capitalization of Reserves and Issue of Bonus Shares

The Articles of Association permit a resolution of the shareholders in a general meeting to resolve in certain circumstances that certain amounts standing to the credit of certain reserves or securities premium can be capitalized by the issue of fully paid bonus shares or by crediting shares not fully paid-up with the whole or part of any sum outstanding. Bonus shares must be issued pro rata to the amount of capital paid-up on existing shareholdings.

Any issue of bonus shares by a listed company would be subject to the guidelines issued by the SEBI. The relevant SEBI Regulations prescribe that no company shall, pending conversion of convertible securities, issue any shares by way of bonus unless a similar benefit is extended to the holders of such convertible securities, through a proportionate reservation of shares. Further, in order to issue bonus shares a company should not have defaulted in payment of interest or principal in respect of fixed deposits and interest on existing debentures or principal redemption thereof and should have sufficient reason to believe that it has not defaulted in respect of any statutory dues of the employees. The declaration of bonus shares in lieu of a dividend cannot be made. A bonus issue may be made out of free reserves built out of genuine profits or share premium collected in cash and not from reserves created by revaluation of fixed assets.

The issue of bonus shares must take place within fifteen days from the date of approval by the board, if the articles of association do not require such company to seek shareholders’ approval for capitalisation of profits or reserves for making bonus issues. If a company is required to seek shareholders’ approval for capitalisation of profits or reserves for making bonus issues, then the bonus issue should be implemented within two months from the date of the board meeting wherein the decision to issue bonus shares was taken subject to shareholders’ approval.

Pre-emptive Rights and Alteration of Share Capital

Subject to the provisions of the Companies Act, the Company may increase its share capital by issuing new shares on such terms and with such rights as the Company, by the action of its shareholders in a general meeting, determines. Such new shares shall be offered to existing shareholders listed on the members’ register on the record date or to shareholders holding Shares in dematerialized form as per the list provided by National Securities Depository Limited (“NSDL”) and Central Depository Services (India) Limited (“CDSL”) in proportion to the amount paid-up on those shares at that date. The offer shall be made by notice specifying the number of shares offered and the date (being not less than 30 days from the date of the offer) after which the offer, if not accepted, will be deemed to have been declined. After such date, the Board may dispose of the

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shares offered in respect of which no acceptance has been received, in such manner as it thinks most beneficial to the Company. The offer is deemed to include a right exercisable by the person concerned to renounce the shares offered to him in favor of any other person provided that the person in whose favor such shares have been renounced is approved by the Directors in their absolute discretion.

However, under the provisions of the Companies Act, new shares may be offered to any persons, whether or not those persons include existing shareholders, if a special resolution to that effect is passed by the shareholders of the company in a general meeting. The issue of the Equity Shares pursuant to this Issue has been approved by a special resolution of the Company’s shareholders and such shareholders have waived their pre-emptive rights with respect to such Equity Shares.

The Company’s issued share capital may, among other things, be increased by the exercise of warrants attached to any security of the Company or individually issued, which entitles the holder to subscribe for Shares in the Company or upon the conversion of convertible debentures issued. The issue of any convertible debentures or the taking of any convertible loans, other than from the Central Government and financial institutions, requires the approval of a special resolution of shareholders.

Preference Shares

Preference share capital is that part of the paid-up capital of the company which fulfils both the requirements below:

• with respect to dividends, it carries or will carry a preferential right to be paid a fixed amount or an amount calculated at a fixed rate; and

• with respect to capital, it carries or will carry on a winding-up of the company, a preferential right to be repaid the amount of the capital paid-up or deemed to have been paid-up, subject to the provisions of the Companies Act.

Preferences shares must be redeemed within 20 years of issue. Under the Companies Act, the Company may issue redeemable preference shares but:

• no such shares may be redeemed except out of profits otherwise available for dividends or out of the proceeds of a fresh issue of shares made for the purposes of the redemption;

• no such shares may be redeemed unless they are fully paid;

• the premium, if any, payable on redemption shall have been provided for out of the Company’s profits or security premium account, before the shares are redeemed;

• where any such shares are redeemed otherwise than out of the proceeds of a fresh issue, there shall, out of profits which would otherwise have been available for dividends, be transferred to a reserve fund, to be called the “Capital Redemption Reserve Account”, a sum equal to the nominal amount of the shares redeemed: and

• the provisions of the Companies Act relating to the reduction of the share capital of a company shall, except as provided under Section 80 of the Companies Act, apply as if such reserve account were paid-up share capital of such company.

General Meetings of Shareholders

The Company must hold its annual general meeting each year within fifteen months of the previous annual general meeting and within six months after the end of each accounting year. The Registrar of Companies may extend this period in special circumstances at the Company’s request. The Board may

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convene an extraordinary general meeting of shareholders when necessary and shall convene such a meeting at the request of a shareholder or shareholders holding in the aggregate not less than 10% of the Company’s issued paid-up capital.

Written notices convening a meeting setting out the date and place of the meeting and its agenda must be given to members at least twenty one clear days prior to the date of the proposed meeting and where any special business is to be transacted at the meeting, an explanatory statement shall be annexed to the notice as required under the Companies Act. A general meeting may be called after giving shorter notice if consent is received from all shareholders, in the case of an annual general meeting, and from shareholders holding not less than 95% of the Company’s paid-up capital in the case of any other general meeting. The Company’s general meetings are held in Mumbai.

A listed public company intending to pass a resolution relating to matters such as, but not limited to, an amendment in to the objects clause of the memorandum of association, a buy-back of shares under the Companies Act, the giving of loans or extending a guarantee in excess of limits prescribed under the Companies Act (and guidelines issued thereunder) is required to pass the resolution by means of a postal ballot instead of transacting the business at the general meeting of the company. A notice to all the shareholders must be sent along with a draft resolution explaining the reasons thereof and requesting them to send their assent or dissent in writing on a postal ballot within a period of thirty days from the date of such notice. Under the Companies Act, the quorum for the Company’s general meetings is five members present in person or by proxy.

Voting Rights

At a general meeting, upon a show of hands, every member holding shares and entitled to vote and present in person has one vote. Upon a poll, the voting rights of each shareholder entitled to vote and present in person or by proxy shall be in the same proportion as the share capital paid-up on each share held by such holder bears to the total paid-up capital of the Company.

Voting is by show of hands, unless a poll is ordered by the Chairman of the meeting or demanded by a shareholder or shareholders holding at least 10% of the voting rights in respect of the resolution or by those holding paid-up capital of at least Rs.50,000.

Ordinary resolutions may be passed by simple majority of those present and voting. Special resolutions require the vote of three-fourths of the members present and voting. The Companies Act provides that to amend the Articles of Association, a special resolution is required to be passed in a general meeting. Certain instances, including dissolutions or a merger of the Company, preferential allotment of shares and, in any case where the shareholding of public financial institutions and banks exceeds 25%, appointment of statutory auditors, require a special resolution.

A shareholder may exercise his voting rights by proxy to be given in the form required by the Articles of Association of the Company. The instrument appointing a proxy is required to be lodged with the Company at least 48 hours before the time of the meeting. Any shareholder of the Company may appoint a proxy. A proxy does not have a right to speak at meetings and, unless the Articles of Association provide otherwise, shall not vote except on a poll. A corporate shareholder is also entitled to nominate a representative to attend and vote on its behalf at general meetings, who shall not be deemed a proxy. Such an authorized representative can vote in all respects as if a member, including on a show of hands and a poll.

The Companies Act allows for a company to issue shares with differential rights as to dividends, voting or otherwise, subject to certain conditions prescribed under applicable law. In this regard, the laws require that for a company to issue shares with different voting rights the company must have had distributable profits in terms of the Companies Act for a period of three financial years, the company has not defaulted in filing

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annual accounts and annual returns for the immediately preceding three years, the Articles of Association of the Company allow for the issuance of such shares with different voting rights and such other conditions set forth in the Companies (Issue of Share Capital with Differential Voting Rights) Rules, 2001 have been complied with.

Convertible Securities/Warrants

The Company may from time to time issue debt instruments that are partly and fully convertible into Shares and/or warrants to purchase Shares.

Register of Shareholders and Record Dates

The Company is required to maintain a register of shareholders at its registered office. The register and index of beneficial owners maintained by a depository under the Depositories Act is deemed to be an index of members and register and index of debenture holders. The Company recognizes as shareholders only those persons who appear on its register of shareholders and the Company cannot recognize any person holding any share or part of it upon any trust, express, implied or constructive. In the case of shares held in physical form, the Company registers transfers of shares on the register of shareholders upon lodgement of the share transfer form duly complete in all respects accompanied by a share certificate or, if there is no certificate, the letter of allotment in respect of shares to be transferred together with duly stamped transfer forms. In respect of electronic transfers, the depository transfers shares by entering the name of the purchaser in its books as the beneficial owner of the shares. In turn, the Company enters the name of the depository in its records as the registered owner of the shares. The beneficial owner is entitled to all the rights and benefits as well as the liabilities with respect to the shares that are held by the depository. Transfer of beneficial ownership through a depository is exempt from any stamp duty.

For the purpose of determining the shareholders, the register may be closed for periods not exceeding 45 days in any one year or 30 days at any one time or at such times, as the board of directors may deem expedient in accordance with the provisions of the Companies Act. In order to determine the shareholders entitled to dividends, the Company keeps the register of shareholders closed for approximately seven to 15 days, generally before the AGM. Under the listing regulations of the stock exchanges on which the Company’s outstanding Shares are listed, the Company may, upon at least 30 days’ advance notice or, where Shares are in dematerialized form, 15 days’ advanced notice, to such stock exchanges, set a record date and/or close the register of shareholders in order to ascertain the identity of shareholders. The trading of Shares and the delivery of certificates in respect thereof may continue while the register of shareholders is closed.

Postal Ballots

Under the provisions of the Companies Act, the Government has framed rules for listed companies for voting by postal ballot instead of transacting the business in a general meeting of the company, in the case of resolutions including resolutions for alteration of the objects clause in the company’s memorandum of association, buy-back of shares, issue of shares with differential voting rights, a sale of the whole or substantially the whole of an undertaking of a company, giving loans and extending guarantees in excess of prescribed limits, for change of the registered office of the company in certain circumstances and for variation in the rights attached to a class of shares or debentures. The resolution passed by means of postal ballot shall be deemed to have been duly passed at a general meeting physically convened. A notice to all the shareholders has to be sent along with a draft resolution explaining the reasons thereof and requesting them to send their assent or dissent in writing on a postal ballot within a period of 30 days from the date of posting the notice. Postal voting includes voting in electronic form.

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Annual Report and Financial Results

The statutory financial statements for the relevant financial year, the directors’ report and the auditors’ report of the Company (the “Annual Report”) must be laid before the AGM. The Annual Report also includes certain other financial information of the Company, such as the audited financial statements as of the date of closing of the financial year, directors’ report, management’s discussion and analysis and a corporate governance section and is made available for inspection at our registered office during normal working hours for 21 days prior to the AGM.

Under the Companies Act, the Company must file the Annual Report with the Registrar of Companies within 30 days from the date of the AGM. As required under the Listing Agreement, copies are required to be simultaneously sent to the BSE, the NSE and other stock exchanges on which the Company’s Equity Shares are listed. The Company must also publish its financial results in at least one English language daily newspaper circulating in the whole or substantially the whole of India and also in one of the daily newspapers published in the language of the region where the Company’s registered office is situated.

The Company files file certain information online on the SEBI’s website and on the Company’s website, including the Annual Report, half-yearly and quarterly financial statements, report on corporate governance and the shareholding pattern statement, in accordance with the requirements of the Listing Agreement as may be specified by the SEBI from time to time .

Transfer of Shares

Following the introduction of the Depositories Act and the repeal of Section 22A of the SCRA Act, which enabled companies to refuse to register the transfer of shares in some circumstances, the equity shares of a public company became freely transferable, subject only to the provisions of Section 111A of the Companies Act. Since the Company is a public company, the provisions of Section 111A will apply to it. Furthermore, in accordance with the provisions of Section 111A(2) of the Companies Act, the Board may exercise their discretion if they have sufficient cause to do so. If the Board, without sufficient cause, refuses to register a transfer of shares within two months from the date on which the instrument of transfer or intimation of transfer, as the case may be, is delivered to the Company, the shareholder wishing to transfer his, her or its shares may file an appeal with the Company Law Board (the “CLB”) and the CLB can direct the Company to register such transfer.

Pursuant to Section 111A(3), if a transfer of shares contravenes any of the provisions of the SEBI Act , or the regulations issued thereunder, or the Sick Industrial Companies (Special Provisions) Act, 1985 (“SICA”) or any other Indian laws, the CLB may, on application made by the company, a depository, a participant, an investor or the SEBI, within two months from the date of transfer of any shares or debentures held by a depository or from the date on which the instrument of transfer or the intimation of the transmission was delivered to the company, as the case may be, after such inquiry as it thinks fit, direct the rectification of the register of records. The CLB may, in its discretion, issue an interim order suspending the voting rights attached to the relevant shares before making or completing its investigation into the alleged contravention. Further, the provisions of Section 111A do not restrict the right of a holder of shares or debentures to transfer such shares or debentures and any person acquiring such shares or debentures shall be entitled to voting rights unless the voting rights have been suspended by the CLB. By the Companies (Second Amendment) Act, 2002, the CLB is proposed to be replaced by the National Company Law Tribunal (the “NCLT”) , which is expected to be set up shortly. All powers of the CLB would then be conferred on the NCLT. Further, the SICA is sought to be repealed by the Sick Industrial Companies (Special Provisions) Repeal Act, 2003. However, this Act has not yet been brought into force.

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Shares held through depositories are transferred in the form of book-entries or in electronic form in accordance with the regulations laid down by the SEBI. These regulations provide the regime for the functioning of the depositories and the participants and set out the manner in which records are to be kept and maintained and the safeguards to be followed in this system. Transfers of beneficial ownership of shares held through a depository are exempt from stamp duty. The Company has entered into an agreement for such depository services with NSDL and CDSL. Alpha Systems Private Limited are the registrars who maintain all records pertaining to physical transfer and transmission of shares and details of transfers and transmissions in electronic form through electronic connectivity with NSDL and CDSL.

SEBI requires that the shares for trading and settlement purposes be in book-entry form for all investors, except for transactions that are not made on a stock exchange and transactions that are not required to be reported to the stock exchange. See “Indian Securities Market — Depositories”.

Pursuant to the Listing Agreement, in the event that the Company has not effected the transfer of Shares within one month or where the Company has failed to communicate to the transferee any valid objection to the transfer within the stipulated time period of one month, it is required to compensate the aggrieved party for the opportunity loss caused during the period of delay.

The Companies Act provides that the shares or debentures of a public listed company (such as the Company) shall be freely transferable. The Articles of Association provide for certain restrictions on the transfer of shares, including granting power to the Board in certain circumstances to refuse to register or acknowledge the transfer of shares or other securities issued by the Company. However, the applicable case law suggests that inter se arrangements between shareholders of a company cannot bind a company in this regard and, therefore, the enforceability of such restrictions under the Companies Act may not be possible.

Acquisition by the Company of its Own Shares (Buy-Back)

A company is prohibited from acquiring its own shares unless the consequent reduction of capital is effected by an approval of at least 75% of its shareholders, voting on it in accordance with the Companies Act and sanctioned by the High Court of competent jurisdiction. Subject to certain conditions, a company is prohibited from giving, whether directly or indirectly and whether by means of loan, guarantee, provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscription made or to be made by any person for any shares in the company or its holding company. However, pursuant to certain amendments to the Companies Act, a company has been empowered to purchase its own shares or other specified securities out of its free reserves, the securities premium account or the proceeds of any fresh issue of shares or other specified securities (other than the kind of shares or other specified securities proposed to be bought back), subject to certain conditions, including:

• the buy-back should be authorized by the Articles of Association of the company;

• a special resolution has been passed in a general meeting authorizing the buy-back (in the case of listed companies, by means of a postal ballot);

• the buyback is limited to 25% of the total paid-up capital and free reserves;

• the buy-back cannot exceed 25% of the paid-up equity capital in a financial year;

• the debt owed by the company is not more than twice the capital and free reserves after such buy-back; and

• the buy-back is in accordance with the Securities and Exchange Board of India (Buy-Back of Securities) Regulations 1998, as amended.

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A board resolution will constitute sufficient corporate authorization for a buy-back that is for less than 10% of the total paid-up equity capital and free reserves of the company. A company buying back its securities is required to extinguish and physically destroy the securities so bought back within seven days of the last date of completion of the buy-back. Further, a company buying back its securities is not permitted to buy-back any securities for a period of one year from the buy-back or to issue the same kind of shares or specified securities for six months subject to certain limited exceptions.

A company is also prohibited from purchasing its own shares or specified securities through any subsidiary company including its own subsidiary companies or through any investment company Further, a company is prohibited from purchasing its own shares or specified securities, if the company is in default in the repayment of deposit or interest, in the redemption of debentures or preference shares, in payment of dividend to a shareholder, in repayment of any term loan or interest payable thereon to any financial institution or bank or in the event of non-compliance with certain other provisions of the Companies Act.

Liquidation Rights

Subject to the rights of creditors, workmen and of the holders of any other shares entitled by their terms of issue to preferential repayment over the Shares, in the event of winding up the Company, the holders of the Shares are entitled to be repaid the amounts of capital paid-up or credited as paid-up on such Shares, provided however that certain debts, including taxes, cesses payable to the Central or the State Government and certain amounts payable to employees, shall be paid in priority to all other debts. All surplus assets remaining after all other payments are made would belong to the holders of the Equity Shares in proportion to the amount paid-up or credited as paid-up on such shares respectively at the commencement of the winding-up.

Disclosure of Ownership Interest

Section 187C of the Companies Act requires beneficial owners of shares of Indian companies who are not holders of record to declare to that company the details of the holder of record and the holder of record to declare details of the beneficial owner. Any lien, promissory note or other collateral agreement created, executed or entered into with respect to any equity share by its registered owner, or any hypothecation by the registered owner of any equity share, shall not be enforceable by the beneficial owner or any person claiming through the beneficial owner if such declaration is not made. Failure by a person to comply with Section 187C will not affect the company’s obligation to register a transfer of Shares or to pay any dividends to the registered holder of any shares in respect of which the declaration has not been made.

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TAXATION

Indian Taxation

The following is a summary of the material Indian tax consequences of owning and disposing of Equity Shares purchased in this Issue and held as capital assets by holders who are Non-Residents, as defined below.

YOU SHOULD CONSULT YOUR OWN TAX ADVISORS CONCERNING THE INDIAN TAX IMPLICATIONS AND CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF EQUITY SHARES IN YOUR PARTICULAR SITUATION.

For these purposes, “Non-Resident” means a person (including an individual, a Hindu Undivided Family, a company, a firm, an association of persons or a body of individuals (whether incorporated or not), a local authority, and every artificial juridical person) who is not a resident in India. For purposes of the IT Act, an individual is considered to be a resident in India during any previous year if he or she is in India in that year for:

• a period or periods amounting in total to 182 days or more; or

• 60 days or more and within the four preceding years he/she has been in India for a period or periods amounting to 365 days or more; or

• 182 days or more, in the case of a citizen of India or a person of Indian origin living abroad who visits India; or

• 182 days or more, in the case of a citizen of India who leaves India as a member of a crew of an Indian ship or for the purposes of employment outside India.

A company is considered to be a resident in India in any previous year if it is an Indian Company or if the control and management of its affairs is situated wholly in India during that year.

A Hindu undivided family, firm or other association of persons is considered to be a resident in India in every case except where the control and management of its affairs is situated wholly outside India during that year.

The following is based on the provisions of Indian tax laws as of the date hereof, which are subject to change, possibly on a retroactive basis.

This summary is not intended to constitute a complete analysis of the Indian tax consequences to any particular Non-Resident holders. Individual tax consequences of an investment in Equity Shares may vary for Non-Residents in various circumstances, and potential investors should therefore consult their own tax advisors as to the tax consequences of such purchase, ownership and disposal under the tax laws of India, the jurisdiction of their residence and any tax treaty between India and their country of residence. The Income Tax Act 1961 is revised by the annual Finance Act every fiscal year. The provisions of the tax laws summarized below are based on the Income Tax Act 1961 as last amended by the Finance Act (No.2) 2009.

Taxation of Dividends Dividends on shares received from an Indian company on which dividend distribution tax has been

paid are exempt from tax in the hands of the shareholders. However, an Indian company distributing dividends is subject to a distribution tax at the rate of 15% plus surcharge of 10% and education cess of 3%,

187

the effective rate being 16.995%. Neither distribution of bonus shares nor distribution of rights to subscribe for equity shares to Non-Residents is a taxable event under Indian tax laws.

Income Tax Laws and Tax Treaty Benefits The taxation of Non-Residents in India is governed by the provisions of the IT Act and the tax treaty

between India and the respective country of jurisdiction of those Non-Residents (“Tax Treaty”). As per Section 90(2) of the IT Act, the provisions of the IT Act would supersede those of the relevant Tax Treaty to the extent that they are more beneficial to the person chargeable to tax than the provisions contained in the relevant Tax Treaty.

Taxation of Capital Gains The Tax Treaties between India and countries such as the U.S. and U.K. do not limit India’s ability to

impose tax on capital gains. However, capital gains on the sale of Equity Shares purchased in this Issue by residents of certain other countries, such as Mauritius and Singapore, will not be taxable in India by virtue of the provisions contained in the Tax Treaty between India and these countries, which is again subject to fulfilment of the conditions stipulated herein.

Equity Shares held by a Non-Resident investor for a period of more than one year shall be treated as long-term capital assets and will attract long term capital gains. If the Equity Shares are held for a period of one year or less than one year, they shall be treated as short term capital assets and the capital gain arising on the sale thereof is to be treated as short-term capital gain.

The gain on the disposal of an Equity Share purchased with foreign currency must be computed by converting the cost of acquisition and full value of the consideration received or accruing as a result of the transfer into the same foreign currency as was initially utilized for acquisition, and the capital gains so computed in foreign currency shall be reconverted into Rupees. In respect of securities of Indian companies purchased with foreign currency, the cost of acquisition is not allowed to be increased on account of inflation, i.e. indexation benefits are not available in such a case.

Long-Term Capital Gains In the event that the benefits of a Tax Treaty are not available to Non-Residents or the applicable Tax

Treaty permits the taxation of capital gains in India, incidence of tax would be as follows:

• Long-term capital gains, being gains on the sale of listed Indian securities held for a period of more than one year, would not be taxable in India, provided securities transaction tax (“STT”) has been paid on sale of such securities.

• Long-term capital gains realized on the sale of listed Indian securities not routed through a recognized stock exchange in India and therefore not subject to STT would be taxed at the rate of 10% plus surcharge and education cess.

• Long-term capital gains on the sale of unlisted securities will be taxed at the rate of 20% plus surcharge and education cess.

Short-Term Capital Gains • Short-term capital gains being gains on the sale of listed Indian securities held for a period of one year

or less, will be taxed at the rate of 15% plus surcharge and education cess, provided STT has been paid on the same.

• In the event that the sale is not through a stock exchange and as a result no STT is paid, short-term gains are subject to tax at variable rates, with a maximum rate of 40% plus a surcharge of 2.5% for non-resident companies and at slab rates for non-resident individuals, with the highest rate being 30%

188

plus a surcharge of 10% where income exceeds Rs.1 million and an education cess at the rate of 3% of the tax and surcharge.

STT All taxable securities transactions entered into on a recognized stock exchange in India will be subject

to STT levied on the transaction value.

Delivery Based Transactions on a Recognized Stock Exchange In the case of purchase or sale of equity shares or units of an equity oriented fund which is settled by

way of actual delivery or transfer of the equity share or unit, STT will be levied at the rate of 0.125% of the transaction value on both the buyer and seller of the equity share or unit.

Non-delivery Based Transactions on a Recognized Stock Exchange In the case of sale of equity shares or units of an equity oriented fund settled otherwise than by way of

actual delivery or transfer of the equity share or unit, STT will be levied at the rate of 0.025% of the transaction value on the seller of the equity share or unit.

Credit of STT In the case of income being treated as trading income, STT paid can be claimed as a deduction from

business income calculated as per the provisions of the IT Act.

Characterization of the Income of the Investor There are contradicting judicial rulings on the characterization of income of a fund which regularly

buys and sells shares and securities in India. Treatment of such income has been clarified to a limited extent by the revenue authorities by way of a circular providing guidance for such characterization. If the income of the Investor is characterized as business income and it is regarded as having a permanent establishment in India, such income could be taxed at the rate of 42.23%.

Tax Deduction at Source Generally, tax, surcharge and education cess on capital gains, if any, are withheld at source by the

purchaser or the person paying for the equity shares in accordance with the relevant provisions of the IT Act, except capital gains arising to FIIs or where shares and securities are sold on a stock exchange.

Capital Loss Generally, long-term loss arising from a transfer of a capital asset in India can only be set off against

long-term capital gains. Since long-term capital gains on the sale of listed equity shares in respect of which STT has been paid is not liable to capital gains tax, it is doubtful whether any long-term capital loss arising on account of such sale would be allowed to be set off. A short-term capital loss can be set off against capital gains, whether short-term or long-term. To the extent that the loss is not absorbed in the year of transfer, it may be carried forward for a period of eight years.

The foregoing does not purport to be a complete analysis of the potential tax considerations relating to this Issue, and should not be construed as tax advice or a tax opinion. Prospective investors should consult their own tax advisors as to the particular tax considerations applicable to them relating to the purchase, ownership and disposal of the Equity Shares, including the applicability of local tax laws or non-tax laws, any changes in applicable tax laws and any pending or proposed legislation or regulations.

189

LEGAL PROCEEDINGS

From time to time, we are involved in legal proceedings filed by and against us, arising in the ordinary course of our business. These legal proceedings, which are pending adjudication, are primarily in the nature of (a) civil cases, (b) labor cases, (c) arbitration proceedings, (d) direct and indirect tax proceedings, (e) criminal proceedings and (f) consumer cases. We believe that the number of legal proceedings in which we are involved is not unusual for a company of our size in the context of doing business in India. We are not involved in any legal proceedings and no legal proceedings are threatened which may have, or have had, during the year preceding the date of this Placement Document, a material adverse effect on our business, properties, financial conditions or operation. Following are certain material litigations filed by and against us and SWCL (since merged with us) and our Promoter Director Mr. Vijay Mallya.

Tax Cases Filed Against USL

Disputed claims against the Company not acknowledged as debts include income tax demands under appeal of Rs.1,437.0 million, sales tax demands under appeal in various states of Rs.604.0 million and other miscellaneous claims of Rs.244.3 million. See Note 1 of Schedule 19 to our consolidated financial statements as of and for the year ended March 31, 2009 included elsewhere in this Placement Document.

• On an appeal filed by USL against the orders of the Commissioner of Central Excise before Customs Excise and Service Tax Appellate Tribunal, Bangalore (CESTAT), demanding differential duty of Rs.354.60 million with additional penalties, and on royalties received on sale of IMFL and value attributable to the addition of food flavors to our products held that we were not liable for payment of the duty demanded and that no penalty can be levied. The appeals were allowed. The Department has filed an appeal in the Supreme Court of India, which has been admitted and will be heard in due course.

• The Income Tax Department has filed a Special leave petition in the Supreme Court being ITA reference SLP No.4978/06 for AY 1994-95 on the basis that the High Court has committed an error in upholding the decision of ITAT, deleting the additions made by the Assessing officer in respect of disallowance of Corporate guarantee obligation of Rs.186.7 million (Tax liability-Rs.96.6 million) claimed by the assessee as Corporate guarantee devolution payments, unmindful of the fact that such claim was made with reference to a counter guarantee given in favor of a company engaged in business totally alien to that of the Respondent and the fact that such amount was not even debited by the Respondent in its books of accounts for the previous year ended 31.3.94, by merely placing reliance on an unconsidered earlier order.

Tax Cases filed by USL and SWDL (since merged with USL)

The most material of these include:

• Sales Tax Demand raised by the Assistant Commissioner of Commercial Taxes, Zone VIII, Chennai of Rs. 406.08 million for liability of ACI Limited, a company which was a subsidiary of SWC, in relation to which a writ has been filed before the High Court of Madras being WP No.5261 of 2008 (USL vs Commercial Tax Officer and Asst. Commissioner (CT) Zone VIII, Chennai) against the demand of Rs. 406.08 million. The High Court heard the writ petition on 3rd March, 2008. However, the final decision in the matter is awaited.

• USL has filed an appeal before CIT(A) being Appeal No.406/08-09 for AY 2006-07 against the disallowance under Section 14A of the Income Tax Act, 1961 and in relation to bad debts written off

190

and in relation to exchange fluctuation loss etc, amounting to Rs.822.2 million and claiming a tax relief of Rs.276.7 million. The appeal is pending.

• SWDL had filed an appeal before CIT (A) for A.Y.2004-05 in respect of depreciation disallowed, professional fee treated as capital, unsecured loan tax under Section 68, advertisement and sales promotion, bonus or commission claimed under Section 37(1) treated as not allowable under Section 36(1) (ii), ad hoc provision, advances written off, disallowance under Section 14A, 43B and stamp duty treated as capital. The amount under dispute is Rs. 222.27 million and the tax relief sought is Rs.79.73 million. The appeal is pending.

Cases Filed By/Against SWC

General:

SWC, which has merged pursuant to the 2007 Scheme, has substantial pending litigation and tax claims pending against it. We are exposed to the risk of additional liability over and above the provisions made, depending on final adjudication by the authorities. See “Risk Factors – Risks Relating to Our Operations – We may not be sufficiently covered for liabilities arising out of litigation and tax claims pending against SWC, which have been passed to us as a result of our acquisition of SWC, which has since merged with us, and which could expose us to loss”.

We believe that we have well founded defenses to the claims made against us. However, as in most legal cases, no assurance can be given as to the outcome thereof. See “Risk Factors – Risks Relating to Our Operations – Adverse determination of legal proceedings in which we are involved may harm our reputation and impose high financial liability on us”.

SWC, which has merged with us pursuant to a scheme of amalgamation, had substantial pending litigation and tax claims pending against it. These included certain original tax claims of Rs.2711.8 million, which were set aside by the tax authorities, but were pending before the Settlement Commission of the Income Tax Department. However, the Settlement Commission disposed of the matter and the demand was fully paid by SWC. Against the order of the Settlement Commission, the Income Tax Department filed a Special Leave Petition in the Supreme Court of India which was subsequently withdrawn by the Department. The Supreme Court while allowing the Department to withdraw the Special Leave Petition has treated the claims as dismissed but has granted liberty to the Income Tax Department to file a Writ Petition. The Company understands that no writ has been filed to date by the Income Tax Department. Under the terms of the share purchase agreement entered into between certain of our subsidiary companies and the then majority shareholder group of SWC, in March 2005 we acquired up to 54.54% of the equity share capital of SWC for Rs.325 per share; we did not receive an indemnity for liabilities arising out of litigation and tax claims pending against SWC. We are exposed to the risk of additional liability, depending on the final adjudication by the authorities. For further details on the SWC scheme of amalgamation, see Note 2 of Schedule 19 to our consolidated financial statements as of and for the year ended March 31, 2009 included elsewhere in this Placement Document.

Material Litigation Against SWC:

• Original Application No. 252 of 2000 was filed before Debt Recovery Tribunal at Calcutta by State Bank of Patiala against Genelec India Limited and SWC for recovery of a sum of Rs.131.35 million. SWC was made a party in the proceedings on the ground that that a scheme of amalgamation of Genelec India Limited was filed before BIFR by SWC and the same was sanctioned by BIFR. SWC has filed an application for expungement of SWC from the proceeding on the ground that the amalgamation scheme with Genelec India Limited was not pursued further. The matter is pending for affidavit on evidence to be filed by bank on December 18, 2009.

191

• The CIT (Central I) has filed an Appeal against SWC in the Calcutta High Court bearing ITA No. 31 of 2003 challenging the order of the ITAT CITA dated February 28, 2002 relating to the allowance of loss from merged subsidiaries of Rs.211. 2 million. This issue has been held in favor of SWC by the ITAT and the beneficial effect of this amount has been received by SWC. The Company understands that the appeal is yet to be admitted.

• SWC has filed an appeal bearing No.144 of 2002 before the Calcutta High Court challenging the order of ITAT dated 28th February 2002. The grounds taken were on various issues such as advance to Calchem Co, provision for bad debts, APSEB Depreciation, waiver of Interest, certain expenses and interest under Sections 234A and 234B. The tax liability involved is Rs.184.89 million. The appeal has been admitted and is pending. A miscellaneous application had been filed before ITAT which was held in favor of SWC and accordingly, the assessment order for this year has been annulled and the refund for the same has been received by SWC.

• An Appeal has been filed by the CIT(Central I), Calcutta against SWC in the Calcutta High Court bearing ITA No. 324 of 2007 challenging the recalling of its order dated 25th February, 2002 by the Income Tax Appellate Authority by its order dated 15th September, 2006.The amount involved is Rs.257.03 million. A miscellaneous application had been filed before ITAT which was held in favor of SWC and the recalling order of ITAT was passed in favor of SWC, pursuant which SWC has received the refund for the same. This appeal has been admitted and is pending.

• An Appeal has been filed by the CIT(Central I), Calcutta against SWC in the Calcutta High Court bearing ITA No.700 of 2007 challenging the order of ITAT dated 9th March 2007. The amount involved is Rs.257.03 million. After the recalling order of ITAT, favoring SWC, the ITAT in a subsequent order held these issues / amount in favor of SWC. SWC has received the refund for this amount. This departmental appeal has been admitted and is pending.

Criminal Cases Filed Against our Promoter Director

A criminal fraud case was initiated in 1984 against the officers of the former Carew & Co. Ltd., which has since been amalgamated with our Company, alleging the use of fake and forged import permits. As is typical in cases of this nature in India, the directors of Carew & Co. Ltd., including Dr. Vijay Mallya, our current Chairman, were impleaded as parties to the case. Dr. Mallya is the only director remaining from Carew & Co. Ltd. who is associated with our Company today. There is no specific allegation against Dr. Mallya in relation to any wrongdoing, but he is named as a defendant/accused. When this case was initiated, there was no statute of limitation on the length of time that the case can remain open.

Appeal being P. S. Case No.445 of 1990, No.446 of 1991 and No.379 of 1984, has been filed by State of Bihar against our Company before Judicial Magistrate, Patna for the period 1990 and 1984, respectively. Matters relate to criminal cases instituted against our Company on account of export of IMFL on the basis of forged permits. These cases were dismissed. The State of Bihar aggrieved by the said dismissals has filed these appeals praying for conviction of USL on the said charges.

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INDEPENDENT ACCOUNTANTS

Our consolidated financial statements included in this Placement Document as of and for the three years ended March 31, 2007, 2008 and 2009 have been audited by Price Waterhouse, as stated in their reports appearing elsewhere in this Placement Document. Price Waterhouse has completed a limited review as required under Clause 41 of the Listing Agreement of the unaudited unconsolidated financial results as of and for the three months ended June 30, 2009, as stated in their report appearing elsewhere in this Placement Document.

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GENERAL INFORMATION

1. We were incorporated as a public limited company under the Companies Act. Our registered office is located at UB Tower, #24, Vittal Mallya Road, Bangalore, 560 001, India. Our Regional Profit Centers are located in Mumbai, Bangalore, New Delhi, Calcutta and Hyderabad.

2. This Issue was authorized and approved by our Board of Directors on July 29, 2009 and approved by the shareholders in their meeting on September 30, 2009.

3. We have received in-principle approval to list the Equity Shares on the BSE, NSE and the BgSE.

4. Copies of our Memorandum and Articles of Association will be available for inspection during usual business hours on any weekday (except Saturdays and public holidays) at our Registered Office.

5. Other than certain consents required under the terms of certain financing documents to which the Company is a party, we have obtained all consents, approvals and authorizations required in connection with this Issue.

6. There has been no material change in our financial or trading position since June 30, 2009, the date of the latest reviewed consolidated financial statements included in this Placement Document, except as disclosed herein.

7. Except as disclosed in this Placement Document, there are no litigation or arbitration proceedings against or affecting us or our assets or revenues, nor are we aware of any pending or threatened litigation or arbitration proceedings, which are or might be material in the context of this Issue of Equity Shares.

8. Our auditors are Price Waterhouse, which have audited the consolidated financial statements of our Company as of and for the years ended March 31, 2007, 2008 and 2009. Price Waterhouse has completed a limited review as required under Clause 41 of the Listing Agreement of the unconsolidated financial results of the Company as of and for the three months ended June 30, 2009. They have consented to the inclusion of their reports in this Placement Document. A written consent under the listing rules of the SEBI is different from a consent filed with the U.S. Securities and Exchange Commission under section 7 of the Securities Act, which is applicable only to transactions involving securities registered under the Securities Act. As the offered securities have not been and will not be registered under the Securities Act, Price Waterhouse has not filed a consent under section 7 of the Securities Act.

9. We confirm that we are in compliance with the minimum public shareholding requirements as required under the terms of the listing agreements with the BSE, NSE and the BgSE.

10. The Floor Price for the Issue is Rs.913.70, calculated in accordance with Regulation 85(1) of the SEBI Regulations, as certified by our statutory auditors Price Waterhouse.

11. Under our Memorandum of Association, our principal objects are to carry out the business described under “Our Business”.

F-1

INDEX TO FINANCIAL INFORMATION

Unaudited and unconsolidated financial results of the Company as of and for the three months ended June 30, 2009

Auditors’ limited review report under Clause 41 of the Listing Agreement of Price Waterhouse, Chartered Accountants dated July 29, 2009......................................................... F-2

Unaudited financial results for the three months ended June 30, 2009 .................................... F-3

Consolidated financial statements of the Company as of and for the year ended March 31, 2009

Auditors’ report of Price Waterhouse, Chartered Accountants dated July 29, 2009................. F-7

Consolidated balance sheet as of March 31, 2009 ................................................................... F-8

Consolidated profit and loss account for the years ended March 31, 2009 .............................. F-9

Consolidated cash flow statement for the years ended March 31, 2009................................... F-10

Schedules and notes to the consolidated financial statements.................................................. F-12


Auditors’ report of Price Waterhouse, Chartered Accountants dated November 29, 2008....... F-48






Auditors’ report of Price Waterhouse, Chartered Accountants dated October 31, 2007........... F-84





To the Board of Directors of United Spirits Limited

LIMITED REVIEW REPORT

1. We have reviewed the accompanying statement of ‘Un-audited financial results (Provisional) for the three months ended June 30, 2009’ (the ‘Statement’) in which are incorporated the results for the quarter ended June 30, 2009 (‘interim financial information’) of United Spirits Limited prepared by the Company pursuant to Clause 41 of the Listing Agreement with the Stock Exchanges in India, which has been initialled by us for identification purposes. This Statement is the responsibility of the Company’s management and has been approved by the Board of Directors. Our responsibility is to issue a report on the Statement based on our review.

2. We conducted our review in accordance with the Standard on Review Engagement (SRE) 2400, “Engagements to Review Financial Statements” issued by the Institute of Chartered Accountants of India. This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement.

3. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

4. Based on our review conducted as above, nothing has come to our attention that causes us to believe that the Statement prepared, fairly in all material respects, in accordance with the Accounting Standards notified

pursuant to the Companies (Accounting Standards) Rules, 2006 as per Section 211(3C) of the Companies Act, 1956 and other recognised accounting practices and policies, has not disclosed the information required to be disclosed in terms of Clause 41 of the Listing Agreement including the manner in which it is to be disclosed, or that it contains any material misstatement.

5. Further, we also report that we have traced the number of shares as well as the percentage of shareholdings in respect of the aggregate amount of public shareholdings, as well as that of the promoters and promoter group (both pledged/encumbered and non-encumbered), as disclosed in aforesaid Statement, from the representations and other records and information and explanations given to us by the company’s management, and found the same to be in accordance therewith.

J. Majumdar

Partner

Membership No. – 51912

For and on behalf of

Price Waterhouse

Chartered Accountants

5th Floor, Tower “D”, The Millenia

Place : Bangalore 1 & 2, Murphy Road, Ulsoor,

Date: July 29, 2009 Bangalore – 560 008

F-2

F-2 F-3

+

Auditors' Report to the Board of Directors of United Spirits Limited

1. We have audited the attached Consolidated Balance

Sheet of United Spirits Limited and its subsidiaries

(United Spirits Limited Group) as at March 31, 2009,

the Consolidated Profit and Loss account for the

year ended on that date annexed thereto, and the

Consolidated Cash Flow Statement for the year

ended on that date, which we have signed under

reference to this report. These Consolidated Financial

Statements are the responsibility of the United Spirits

Limited’s management and have been prepared by

the management on the basis of separate financial

statements and other financial information regarding

components. Our responsibility is to express an opinion

on these Consolidated Financial Statements based on

our audit.

2. We conducted our audit in accordance with auditing

standards generally accepted in India. Those Standards

require that we plan and perform the audit to obtain

reasonable assurance about whether the financial

statements are free of material misstatement. An

audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial

statements. An audit also includes assessing the

accounting principles used and significant estimates

made by the management, as well as evaluating the

overall financial statement presentation. We believe

that our audit provides a reasonable basis for our

opinion.

3. We did not audit the financial statements of certain

subsidiaries, whose financial statements reflect total

assets of Rs. 68,927.464 Million as at March 31, 2009,

total revenues of Rs. 16,381.334 Million and net cash

outflow amounting to Rs. 731.870 Million for the year

ended on that date as considered in the Consolidated

Financial Statements and associates whose financial

statements reflect the United Spirits Limited Group’s

share of loss of Rs. 1.308 Million for the year ended on

that date as considered in the Consolidated Financial

Statements. These financial statements and other

information of these subsidiaries and associates have

been audited by other auditors, whose reports have

been furnished to us, and our opinion, insofar as it

relates to the amounts included in respect of these

subsidiaries, is based solely on the report of the other

auditors.

4 We report that the Consolidated Financial Statements

have been prepared by United Spirits Limited’s

management in accordance with the requirements

of Accounting Standard 21, Consolidated Financial

Statements and Accounting Standard 23, Accounting

for Investments in Associates in Consolidated Financial

Statements, as specified in the Companies (Accounting

Standard) Rules, 2006.

5. Based on our audit and on consideration of the reports

of other auditors on separate financial statements and

on the other financial information of the components,

in our opinion and to the best of our information and

according to the explanations given to us, the attached

Consolidated Financial Statements, give a true and

fair view in conformity with the accounting principles

generally accepted in India:

i) in the case of the Consolidated Balance Sheet, of

the state of affairs of the United Spirits Limited

Group as at March 31, 2009;

ii) in the case of the Consolidated Profit and Loss

account, of the loss for the year ended on that

date; and

iii) in the case of the Consolidated Cash Flow

Statement, of the cash flows for the year ended

on that date.

J. MajumdarPartner

Membership Number – F 51912For and on behalf of

Place: Bangalore Price WaterhouseDate : July 29, 2009 Chartered Accountants

F-7

Consolidated Financial StatementBalance Sheet as at March 31, 2009

Rs. Million Schedule 2009 2008

SOURCES OF FUNDSShareholders’ Funds

Share Capital 1 1,001.633 885.744 Share Capital Suspense 1A 28.239 -Reserves and Surplus 2 22,826.141 19,886.905

Minority Interest 62.854 1,992.239

Loan FundsSecured Loans 3 69,926.045 65,270.189 Unsecured Loans 4 3,678.829 771.175

Term Liability towards Franchisee rights [Schedule 19 Note 4] 4,431.413 -Deferred Tax Liability (Net) [Schedule 19 Note 15(b)] - 18.029

101,955.154 88,824.281 APPLICATION OF FUNDS

a) Fixed Assets 5Gross Block 22,919.456 16,985.241 Less: Depreciation 6,649.966 6,357.133 Net Block 16,269.490 10,628.108 Capital Work in Progress 288.382 534.432

16,557.872 11,162.540

b) Goodwill on Consolidation 44,738.318 53,259.734

Investments 6 9,501.457 2,119.087

Deferred Tax Asset (Net) [Schedule 19 Note 15(b)] 917.977 -

Foreign Currency Monetory Item Translation Difference [Schedule 19 Note17(d)(ii)] 5,597.523 -

Current Assets, Loans and AdvancesInventories 7 17,458.044 14,850.027 Sundry Debtors 8 8,879.604 8,369.997 Cash and Bank Balances 9 4,490.023 5,437.838 Other Current Assets 10 2,145.024 1,469.204 Loans and Advances 11 7,399.294 4,350.572

40,371.989 34,477.638 Less: Current Liabilities and Provisions 12

Liabilities 13,878.812 11,933.516 Provisions 2,584.477 1,227.972

16,463.289 13,161.488 Net Current Assets 23,908.700 21,316.150

Miscellaneous Expenditure ( to the extent not written off) 13 733.307 966.770

101,955.154 88,824.281 Statement on Significant Accounting Policies 18Notes on Accounts 19

The Schedules referred to above and the notes thereon form an integral part of the Accounts.

This is the Consolidated Balance Sheet referred to in our report of even date

J. MAJUMDAR M. R. DORAISWAMY IYENGAR V. K. REKHIPartner Director Managing DirectorFor and on behalf ofPrice Waterhouse V. S. VENKATARAMAN P. A. MURALIChartered Accountants Company Secretary Chief Financial Officer

Bangalore BangaloreJuly 29, 2009 July 29, 2009

F-8

Consolidated Financial StatementProfit and Loss Account for the year ended March 31, 2009

Rs. Million

Schedule 2009 2008

INCOMESales (Gross) 88,991.063 71,710.354 Less: Excise Duty 38,449.701 28,993.749

50,541.362 42,716.605 Income arising from Sale by Manufacturers under ‘Tie-up' agreements (Tie-up units) 2,286.740 2,393.606Income from Brand Franchise 1,417.905 1,165.041 Income from IPL Franchise 434.608 - Other Income 14 1,038.408 1,063.172

55,719.023 47,338.424 EXPENDITURE

Materials 15 26,909.455 20,905.933 Manufacturing and Other Expenses 16 20,067.629 14,670.312 Interest and Finance charges 17 7,175.643 5,447.563 Exchange Loss (Net) 3,809.315 81.168

57,962.042 41,104.976 Profit before Exceptional and Other (2,243.019) 6,233.448 Non-Recurring items, Depreciation and TaxationDepreciation 925.839 741.412 Profit before Exceptional and Other Non-Recurring Items and Taxation (3,168.858) 5,492.036 Exceptional and Other Non-Recurring Items (Net) - Contingency Provision Written Back - 181.258 (Loss)/ Profit before Taxation and before share in Profit/Losses) of Associates (3,168.858) 5,673.294 Provision for Taxation:

Current Tax 1,815.351 1,841.299 Deferred Tax (949.703) 773.129 Fringe Benefit Tax 50.063 46.815

(Loss)/Profit after Taxation and before share in (4,084.569) 3,012.051 Profits/(Losses) of AssociatesShare in Profits/ (losses) of Associates (Net) (1.308) (7.419)(Loss) / Profit before Minority Interest (4,085.877) 3,004.632 Minority Interest in (Profit)/Loss (1.741) (284.048)Net (Loss)/ Profit for the year (4,084.136) 2,720.584 Profit brought forward from previous year 8,036.929 5,822.345 Profit transferred on Amalgamation [Schedule 19 Note 2(D)] (162.543) -

3,790.250 8,542.929 Appropriations:Proposed Dividend

Equity Shares - Interim 8.552 - Equity Shares - Final 206.280 132.623 Corporate Tax on Proposed Dividend 36.679 25.877 Transfer to Capital Redemption Reserve - 77.500 Transfer to General Reserve 350.000 270.000

Profit carried to Balance Sheet 3,188.739 8,036.929 Basic Earnings Per Share (Rs.) (Face Value of Rs.10 each) (39.66) 31.59 Diluted Earnings Per Share (Rs.) (Face Value of Rs.10 each) (39.66) 31.11 Statement on Significant Accounting Policies 18Notes on Accounts 19The Schedules referred to above and the notes thereon form an integral part of the Accounts.This is the Consolidated Profit and Loss Account referred to in our report of even date



F-9

Consolidated Financial StatementCash Flow Statement for the Year Ended March 31, 2009

Rs. Million2009 2008

A. CASH FLOW FROM OPERATING ACTIVITIESNet profit/(loss) before Exceptional and OtherNon- recurring items and Taxation (3,168.858) 5,492.036 Adjustments for :Depreciation 925.839 741.412 Unrealised Foreign Exchange Loss/(Gain) 3,174.218 (72.702)Bad Debts/Advances written off 19.289 187.060 Loss/(Gain) on Fixed Assets Sold/Written Off (Net) (142.002) (97.325)Loss/(Gain) on Sale of Investments (Net) (24.500) 5.798 Liabilities no longer required written back (136.619) (199.962)Provision for Doubtful Debts/Advances/Deposits 212.444 135.350 Provision for diminution in value of Investments/(Written back) 0.031 0.051 Provision for Onerous Lease/(written back) 403.578 (82.863)Provision - Others 1,057.645 77.550 Interest and Finance Charges 7,377.259 5,880.823 Income from investments (31.696) (94.097)Interest Income (201.616) 12,633.870 (433.260) 6,047.835 Operating profit before working capital changes 9,465.012 11,539.871

(Increase)/decrease in Trade and other receivables (3,991.660) (2,597.188)(Increase)/decrease in Inventories (2,608.017) (793.677)Increase/(decrease) in Trade payables 1,846.147 (4,753.530) (3,208.175) (6,599.040)

Cash generated from operations 4,711.482 4,940.831

Direct taxes paidFringe Benefit taxes paidCash flow before Exceptional and Other Non-Recurring Items

(2,314.180) (2,222.266)

(43.632) (45.320)2,353.670 2,673.245

Prior Period, Exceptional and Other Non-Recurring items - -Cash flow after extraordinary itemsand net cash from operating activities 2,353.670 2,673.245

B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of fixed assets (951.509) (2,641.536)Payment towards Franchise rights (501.575) -Sale of fixed assets 189.223 168.906 Finance Lease Payments (17.257) (15.159)Purchase of long term investments (9.683) (14.582)Purchase of current investments (50.000) (1,303.931)Consideration paid on acquisitions of shares in Subsidiaries - (36,574.961)[net of cash and cash equivalent on the acquisition date Rs. NIL (2008: Rs.112.446 Million)]

Disposal of Investment in Associate 10.700 - Sale of long term investments 1,068.924 1.539 Sale of current investments 881.551 1,249.216 Interest received 214.423 419.443 Dividend received 29.993 82.958

Net cash used in investing activities 864.790 (38,628.107)

F-10

Consolidated Financial StatementsCash Flow Statement for the Year Ended March 31, 2009 (Contd.)


C. CASH FLOW FROM FINANCING ACTIVITIESShare Application Money in a Subsidiary Company 50.000 - Expenses incurred on arrangement of borrowings - (788.716)Proceeds/(Repayment) of long term loans

Proceeds 2,170.756 40,742.225 Repayment (4,465.117) (505.269)

Proceeds/(Repayment) of fixed deposits 95.169 (117.669)Proceeds/(Repayment) of short term loans 2,814.552 (1,700.328)Working Capital Loan / Cash Credit from Banks (net) 2,415.467 2,340.240 Interest and Finance charges Paid

[including on Finance lease Rs. 2.981 Million (2008: Rs. 3.003 Million)]

(7,104.189) (4,124.167)

Dividends paid (142.913) (175.510)Corporate Tax on distributed profit - (56.119)

Net cash used in financing activities (4,166.275) 35,614.687

Net increase in cash and cash equivalents (947.815) (340.175)Cash and cash equivalents as at March 31, 2008 5,437.838 5,778.013Cash and cash equivalents as at March 31, 2009 4,490.023 5,437.838

(947.815) (340.175)

Notes:

1. The above Cash Flow Statement has been compiled from and is based on the Balance Sheet as at March 31, 2009 and the related Profit and Loss Account for the year ended on that date.

2. The above cash flow statement has been prepared under the indirect method as set out in the Accounting Standard - 3 on Cash Flow Statements as notified under Section 211(3C) of the Companies Act, 1956 and reallocation required for this purpose are as made by the Company.

3. Previous year’s figures have been regrouped wherever necessary in order to conform to this year’s presentation.

This is the Consolidated Cash Flow Statementreferred to in our report of even date.



F-11

Rs. Million

2009 2008

1. SHARE CAPITAL

Authorised

245,000,000 (2008: 110,000,000) Equity Shares of Rs.10/- each 2,450.000 1,100.000

84,200,000 (2008: 10,000,000) Preference Shares of Rs.10/- each 842.000 100.000

[Schedule 19 Note 2(A)(IV)] 3,292.000 1,200.000

Issued, Subscribed and Paid-up

100,163,256 (2008: 100,163,256) Equity Shares of Rs.10/- each fully paid up. 1,001.633 1,001.633

Less: Nil (2008: 11,588,984)Equity Shares held by Subsidiaries - 115.889

1,001.633 885.744

Notes :

Of the above,

1. 51,719,968 (2008: 51,719,968) Equity Shares were allotted as fully paid up on July 9, 2001 to the Shareholders of the erst-while McDowell & Company Limited, pursuant to the Schemes of Amalgamation for consideration other than cash.

2. 34,010,521 (2008: 34,010,521) Equity Shares were alloted as fully paid on November 6, 2006 to Equity Shareholders of erstwhile Herbertsons Limited, Triumph Distillers & Vintners Private Limited, Baramati Grape Industries Limited, United Distillers India Limited and Shaw Wallace Distilleries Limited pursuant to a Scheme of Amalgamation for consideration other than cash.

3. 8,751,381 (2008: 8,751,381) Equity shares of Rs.10/- each fully paid up represent 17,502,762 (2008: 17,502,762) Global Depository Shares issued by the Company on March 29, 2006.

4. 5,681,326 (2008: 5,681,326) Equity shares of Rs.10/- each fully paid up were alloted consequent to conversion of 100,000, 2% Convertible Bonds in Foreign Currency during 2008.

1A. SHARE CAPITAL SUSPENSE

Equity Share Suspense

7,749,121 (2008: Nil) Equity Shares of Rs.10/- each to be issued as fully paid up to the Equity Shareholders of Transferor Companies pursuant to the Scheme of Amalgamation for consideration other than cash [Schedule 19 Note 2(A)(I)]

77.491 -

Less: 4,925,231 (2008: 11,588,984) Equity Shares to be held by Subsidiaries 49.252 -

28.239 -

Consolidated Financial StatementSchedules forming part of Balance Sheet as at March 31, 2009

F-12

Rs. Million

2009 20082. RESERVES AND SURPLUS

Central SubsidyAs per Last Balance Sheet 1.500 1.500

Capital Redemption ReserveAs per last Balance Sheet 578.946 464.446

Transferred from the General Reserve - 37.000 Transferred from the Profit and Loss Account - 77.500

578.946 578.946

Securities Premium AccountAs per last Balance Sheet 9,893.918 5,457.811 Addition during the year:(a) Conversion of 100,000, 2% Convertible Bonds in Foreign

Currency - 4,386.164

(b) Premium payable on redemption of 2% Convertible Bonds in Foreign Currency reversed during the year

- 49.943

9,893.918 9,893.918 Employee Housing Fund

As per last Balance Sheet 0.625 0.625

Foreign Currency Translation Reserve 350.527 (82.000)

Contingency ReserveAs per last Balance Sheet 110.000 110.000

General ReserveAs per last Balance sheet 1,346.987 1,113.987 Add: Addition during the year(a) Reserve arising on amalgamation [Schedule 19 Note 2(A)(V)

(d) and 2(B)(II)(c)]7,849.035 -

(b) Adjustment on adoption of notification under Companies (Accounting Standards) Rules, 2009 relating to AS11 - “The Effects of Changes in Foreign Exchange Rates” [Schedule 19 Note 17(d)]

99.360 -

(c) Transferred from Profit and Loss Account 350.000 270.000 9,645.382 1,383.987

Less:(a) Expenses relating to Amalgamation [Schedule 19 Note 2(C)] (146.879) –

(b) Diminution in value of certain fixed assets of the Company [Schedule 19 Note 2(A)(V)(e)]

(80.704) -

(c) Transfer from Foreign Currency Translation Reserve onamalgamation [Schedule 19 Note 2(B)(II)(d)]

(715.913) -

(d) Transferred to Capital Redemption Reserve - (37.000)8,701.886 1,346.987

Surplus in Profit and Loss Account 3,188.739 8,036.929 22,826.141 19,886.905

Consolidated Financial StatementSchedules forming part of Balance Sheet as at March 31, 2009 (Contd.)

F-13

Rs. Million

2009 20083. SECURED LOANS

Term Loans From Banks [Note (i)] 61,893.339 59,638.123 [Repayable within one year: Rs.6,314.639 Million (2008: Rs.1,604.634 Million)]

Working Capital Loan / Cash Credit from Banks [Note (ii) and (iii)] 8,005.982 5,590.515 Finance Lease [Note (iv)] 26.724 41.551

69,926.045 65,270.189 Notes:(i) Out of the above loans:

(a) Secured by charge on certain fixed assets of the Company including Land and Building. 1,426.205 488.222

(b) Secured by charge on certain fixed assets of the Company including Land and Buildings, pledge of certain shares held by the Company and also by pledge of certain shares of other Companies. 2,062.412 3,906.754

(c) Foreign Currency Borrowings and External Commercial Borrowings secured by charge on certain fixed assets of the Company inlcuding land and buildings, a trade mark and fixed deposits with bank (charge created subsequent to year end). 1,775.550 1,404.200

(d) Secured by a second charge on certain fixed assets of the Company including land and building. 62.500 125.000

(e) Secured by hypothecation of specific fixed assets acquired under respective agreements. 0.305 4.627

(f) Secured by a charge on fixed and floating securities over the Group's assets including a pledge on Group's maturing stock and pledge over the Share Capital of Subsidiary Companies in United Kingdom. 24,358.044 28,307.701

(g) Secrued by hypothecation of certain trademarks of the Group Pledge of certain shares held by the Group and Trust including charge on Immovable property, current assets including inventories held by the Group. 31,428.520 24,856.350

(h) Secured by charge on property 308.200 255.938 (i) Secured by fixed assets and inventory 471.603 289.331

(ii) Secured by charge on certain fixed assets of the Company including land and building and hypothecation of inventories (except those held outside India), book debts and other current assets..

(iii) Includes Foreign Currency Non-Resident [FCNR(B)] Loans. - 893.069 (iv) Secured against assets acquired under lease agreements

4. UNSECURED LOANSFixed Deposits 631.505 553.385

[Repayable within one year Rs.148.294 Million (2008: Rs. 367.072 Million)]Long term loan from a bank (Note below) 750.000 - [Repayable within one year Rs.Nil (2008: Rs. Nil)]Short term loan from banks 2,150.000 - [Repayable within one year Rs.2,150 Million (2008: Rs. Nil)]From Others 106.732 177.198

Interest accrued and due 40.592 40.592 3,678.829 771.175

Note: Out of the above loans Rs.750 Million (Rs. Nil) is guaranteed by a promoter/ director of the Company.


F-14

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f Bal

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et a

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F-15


6. INVESTMENTSCURRENTUnquoted InvestmentsUnits (Fully Paid)

Mutual funds Investments 21.386 851.233 Total Current Investments 21.386 851.233

LONG TERM

Quoted InvestmentsA. Trade

Fully Paid Equity Shares 0.532 10.155 B. Non-Trade

Fully Paid Equity Shares 4.147 6.124 4.679 16.279

Units (Fully Paid) (Note 1) 3.839 35.982 Total Quoted Investments (A+B) 8.518 52.261

Unquoted InvestmentsC. Trade

Fully paid Equity Shares 10.828 0.683 Associates** 8.721 15.896 Add: Accumulated Profits/ (Losses) of Associates

(net of dividend received) (8.721) (11.197) - 4.699

** Including Goodwill on acquisition of AssociatesRs.3.518 Million (2008: Rs. 10.828 Million)

Fully paid Preference Shares - 0.250

10.828 5.632 D. Non-Trade

In Government Securities 0.200 1,006.501 In Fully Paid Debentures 0.048 0.048 Fully Paid Equity Shares 10.675 10.800

10.923 1,017.349 E. Others (Note 2) 9,450.681 194.676

9,450.681 194.676 Total Unquoted Investments (C+D+E) 9,472.432 1,217.657

Total Long Term Investments (A+B+C+D+E) 9,480.950 1,269.918

Total Current and Long Term Investments 9,502.336 2,121.151

Less: Provision for diminution in the value of Investments (Note 3)

0.879 2.064

Total 9,501.457 2,119.087


F-16

Rs. Million

2009 2008

6. INVESTMENTS (Contd.)

Aggregate Value of Quoted Investments

- Book Value 8.518 901.430

- Market Value 68.748 1,182.416

Aggregate book value of Unquoted Investments 9,472.432 1,217.657

Acquired on acquisition - 9.378

Additions during the year 52.666 1,322.503

Adjustments to Investments 9,256.005 -

Sold during the year 1,927.486 1,256.823

Notes:

1. Investments in units of Unit Trust of India amounting to Rs.3.175 Million (2008: Rs. 34.400 Million) represent those made

under Rule 3A of the Companies (Acceptance of Deposit) Rules, 1975.

2. Include:

a) Rs. 9,409.541 Million (2008: Rs.153.536 Million) pertaining to investment in USL Benefit Trust represents beneficial

interest USL Benefit Trust which holds 3,459,090 (2008: 2,152,659) equity shares of Rs.10 each of the Company, with

all additions or accretions thereto in trust for the benefit of the Company and includes 10,282,553 Shares held by

erstwhile Shaw Wallace and Company referred to in Schedule 19 Note 2(A)(III).

b) Rs. 41.140 Million (2008: Rs. 41.140 Million) pertaining to 72,416,505 (2008: 72,416,505) Equity Shares of SWBL whose

beneficial ownership vested with SWFSL are kept with escrow agent in view of court order. Pursuant to a scheme

of amalgamation, such beneficial interest are held in trust by the trustee of SWFSL benefit trust for the benefit of

SWBL

3. Investments written off during the year aggregated to Rs.1.216 Million (2008: Rs. Nil) adjusted against the provision for

diminution in the value of Investment.


F-17

Rs. Million

2009 2008

7. INVENTORIES

Raw Materials including materials in transit 1,210.364 777.277

Packing Materials, Stores and Spares 1,065.984 754.209

Finished goods including goods in transit 3,320.363 2,548.239

Work-in-Progress 11,861.333 10,770.302

17,458.044 14,850.027

8. SUNDRY DEBTORS

(Unsecured)

Exceeding six months:

Considered Good 14.434 64.064

Considered Doubtful 147.707 149.849

162.141 213.913

Others: Considered Good 8,865.170 8,305.933

9,027.311 8,519.846

Less: Provision for Doubtful debts 147.707 149.849

8,879.604 8,369.997

9. CASH AND BANK BALANCES

Cash on Hand 5.527 6.558

Remittance in Transit/ Cheques on Hand 232.624 30.675

Balances with Scheduled Banks:

On Current Accounts [Note (i)] 2,398.959 1,010.607

On Unpaid Dividend Account 17.878 19.730

On Deposit Account [Note (ii) and Note (iii)] 1,835.035 4,370.268

4,490.023 5,437.838

Notes:

(i) includes Rs.32.097 Million (2008: Rs.25.285 Million) in Exchange Earners Foreign Currency . (EEFC) Account and Rs.8.703 Million (2008: Rs.1.155 Million) in Foreign Currency

(ii) (a) includes Rs. 0.587 Million (2008: Rs. 8.403 Million) pledged with Government Departments.

(b) includes Rs. 1.300 Million (2008: Rs.2.673 Million) as margin against bank guarantee.

(iii) includes Rs.133.926 Million (2008: Nil) pledge as Security against loan from a bank

10. OTHER CURRENT ASSETS

(Unsecured, Considered Good except otherwise stated)

Income accrued on Investments and Deposits 46.331 59.138

Other Deposits – Considered Good 2,093.820 1,405.448

– Considered Doubtful 9.940 8.031

Fixed assets held for sale 4.873 4.618

2,154.964 1,477.235

Less: Provision for Doubtful Deposits 9.940 8.031

2,145.024 1,469.204


F-18

Rs. Million

2009 200811. LOANS AND ADVANCES

(Unsecured, considered good except where otherwise stated)Advances recoverable in cash or in kind or for value to be receivedAdvances to Tie-up units – Considered Good 2,522.168 917.736 – Considered Doubtful 20.314 21.519 Advances Income Tax (Net of Provisions) 491.243 - Other Advances – Considered Good 4,385.883 3,432.836 – Considered Doubtful 500.947 295.564

7,920.555 4,667.655 Less: Provision for Doubtful Advances 521.261 317.083

7,399.294 4,350.572

12. CURRENT LIABILITIES AND PROVISIONSA. Liabilities

Acceptances * 1,126.924 753.918 Sundry Creditors 9,790.924 8,502.305 Dues to Directors 49.193 51.486 Investors Education and Protection Fund [Schedule 19 Note 8]

Unclaimed Debentures 0.001 0.001 Unclaimed Dividends 19.518 22.840 Unclaimed Fixed Deposits 28.074 11.025

Security Deposit 130.847 115.810 Advances Received from Customers 371.992 183.105 Interest accrued but not due 1,847.209 1,734.259 Other Liabilities 514.130 558.767

13,878.812 11,933.516 * Includes bills drawn against inland letters of credit of Rs. 876.924 Million

(2008: Rs. 215.149 Million) and secured by a charge on debtors, inventories and other current assets.

B. ProvisionsProposed Dividend

Equity Shares - Final 206.280 131.039Corporate Tax on Proposed Dividend 36.679 -Taxation (Net of Payments) - 7.586Fringe Benefit Tax (Net of Payments) 8.467 2.036Provision for Contingencies - 103.744Onerous Lease Provision [Schedule 19 Note 16] 909.890 600.601Employee Benefits 1,423.161 382.966

2,584.477 1,227.972

13. MISCELLANEOUS EXPENDITUREExpenditure Incurred for Raising Borrowed FundsAs per the last Balance Sheet 966.770 - Add: Additions during the year - 1,078.845

966.770 1,078.845

Less: Amortisation during the year 160.140 112.075 806.630 966.770

Less: Translation Adjustments 73.323 -733.307 966.770


F-19

Rs. Million

2009 2008

14. OTHER INCOME

Income from Investments:

Dividend income from other investments 31.696 94.097

[Tax deducted at source Rs. 1.905 Million (2008: Rs.1.905 Million)]

Lease Rent 322.776 261.801

Profit on Sale of Fixed Assets (Net) 142.012 114.274

Profit on Sale of Investments 24.500 -

Provision for Onerous Lease written back - 82.863

Liabilities no longer required written back 136.619 199.962

Bad debts/ Advances recovered 0.088 3.173

Scrap Sales 158.491 160.114

Insurance Claims 2.814 3.308

Miscellaneous 219.412 143.580

1,038.408 1,063.172

15. MATERIALS

Raw Materials Consumed 12,140.730 8,160.766

Purchase of Finished Goods 5,292.096 4,409.791

Packing Materials Consumed 11,097.935 8,522.697

Movement in Stocks:

Opening Stock:

Work-in-Progress 10,770.302 1,422.364

Finished Goods 2,548.239 1,063.708

13,318.541 2,486.072

Add : Taken over on Amalgamation/Acquisition

Work-in-Progress - 9,188.949

Finished Goods - 1,083.380

- 10,272.329

Closing Stock:

Work-in-Progress 11,861.333 10,770.302

Finished Goods 3,320.363 2,548.239

15,181.696 13,318.541

(Increase)/ Decrease in Stocks (1,863.155) (560.140)

Excise Duty on Opening/Closing Stock of Finished Goods (Net) 241.849 372.819

26,909.455 20,905.933

Consolidated Financial StatementSchedules forming part of Profit & Loss Account for the year ended March 31, 2009

F-20

Rs. Million

2009 2008

16. MANUFACTURING AND OTHER EXPENSES

Employee Cost:

Salaries, Wages and Bonus 4,174.779 3,748.690

Contribution to Provident and Other Funds 441.248 408.542

Workmen and Staff Welfare 132.447 117.749

Voluntary Retirement Scheme Compensation - 4.053

Actuarial Loss/ (Gain) on Pension 1,746.228 (975.539)

6,494.702 3,303.495

Direct Expenses on IPL Franchise 411.571 -

Power and Fuel 706.332 444.233

Stores and Spares Consumed 130.584 110.942

Repairs and Maintenance:

Buildings 87.824 71.483

Plant and Machinery 182.926 155.477

Others 217.315 136.034

Rent 107.924 281.236

Rates and Taxes 457.318 417.433

Insurance 133.719 117.390

Travelling and Conveyance 640.265 561.727

Legal and Professional 656.441 633.271

Freight Outwards 1,008.744 815.710

Advertisement and Sales Promotion 5,378.471 4,781.123

Commission on Sales 390.848 405.644

Royalty/ Brand Fee/ Trade Mark Licence Fees 60.032 96.925

Cash Discount 363.748 206.742

Sales Tax 194.732 142.850

Fixed Assets Written Off 0.010 16.949

Loss on Sale of Investments - 5.798

Directors’ Remuneration:

Sitting Fee 1.180 2.311

Commission 48.727 51.044

Bad Debts and Advances Written Off 19.289 187.060

Provision for Doubtful Debts/ Advances / Deposits 212.444 135.350

Provision for Onerous Lease 403.578 -

Provision for Diminution in Value of Investments (Net) 0.031 0.051

Research and Development 30.536 28.779

Others:

Personnel and Administration 415.636 360.199

Selling and Distribution 977.023 947.971


20,067.629 14,670.312

Consolidated Financial StatementSchedules forming part of Profit & Loss Account for the year ended March 31, 2009 (Contd.)

F-21

Rs. Million

2009 2008

17. INTEREST AND FINANCE CHARGES

Interest on:

Fixed Loans 4,795.748 3,842.234

Others Loans 1,998.334 1,617.936

Amortisation of Expenditure Incurred for Raising Borrowed Funds 160.140 112.075

Finance Charges (including Bill discounting charges) 423.037 308.578

7,377.259 5,880.823

Less : Interest Income:

On Investments 1.222 2.144

On Deposits and Other Accounts (Gross) 196.009 341.877

On Income Tax Refunds 4.385 89.239

7,175.643 5,447.563


F-22

Consolidated Financial StatementSchedules forming part of account for the year ended March 31, 2009

18. STATEMENT ON SIGNIFICANT ACCOUNTING POLICIES

1. Basis of Preparation of Consolidated Financial Statements

The Consolidated Financial Statements relate to United Spirits Limited (the Company) and its subsidiaries and

associates (the Group). The Consolidated Financial Statements are prepared in accordance with Accounting

Standard (AS) 21 on Consolidated Financial Statements and AS 23 on Accounting for Investments in Associates in

Consolidated Financial Statement as specified in the Companies (Accounting Standard) Rules, 2006, and the relevant

provisions of the Companies Act, 1956 of India. The Consolidated Financial Statements are prepared by adopting

uniform accounting policies for like transactions and other events in similar circumstances and are presented to

the extent possible, in the same manner as the Company’s separate financial statement. Accounting policies have

been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an

existing accounting standard requires a change in the accounting policy hitherto in use.

On occasion, a subsidiary company whose financial statements are consolidated may issue its shares to third parties

as either a public offering or private placement at per share amounts in excess of or less than the Company's

average per share carrying value. With respect to such transactions, the resulting gains or losses arising from

the dilution of interest are recorded as Capital Reserve/Goodwill. Gains or losses arising on the direct sale by the

Company of its investment in its subsidiaries or associated companies to third parties are transferred to the profit

and loss account. Such gains or losses are the difference between the sale proceeds and the net carrying value of

the investments.

2. Subsidiary and Associate Companies considered in the Consolidated Financial Statements:

(A) Subsidiary Companies:

Sl.No.

Name of the CompanyCountry of

Incorporation

Proportion of owner-ship interest

(%)

Proportion of voting power held directly or indirectly, if different from proportion of

ownership interest (%)

2009 2008 2009 2008

1 Asian Opportunities & Investments Limited(AOIL)

Mauritius 100 100 - -

2 United Spirits Nepal Private Limited Nepal 82.47 82.47 - -

3 Zelinka Limited (ZL) (ii) Cyprus - 100 - -

4 Shaw Wallace & Company Limited (SWCL) (ii)

India - 75 - -

5 Ramanretti Investments & Trading Ltd. (RITL) (iii) India 100 75 - -

6 Shaw Wallace Breweries Limited (SWBL) (iii)

India 100 75 - 100

7 Primo Distributors Pvt. Ltd. (PDPL) (ii) India - 100 - -

8 Palmer Investment Group Ltd.(PIG) British Virgin Islands

100 100 - -

9 RG Shaw & Company Ltd. (RGSC) U.K. 100 100 - -

10 Shaw Scott & Company Ltd. (SSC) U.K. 100 100 - -

11 Shaw Darby & Company Ltd. (SDC) U.K. 100 100 - -

12 Thames Rice Milling Company Limited (TRMC) U.K. 100 100 - -

F-23

Consolidated Financial StatementSchedules forming part of account for the year ended March 31, 2009 (Contd.)

(A) Subsidiary Companies ( Contd.)

Sl.No.


IncorporationProportion of owner-

ship interest (%)



2009 2008 2009 2008

13 Shaw Wallace Overseas Limited (SWOL) (iii) U.K. 100 75 - 100

14 JIHL Nominees Limited(JIHL) Jersey Islands 100 100 - -

15 Montrose International S.A (MI) Panama 100 100 - -

16 USL Holdings Limited (UHL)British Virgin

Islands100 100 - -

17Spring Valley Investments Holding Inc.(SVIH)

British Virgin Islands

100 100 - -

18 USL Holdings (UK) Limited (UHUKL) U.K 100 100 - -

19 United Spirits (UK) Limited (USUKL) U.K 100 100 - -

20United Spirits (Great Britain) Limited(USGBL)

U.K 100 100 - -

21 Four Seasons Wines Limited (FSWL) India 100 100 - -

22 United Vintners Limited (UVL) India 100 100 - -

23 United Alcobev Limited (UAL) India 100 100 - -

24 McDowell Beverages Limited (MBL) India 100 100 - -

25 McDowell (Scotland) Limited (MSL) Scotland 100 100 - -

26 Bouvet Ladubay S.A.S (BL) France 100 100 - -

27 Chapin Landias S.A.S (CL) France 100 100 - -

28 Herbertsons Limited (HL) India 100 100 - -

29 Daffodils Flavours & Fragrances Private Limited (DFFPL)

India 100 100 - -

30 Jasmine Flavours and Fragrances Private Limited

India 100 100 - -

31 Royal Challengers Sports Private Limited India 100 100 - -

32 McDowell and Company Limited India 100 100 - -

33 Liquidity Inc. USA 51 51 - -

34 USL Shanghai Trading Company Limited (USLS) (i)

China 100 - - -

Whyte and Mackay Group

35 Whyte and Mackay Group Limited U.K 100 100

36 Bruce & Company (Leith) Limited U.K 100 100 - -

37 Charles Mackinlay & Company Limited U.K 100 100 - -

38 Dalmore Distillers Limited U.K 100 100 - -

39 Dalmore Whyte & Mackay Limited U.K 100 100 - -

40 Edinburgh Scotch Whisky Company Limited

U.K 100 100 - -

41 Ewen & Company Limited U.K 100 100 - -

42 Fettercairn Distillery Limited U.K 100 100 - -

43 Findlater Scotch Whisky Limited U.K 100 100 - -

F-24

Sl.No.



ship interest (%)



2009 2008 2009 2008

44 Glayva Liqueur Limited U.K 100 100 - -

45 Glentalla Limited U.K 100 100 - -

46 GPS Realisations Limited U.K 100 100 - -

47 Grey Rogers & Company Limited U.K 100 100 - -

48 Hay & MacLeod Limited U.K 100 100 - -

49 Invergordon Distillers (Holdings) Limited U.K 100 100 - -

50 Invergordon Distillers Group Limited U.K 100 100 - -

51 Invergordon Distillers Limited U.K 100 100 - -

52 Invergordon Gin Limited U.K 100 100 - -

53 Isle of Jura Distillery Company Limited U.K 100 100 - -

54 Jarvis Halliday & Company Limited U.K 100 100 - -

55 John E McPherson & Sons Limited U.K 100 100 - -

56 Kensington Distillers Limited U.K 100 100 - -

57 Kyndal Spirits Limited U.K 100 100 - -

58 Leith Distillers Limited U.K 100 100 - -

59 Loch Glass Distilling Company Limited U.K 100 100 - -

60 Longman Distillers Limited U.K 100 100 - -

61 Lycidas (437) Limited U.K 100 100 - -

62 Pentland Bonding Company Limited U.K 100 100 - -

63 Ronald Morrison & Company Limited U.K 100 100 - -

64 St Vincent Street (437) Limited U.K 100 100 - -

65 Tamnavulin-Glenlivet Distillery Company Limited

U.K 100 100 - -

66 TDL Realisations Limited U.K 100 100 - -

67 The Sheep Dip Whisky Company Limited U.K 100 100 - -

68 W & S Strong Limited U.K 100 100 - -

69 Watson & Middleton Limited U.K 100 100 - -

70 Whyte & Mackay Distillers Limited U.K 100 100 - -

71 William Muir Limited U.K 100 100 - -

72 WMB Realisations Limited U.K 100 100 - -

73 Whyte and Mackay Property Limited U.K 100 100 - -

74 Whyte and Mackay de Venezuela CA Venezuela 100 100 - -

75 KI Trustees Limited U.K 100 100 - -

76 Wauchope Moodle & Company Limited U.K 100 100 - -

77 Whyte and Mackay Limited U.K 100 100 - -

78 Whyte and Mackay Warehousing Limited U.K 100 100 - -

79 Whyte and Mackay Holdings Limited U.K 100 100 - -

(A) Subsidiary Companies (Contd.)


F-25

2. Subsidiary and Associate Companies considered in the Consolidated Financial Statements: (Contd.)

(B) Associate Companies (Note 4 below)


IncorporationProportion of owner-ship

interest (%)2009 2008

1 Utkal Distillery Limited (Utkal) (iv) India - 432 Wine Soc of India Private Limited India 49 49

(i) Became subsidiaries/ associate during the year.

(ii) Ceased to be subsidiaries due to amalgamation (Schedule 19 Note 2).

(iii) Became wholly owned subsidiaries due to amalgamation (Schedule 19 Note 2).

(iv) Sold during the year.

(v) Consolidated Financial Statements also include financial statements of USL Benefit Trust and SWFSL Benefit

Trust.

3. Principles of Consolidation

These Consolidated Financial Statements have been prepared by consolidation of the financial statements of the

Company and its subsidiaries on a line-by-line basis after fully eliminating the inter-Company transactions.

4. Accounting for Investment in Associates

a) Accounting for Investments in Associate Companies has been carried out under the Equity Method of accounting

prescribed under AS 23 wherein Goodwill/Capital Reserve arising at the time of acquisition and the Group’s

share of profits or losses after the date of acquisition have been adjusted in the investment value.

b) U B Distilleries Limited (UBDL)

UBDL, which was an associate company of erstwhile HL in view of significant influence, ceased its operations

in 2003-04, consequent to the order of the Hon’ble Supreme Court of India vesting the distillery unit with the

state of Bihar. Since the Company does not have any investment /significant influence in UBDL, the same has

not been accounted for as an associate in these Consolidated Financial Statements under the Equity Method.

5. Basis of presentation of Financial Statements

The Consolidated Financial Statements of the Group have been prepared under historical cost convention, except as

otherwise stated, in accordance with the Generally Accepted Accounting Principles (GAAP) in India, the Accounting

Standards as specified in the Companies (Accounting Standard) Rules, 2006, and the relevant provisions of the

Companies Act,1956 of India.

6. Fixed Assets

(a) Fixed assets are stated at their original cost of acquisition and subsequent improvements thereto including taxes,

duties, freight and other incidental expenses related to acquisition and installation of the assets concerned,

except amounts adjusted on revaluation and amalgamation. Interest on borrowings attributable to qualifying

assets are capitalised and included in the cost of fixed assets as appropriate.

(b) The costs of fixed assets acquired in amalgamations are determined at their fair values, on the date of acquisition

or nearer thereto, or as approved under the schemes of amalgamation.

(c) Assets held for disposal are stated at their net book value or estimated net realisable values, whichever is

lower.


F-26

(d) Goodwill represents the difference between the Company’s share in the net worth of a subsidiary and cost

of acquisition at each point of time of making the investment in the subsidiary. Negative goodwill is shown

separately as Capital Reserve on consolidation.

(e) Intangible assets are stated at the consideration paid for acquisition less accumulated amortisation.

7. Leases

Assets acquired under Leases, where the Company has substantially all the risks and rewards of ownership, are

classified as finance leases. Such leases are capitalised at the inception of the lease at lower of the fair value or the

present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental

paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on

the outstanding liability for each period.

Assets acquired on leases, where a significant portion of the risk and rewards of ownership are retained by the

lessor, are classified as operating leases. Lease rentals are charged to the Profit and Loss Account on accrual basis.

Income from operating leases is credited to Profit and Loss Account on a straight line basis over the lease term.

8. Depreciation and Amortisation

a) Depreciation is provided on the Straight Line Method, including on assets revalued, at rates prescribed in Schedule XIV to the Companies Act, 1956 of India except for the following, which are based on management’s estimate of useful life of the assets concerned :

i) Computers, Vehicles and Aircrafts over a period of three, five and eleven years respectively;ii) In respect of certain items of Plant and Machinery eligible for triple shift allowance, depreciation is provided

for the full year on triple shift basis;iii) In respect of fixed assets of Whyte and Mackay Group, depreciation is provided based on management

estimate of useful lives of the assets concerned as below:

Buildings 50 years

Plant and Machinery 10 to 20 years

Vehicles 4 years

Computers 3 years

Also refer Note 6(b) on Schedule 19

b) Fixed assets acquired on amalgamation, over the remaining useful life computed based on rates prescribed in Schedule XIV to the Companies Act, 1956 of India, as below:

Buildings – Factory 1 to 30 years – Non Factory 1 to 54 yearsPlant & Machinery 1 to 20 yearsVehicles 1 to 4 yearsComputers 1 to 2 years

c) Assets taken on finance lease are depreciated over their estimated useful life or the lease term, whichever is lower.

d) Leasehold Land are not amortised.

e) Goodwill arising on amalgamation is charged to the Profit and Loss Account in the year of amalgamation.

f) Goodwill arising on Consolidation is not amortised.


F-27

g) Intangible assets are amortised, on a straight line basis, commencing from the date the asset is available for its use, over their respective individual estimated useful lives as estimated by the management:

Trademark , formulae and License 10 Years Franchise Rights in Perpetuity 50 Years (Refer Schedule 19 Note 4)

9. Impairment

Impairment loss, if any, is provided to the extent the carrying amounts of assets exceed their recoverable amounts.

Recoverable amount is higher of the net selling price of an asset and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

10. Investments

Long-term Investments are stated at cost to the Company. Provision for diminution in the value is made to recognise a decline, other than temporary, in the value of long-term investments.

Current investments are valued at cost or market value, whichever is less.

11. Inventories

Inventories are valued at lower of cost and net realisable value. The costs are, in general, ascertained under Weighted Average Method. Finished goods and Work-in-Progress include appropriate manufacturing overheads and borrowing costs, as applicable. Excise/ Customs duty payable on stocks in bond is added to the cost. Due allowance is made for obsolete and slow moving items.

12. Revenue Recognition

Sales are recognised when goods are despatched from distilleries/ warehouses of the Company in accordance with the terms of sale except where such terms provide otherwise, where sales are recognised based on such terms. Gross Sales are inclusive of excise duty but are net of trade discounts and sales tax, where applicable.

Income arising from sales by manufacturers under “Tie-up” agreements (Tie-up units) and income from brand franchise are recognised in terms of the respective contracts on sale of the products by the Tie-up unit/Franchisees. Income from brand franchise is net of service tax, where applicable.

Dividend income on investments are recognised and accounted for when the right to receive the payment is established.

13. Foreign Currency Transactions

Transactions in foreign currency are recognised at the rates of exchange prevailing on the dates of the transactions.

Liabilities/ assets in foreign currencies are reckoned in the accounts as per the following principles:

Exchange differences arising on a monetary item that, in substance, forms part of an enterprise’s net investment in a non-integral foreign operation is accumulated in a foreign currency translation reserve in the enterprise’s financial statements until the disposal of the net investment.

Exchange differences arising on reporting of long term foreign currency monetary items, with the exception of exchange differences arising on a monetary item that, in substance, forms part of an enterprise’s net investment in a non-integral foreign operation, at rates different from those at which they were initially recorded during the

period or reported in previous financial statements are accounted as below:


F-28

(a) In so far as they relate to the acquisition of depreciable capital assets, are added to or deducted from the cost

of the asset and are depreciated over the balance life of the asset; and

(b) In other cases, the said exchange differences are accumulated in a ‘Foreign Currency Monetary Item Translation

Difference Account’ and amortised over the balance period of such long term asset/liability but not beyond

March 31, 2011.

All other monetary assets and liabilities denominated in foreign currency are restated at the rates ruling at the

year end and all exchange gains/ losses arising therefrom are adjusted to the Profit and Loss Account, except those

covered by forward contracted rates where the premium or discount arising at the inception of such forward

exchange contract is amortised as expense or income over the life of the contract.

Exchange differences on forward contracts are recognised in the Profit and Loss Account in the reporting period

in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such forward contracts

is recognised as income or expense for the year.

For forward exchange contracts and other derivatives that are not covered by AS-11 ‘The Effects of Changes in

Foreign Exchange Rates’, the Company follows the guidance in the announcement of the Institute of Chartered

Accountants of India (ICAI) dated March 29,2008 whereby for each category of derivatives, the Company records any

net mark- to- market losses. Net mark-to-market gains are not recorded for such derivatives. [Also refer Schedule

19 Note 17 below]

Foreign Company:

In respect of overseas subsidiary companies, Income and Expenses are translated at average exchange rate for the

year. Assets and Liabilities, both monetary and non-monetary, are translated at the year-end exchange rates. The

differences arising out of translation are included in the foreign currency translation reserve. Any Goodwill or

Capital Reserve arising on acquisition of non integral operation is translated at closing rate.

14. Employee Benefits

a) Defined-contribution plans

These are plans in which the Group pays pre-defined amounts to separate funds and does not have any legal

or informal obligation to pay additional sums. These comprise of contributions to the employees’ provident

fund with the government, superannuation fund and certain state plans like Employees’ State Insurance

and Employees’ Pension Scheme. The Group’s payments to the defined contribution plans are recognised as

expenses during the period in which the employees perform the services that the payments cover.

b) Defined-benefit plans

Gratuity:

The Group provides for gratuity, a defined benefit plan (the Gratuity Plan), to certain categories of employees.

Liability with regard to the Gratuity Plan is accrued based on actuarial valuation, based on Projected Unit

Credit Method at the balance sheet date, carried out by an independent actuary. Actuarial Gains and Losses

comprise experience adjustments and the effect of changes in the actuarial assumptions and are recognised

immediately in the Profit and Loss Account as income or expense.


F-29

Pension:

Whyte and Mackay Group operates and contributes in a defined benefit pension scheme (the Pension Plan).

Liability with regard to Pension Plan is accrued based on actuarial valuation, based on Projected Unit Credit

Method at the balance sheet date, carried out by an independent actuary. Actuarial Gains and Losses comprise

experience adjustments and the effect of changes in the actuarial assumptions and are recognised immediately

in the Profit and Loss Account as income or expense.

Provident Fund:

Group’s Provident Funds administered by trusts set up any company in the Group where the company’s

obligation is to provide the agreed benefit to the employees and the actuarial risk and investment risk fall,

in substance, on the company, are treated as a defined benefit plan. Liability with regard to such provident

fund plans are accrued based on actuarial valuation, based on Projected Unit Credit Method, carried out by an

independent actuary at the balance sheet date. Actuarial Gains and Losses comprise experience adjustments

and the effect of changes in the actuarial assumptions and are recognised immediately in the Profit and Loss

Account as income or expense.

Death Benefit:

Death Benefit payable at the time of death is actuarially ascertained at the year-end and provided for in the

accounts.

c) Other long term employee benefits:

Compensated absences which are not expected to occur within twelve months after the end of the period

in which the employee renders the related services are recognised as a liability at the present value of the

defined benefit obligation at the balance sheet date based on actuarial valuation carried out at each balance

sheet date.

d) Short term employee benefits:

Undiscounted amount of short term employee benefits expected to be paid in exchange for the services

rendered by employees is recognised during the period when the employee renders the services. These

benefits include compensated absences such as paid annual leave and performance incentives.

15. Expenditure on account of Voluntary Retirement Scheme

Expenditure on account of Voluntary Retirement Scheme of employees is expensed in the period in which it is

incurred.

16. Research and Development

Revenue expenditure on research and development is charged to Profit and Loss Account in the period in

which it is incurred. Capital Expenditure is included as part of fixed assets and depreciated on the same basis

as other fixed assets.

17. Taxes on Income

Provision for income tax comprises current taxes and deferred taxes. Current tax is determined as the amount

of tax payable in respect of taxable income for the period in accordance with the applicable laws.

Deferred tax is recognised on timing differences between the accounting income and the taxable income for

the year and quantified using the tax rates and laws enacted or substantively enacted as on the balance sheet

date.


F-30

Deferred tax assets are recognised and carried forward to the extent that there is a reasonable / virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realised.

Fringe Benefit Tax is determined at current applicable rates on expenses falling within the ambit of “Fringe Benefit” as defined under the Income Tax Act, 1961.

18. Earnings / (Loss) per Share (EPS)

Basic EPS is arrived at based on Net Profit after Taxation available to equity shareholders to the weighted average number of equity shares outstanding during the year. The Diluted EPS is calculated on the same basis as Basic EPS, after adjusting for the effects of potential dilutive equity shares unless impact is anti-dilutive.

19. Provisions

A provision is recognised when an enterprise has a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions, other than employee benefits, are not discounted to their present value and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.

Onerous Lease Provision:

When a leasehold property ceases to be used in the business or a commitment is entered into which would cause this to occur, provision is made for the entire amount by which the recoverable amount of interest in the property is expected to be insufficient to cover future obligations relating to the lease.

20. Contingencies

Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty are treated as contingent and, to the extent not provided for, are disclosed by way of notes on the accounts.

21. Share / Foreign Currency Convertible Bonds [FCCBs] issue expenses and Premium on Redemption of FCCB :

Share/ FCCBs issue expenses incurred are expensed in the year of issue and premium payable on FCCBs is expensed over the currency of FCCBs. Both are adjusted to the Securities Premium Account as permitted by Section 78(2) of the Companies Act, 1956.

22. Expenditure

Expenses are net of taxes recoverable, where applicable.

23. Government grants

Government grants related to revenue expenses are recognised on a systematic basis in the Profit and Loss Account over the periods necessary to match them with the related costs which they are intended to compensate.

24. Miscellaneous Expenditure (to the extent not written off)

Expenditure incurred for raising borrowed funds represents ancillary costs incurred in connection with the arrangement of borrowings and is amortised over the tenure of the respective borrowings. Amortisation of

such Miscellaneous Expenditure is included under Interest and Finance charges.


F-31

19. NOTES ON ACCOUNTS

1. Contingent Liabilities Rs. Million

2009 2008a) Guarantees given by the Company’s bankers for which Counter

Guarantees have been given by the Company 172.217 141.942

b) Disputed claims against the Company not acknowledged as debts, currently under appeal / sub judice: (i) Excise demands for excess wastages and distillation losses 238.384 231.804(ii) Other miscellaneous claims 244.274 367.582(iii) Income Tax demand (including interest) under appeal 1,436.973 211.573(iv) Sales Tax demands under appeal in various states 604.036 682.086

c) Co-accepted bills of Tie-up Units - since fully settled 15.016 216.740d) Claims from suppliers not acknowledged as debts 45.490 50.967

The Management is hopeful of succeeding in the above appeals /disputes based on legal opinions / legal

precedents.

2. A. The Scheme of Amalgamation under Section 391 to 394 of the Companies Act, 1956 for the amalgamation

of Shaw Wallace & Company Limited (‘SWCL’), a subsidiary company, and Primo Distributors Private Limited

(‘Primo’), a wholly owned subsidiary company, (together ‘Transferor Companies’) with the Company (‘the

Scheme’) and their respective shareholders, with effect from April 1, 2007 being the Appointed Date, has

been sanctioned by Hon’ble High Court of Karnataka, Hon’ble High Court of Judicature at Bombay and

Hon’ble High Court at Calcutta.

Upon necessary filings with the respective Registrar of Companies, the Scheme has become effective on July

6, 2009 and effect thereof have been given in the accounts. Consequently,

a. In terms of the Scheme the entire business and undertaking of Transferor Companies including all assets

and liabilities, as a going concern, stand transferred to and vested in the Company (hereinafter referred

to as ‘Amalgamation’) with effect from April 1, 2007 being the Merger Appointed Date.

b. Primo ceased to be subsidiary of the Company and Shaw Wallace Breweries Limited (SWBL) became a

direct subsidiary of the Company. Primo stand dissolved without being wound up. SWCL will be dissolved

without winding up by separate order by the Hon’ble High Court at Calcutta.

c. The SWCL was engaged in manufacture and sale of potable alcohol and Primo was engaged in the

business of distribution of alcoholic beverages.

(I) (a) In Consideration of the amalgamation, the Company will issue:

7,749,121 equity shares of Rs.10/- each aggregating to Rs.77.491 Million in the ratio of 4 (four) fully paid

up Equity Shares of the face value of Rs.10/- each of the Company for every 17 (Seventeen) fully paid up

equity shares of Rs.10/- each held in SWCL. [also refer Note 2 A (II) below]:

Pending issue of these Equity Shares, a sum of Rs. 77.491 million has been shown under Equity Share

Capital Suspense. Subsequently, on July 24, 2009, the allotment of the Company’s shares to the eligible

shareholders of SWCL has been completed. Steps have been taken to list the shares with the stock

exchanges where existing shares of the company are currently listed.

(b) As primo was a wholly owned subsidiary of the Company, no consideration was payable pursuant to

amalgamation of Primo with the Company.


F-32

(II) Pursuant to the Scheme, Equity Shares to be issued as above include 4,925,231 Equity Shares of Rs.10/- each fully paid up to be issued to Palmer Investment Group Limited (Palmer), R.G.Shaw & Company Limited (R G Shaw), JIHL Nominees Limited (JIHL Nominees), Shaw Scott & Company Limited (Shaw Scott), Shaw Darby & Company Limited (Shaw Darby) and Thames Rice Milling Company Limited (Thames Rice), subsidiaries of the Company, in exchange for the 20,932,244 Equity Shares of Rs.10/- each fully paid up held by them in the share capital of SWCL, in the proportion of Equity Shares held by them respectively.

(III) Pursuant to the Scheme, 10,282,553 Equity Shares of Rs.10/- each fully paid up held by SWCL and 1,306,431 Equity Shares of Rs.10/- each fully paid up held by Primo in the share capital of the Company were to be transferred to the SWCL Benefit Trust and the Primo Benefit Trust established by virtue of trust deeds dated July 25, 2008 for the benefit of SWCL and Primo respectively. Upon the Scheme becoming effective, the beneficial interest in SWC Benefit Trust and Primo Benefit Trust stands transferred and vested in the USL Benefit Trust established by virtue of trust deed dated September 26, 2006 for the benefit of the Company. Subsequent to the year end, on June 30, 2009 SWCL has sold 10,282,553 Equity Shares held by it in the Company in the open market, through the stock exchanges and 1,306,431 Equity shares held by Primo in the Company has been transferred to Primo Benefit Trust on July 6, 2009 which stands vested with USL Benefit Trust in terms of the scheme.

(IV) Pursuant to the scheme, the Authorised Share Capital of the Company stands increased and reclassified, without any further act or deed on the part of the Company, including payment of stamp duty and Registrar of Companies fees, by the authorised share capital of the transferor companies amounting to Rs 2,092 Million and the Memorandum of Association and Articles of Association of the Company stand amended accordingly without any further act or deed as the part of the Company.

(V) Accounting for Amalgamation

The amalgamation of the Transferor Companies with the Company is accounted for on the basis of the Purchase Method as envisaged in the Accounting Standard (AS) -14 on Accounting for Amalgamations specified in the Companies (Accounting Standard) Rules 2006 and in terms of the Scheme, as below:

a. All tangible assets [excluding investment in shares held by the Transferor Companies in the Company and the interest in the USL Benefit Trust in accordance with the terms of the Scheme as explained in Note 2 (A) (III) above] and liabilities of the Transferor Companies at their respective fair values.

b. Interest in USL Benefit Trust, arising from the terms of the Scheme as explained in Note 2 (A) (III) above, has been accounted as Investment, valued and recorded, in the manner prescribed in the Scheme, at the average of the weekly high and low of the closing price of the Company, on the stock exchange where the shares of the Company are more frequently traded in terms of turnover, for the period ended six months preceding the Appointed Date, i.e. April 1, 2007, aggregating to Rs. 9,256.006 Million.

c. The equity shares directly held by the Company in the Transferor Companies stand cancelled and debited to General Reserve of the Company. [refer (d) below].

d. Rs.7,860.187 Million being the difference between the value of net assets of the Transferor Companies transferred to the Company (determined as stated above) and the face value of equity shares to be issued and after adjusting for the equity shares directly held by the Company in the Transferor Companies which are cancelled, is credited to General Reserve of the Company. This accounting treatment of the reserve has been prescribed in the Scheme. Had the Scheme not prescribed this treatment, this amount

would have been credited to Capital Reserve.


2. A. (Contd.)

F-33

e. The Company, based on the reports by Independent valuer, has revalued, at their respective fair values, all

fixed assets being Land, Buildings, Plant and Machinery, Furniture and Fixtures and Office Equipment and

Vehicles, at one location, as at April 1, 2007 and an amount of Rs. 80.704 Million, being diminution in value

of certain Plant and Machinery determined based on their respective disposal value as estimated by the

independent valuer, has been debited to General Reserve. This accounting treatment has been prescribed in

the Scheme. Had the scheme not prescribed this treatment, Rs.80.704 Million being diminution in value of

certain fixed assets would have been debited to the Profit and Loss Account for the year instead of General

Reserve, having corresponding impact on the net profit for the year.

B. The Scheme of Amalgamation under Section 391 to 394 of the Companies Act, 1956 for the amalgamation of

Zelinka Limited (‘Zelinka’ or the ‘Transferor Company’), Cyprus, with the Company (‘the ZL Scheme’) and their

respective shareholders, with April 1, 2007 being the Appointed Date, has been sanctioned by Hon’ble High Court

of Karnataka and the certified copy of the Order of the Hon’ble High Court of Karnataka has been filed with

the Registrar of Companies. Zelinka has complied with the procedure required to be followed under the local

corporate laws of Cyprus to give effect to the ZL scheme. Accordingly, the ZL scheme became operative from

March 26, 2009. The Company has given effect to the ZL Scheme in these accounts with effect from April 1, 2007

being the Appointed Date. Consequently, in terms of the ZL Scheme:

a. The entire business and undertaking of Zelinka including all assets and liabilities, as a going concern, stand

transferred to and vested in the Company with effect from April 1, 2007 being the Merger Appointed Date.

b. Zelinka ceased to be subsidiary of the Company and Palmer Investment Group Ltd, British Virgin Island and

Montrose International SA, Panama have became wholly owned subsidiaries of the Company and Liquidity

Inc, USA has become direct subsidiary of the Company.

Zelinka was engaged in Investment related activities.

I. As Zelinka was a wholly-owned subsidiary of the Company, no consideration was payable pursuant to the

amalgamation of Zelinka with the Company.

II. Accounting treatment

The amalgamation of Zelinka with the Company is accounted on the basis of the Purchase Method

as envisaged in the Accounting Standard (AS) -14 on Accounting for Amalgamations specified in the

Companies (Accounting Standard) Rules 2006 and in terms of the Scheme, as below:

a) All assets and liabilities of the Transferor Company at their respective book values.

b) The investment held by the Company in the equity share capital of the Transferor Company stands

cancelled and debited to General Reserve of the Company. [refer (e) below].

c) Rs.11.152 Million being the difference between the value of net assets of the Transferor Company

transferred to the Company (determined as stated above) after adjusting for investments cancelled

is debited to General Reserve of the Company. This accounting treatment of the reserve has been

prescribed in the ZL Scheme. Had the ZL Scheme not prescribed this treatment, this amount would

have been debited to Goodwill, which would have been charged to the Profit and Loss Account for

the year as per the accounting policy of the Company, with a corresponding impact on the net profit

for the year.


2. A. (v) (Contd.)

F-34

d) Interest free loans in foreign currency aggregating to Rs. 7,345.279 Million as on April 1, 2007, granted by the Company to Zelinka for acquisition of long term strategic investments, stand cancelled. Exchange difference on such loans aggregating to Rs.144.912 million as on April 1, 2007, accumulated by the Company in Foreign Currency Translation Reserve, has been transferred to General Reserve. This accounting treatment of the reserve has been prescribed in the ZL Scheme. Exchange differences of Rs.570.131 million during the year ended March 31, 2008 stands reversed on cancellation of such loans on amalgamation. Had the ZL Scheme not prescribed this treatment, this amount would have been debited to the Profit and Loss Account for the year instead of General Reserve, having corresponding impact on the net loss for the year.

e) The difference as on the appointed dated, i.e. April 1, 2007, between the cost of investment of Zelinka in the shares of its subsidiary viz., Palmer and similarly the cost of investment of Palmer in the shares of its subsidiaries viz., RG Shaw, JIHL nominees, Shaw Scott, Shaw Derby and Thames Rice, and the cost of shares of the Company, if any, held by these subsidiaries after considering the book values of the assets (net of liabilities), has been reflected as Goodwill on Consolidation. Had the ZL Scheme not prescribed this treatment, Goodwill on Consolidation and General Reserves would have been lower by Rs.3,793.500 Million.

C. All costs and expenses (including those of the Transferor Companies) incidental with the finalisation of the schemes and to put these into operation, including expenses in connection with excise and label re-registrations, all advisory fees, stamp duty charges, meeting expenses, professional fees, consultant fees including expenses and other expenses or charges attributable to the implementation of the Scheme (expenses relating to amalgamation), aggregating to Rs. 146.879 Million are debited to General Reserve in the books.

This accounting treatment of the cost and expenses has been prescribed in the Schemes. Had the Scheme not prescribed this treatment, this amount would have been debited to the Profit and Loss Account for the year instead of General Reserve, having corresponding impact on the net loss for the year.

D. From April 1, 2007, the Transferor Companies had carried out the business in trust on behalf of the Company. Accordingly, adjustment to the Profit for the year ended March 31, 2008 of the Transferor Companies on amalgamation aggregating to Rs. 162.543 Million have been debited to the Balance in Profit and Loss Account.

E. Board of Directors of the erstwhile Central Distilleries & Breweries Limited (CDBL) (amalgamated with erstwhile SWDL amalgamated with the Company in an earlier year) on April 29, 1986 decided to issue 134,700 Equity Shares of Rs.10 each, the allotment whereof was stayed by the Hon’ble High Court of Delhi on September 13,1988. The Hon’ble High Court of Delhi had vacated its order and has ordered to keep in abeyance the allotment on 72,556 shares and the matter is sub-judice. The holders, in exchange of these shares will be entitled to 17,776 equity shares of Rs.10 each of the Company pursuant to a Scheme of Arrangement. Necessary adjustments in this respect will be carried out on disposal of the matter pending before the aforesaid Court.

F. Pursuant to the schemes of amalgamation, the bank accounts, agreements, licences and certain immovable properties are in the process of being transferred in the name of the Company.

3. The Board of Directors of the Company at their meeting held on November 29, 2008 have approved the proposal of merger of Balaji Distilleries Limited (‘BDL’) with the Company with effect from April 1, 2009 as per the Scheme of Arrangement between BDL, Chennai Breweries Private Limited (‘CBPL’) and the Company, subject to the necessary approvals.

The Draft Rehabilitation Scheme along with the Scheme of Arrangement is pending with the Board for Industrial and Financial Reconstruction formed under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 , for approval.


2. B. (ii) (Contd.)

F-35


4. (a) The Group through Royal Challengers Sports Private Limited, a subsidiary Company, holds the perpetual

right to the Bangalore Franchise of BCCI-IPL. Although this right is perpetual it would be prudent to consider

this as having a ‘finite’ rather than an ‘infinite’ life. The limited over version of the game which was first

introduced in 1970s is continuing even now after 38 years and an even shorter version (20 over) has only

recently being introduced and is more popular than the 50 over format. The Management has held discussion

internally as well as with other experts in the field on the subject of useful life and the period of amortisation.

Although the Management regards the useful life as indefinite, as a measure of prudence a useful life of 50

years is considered as appropriate and the rights are amortised over 50 years having regard to the following

factors:

• The game of cricket has been in existence for over 100 years and there is no indication of interest in the

game and the commercial prospects waning

• The shorter version of the game is increasingly popular.

• The commercial exploitation of the shorter version is on an increasing scale and is expected to reach the

scale which other games like soccer have reached.

• This industry (cricket) is, therefore, highly stable and the market demand for this game is likely to remain

for more than 50 years with its spread to many countries.

• IPL and its teams have acquired brand status and teams are not identified with countries or geographies

but with brand names.

• The franchisees have the intent and ability to provide the necessary financial and other resources required

to obtain the expected future economic benefits from this for atleast 50 years.

The carrying value of the capitalized Rights would be assessed for impairment at every balance sheet date

The carrying amount of Franchise Rights as at March 31, 2009 is Rs.4,834.328 Million to be amortised over

the remaining period of 49 years.

Term liability towards franchisee rights at the year end aggregating to Rs.4,431.413 Million is payable over a

period of 9 years, of which Rs.492.379 Million is payable within one year.

(b) The governing bodies of this sport in India and globally, over a period of last 7 to 15 years have experienced

an annualised growth of 19 to 35% in their Media/Central Rights. The management believes, given the sheer

appeal of this format which has surpassed all expectations, an annualised growth of 20% from 2015 to 2025,

a 15% annualized growth from 2026 to 2035 and a 4% annualised growth for the balance period of life. The

Gate Receipts and Merchandising revenues are based on specific interventions designed to increase the same

in the near to medium term, including geographical expansion in the case of Merchandising revenue, with a

5-7% inflation / premiumisation assumptions built in. The key assumption in Local Rights has been indexed

to Central Rights.

Management has tested for impairment of Franchise Rights at the balance sheet date based on the cash flow

projection using the above assumptions, which did not indicate any impairment.

F-36



a) Defined Contribution Plans

The Group offers its employees defined contribution plan in the form of Provident Fund (PF) with the government, Superannuation Fund (SF) and certain state plans such as Employees’ State Insurance (ESI) and Employees’ Pension Scheme (EPS). PF and EPS cover substantially all regular employees while the SF covers certain executives and the ESI covers certain workers. Contribution to SF is made to trust managed by the Group, while other contributions are made to the Government’s funds. While both the employees and the Group pay predetermined contributions into the Provident Fund and the ESI Scheme, contributions into the Pension Fund and the Superannuation Fund are made only by the Group. The contributions are normally based on a certain proportion of the employee’s salary.

During the year, the Group has recognised the following amounts in the Profit and Loss Account, which are included in Contribution to Provident and other funds in Schedule 16:

Rs.Million2009 2008

Provident Fund and Employees’ Pension Scheme* 95.887 96.287Superannuation Fund 33.494 29.726Employees’ State Insurance 8.738 8.819

138.119 134.832

* Excluding contribution to PF made to trusts managed by the Company.

b) Defined Benefit Plans

Gratuity:

The Group provides for gratuity, a defined benefit plan (the Gratuity Plan), to certain categories of employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement or termination of employment, an amount based on the respective employee’s last drawn salary and years of employment with the Group. The Group has employees’ gratuity funds managed by the Group as well as by Insurance Companies. In certain subsidiaries gratuity plan is funded.

Pension:

Whyte and Mackay Group operates and contributes in a defined benefit Pension Scheme, under which amounts are held in a separately administered trust.

Provident Fund:

For certain executives and workers of the Group, contributions are made as per applicable Indian laws towards Provident Fund to certain Trusts set up and managed by the Group, where the Company’s obligation is to provide the agreed benefit to the employees and the actuarial risk and investment risk fall, in substance, on the Group. Having regard to the assets of the Fund and the return on the investments, shortfall in the assured rate of interest notified by the Government, which the Group is obliged to make good is determined actuarially.

Death Benefit:

The Company provides for Death Benefit, a defined benefit plan, (the Death Benefit Plan) to certain categories of employees. The Death Benefit Plan provides a lump sum payment to vested employees on Death, an amount based on the respective employee’s last drawn salary and remaining years of employment with the Company after adjustments for any compensation received from the insurance Company and restricted to

limits set forth in the said plan. The Death Benefit Plan is Non-Funded.

F-37


b)

Def

ined

Ben

efit

Pla

ns

(Co

ntd

.)R

s. M

illio

n

2009

2008

Fund

edN

on-F

unde

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Non

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ded

Part

icul

ars

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tuity

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PFG

ratu

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PFPe

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ratu

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and

clo

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f the

pre

sent

val

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f the

de

fined

ben

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oblig

atio

nO

blig

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n at

the

begi

nnin

g of

the

year

539.

162

7,70

0.33

41,

052.

977

5.19

617

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3.85

447

8.66

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2.62

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3.52

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0-

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114.

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195.

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0.89

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427.

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195.

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by

the

Com

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584.

514

--

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(loss

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1,09

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144

973.

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4.97

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of p

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of

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[Incl

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1]

F-38


2009

2008

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114.

540

89.8

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1836

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9.92

510

.957

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6261

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(859

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)(0

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9

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F-39

6. Fixed Assets

a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) – Rs. 472.728 Million (2008: Rs. 553.079 Million).

b) In view of different sets of environment in which foreign subsidiaries operate in their respective countries, provision for depreciation is made to comply with local laws and use of management estimate. It is practically not possible to align rates of depreciation of such subsidiaries with those of the Company. However on review, the management is of the opinion that provision of such depreciation is adequate.

Accounting policies followed by Whyte and Mackay Group in respect of depreciation on fixed assets are different from accounting policies of the Company as mentioned in Note 8(iii) Schedule 18. The proportion of the fixed assets in the consolidated financial statement to which different accounting policies have been applied are as below:

Rs. Million

2009 2008Gross Block Proportion

%Gross Block Proportion

%Building 2,195.330 49% 2,325.689 54%Plant & Machinery 5,193.470 61% 5,361.108 62%Vehicles 28.880 16% 31.723 13%

7. Current Assets, Loans and Advances

a) Loans and Advances include:

(i) An amount of Rs. 736.429 Million (2008: Rs. 489.847 Million) due from a Tie-up unit secured by the assets of the Tie-up unit.

(ii) An amount of Rs. 250 Million (2008: Rs. Nil) due from a proposed tie-up unit secured by the shares of the proposed tie-up unit.

b) Certain confirmation of balances from Sundry Debtors, Loans and Advances, Deposits and Sundry Creditors are awaited and the account reconciliations of some parties where confirmations have been received are in progress. Adjustment for differences, if any, arising out of such confirmations/reconciliations would be made in the accounts on receipt of such confirmations and reconciliation thereof. The management is of the opinion that the impact of adjustments, if any, is not likely to be significant. In the opinion of the management, all Current Assets, Loans and Advances including advances on capital accounts would be realised at the values at which these are stated in the accounts, in the ordinary course of business.

c) Bank balances with scheduled bank includes Rs 154.000 Million (2008: Rs. 715.055 Million) out of the proceeds of the beer business sold in the earlier year, kept under escrow pending resolution of various taxation matters. Subsequent to the year end, the taxation matters have been resolved and the escrow amount has been released.

d) The Company has granted interest free loans in foreign currency amounting to Rs.7,435.245 Million [2008: Rs. 6190.725 Million, excluding Rs.6836.073 Million relating to Zelinka cancelled on amalgamation as referred to in Note 2(B)(II)(d) above] given to USL Holdings Limited (USL Holdings), BVI, a subsidiary of the Company, for acquisition of long term strategic investments. Management is of the view that out of these loans, Rs.3,630.300 Million (2008: Rs.3,987.000 Million), from the inception of the grant of loans, in substance, form part of the Company’s net investment in the subsidiary, as the settlement of these loans is neither planned nor likely to occur in the foreseeable future and management intends to convert these loans into investment in share capital of the subsidiary in near future. Accordingly, in accordance with AS 11 - The Effects of Changes in Foreign Exchange Rates (AS 11), exchange difference aggregating to Rs.463.905 Million (2008: Rs. 106.905 Million excluding Rs.715.043 Million relating to loans to Zelinka referred in Note 2(B)(II)(d) above) arising on such loans has been accumulated in a foreign currency translation reserve, which at the time of the disposal

of the net investment in these subsidiaries would be recognised as income or as expenses.


F-40

8. As required under Section 205C of the Companies Act, 1956, the Company has transferred Rs. 4.678 Million (2008: Rs. 10.517 Million) to the Investor Education and Protection Fund (IEPF) during the year. On March 31, 2009, no amount was due for transfer to the IEPF.

9. Interest on inter corporate deposit included under Unsecured Loan – others in Schedule 4 acquired on amalgamation, where negotiation/ settlement has not been finalised, has been provided in terms of the decree and / or otherwise considered adequate by the management. In the opinion of the management, interest so far provided is adequate and no further provision is necessary in this respect. Adjustments, if any, are carried out as and when the amounts are determined on final disposal / settlement of the matter.

10. Borrowing Costs Rs. Million

2009 2008a) Interest included in the Closing Stock of Malt and Grape Spirit under

maturation82.643 38.117

b) Amortisation of Expenditure Incurred for Raising Borrowed Funds 160.140 112.075

11. Segment Reporting

The Company is primarily organised into two main geographic segments:

India: The ‘India’ segment is engaged in the business of manufacture, purchase and sale of Beverage Alcohol (Spirits and Wines) including through Tie-up units/ brand franchisees within India.

Outside India: The ‘Outside India’ segment is engaged in the business of manufacture, purchase and sale of Beverage Alcohol (Spirits and Wines) including through Tie-up units/ brand franchisees outside India.

A. Primary Segmental Reporting Rs. Million

Geographic Segment India Outside IndiaUn allocated /

EliminationTotal

2009 2008 2009 2008 2009 2008 2009 2008(i) Revenue

External 75,414.761 58,607.017 18,722.267 17,631.059 - - 94,137.028 76,238.076Less: Excise Duty 33,655.018 24,616.008 4794.683 4377.741 - - 38,449.701 28,993.749Inter-segment 118.227 38.630 1803.187 314.774 (1,921.414) (353.404) - - Total Revenue 41,641.516 33,952.379 12,124.396 12,938.544 (1,921.414) (353.404) 55,687.327 47,244.327

(ii) ResultSegment Result Profit/(Loss)

6,534.077 6,541.923 (2,558.988) 4,303.579 - - 3,975.089 10,845.502

Unallocated corporate expenses/(income)

- - - - - - - -

Income from Investments 7.964 - 23.732 - - 94.097 31.696 94.097 Interest and Finance Charges

3,496.371 - 3,679.272 - - 5,447.563 7,175.643 5,447.563

Profit/(Loss) before Taxation

3,045.670 6,541.923 (6,214.529) 4,303.579 - (5,353.466) (3,168.858) 5,492.036

Prior Period, Exceptional and Other Non-Recurring Items

- 181.258 - - - - - 181.258

Profit before taxation 3,045.670 6,360.665 (6,214.529) 4,303.579 - (5,353.466) (3,168.858) 5,673.294Provision for taxation - - - - 915.711 2,661.243 915.711 2,661.243Profit/(Loss) after Taxation 3,045.670 6,360.665 (6,214.529) 4,303.579 (915.711) (8,014.709) (4,084.569) 3,012.051Total Revenue 55,687.327 47,244.327Income from Investments 31.696 94.097

55,719.023 47,338.424


F-41

Geographic Segment India Outside IndiaUn allocated /

EliminationTotal

2009 2008 2009 2008 2009 2008 2009 2008(iii) Other information

Segment Assets 55,644.947 22,991.609 11,519.678 25,734.426 44,738.318 53,259.73 111,902.943 101,985.769Segment Liabilities 17,526.859 6,798.504 7,355.128 4,574.720 69,617.589 67,847.657 94,499.576 79,220.881 Capital Expenditure 106.662 1215.284 844.847 1,426.254 - - 951.509 2,641.538 Depreciation 463.294 322.780 462.545 15.081 - - 925.839 337.861 Other non cash expenses 290.926 197.160 1,265.452 2.889 - - 1,556.378 200.049

B. Secondary Segmental Reporting

The Group is engaged in the business of manufacture, purchase and sale of Beverage Alcohol (Spirits and Wines) including through Tie-up units / brand franchisees, which constitutes a single business segment. The Group’s other operations did not exceed the quantitative threshold for disclosure as envisaged in AS 17- ‘Segment Reporting’ specified in the Companies (Accounting Standard) Rules 2006.

Notes:a. Segment accounting policies are in line with the accounting policy of the Company.b. Segment revenue includes sales and other income directly identifiable with/allocable to the segment including

intersegment revenues.c. Expenses that are directly identifiable with/allocable to segment are considered for determining the segment

results. Expenses which relates to the group as a whole and not allocable to segments, are included under “Unallocable Corporate expenses”.

d. Income which relates to the group as a whole and not allocable to segments is included in “Unallocable Corporate income”.

e. Segment revenue resulting from transactions with other segments is accounted on the basis of transfer price agreed between the segments. Such transfer prices are either determined to yield a desired margin or agreed on a negotiated basis.

f. Segment assets and liabilities includes those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represents the assets and liabilities that relates to the company as a whole and not allocable to any segment. Unallocable assets mainly comprise trade investments in associate companies.

Unallocable liabilities include mainly loan funds and proposed dividend.

12. Related Party Disclosures

a) Names of related parties and description of relationship

Associates with whom transactions have takenplace during the year

Key Management personnel

Employees' Benefit Plans where there is significant influence

(i) Utkal Distillers Limited(Utkal) (upto July, 2008)

Mr.V.K.Rekhi Managing Director

Mc Dowell & Company Limited Staff Gratuity Fund (McD SGF)

UB Distilleries Limited[Schedule 18 Note 4(b) ]^

McDowell & Company Limited Officers'Gratuity Fund(McD OGF)

Wine Soc of India Private Limited

SWDL Group Officers Gratuity Fund (SWDL OGF)^

SWDL Employees Gratuity Fund (SWDL EGF)^Herbertsons Limited Employees Gratuity Fund (HL EGF)^Phipson & Company Limited Management Staff Gratuity Fund. (PCL SGF)^Phipson & Company Limited Gratuity Fund. (PCL GF)^Carew & Company Ltd. Gratuity Fund (CCL GF)^Mc Dowell & Company Limited Provident Fund (McD PF)Herbertsons Limited Executives Provident Fund (HL EPF)^


11 A. Primary Segmental Reporting (Contd.)

F-42

The Bengal Distilleries Company Limited Staff Provident Fund(BD PF)Shaw Wallce & Associated Companies Employees’ Gratuity Fund^Shaw Wallce & Associated Companies Executive Staff Gratuity Fund^Shaw Wallce & Associated Companies Provident Fund^Whyte and Mackay Pension Scheme

^ No transactions during the year.

b) Summary of the transactions with related parties: Rs. Million

2009 2008

Sl.No.

Nature of transactions *

Ass

ocia

tes

Key

Man

agem

ent

pers

onne

l

Empl

oyee

s’ Be

nefit

Pl

ans w

here

ther

e is

signi

fican

t in

fluen

ce

Total

Ass

ocia

tes

Key

Man

agem

ent

pers

onne

l

Empl

oyee

s’ Be

nefit

Pl

ans w

here

ther

e is

signi

fican

t in

fluen

ce

Total

a) Purchase of goods- Utkal - - - - 0.309 - - 0.309

b) Sale of goods- Utkal 0.981 - - 0.981 6.328 - - 6.328

c) Income from sale by Tie-up Units.- Utkal 30.858 - - 30.858 125.223 - - 125.223

d) Sale/ (Purchase) of Fixed Assets- Utkal - - - - 0.336 - - 0.336

e) Interest received fromassociates - Wine Soc 1.809 - - 1.809 - - - -

f) Rental Deposit - 3.140 - 3.140 - 2.859 - 2.859g) Finance (including loans and equity

contributions in cash or in kind)- Wine Soc of India 49.320 - - 49.320 2.000 - - 2.000- Utkal (126.478) - - (126.478) (135.830) - - (135.830)

h) Managing Directors’ Remuneration - 42.362 - 42.362 - 31.439 - 31.439i) Rent - 3.069 - 3.069 - 2.790 - 2.790j) Contribution to Gratuity Fund

- McD OGF - - 43.693 43.693 - - 5.984 5.984- McD SGF - - 33.493 33.493 - - 33.621 33.621- SWC PF - - 0.654 0.654 - - - -

k) Contribution to Provident Fund-McD PF - - 55.068 55.068 - - 48.015 48.015-HL EPF - - - - - - - -- BD PF - - - - - - 0.863 0.863

l) Contribution to Pension SchemeWhyte and Mackay Pension Scheme - - 351.416 351.416 - - 1,584.514 1,584.514

m) Amount due from- Utkal - - - - 489.847 - - 489.847- Wine Soc 49.320 - - 49.320 - - - -

* Excludes Reimbursement of Expenses and Cost sharing arrangements.

The above information has been determined to the extent such parties have been identified on the basis of

information provided by the Company, which has been relied upon by the auditors.


12 a) Names of related parties and description of relationship (Contd.)

F-43

13. (a) The Company’s significant leasing arrangements in respect of operating leases for premises (residential, office,

stores, godown, manufacturing facilities etc), which are not non-cancellable, range between 11 months and

3 years generally (or longer in certain cases) and are usually renewable by mutual consent on mutually

agreeable terms.

Leasing arrangements entered into prior to April 1, 2001 have not been considered for treatment under AS

19 ‘Accounting for Leases’.

The Whyte and Mackay Group entered into an operating lease agreement in September 2006 to rent a

property over a 30 year period at an annual cost of Rs.69.31 Million. The annual rent payable is subject to

review every 5 years. There are no contingent rent payments.

The aggregate lease rentals payable are charged as Rent under Schedule 16 to the accounts.

Sub-lease payments received Rs. 322.776 Million (2008: Rs. 261.801 Million) have been recognised in the

statement of Profit and Loss for the year and are included under Schedule 14.

Total of future minimum lease payments under non-cancellable operating leases for each of the following periods:


(i) Not later than one year; 30.228 8.611(ii) later than one year and not later than five years; 9.337 38.514(iii) later than five years; the total of future minimum sublease payments expected to be received under non-cancellable subleases at the balance sheet date;

68.764 69.294

108.329 116.419

(b) The Company has acquired computer equipment and cars on finance leases. The lease agreements are for a

primary period of 48 months for computer equipments and for 36 months to 60 months for cars. The Company

has an option to renew these leases for a secondary period. There are no exceptional/restrictive covenants in

the lease agreements.

The minimum lease payments and their present value, for each of the following periods are as follows:

Rs. Million

2009 2008

Particulars Present Value of

payments

Minimumlease

payments

PresentValue of

payments

Minimumlease

payments

Later than one year and not later than five years 15.618 17.137 24.074 26.683Later than five years - - - -

15.618 17.137 24.074 26.683

Not later than one year 11.106 12.930 17.477 20.304

26.724 30.067 41.551 46.987

Less: Finance Charges 3.343 5.436Present value of net minimum lease payments 26.724 41.551


F-44

2009 2008

14. Earnings / (Loss) per Share:

Nominal Value of equity shares (Rs) 10 10a) Net Profit/(Loss) after tax and attributable to Minority (Rs. Million) (4,084.136) 2,720.584b) Basic number of Equity Shares of Rs.10 each outstanding during the year # 102,985,569 88,574,272c) Weighted Average number of Equity Shares of Rs.10 each outstanding

during the year 102,985,569 86,113,691d) Basic Earnings Per Share (Rs.) (a /c) (39.66) 31.59e) Dilutive Effect on Profit (Rs Million) * - 23.131f) Profit/(Loss) attributable to equity shareholders for computing Diluted

EPS (Rs. Million) (a+e) (4,084.136) 2,743.715g) Dilutive Effect on Weighted average number of equity shares outstanding

during the year * - 2,080,338h) Weighted average number of Equity Shares and equity equivalent shares

for computing Diluted EPS (c+g) 102,985,569 88,194,029i) Diluted Earnings Per Share(Rs.) (f / h) (39.66) 31.11

* Diluted effect on weighted average number of equity shares and profit attributable is on account of Foreign Currency Convertible Bonds.

# Including Equity Shares to be issued referred to in Note 2(A)(I)(a).

15. Taxes on Income:

a) Current Taxation Rs. Million

Provision for current taxation includes:

2009 2008

i) Income Tax 1,802.351 1,828.799ii) Wealth Tax 13.000 12.500

Total 1,815.351 1,841.299

b) Deferred Taxation

The net Deferred Tax (Asset) / Liability as on March 31, 2009 has been arrived at as follows:

Rs. Million

Particulars DeferredTax (Assets) / Liabilities as on 1.4.2008

CurrentYear charge

/ (credit)

Translation Adjustment

Deferred Tax(Assets) /

Liabilities as on 31.03.2009

Difference between book and tax depreciation 477.296 318.299 (9.614) 785.981

Provision for Doubtful Debts (131.814) (71.496) - (203.310)

Employee Benefits (220.526) (362.280) 37.816 (544.990)

Others (106.927) (881.120) 32.389 (955.658)

Total 18.029 (996.597) 60.591 (917.977)

Less: Adjustment on adoption of notification for amendment to AS 11

(48.014)

(949.703)


F-45

16. Onerous Lease Provision

Rs. Million

2009 2008At the beginning of the year 600.601 -Add: Taken over on acquisition - 683.464Less: Translation Adjustment (94.289) -

506.312 683.464

Add/ (Less): Provisions made/ (Written back) during the year - (82.863)

Charged/ (Credited) to income statement 403.578 (82.863)

(Less): Utilised (incurred and charged against provision) during the year - -

At the end of the year 909.890 600.601

Note:

These provisions were set up in relation to certain leasehold properties of Whyte and Mackay Group, which are

un-let or sub-let at a discount. The provisions take account of current market conditions and expected future

vacant periods and are utilised over the remaining period of the lease, which at March 31, 2009 is between 7 and

20 years.


a) The Group has marked to market all the outstanding derivative contracts on the balance sheet date and has

recognised the resultant loss amounting to Rs.1,350.142 Million (2008: Rs. 423.716 Million ) during the year.

b) As on March 31, 2009, the Group has the following derivative instruments outstanding:

i) Forward currency exchange contracts (Euro - GBP) amounting to Euro. 1 Million (2008: Nil) for the purpose

of hedging its exposures to foreign currency loans.

ii) Interest and Currency Swap arrangement (USD-INR) in connection with borrowings amounting to USD 35

Million (2008: USD 35 Million).

iii) Interest Rate Swap arrangements in connection with borrowings amounting to GBP 171.250 Million

(2008: GBP. 171.250 Million).

c) The year end foreign currency exposures that have not been hedged by a derivate instrument or otherwise

are as under :

i) Receivables: USD 0.876 Million (2008: USD 0.845 Million), Euro 0.188 Million (2008: Euro 1.816 Million),

Canadian Dollars 0.298 Million (2008: Rs.Nil), Taiwan Dollar 3.639 Million (2008: Rs. Nil)

ii) Term Loans USD 641.175 Million (2008: USD 641.175 Million).

d) The Central Government vide notification dated March 31, 2009 has amended Accounting Standard (AS-

11)- The effects of changes in Foreign Exchange Rates, notified under the Company’s (Accounting Standard)

Rules, 2006. The Company has exercised the option stated in Paragraph 46 of AS 11 retrospectively from

April 1, 2007.

As a result, the Company has changed its accounting policy for recognition of exchange differences arising on

reporting of long term foreign currency monetary items, with the exception of exchange differences arising

on a monetary item that, in substance, forms part of an enterprise’s net investment in a non-integral foreign

operation, at rates different from those at which they were initially recorded during the period or reported

in previous financial statements, which hitherto were charged to the Profit and Loss Account, as below :


F-46

(i) In so far as they relate to the acquisition of depreciable capital assets, are added to or deducted from

the cost of asset and are depreciated over the balance life of the asset. This, however, did not have any

impact on the results for the year ended March 31, 2009; and

(ii) In other cases, the said exchange differences are accumulated in a ‘Foreign Currency Monetary Item

Translation Difference Account’ and amortised over the balance period of such long term asset/liability

but not beyond March 31, 2011. Exchange difference recognised in the Profit and Loss Account upto

last financial year ending March 31, 2008 relating to said long term monetary items in foreign currency

aggregating to Rs. 99.360 Million (net of deferred tax Rs. 48.014 Million) has been credited to the opening

revenue as provided in the rules. As a result of this change in accounting for exchange difference, net

Loss for the year is lower by Rs. 8,817.723 Million. The amount remaining to be amortised in the financial

statement as on March 31, 2009 is Rs.5,597.523 Million.

18. a) Previous year’s figures have been regrouped / re-arranged wherever necessary.

b) In view of the amalgamation described in Note 2 above, the figures for the year ended March 31, 2009 are

not comparable with those of previous year.




17. Foreign Currency Transactions (Contd.)

F-47

Auditors' Report to the Board of Directors of United Spirits Limited

1. We have audited the attached Consolidated Balance Sheetof United Spirits Limited and its subsidiaries (United SpiritsLimited Group) as at March 31, 2008, the Consolidated Profitand Loss account for the year ended on that date annexedthereto, and the Consolidated Cash Flow Statement for theyear endedon thatdate,whichwehave signedunder referenceto this report. These Consolidated Financial Statements arethe responsibility of the United Spirits Limited’s managementand have been prepared by the management on the basis ofseparate financial statements and other financial informationregarding components. Our responsibility is to express anopinion on these Consolidated Financial Statements basedon our audit.

2. We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those Standards require that weplan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing theaccounting principles used and significant estimates made bythe management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. We did not audit the financial statements of certainsubsidiaries, whose financial statements reflect total assets ofRs. 81,031.411 Million as at March 31, 2008, total revenuesof Rs. 21,917.022 Million and net cash inflow amountingto Rs. 3,110.418 Million for the year ended on that dateas considered in the Consolidated Financial Statements andassociates whose financial statements reflect the UnitedSpirits Limited Group’s share of loss of Rs. 7.419 Million forthe year ended on that date as considered in the ConsolidatedFinancial Statements. These financial statements and other

information of these subsidiaries and associates have beenaudited by other auditors, whose reports have been furnishedto us, and our opinion, insofar as it relates to the amountsincluded in respect of these subsidiaries, is based solely on thereport of the other auditors.

4 We report that the Consolidated Financial Statements havebeen prepared by United Spirits Limited’s management inaccordance with the requirements of Accounting Standard21, Consolidated Financial Statements and AccountingStandard 23, Accounting for Investments in Associates inConsolidated Financial Statements, issued by The Institute ofChartered Accountants of India.

5. Based on our audit and on consideration of the reports ofother auditors on separate financial statements and onthe other financial information of the components, in ouropinion and to the best of our information and accordingto the explanations given to us, the attached ConsolidatedFinancial Statements, give a true and fair view in conformitywith the accounting principles generally accepted in India:

i) in the case of the Consolidated Balance Sheet, of thestate of affairs of the United Spirits Limited Group as atMarch 31, 2008;

ii) in the case of the Consolidated Profit and Loss account,of the profit for the year ended on that date; and

iii) in the case of the Consolidated Cash Flow Statement, ofthe cash flows for the year ended on that date.

J. MajumdarPartner

Membership Number – F 51912For and on behalf of

Place: Bangalore Price WaterhouseDate : November 29, 2008 Chartered Accountants

F-48

Consolidated Financial StatementBalance Sheet as at March 31, 2008


Bangalore BangaloreNovember 29, 2008 November 29, 2008

Rs. MillionSchedule 2008 2007

SOURCES OF FUNDSShareholders’ Funds

Share Capital 1 885.744 828.930Reserves and Surplus 2 19,886.905 12,863.346

Minority Interest 1,992.239 1,712.285

Loan FundsSecured Loans 3 66,917.792 9,507.589Unsecured Loans 4 771.175 5,294.050

-Deferred Tax Liability (Net) [Schedule 19 Note 18(b)] 18.029 18.618

90,471.884 30,224.818APPLICATION OF FUNDSa) Fixed Assets 5

Gross Block 16,985.241 6,821.724Less: Depreciation 6,357.133 1,764.466Net Block 10,628.108 5,057.258Capital Work in Progress 534.432 133.227

11,162.540 5,190.485

b) Goodwill on Consolidation 53,259.734 11,324.130

Investments 6 2,119.087 2,044.080

Current Assets, Loans and AdvancesInventories 7 14,850.027 3,552.856Sundry Debtors 8 8,369.997 3,991.387Cash and Bank Balances 9 5,437.838 5,778.013Other Current Assets 10 1,469.204 1,218.462Loans and Advances 11 4,582.675 4,389.510

34,709.741 18,930.228Less: Current Liabilities and Provisions 12

Liabilities 10,303.363 6,049.607Provisions 1,210.522 1,214.498

11,513.885 7,264.105Net Current Assets 23,195.856 11,666.123

Miscellaneous Expenditure ( to the extent not written off) 13 734.667 -

90,471.884 30,224.818Statement on Significant Accounting Policies 18Notes on Accounts 19

The Schedules referred to above and the notes thereon form an integral part of the Accounts.

This is the Consolidated Balance Sheetreferred to in our report of even date

F-49

Consolidated Financial StatementProfit and Loss Account for the year ended March 31, 2008


INCOMESales (Gross) 71,710.354 48,015.589Less: Excise Duty 28,993.749 20,867.652

42,716.605 27,147.937Income arising from Sale by Manufacturers under ‘Tie-up'agreements (Tie-up units) 2,393.606 1,531.581Income from Brand Franchise 1,165.041 938.716Other Income 14 1,063.172 875.518

47,338.424 30,493.752EXPENDITURE

Materials 15 20,905.933 16,046.969Manufacturing and Other Expenses 16 14,751.480 9,213.640Interest and Finance charges 17 5,447.563 873.405

41,104.976 26,134.014Profit before Prior period, Exceptional and Other Non-Recurring items, Depreciation and Taxation 6,233.448 4,359.738Depreciation 741.412 337.861Profit before Prior period, Exceptional and Other Non-Recurring Items and Taxation 5,492.036 4,021.877Prior period, Exceptional and Other Non-Recurring Items (Net) 181.258 3,134.686[Schedule 19 Note 11 ]Profit before Taxation 5,673.294 7,156.563Provision for Taxation:

Current Tax 1,841.299 1,077.621Deferred Tax 773.129 (65.912)Fringe Benefit Tax 46.815 37.599

Profit after Taxation and before share inProfits/(Losses) of Associates 3,012.051 6,107.255Share in Profits/ (losses) of Associates (7.419) (0.254)Profit before Minority Interest 3,004.632 6,107.001Minority Interest in (Profit)/Loss (284.048) (437.478)Net Profit for the year 2,720.584 5,669.523Profit brought forward from previous year 5,822.345 932.348

8,542.929 6,601.871Appropriations:Proposed Dividend

Equity Shares - Interim - 101.163Equity Shares - Final 132.623 85.596Corporate Tax on Proposed Dividend 25.877 50.119Transfer to Capital Redemption Reserve 77.500 -Transfer to General Reserve 270.000 542.648

Profit carried to Balance Sheet 8,036.929 5,822.345Basic Earnings Per Share (Rs.) 31.59 68.40Diluted Earnings Per Share (Rs.) 31.11 68.40Statement on Significant Accounting Policies 18Notes on Accounts 19The Schedules referred to above and the notes thereon form an integral part of the Accounts.This is the Consolidated Profit and Loss Accountreferred to in our report of even date



F-50

Consolidated Financial StatementCash Flow Statement for the Year Ended March 31, 2008


A. CASH FLOW FROM OPERATING ACTIVITIESNet profit/(loss) before Prior Period, Exceptional and OtherNon- recurring items and Taxation 5,492.036 4,021.877Adjustments for :Depreciation 741.412 337.861Unrealised Foreign Exchange Loss/(Gain) (72.702) (150.466)Bad Debts/Advances written off 187.060 43.476Loss/(Gain) on Fixed Assets Sold/Written Off (Net) (97.325) (79.230)Loss/(Gain) on Sale of Investments (Net) 5.798 (0.794)Liabilities no longer required written back (199.962) (400.537)Provision for Doubtful Debts/Advances/Deposits 135.350 96.828Provision for diminution in value of Investments/(Written back) 0.051 (1.098)Provision for Onerous Lease written back (82.863) –Provision - Others 77.550 142.434Interest and Finance Charges 5,880.823 1,230.950Income from investments (94.097) (106.632)Interest Income (433.260) 6,047.835 (357.545) 755.247Operating profit before working capital changes 11,539.871 4,777.124

(Increase)/decrease in Trade and other receivables (2,597.188) (1,590.403)(Increase)/decrease in Inventories (793.677) (117.721)Increase/(decrease) in Trade payables (3,208.175) (6,599.040) (151.741) (1,859.865)

Cash generated from operations 4,940.831 2,917.259Direct taxes paidFringe Benefit taxes paidCash flow before Prior Period, Exceptional and Other Non-Recurring Items Prior Period, Exceptional and Other Non - Recurring items

(2,222.266) (559.274) (45.320) (63.787)

2,673.245 2,294.198– 3,007.199

Cash flow after extraordinary itemsand net cash from operating activities 2,673.245 5,301.397

B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of fixed assets (2,641.536) (403.074)Sale of fixed assets 168.906 154.564Finance Lease Payments (15.159) (7.785)Purchase of long term investments (14.582) (698.612)Purchase of current investments (1,303.931) (795.468)Consideration paid on acquisitions of shares in Subsidiaries (36,574.961) (1,070.778)[net of cash and cash equivalent on the acquisition date Rs.112.446 Million (2007: Rs.27.202 Million)]Sale of long term investments 1.539 754.612Sale of current investments 1,249.216 700.001Interest received 419.443 320.638Dividend received 82.958 106.169

Net cash used in investing activities (38,628.107) (939.733)

F-51

This is the Cash Flow Statement referred to in ourreport of even date.

C. CASH FLOW FROM FINANCING ACTIVITIESExpenses incurred on arrangement of borrowings (788.716) –Proceeds/(Repayment) of long term loans

Proceeds 40,742.225 3,830.041Repayment (505.269) (4,285.349)

Proceeds/(Repayment) of fixed deposits (117.669) (52.283)Proceeds/(Repayment) of short term loans (1,700.328) (69.507)Working Capital Loan / Cash Credit from Banks (net) 2,340.240 (159.587)Interest and Finance charges Paid[including on Finance lease Rs. 3.003 Million(2007: Rs. 0.681 Million)]

(4,124.167) (1,183.813)

Dividends paid (175.510) (222.927)Corporate Tax on distributed profit (56.119) (51.646)

Net cash used in financing activities 35,614.687 (2,195.071)

Net increase in cash and cash equivalents (340.175) 2,166.593Cash and cash equivalents as at March 31, 2007 5,778.013 3,611.420Cash and cash equivalents as at March 31, 2008 5,437.838 5,778.013

(340.175) 2,166.593Notes:1. The above Cash Flow Statement has been compiled from and is based on the Balance Sheet as at March 31, 2008 and the related

Profit and Loss Account for the year ended on that date.2. The above cash flow statement has been prepared under the indirect method as set out in the Accounting Standard - 3 on Cash Flow

Statements as notified under Section 211(3C) of the Companies Act, 1956 and reallocation required for this purpose are as made bythe Company.

3. Previous year’s figures have been regrouped wherever necessary in order to conform to this year’s presentation.


Consolidated Financial StatementsConsolidated Cash Flow Statement for the Year Ended March 31, 2008 (Contd.)

J. MAJUMDAR M. R. DORAISWAMY IYENGAR V. K. REKHI

Partner Director Managing DirectorFor and on behalf ofPrice Waterhouse V. S. VENKATARAMAN P. A. MURALI

Chartered Accountants Company Secretary Chief Financial Officer


F-52

Rs. Million

2008 20071. SHARE CAPITAL

Authorised

110,000,000 (2007: 110,000,000) Equity Shares ofRs.10/- each

1,100.000 1,100.000

10,000,000 (2007: 10,000,000) Preference Shares ofRs.10/- each

100.000 100.000

Issued, Subscribed and Paid-up

100,163,256 (2007: 94,481,930) Equity Shares of Rs.10/-each fully paid up.

1,001.633 944.819

Less:11,588,984 (2007: 11,588,984) Equity Shares held by Subsidiaries 115.889 115.889

885.744 828.930Nil (2007: 7,750,000) 9%, Non Cumulative Non-ConvertibleRedeemable Preference Shares of Rs.10/- each fully paid up – 77.500

Less:Nil (2007: 7,750,000) 9%, Non Cumulative Non-ConvertibleRedeemable Preference Shares held by a subsidiary - 77.500

- -Notes :

Of the above,

1. 51,719,968 (2007: 51,719,968) Equity Shares were allotted as fully paid up on July 9, 2001to the shareholders of the erstwhile McDowell & Company Limited, pursuant to the schemesof Amalgamation for consideration other than cash.

2. 34,010,521 (2007: 34,010,521) Equity Shares were allotted as fully paid on November 6,2006 to Equity Shareholders of erstwhile Herbertsons Limited, Triumph Distillers & VintnersPrivate Limited, Baramati Grape Industries Limited, United Distillers India Limited, and ShawWallace Distilleries Limited pursuant to a Scheme of Amalgamation for consideration otherthan cash.

3. 8,751,381 (2007: 8,751,381) Equity shares of Rs.10/- each fully paid up represent 17,502,762(2007: 17,502,762) Global Depository Shares issued by the Company on March 29, 2006.

4. 5,681,326 (2007: Nil) Equity shares of Rs.10/- each fully paid up were allotted consequent toconversion of 100,000, 2% Convertible Bonds in Foreign Currency.

5. 7,750,000 (2007: 7,750,000) 9% Non-Cumulative Non-Convertible Redeemable PreferenceShares of Rs. 10/- each were issued as fully paid up on November 6, 2006 to 9 % Non-Cumulative Non-Convertible Redeemable Preference Shareholders of erstwhile Shaw WallaceDistilleries Limited pursuant to a Scheme of Amalgamation for consideration other thancash.The above 7,750,000 (2007: 7,750,000) 9% Non-Cumulative Non-Convertible RedeemablePreference Shares of Rs. 10/- each have been redeemed at par on July 11, 2007.


F-53


2. RESERVES AND SURPLUS

Central SubsidyAs per Last Balance Sheet 1.500 1.500

Capital Redemption ReserveAs per last Balance Sheet 464.446 464.446Transferred from the General Reserve 37.000 –Transferred from the Profit and Loss Account 77.500 –

578.946 464.446

Securities Premium AccountAs per last Balance Sheet 5,457.811 5,505.775Addition during the year:(a) Conversion of 100,000, 2% Convertible Bonds in Foreign Currency 4,386.164 –

(b) Premium payable on redemption of 2% Convertible Bonds in ForeignCurrency reversed during the year. 49.943 –

9,893.918 5,505.775Less: Adjustments during the year for Premium payable on redemption of

2% Convertible Bonds in Foreign Currency – 9,893.918 (47.964) 5,457.811

Employee Housing FundAs per last Balance Sheet 0.625 0.625

Foreign Currency Translation Reserve (82.000) (107.368)


General Reserve

As per last Balance sheet 1,113.987 573.861Add: Addition during the year(a) Transferred from Profit and Loss Account 270.000 542.648

1,383.987 1,116.509Less:(a) Transferred to Capital Redemption Reserve (37.000) –

(b) Adjustment on adoption of Accounting Standard on ‘EmployeeBenefits’

[Net of deferred tax credit of Rs.Nil (2007: Rs.1.280 Million)] – 1,346.987 (2.522) 1,113.987

Surplus in Profit and Loss account 8,036.929 5,822.34519,886.905 12,863.346


F-54


3. SECURED LOANSTerm Loans

From Banks [Note (i)] 59,638.123 6,192.267[Repayable within one year: Rs.1604.634 Million (2007: Rs.733.068 Million)]

Working Capital Loan / Cash Credit from Banks [Note (ii) and (iii)] 5,590.515 3,238.187Finance Lease [Note (iv)] 41.551 28.713Interest accrued and due 1,647.603 48.422

66,917.792 9,507.589 Notes: (i) Out of the above loans:

(a) Secured by charge on certain fixed assets of the Company including Land andBuilding. 488.222 489.910

(b) Secured by charge on certain fixed assets of the Company, pledge of certain sharesheld by the Company and also by pledge of certain shares of other companies. 3,907.294 3,688.816

(c) Foreign Currency Borrowings secured by charge on fixed assets of the company,pledge of certain shares held by the Company and also by pledge of investments heldby other companies. – 282.349

(d) Secured by a second charge on certain fixed assets of the Company including Landand Building. 125.000 187.500

(e) Secured by charge on a brand – 6.600(f) Foreign Currency External Commercial Borrowings secured by charge on specific Fixed

Assets and a Brand. 1,404.200 1,522.850(g) Secured by hypothecation of specific fixed assets acquired under respective

agreements. 4.627 14.242(h) Secured by a charge on fixed and floating securities over the Group’s assets including

a pledge over the Group’s maturing stock and a pledge over the share capital ofsubsidary companies in United Kingdom. 28,307.701 –

(i) Secured by hypothecation of certain Trademarks of the Group pledge ofcertain shares held by the Group and Trust including a floating charge onImmovable property, Current Assets including Inventories held by the Group 24,856.350 –

(j) Secured by a charge on a property. 255.398 –

(k) Secured by a charge on fixed assets and Inventory. 289.331 –(ii) Secured by hypothecation of Inventories, book debts and other current assets.

(iii) Includes Foreign Currency Non-Resident [FCNR(B)] Loans. 893.069 396.331(iv) Secured against assets acquired under lease agreements


[Repayable within one year Rs. 367.072 Million (2007: Rs. 187.112 Million)]From Banks – 117.388[Repayable within one year Rs. Nil (2007: Rs. 100.000 Million)]2% Convertible Bonds in Foreign Currency – 4,423.643From Others 177.198 43.503[Repayable within one year Rs. Nil (2007: Rs. Nil)]

Interest accrued and due 40.592 41.506 771.175 5,294.050


F-55

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F-56

6. INVESTMENTSRs. Million

Particulars 2008 2007

CURRENTQuoted InvestmentsUnits (Fully Paid)

Mutual funds Investments 851.233 796.030Total Current Investments 851.233 796.030

LONG TERM

Quoted InvestmentsA. Trade

Fully Paid Equity Shares 10.155 0.033B. Non-Trade

Fully Paid Equity Shares 6.124 4.554 16.279 4.587

Units (Fully Paid) (Note 1) 35.982 35.317Total Quoted Investments (A+B) 52.261 39.904

Unquoted InvestmentsC. Trade

Fully paid Equity Shares (Note 2) 0.683 2.621Associates** 15.896 7.199Add: Accumulated Profits/ (Losses) of Assoicates

(net of dividend received) (11.197) (3.778)4.699 3.421

** Including Goodwill on acquisition of AssociatesRs.10.828 Million (2007: Rs. 7.310 Million)

Fully paid Preference Shares 0.250 0.250

5.632 6.292D. Non-Trade

In Government Securities 1,006.501 1,000.961In Fully Paid Debentures 0.048 0.048Fully Paid Equity Shares 10.800 8.182

1,017.349 1,009.191E. Others (Note 3) 194.676 194.676

194.676 194.676Total Unquoted Investments (C+D+E) 1,217.657 1,210.159Total Long Term Investments (A+B+C+D+E) 1,269.918 1,250.063

Total Current and Long Term Investments 2,121.151 2,046.093Less: Provision for diminution in the value of Investments 2.064 2.013Total 2,119.087 2,044.080


F-57

6. INVESTMENTS (Contd.)Rs. Million


Aggregate Value of Quoted Investments

- Book Value 901.430 833.921

- Market Value 1,182.416 852.023

Aggregate book value of Unquoted Investments 1,217.657 1,210.159

Acquired on acquisition 9.378 7.006

Additions during the year 1,322.503 1,495.053

Adjustments to Investments – 41.140

Sold during the year 1,256.823 1,984.735

Notes:

1. Investments in units of Unit Trust of India amounting to Rs. 34.400 Million represent those made under Rule 3A of the Companies(Acceptance of Deposit) Rules, 1975.

2. The erstwhile amalgamating Carew Phipson Limited has submitted its claim to Custodian of Enemy Property for India towards thefull payment of the value of shares of which 25% was received and the balance value of investment was written off in the books in1977, retaining a token amount of Re.1 in the books pending disposal of the representation to the custodian for final payment in thisregard.

3. Others include:

a) Rs.153.536 Million (2007: Rs.153.536 Million) pertaining to 2,152,660 (2007: 2,152,660) Equity Shares of Rs.10/ each fully paid upissued to USL Benefit Trust pursuant to scheme of amalgamation to hold such shares with all additions or accretion thereto in trustfor the benefit of the Company.

b) Rs. 41.140 Million (2007: Rs.41.140 Million) pertaining to 72,416,505 (2007:72,416,505) Equity Shares of SWBL whose beneficialownership vested with SWFSL are kept with escrow agent in view of court order. Pursuant to the scheme of amalgamation, suchbeneficial interest are held in trust by the trustees of SWFSL benefit trust for the benefit of SWBL.


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7. INVENTORIES

Raw Materials including materials in transit 777.277 654.622Packing Materials, Stores and Spares 754.209 412.162Finished goods including goods in transit 2,548.239 1,063.708Work-in-Progress 10,770.302 1,422.364

14,850.027 3,552.8568. SUNDRY DEBTORS

(Unsecured)Exceeding six months:Considered Good 64.064 113.020Considered Doubtful 149.849 108.618

213.913 221.638Others: Considered Good 8,305.933 3,878.367

8,519.846 4,100.005Less: Provision for Doubtful debts 149.849 108.618

8,369.997 3,991.3879. CASH AND BANK BALANCES

Cash on Hand 6.558 7.044Remittance in Transit/ Cheques on Hand 30.675 8.065Balances with Scheduled Banks:

On Current Accounts [Note (i)] 1,010.607 490.214On Unpaid Dividend Account 19.730 104.779On Deposit Account [Note (ii)] 4,370.268 5,167.911

5,437.838 5,778.013Notes:

(i) includes Rs. 25.385 Million (2007: Rs. 27.271 Million) in Exchange Earners Foreign Currency(EEFC) Account and Rs. 1.155 Million (2007: Rs. 18.052 Million) in Foreign Currency.

(ii) (a) includes Rs.8.403 Million (2007: Rs.0.214 Million) pledged with Government Departments.(b) includes Rs. 2.673 Million (2007: Rs. 0.550 Million) as margin against Bank Guarantee.(c) includes Rs. 715.055 Million (2007: Rs. 1,092.205 Million) in escrow account in terms of

a separate agreement dated May 27, 2005 between SWBL and MBL.

10. OTHER CURRENT ASSETS

(Unsecured, Considered Good except otherwise stated)Income accrued on Investments and Deposits 59.138 45.321Other Deposits – Considered Good 1,405.448 1,170.351

– Considered Doubtful 8.031 9.999Fixed assets held for sale 4.618 2.790

1,477.235 1,228.461Less: Provision for Doubtful Deposits 8.031 9.999

1,469.204 1,218.462


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11. LOANS AND ADVANCES

(Unsecured, considered good except where otherwise stated)Advances recoverable in cash or in kind or for value to be receivedAdvances to Tie-up units – Considered Good 917.736 643.581

– Considered Doubtful 21.519 21.519Advances for Acquisition of Trade Mark – 217.493Other Advances – Considered Good 3,664.939 3,528.436

– Considered Doubtful 295.564 130.119 4,899.758 4,541.148

Less: Provision for Doubtful Advances 317.083 151.638 4,582.675 4,389.510


Acceptances * 753.918 643.214Sundry Creditors 8,519.755 4,439.423Dues to Directors 51.486 37.434Investors Education and Protection Fund [Schedule 19 Note 12]

Unclaimed Debentures 0.001 7.997Unclaimed Dividends 22.840 19.757Unclaimed Fixed Deposits 11.025 14.069

Security Deposit 115.810 99.653Advances Received from Customers 183.105 125.192Interest accrued but not due 86.656 71.331Other Liabilities 558.767 591.537

10,303.363 6,049.607* Includes bills drawn against inland letters of credit of Rs.215.149 Million(2007:113.031 Million) and secured by a charge on debtors, inventories andother current assets.


Equity Shares - Interim - 87.319Equity Shares - Final 131.039 85.596

Corporate Tax on Proposed Dividend - 30.242Taxation (Net of Payments) 7.586 388.553Fringe Benefit Tax (Net of Payments) 2.036 0.541Provision for redemption premium - 49.493Provision for Contingencies 103.744 284.788Onerous Lease Provision [Schedule 19 Note 19] 600.601 -Employee Benefits 365.516 287.966

1,210.522 1,214.498

13. MISCELLANEOUS EXPENDITUREExpenditure Incurred for Raising Borrowed Funds[Additions Rs.788.716 Million (2007: Rs.Nil) and AmortisationRs.54.049 Million (2007: Rs.Nil)] 734.667 -

734.667 -


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Rs. Million

2008 200714. OTHER INCOME

Income from Investments:Dividend income from other investments 94.097 106.632[Tax deducted at source Rs.1.905 Million (2007:Rs.0.635 Million)]

Lease Rent 261.801 –Profit on Sale of Fixed Assets (Net) 114.274 94.480Profit on Sale of Investments – 0.794Provision for Onerous Lease written back 82.863 –Liabilities no longer required written back 199.962 400.537Provision for Diminution in Value of Investment written back – 1.098Exchange Gain (Net) – 60.229Bad debts/ Advances recovered 3.173 18.993Scrap Sales 160.114 91.355Insurance Claims 3.308 18.404Miscellaneous 143.580 82.996

1,063.172 875.518

15. MATERIALS

Raw Materials Consumed 8,160.766 6,689.816Purchase of Finished Goods 4,409.791 3,554.982Packing Materials Consumed 8,522.697 5,974.641

Movement in Stocks:Opening Stock:

Work-in-Progress 1,422.364 761.027Finished Goods 1,063.708 1,267.500

2,486.072 2,028.527Add : Taken over on Acquisition

Work-in-Progress 9,188.949 484.096Finished Goods 1,083.380 5.771

10,272.329 489.867Closing Stock:

Work-in-Progress 10,770.302 1,422.364Finished Goods 2,548.239 1,063.708

13,318.541 2,486.072(Increase)/ Decrease in Stocks (560.140) 32.322Excise Duty on Opening/Closing Stock of Finished Goods (Net) 372.819 (204.792)

20,905.933 16,046.969


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16. MANUFACTURING AND OTHER EXPENSES

Employee Cost:Salaries, Wages and Bonus 3,748.690 1,670.039Contribution to Provident and Other Funds 408.542 257.461Workmen and Staff Welfare 117.749 87.336Voluntary Retirement Scheme Compensation 4.053 8.476

4,279.034 2,023.312Less: Actuarial Gain on Pension Scheme (975.539) 3,303.495 – 2,023.312Power and Fuel 444.233 174.774Stores and Spares Consumed 110.942 46.039Repairs and Maintenance:

Buildings 71.483 40.786Plant and Machinery 155.477 59.273Others 136.034 47.163

Rent 281.236 111.876Rates and Taxes 417.433 143.204Insurance 117.390 50.798Travelling and Conveyance 561.727 427.882

Legal and Professional 633.271 420.857Freight Outwards 815.710 577.829Advertisement and Sales Promotion 4,781.123 2,942.247Commission on Sales 405.644 215.889Royalty/ Brand Fee/ Trade Mark Licence Fees 96.925 67.423Cash Discount 206.742 191.426Sales Tax 142.850 138.243Fixed Assets Written Off 16.949 15.250Loss on Sale of Investments 5.798 –Directors’ Remuneration:

Sitting Fee 2.311 2.633Commission 51.044 36.991

Exchange Loss (Net) 81.168 –Bad Debts and Advances Written Off 187.060 43.476Provision for Doubtful Debts/ Advances / Deposits 135.350 96.828Provision for Diminution in Value of Investments (Net) 0.051 –Research and Development 28.779 8.004Others:

Personnel and Administration 360.199 357.880Selling and Distribution 947.971 753.410Miscellaneous 253.085 220.147

14,751.480 9,213.640


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17. INTEREST AND FINANCE CHARGES

Interest on:Fixed Loans 3,842.234 866.932Others Loans 1,675.962 270.147

Amortisation of Expenditure Incurred for Raising Borrowed Funds 54.049 -Finance Charges (including Bill discounting charges) 308.578 93.871

5,880.823 1,230.950Less : Interest Income:

On Investments 2.144 2.234On Deposits and Other Accounts (Gross) 341.877 351.387On Income Tax Refunds 89.239 3.924

5,447.563 873.405


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18. STATEMENT ON SIGNIFICANT ACCOUNTING POLICIES

1. Basis of Preparation of Consolidated Financial Statements

The Consolidated Financial Statements relate to United Spirits Limited (the Company) and its subsidiaries and associates (theGroup). The Consolidated Financial Statements are prepared in accordance with Accounting Standard (AS 21) on ConsolidatedFinancial Statements and (AS 23) on Accounting for Investments in Associates in Consolidated Financial Statement as specifiedin the Companies (Accounting Standard) Rules, 2006, and the relevant provisions of the Companies Act,1956 of India.The Consolidated Financial Statements are prepared by adopting uniform accounting policies for like transactions andother events in similar circumstances and are presented to the extent possible, in the same manner as the Company’sseparate financial statement. Accounting policies have been consistently applied except where a newly-issued accountingstandard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policyhitherto in use.

On occasion, a subsidiary company whose financial statements are consolidated may issue its shares to third parties as either apublic offering or private placement at per share amounts in excess of or less than the Company's average per share carryingvalue. With respect to such transactions, the resulting gains or losses arising from the dilution of interest are recorded as CapitalReserve/Goodwill. Gains or losses arising on the direct sale by the Company of its investment in its subsidiaries or associatedcompanies to third parties are transferred to the Profit and Loss Account. Such gains or losses are the difference between the saleproceeds and the net carrying value of the investments.

2. Subsidiary and Associate Companies considered in the Consolidated Financial Statements:

(A) Subsidiary Companies:

Sl.No. Name of the Company Country of


ship interest (%)

Proportion of votingpower held directly or

indirectly, if different fromproportion of ownership

interest(%)

2008 2007 2008 2007

1 Asian Opportunities & Investments Limited (AOIL) Mauritius 100 100 - -

2 United Spirits Nepal Private Limited (formerlyMcDowell Nepal Limited)

Nepal 82.47 82.47 - -

3 Zelinka Limited (ZL) Cyprus 100 100 - -

4 Shaw Wallace & Company Limited (SWCL) India 75 75 - -

5 Ramanretti Investments & Trading Ltd. (RITL) India 75 75 100 100

6 Shaw Wallace Breweries Limited (SWBL) India 75 75 100 100

7 Primo Distributors Pvt. Ltd. (PDPL) India 100 100 - -

8 Palmer Investment Group Ltd.(PIG) British VirginIslands

100 100 - -

9 RG Shaw & Company Ltd. (RGSC) U.K. 100 100 - -

10 Shaw Scott & Company Ltd. (SSC) U.K. 100 100 - -

11 Shaw Darby & Company Ltd. (SDC) U.K. 100 100 - -

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(A) Subsidiary Companies ( Contd.)


Incorporation

Proportion ofowner-ship interest

(%)

Proportion of votingpower held directly orindirectly, if differentfrom proportion of

ownership interest(%)2008 2007 2008 2007

12 Thames Rice Milling Company Limited (TRMC) U.K. 100 100 - -13 Shaw Wallace Overseas Limited (SWOL) U.K. 75 75 100 10014 JIHL Nominees Limited(JIHL) Jersey Islands 100 100 - -15 Montrose International S.A (MI) Panama 100 100 - -16 USL Holdings Limited (UHL) British Virgin Islands 100 100 - -17 Spring Valley Investments Holding Inc.(SVIH) British Virgin Islands 100 100 - -18 USL Holdings (UK) Limited (UHUKL) U.K 100 100 - -19 United Spirits (UK) Limited (USUKL) U.K 100 100 - -20 United Spirits (Great Britain) Limited (USGBL) U.K 100 100 - -21 Four Seasons Wines Limited (FSWL) India 100 100 - -22 United Vintners Limited (UVL) India 100 100 - -23 United Alcobev Limited (UAL) India 100 100 - -24 McDowell Beverages Limited (MBL) India 100 100 - -25 McDowell (Scotland) Limited (MSL) Scotland 100 100 - -26 Bouvet Ladubay S.A.S (BL) France 100 100 - -27 Chapin Landias S.A.S (CL) France 100 100 - -28 Herbertsons Limited (HL) India 100 90 - 10029 Daffodils Flavours & Fragrances Private Limited (DFFPL) India 100 100 - -30 Jasmine Flavours and Fragrances Private Limited (i) India 100 - - -31 Royal Challengers Sports Private Limited (i) India 100 - - -32 McDowell and Company Limited (i) India 100 - - -33 Liquidity Inc.(ii) USA 51 - - -

Whyte and Mackay Group34 Whyte and Mackay Group Limited(ii) U.K 100 - - -35 Bruce & Company (Leith) Limited (ii) U.K 100 - - -36 Charles Mackinlay & Company Limited (ii) U.K 100 - - -37 Dalmore Distillers Limited (ii) U.K 100 - - -38 Dalmore Whyte & Mackay Limited (ii) U.K 100 - - -39 Edinburgh Scotch Whisky Company Limited (ii) U.K 100 - - -40 Ewen & Company Limited (ii) U.K 100 - - -41 Fettercairn Distillery Limited (ii) U.K 100 - - -42 Findlater Scotch Whisky Limited (ii) U.K 100 - - -43 Glayva Liqueur Limited (ii) U.K 100 - - -44 Glentalla Limited (ii) U.K 100 - - -45 GPS Realisations Limited (ii) U.K 100 - - -46 Grey Rogers & Company Limited (ii) U.K 100 - - -47 Hay & MacLeod Limited (ii) U.K 100 - - -48 Invergordon Distillers (Holdings) Limited (ii) U.K 100 - - -49 Invergordon Distillers Group Limited (ii) U.K 100 - - -50 Invergordon Distillers Limited (ii) U.K 100 - - -

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ship interest (%)

Proportion of votingpower held directly orindirectly, if differentfrom proportion of

ownership interest(%)2008 2007 2008 2007

51 Invergordon Gin Limited (ii) U.K 100 - - -52 Isle of Jura Distillery Company Limited (ii) U.K 100 - - -53 Jarvis Halliday & Company Limited (ii) U.K 100 - - -54 John E McPherson & Sons Limited (ii) U.K 100 - - -55 Kensington Distillers Limited (ii) U.K 100 - - -56 Kyndal Spirits Limited (ii) U.K 100 - - -57 Leith Distillers Limited (ii) U.K 100 - - -58 Loch Glass Distilling Company Limited (ii) U.K 100 - - -59 Longman Distillers Limited (ii) U.K 100 - - -60 Lycidas (437) Limited (ii) U.K 100 - - -61 Pentland Bonding Company Limited (ii) U.K 100 - - -62 Ronald Morrison & Company Limited (ii) U.K 100 - - -63 St Vincent Street (437) Limited (ii) U.K 100 - - -64 Tamnavulin-Glenlivet Distillery Company Limited (ii) U.K 100 - - -65 TDL Realisations Limited (ii) U.K 100 - - -66 The Sheep Dip Whisky Company Limited (ii) U.K 100 - - -67 W & S Strong Limited (ii) U.K 100 - - -68 Watson & Middleton Limited (ii) U.K 100 - - -69 Whyte & Mackay Distillers Limited (ii) U.K 100 - - -70 William Muir Limited (ii) U.K 100 - - -71 WMB Realisations Limited (ii) U.K 100 - - -72 Whyte and Mackay Property Limited (ii) U.K 100 - - -73 Whyte and Mackay de Venezuela CA (ii) Venezuela 100 - - -74 KI Trustees Limited (ii) U.K 100 - - -75 Wauchope Moodle & Company Limited (ii) U.K 100 - - -76 Whyte and Mackay Limited (ii) U.K 100 - - -77 Whyte and Mackay Warehousing Limited (ii) U.K 100 - - -78 Whyte and Mackay Holdings Limited (ii) U.K 100 - - -

(B) Associate Companies (Note 4 below)

Name of the Company Country ofIncorporation

Proportion of owner-shipinterest (%)

2008 20071 Utkal Distillery Limited (Utkal) India 43 432 Wine Soc of India Private Limited (i) India 49 -

(i) Became subsidiaries/ associate during the year.(ii) Acquired during the year [Refer Schedule 19 Note 7](iii) Consolidated Financial Statements also include financial statements of USL Benefit Trust and SWFSL Benefit Trust.

(A) Subsidiary Companies (Contd.)


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3. Principles of Consolidation

These Consolidated Financial Statements have been prepared by consolidation of the financial statements of the Company andits subsidiaries on a line-by-line basis after fully eliminating the inter-Company transactions.

4. Accounting for Investment in Associates

a) Accounting for Investments in Associate Companies has been carried out under the Equity Method of accounting prescribedunder AS 23 wherein Goodwill/Capital Reserve arising at the time of acquisition and the Group’s share of profits or lossesafter the date of acquisition have been adjusted in the investment value.

b) U B Distilleries Limited (UBDL)UBDL, which was an associate company of erstwhile HL in view of significant influence, ceased its operations in 2003-04,consequent to the order of the Hon’ble Supreme Court of India vesting the distillery unit with the state of Bihar. Sincethe Company does not have any investment /significant influence in UBDL, the same has not been accounted for as anassociate in these Consolidated Financial Statements under the Equity Method.

5. Basis of presentation of Financial Statements

The Consolidated Financial Statements of the Group have been prepared under historical cost convention, except as otherwisestated, in accordance with the Generally Accepted Accounting Principles (GAAP) in India, the Accounting Standards as specifiedin the Companies (Accounting Standard) Rules, 2006, and the relevant provisions of the Companies Act,1956 of India.

6. Fixed Assets

(a) Fixed assets are stated at their original cost of acquisition and subsequent improvements thereto including taxes, duties,freight and other incidental expenses related to acquisition and installation of the assets concerned, except amounts adjustedon revaluation and amalgamation. Interest on borrowings attributable to qualifying assets are capitalised and included in thecost of fixed assets as appropriate.

(b) The costs of Fixed Assets acquired in amalgamations are determined at their fair values, on the date of acquisition or nearerthereto, or as approved under the schemes of amalgamation.

(c) Assets held for disposal are stated at their net book value or estimated net realisable values, whichever is lower.

(d) Goodwill represents the difference between the Company’s share in the net worth of a subsidiary and cost of acquisition ateach point of time of making the investment in the subsidiary. Negative goodwill is shown separately as Capital Reserve onconsolidation.

(e) Intangible assets are stated at the consideration paid for acquisition less accumulated amortisation.

7. Leases

Assets acquired under Leases, where the Company has substantially all the risks and rewards of ownership, areclassified as finance leases. Such leases are capitalised at the inception of the lease at lower of the fair value or the presentvalue of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid isallocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstandingliability for each period.

Assets acquired on leases, where a significant portion of the risk and rewards of ownership are retained by the lessor, areclassified as operating leases. Lease rentals are charged to the Profit and Loss Account on accrual basis.

Income from operating leases is credited to Profit and Loss Account on a straight line basis over the lease term.


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8. Depreciation and Amortisation

a) Depreciation is provided on the Straight Line Method, including on assets revalued, at rates prescribed in Schedule XIV tothe Companies Act, 1956 of India except for the following, which are based on management’s estimate of useful life of theassets concerned:

i) Computers and Vehicles over a period of three and five years respectively;ii) In respect of certain items of Plant and Machinery eligible for triple shift allowance, depreciation is provided for the full

year on triple shift basis;iii) In respect of fixed assets of Whyte and Mackay Group, depreciation is provided based on management estimate of

useful lives of the assets concerned as below:

Buildings 50 years

Plant and Machinery 10 to 20 years

Vehicles 4 years

Computers 3 years

Also refer Note 9(b) on Schedule 19

b) Fixed assets acquired on amalgamation, over the remaining useful life computed based on rates prescribed in Schedule XIVto the Companies Act, 1956 of India, as below:

Buildings 1 to 30 yearsPlant & Machinery 1 to 20 yearsVehicles 1 to 4 yearsComputers 1 to 2 years

c) Assets taken on finance lease are depreciated over their estimated useful life or the lease term, whichever is lower.

d) Leasehold Land are not amortised.

e) Goodwill arising on amalgamation is charged to the Profit and Loss Account in the year of amalgamation.

f) Goodwill arising on Consolidation is not amortised.

g) Intangible assets are amortised, on a straight line basis, commencing from the date the asset is available for its use, over theirrespective individual estimated useful lives as estimated by the management:

Trademark , formulae and License 10 years

9. Impairment

Impairment loss, if any, is provided to the extent the carrying amounts of assets exceed their recoverable amounts.

Recoverable amount is higher of the net selling price of an asset and its value in use. Value in use is the present value of estimatedfuture cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

10. Investments

Long-term Investments are stated at cost to the Company. Provision for diminution in the value is made to recognise a decline,other than temporary, in the value of long-term investments.

Current investments are valued at cost or market value, whichever is less.

11. Inventories

Inventories are valued at lower of cost and net realisable value. The costs are, in general, ascertained under Weighted AverageMethod. Finished goods and Work-in-Progress include appropriate manufacturing overheads and borrowing costs, as applicable.Excise/Customs duty payable on stocks in bond is added to the cost. Due allowance is made for obsolete and slow moving items.


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12. Revenue Recognition

Sales are recognised when goods are despatched from distilleries / warehouses of the Company in accordance with the termsof sale except where such terms provide otherwise, where sales are recognised based on such terms. Gross Sales are inclusive ofexcise duty but are net of trade discounts and sales tax, where applicable.

Income arising from sales by manufacturers under “Tie-up” agreements (Tie-up units) and income from brand franchise arerecognised in terms of the respective contracts on sale of the products by the Tie-up unit/Franchisees. Income from brandfranchise is net of service tax, where applicable.

Dividend income on investments is recognised and accounted for when the right to receive the payment is established.


Transactions in foreign currency are recognised at the rates of exchange prevailing on the dates of the transactions.

Liabilities/ assets in foreign currencies are reckoned in the accounts as per the following principles:

Exchange differences arising on a monetary item that, in substance, forms part of an enterprise’s net investment in a non-integral foreign operation is accumulated in a foreign currency translation reserve in the enterprise’s financial statements untilthe disposal of the net investment.

All other monetary assets and liabilities denominated in foreign currency are restated at the rates ruling at the year end andall exchange gains/ losses arising therefrom are adjusted to the Profit and Loss Account, except those covered by forwardcontracted rates where the premium or discount arising at the inception of such forward exchange contract is amortised asexpense or income over the life of the contract.

Exchange differences on forward contracts are recognised in the Profit and Loss Account in the reporting period in which theexchange rates change. Any profit or loss arising on cancellation or renewal of such forward contracts is recognised as incomeor expense for the year.

For forward exchange contracts and other derivatives that are not covered by AS-11 ‘The Effects of Changes in Foreign ExchangeRates’, the Company follows the guidance in the announcement of the Institute of Chartered Accountants of India (ICAI) datedMarch 29,2008 whereby for each category of derivatives, the Company records any net mark- to- market losses. Net mark-to-market gains are not recorded for such derivatives.

Foreign Company:

In respect of overseas subsidiary companies, Income and Expenses are translated at average exchange rate for the year. Assetsand Liabilities, both monetary and non-monetary, are translated at the year-end exchange rates. The differences arising out oftranslation are included in the foreign currency translation reserve. Any Goodwill or Capital Reserve arising on acquisition of nonintegral operation is translated at closing rate.


a) Defined-contribution plans

These are plans in which the Group pays pre-defined amounts to separate funds and does not have any legal or informalobligation to pay additional sums. These comprise of contributions to the employees’ provident fund with the government,superannuation fund and certain state plans like Employees’ State Insurance and Employees’ Pension Scheme. The Group’spayments to the defined contribution plans are recognised as expenses during the period in which the employees performthe services that the payments cover.


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b) Defined-benefit plans

Gratuity:

The Group provides for gratuity, a defined benefit plan (the Gratuity Plan), to certain categories of employees. Liability withregard to the Gratuity plan is accrued based on actuarial valuation, based on Projected Unit Credit Method at the balancesheet date, carried out by an independent actuary. Actuarial Gains and Losses comprise experience adjustments and theeffect of changes in the actuarial assumptions and are recognised immediately in the Profit and Loss Account as income orexpense.

Pension:

Whyte and Mackay Group operates and contributes in a defined benefit pension scheme (the Pension Plan). Liability withregard to Pension Plan is accrued based on actuarial valuation, based on Projected Unit Credit Method at the balancesheet date, carried out by an independent actuary. Actuarial Gains and Losses comprise experience adjustments and theeffect of changes in the actuarial assumptions and are recognised immediately in the Profit and Loss Account as income orexpense.

Provident Fund:

Group’s Provident Funds administered by trusts set up any company in the Group where the company’sobligation is to provide the agreed benefit to the employees and the actuarial risk and investment risk fall,in substance, on the company, are treated as a defined benefit plan. Liability with regard to such providentfund plans are accrued based on actuarial valuation, based on Projected Unit Credit Method, carried out byan independent actuary at the balance sheet date. Actuarial Gains and Losses comprise experience adjustmentsand the effect of changes in the actuarial assumptions and are recognised immediately in the Profit and Loss Accountas income or expense.

Death Benefit:

Death Benefit payable at the time of death is actuarially ascertained at the year-end and provided for in the accounts.

c) Other long term employee benefits:

Compensated absences which are not expected to occur within twelve months after the end of the period in which theemployee renders the related services are recognised as a liability at the present value of the defined benefit obligation atthe balance sheet date based on actuarial valuation carried out at each balance sheet date.

d) Short term employee benefits:

Undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered byemployees is recognised during the period when the employee renders the services. These benefits include compensatedabsences such as paid annual leave and performance incentives.

15. Expenditure on account of Voluntary Retirement Scheme

Expenditure on account of Voluntary Retirement Scheme of employees is expensed in the period in which it is incurred.

16. Research and Development

Revenue expenditure on research and development is charged to Profit and Loss Account in the period inwhich it is incurred. Capital Expenditure is included as part of fixed assets and depreciated on the same basis as other fixedassets.


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17. Taxes on Income

Provision for income tax comprises current taxes and deferred taxes. Current tax is determined as the amount of taxpayable in respect of taxable income for the period in accordance with the applicable laws.

Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year andquantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets are recognised and carried forward to the extent that there is a reasonable / virtual certainty thatsufficient future taxable income will be available against which such deferred tax asset can be realised.

Fringe Benefit Tax is determined at current applicable rates on expenses falling within the ambit of “Fringe Benefit” asdefined under the Income Tax Act, 1961.

18. Earnings per Share (EPS)

Basic EPS is arrived at based on Net Profit after Taxation available to equity shareholders to the weighted average numberof equity shares outstanding during the year. The Diluted EPS is calculated on the same basis as Basic EPS, after adjustingfor the effects of potential dilutive equity shares unless impact is anti-dilutive.

19. Provisions

A provision is recognised when an enterprise has a present obligation as a result of a past event and it is probable that anoutflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions,other than employee benefits, are not discounted to their present value and are determined based on managementestimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date andadjusted to reflect the current management estimates.

Onerous Lease Provision:

When a leasehold property ceases to be used in the business or a commitment is entered into which would cause this tooccur, provision is made for the entire amount by which the recoverable amount of interest in the property is expected tobe insufficient to cover future obligations relating to the lease.

20. Contingencies

Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty are treated ascontingent and, to the extent not provided for, are disclosed by way of notes on the accounts.

21. Share / Foreign Currency Convertible Bonds [FCCBs] issue expenses and Premium on Redemption of FCCB :

Share/ FCCBs issue expenses incurred are expensed in the year of issue and premium payable on FCCBs is expensed over thecurrency of FCCBs. Both are adjusted to the Securities Premium Account as permitted by Section 78(2) of the CompaniesAct, 1956.

22. Expenditure

Expenses are net of taxes recoverable, where applicable.

23. Government grants

Government grants related to revenue expenses are recognised on a systematic basis in the Profit and Loss Account overthe periods necessary to match them with the related costs which they are intended to compensate.

24. Miscellaneous Expenditure (to the extent not written off)

Expenditure incurred for raising borrowed funds represents ancillary costs incurred in connection with the arrangement ofborrowings and is amortised over the tenure of the respective borrowings. Amortisation of such Miscellaneous Expenditureis included under Interest and Finance charges.


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19. NOTES ON ACCOUNTS

1. Contingent Liabilities Rs. Million

2008 2007a) Guarantees given by the Company’s bankers for which Counter Guarantees

have been given by the Company 141.942 729.130

b) Disputed claims against the Company not acknowledged as debts, currentlyunder appeal / sub judice:(i) Excise demands for excess wastages and distillation losses 231.804 239.091(ii) Other miscellaneous claims 367.582 437.264(iii) Income Tax demand (including interest) under appeal 211.573 1504.867(iv) Sales Tax demands under appeal in various states 682.086 492.628

d) Co-accepted bills of Tie-up Units - since fully settled 216.740 71.651e) Claims from suppliers not acknowledged as debts 50.967 58.583f) Minority share of dividend on 11% Cumulative Redeemable Preference shares - 2.750

The Management is hopeful of succeeding in the above appeals /disputes based on legal opinions / legal precedents.

2. (a) Pursuant to a Scheme of Arrangement, sanctioned by the Hon’ble High Courts of Karnataka and Bombay, amalgamationof eight companies into erstwhile McDowell & Company Limited and demerger of investment business into a resultingcompany (McDowell Holdings Limited) became effective from October 5, 2006 with the appointed date as April 1, 2005and the name of the Company was changed from McDowell & Company Limited to United Spirits Limited. The bankaccounts, agreements and licences have been transferred in the name of the Company. The Investments and certainimmovable properties are in the process of being transferred in the name of the Company.

(b) Board of Directors of the erstwhile Central Distilleries & Breweries Limited (CDBL-amalgamated with SWDL in an earlieryear) on April 29, 1986 decided to issue 134,700 Equity Shares of Rs.10 each, the allotment whereof was stayed by theHon’ble High Court of Delhi on September 13,1988. The Hon’ble High Court of Delhi had vacated its order and hasordered to keep in abeyance the allotment on 72,556 shares and the matter is sub-judice. The holders, in exchange ofthese shares will be entitled to 17,776 equity shares of Rs.10 each of the Company pursuant to a Scheme of Arrangement.Necessary adjustments in this respect will be carried out on disposal of the matter pending before the aforesaid Court.

3. (a) In terms of the Scheme of Amalgamation approved by the shareholders of the Company and the shareholders of ShawWallace & Company Limited (SWCL) and Primo Distributors Private Limited (Primo), subsidiaries of the Company, SWCLand Primo are proposed to be amalgamated with the Company with effect from April 1, 2007. The Scheme has beensanctioned by the Hon’ble High Court of Karnataka and the Hon’ble High Court of Judicature at Bombay. Similar sanctionby the Hon’ble High Court of Calcutta is awaited.

(b) In terms of another Scheme of Amalgamation approved by shareholders of the Company and Zelinka Limited (Zelinka),Cyprus, a subsidiary of the Company, Zelinka is proposed to be amalgamated with the Company with effect from April1, 2007. The Hon’ble High Court of Karnataka has sanctioned the Scheme and Zelinka is taking necessary steps forimplementing the same.

The accounting effect of these schemes shall be given in the year in which these schemes are approved and becomeeffective.

4. The Company has issued during 2006, 100,000 2% Convertible Bonds in Foreign Currency (FCCB) denominated in Bondcertificates of USD 1,000 each aggregating to USD 100 Million. In accordance with the Offering Circular (OC), the Company,during the year, converted 100,000 Bonds into 5,681,326 Equity shares at conversion prices determined in the manner specifiedin the OC resulting in aggregate share premium of Rs. 4,386.164 Million.


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5. Contingency provision of Rs.284.788 Million made in earlier years have also been reviewed during the year and Rs. 181.258Million being no longer required have been written back and included under exceptional and other non-recurring item (ReferNote 11 below). The remaining amount of Rs. 103.530 Million has been kept as a matter of abundant caution to meet liabilitiesarising in future on account of various claims and other disputes pending against SWCL.

6. Interest on inter-corporate deposit (Schedule 4) where negotiation/ settlement has not been finalised, has been provided interms of the decree and/ or otherwise considered adequate by the management. In the opinion of the management, interest sofar provided is adequate and no further provision is necessary in this respect. Adjustments, if any, are carried out as and whenthe amounts are determined on final disposal/ settlement.

7. a) During the year, the Company acquired through its wholly owned subsidiary, United Spirits (Great Britain) Limited, theentire share capital of Whyte and Mackay Group Limited, which in turn holds the entire share capital of Whyte and MackayLimited, a Scotland based Spirits manufacturing Company. The Company has provided security / guarantee on behalf ofthe above wholly owned subsidiary for a sum of US $ 618.915 Million in favour of the lenders.

b) Consequent upon the above acquisition, the following companies became wholly owned subsidiaries of the Company.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 & MackayLimited, Edinburgh Scotch Whisky Company Limited, Ewen & Company Limited, Fettercairn Distillery Limited, FindlaterScotch Whisky Limited, Glayva Liqueur Limited, Glentalla Limited, GPS Realisations Limited, Grey Rogers & CompanyLimited, Hay & MacLeod Limited, Invergordon Distillers (Holdings) Limited, Invergordon Distillers Group Limited,Invergordon Distillers Limited, Invergordon Gin Limited,Isle of Jura Distillery Company Limited, Jarvis Halliday & CompanyLimited, John E McPherson & Sons Limited, Kensington Distillers Limited, Kyndal Spirits Limited, Leith Distillers Limited,Loch Glass Distilling Company Limited, Longman Distillers Limited, Lycidas (437) Limited, Pentland Bonding CompanyLimited, Ronald Morrison & Company Limited, St The Sheep Dip Whisky Company Limited, Vincent Street (437) Limited,Tamnavulin-Glenlivet Distillery Company Limited, TDL Realisations Limited, W & S Strong Limited, Watson & MiddletonLimited, Wauchope Moodie & Company Limited, Whyte & Mackay Distillers Limited, William Muir Limited, WMB RealisationsLimited, Whyte and Mackay Property Limited, Whyte and Mackay de Venezuela CA and KI Trustees Limited.

c) During the year the Company acquired through its wholly owned subsidiary, Zelinka Limited, a majority stake in LiquidityInc., a Delaware corporation of USA, engaged in the business of alcoholic beverages for a sum of USD 2.950 Million.Consequently, Liquidity Inc., has become a subsidiary of the Company.

d) Pursuant to the above, the figures of the current year include figures relating to these subsidiaries as given below:

Rs. MillionLiabilitiesSecured Loans 29,951.405 Unsecured Loans 29,192.499Current Liabilities 3,873.88Provisions 127.628Deferred Tax Liability 0.804AssetsNet Block of Fixed Assets 4,334.085Goodwill On Consolidation 41,930.983Investments 9.624 Inventories 10,160.304 Sundry Debtors 3,329.821 Cash and Bank Balances 3,096.597 Loans and Advances 681.565Profit / ( Loss) after tax for the year 1,029.614

* Profit/ (Loss) after tax for the period before minority interest, whereever applicable


F-73


a) Defined Contribution Plans

The Group offers its employees defined contribution plan in the form of Provident Fund (PF) with the government,Superannuation Fund (SF) and certain state plans such as Employees’ State Insurance (ESI) and Employees’ Pension Scheme(EPS). PF and EPS cover substantially all regular employees while the SF covers certain executives and the ESI coverscertain workers. Contribution to SF is made to trust managed by the Group, while other contributions are made to theGovernment’s funds. While both the employees and the Group pay predetermined contributions into the provident fundand the ESI Scheme, contributions into the pension fund and the superannuation fund are made only by the Group. Thecontributions are normally based on a certain proportion of the employee’s salary.

During the year, the Group has recognised the following amounts in the Profit and Loss Account, which are included inContribution to Provident and other funds in Schedule 15:

Rs.Million2008 2007

Provident Fund and Employees’ Pension Scheme* 96.287 42.631Superannuation Fund 29.726 25.091Employees’ State Insurance 8.819 7.474

134.832 75.196

* Excluding contribution to PF made to trusts managed by the Company.

b) Defined Benefit Plans

Gratuity:

The Group provides for gratuity, a defined benefit plan (the Gratuity Plan), to certain categories of employees. The GratuityPlan provides a lump sum payment to vested employees at retirement or termination of employment, an amount based onthe respective employee’s last drawn salary and years of employment with the Group. The Group has employees’ gratuityfunds are managed by the Group as well as by Insurance Companies. In certain subsidiaries gratuity plan is funded.

Pension:

Whyte and Mackay Group operates and contributes in a defined benefit pension scheme, under which amounts are heldin a separately administered trust.

Provident Fund:

For certain executives and workers of the Group, contributions are made as per applicable Indian laws towards ProvidentFund to certain Trusts set up and managed by the Group, where the Company’s obligation is to provide the agreed benefitto the employees and the actuarial risk and investment risk fall, in substance, on the Group. Having regard to the assetsof the Fund and the return on the investments, shortfall in the assured rate of interest notified by the Government, whichthe Group is obliged to make good is determined actuarially.

Death Benefit:

The Company provides for Death Benefit, a defined benefit plan, (the Death Benefit Plan) to certain categories ofemployees. The Death Benefit Plan provides a lump sum payment to vested employees on Death, an amount based on therespective employee’s last drawn salary and remaining years of employment with the Company after adjustments for anycompensation received from the insurance Company and restricted to limits set forth in the said plan. The Death BenefitPlan is Non-Funded.


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b) Defined Benefit Plans (Contd.) Rs. Million

2008 2007Funded Non-Funded Funded Non-Funded

Particulars Gratuity PFPension

GratuityDeath-Benefit

Gratuity PF Pension Gratuity Death-Benefit

A) Reconciliation of opening and closing balances of the present value of thedefined benefit obligationObligation at the beginning of the year 478.663 962.623 - 5.269 3.525 434.691 911.667 - 5.255 3.092Taken over on Acquisition - - 9,329.580 - - - - - - -Contributions by plan participants - 195.705 39.312 - - - 68.616 - - -Current service cost 79.146 74.620 130.136 (0.077) 0.329 59.428 69.072 - 0.010 0.433Interest cost 37.199 68.228 448.538 0.005 - 33.195 72.721 - 0.004 -Actuarial (gain)/ loss on obligations (1.077) - (1,975.957) (0.013) - 1.312 - - - -Benefits paid (56.668) (248.199) (271.275) - - (49.963) (159.453) - - -Exchange Fluctuation 1.899 - - 0.012 - - - - - -Obligation at the end of the year 539.162 1,052.977 7,700.334 5.196 3.854 478.663 962.623 - 5.269 3.525

B) Reconciliation of opening and closing balances of the fair value of plan assetsPlan Assets at the beginning of the year 427.553 896.106 - - - 322.915 911.667 - - -Taken over on acquisition - - 7,399.872 - - - - - - -Prior period adjustment - - - - - 23.739 - - - -Contributions by plan participants - 195.705 39.312 - - - 68.616 - - -Contributions by the Company 43.430 48.878 1,584.514 - - 110.797 44.055 - - -Expected return on plan assets 34.021 68.685 462.970 - - 27.707 69.241 - - -Actuarial gains / (losses) (10.615) 12.287 (1,000.418) - - (7.642) (38.020) - - -Benefits paid (56.668) (248.199) (271.275) - - (49.963) (159.453) - - -Exchange Fluctuation 0.423 - - - - - - - - -Plan assets at the end of the year 438.144 973.462 8,214.975 - - 427.553 896.106 - - -

C) Reconciliation of present value of defined benefit obligation and the fair value of plan assets to the assets and liabilities recognised in the balance sheet:Present value of obligation at the end of the year 539.162 1,052.977 7,700.334 5.196 3.854 478.663 962.623 - 5.269 3.525Fair value of plan assets at the end of the year 438.144 973.462 8,214.975 - - 427.553 896.106 - - -Liability Recognised in Balance Sheet 101.018 79.515 - 5.196 3.854 51.110 66.517 - 5.269 3.525

[Included under Provisions in Schedule 12(B)](Net Asset) Recognised in Balance Sheet - - (514.641) - - - - - - -

[Included under Loans and Advances in Schedule 11]D) Expenses recognised in the Profit and Loss

AccountCurrent service cost 79.146 74.620 130.136 (0.079) 0.329 59.428 69.072 0.010 - 0.433Interest cost 37.199 68.228 448.538 0.005 - 33.195 72.721 0.004 - -Expected return on plan assets (34.021) (68.685) (462.970) - - (27.707) (69.241) - - -Prior period adjustment - - - - - (23.739) - - - -Actuarial (gains)/losses 9.538 (12.287) (975.539) 0.013 - 6.330 38.020 - - -Total Expenses recognised in the Profit and Loss Account 91.862 61.876 (859.835) (0.061) 0.329 47.507 110.572 0.014 - 0.433Included in:Contribution to Provident and Other Funds inSchedule 15 91.862 61.876 115.704 (0.061) 0.329 71.246 110.572 0.014 - 0.433Actuarial Gain on Pension Scheme in Schedule 15 - - (975.539) - - - - - - -Prior period item in the Profit and Loss Account - - - - - (23.739) - - - -

91.862 61.876 (859.835) (0.061) 0.329 47.507 110.572 0.014 - 0.433


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b) Defined Benefit Plans (Contd.) Rs. Million

2008 2007E) Investment details of plan assets Gratuity PF Pension Gratuity PF

Government securities 17% 34% 27% 18% 28%Securities guaranteed by Government 32% - - 35% -Private Sector Bonds 2% - 15% 2% -Public Sector / Financial Institutional Bonds 1% 29% - 1% 34%Special Deposit Scheme 7% 19% - 7% 34%Fund balance with Insurance Companies 32% - - 31% -Others (including bank balances) 9% 18% 58% 6% 4%

100% 100% 100% 100% 100%Based on the above allocation and the prevailing yields on these assets, the long term estimate of the expected rate of returnon fund assets has been arrived at. Assumed rate of return on assets is expected to vary from year to year reflecting thereturns on matching government bonds.

2008 2007Gratuity PF Pension Gratuity PF

F) Actual return on plan assets 8.55% 8.25% 7.70% 6.51% 7.70%G) Assumptions

Discount Rate (per annum) 8.00% 8.00% 6.90% 8.00% 8.00%Expected Rate of Return on Plan Assets 8.00% 8.19% 6.40% 8.00% 7.98%

Rate of increase in Compensation levels 5.00%Not

Applicable3.60% 5.00% Not

Applicable

Average past service of employees (years) 14.76Not

Applicable12.00 14.04 Not

Applicable

Mortality ratesLIC 1994-96

ultimatetable

LIC 1994-96 ultimate

table

Table PA00year of birth – 117% loading

for current pensioners and a 123% loading for future pensioners

LIC 1994-96ultimatetable

LIC 1994-96 ultimatetable

The estimates of future increase in compensation levels, considered in the actuarial valuation, have been taken on accountof inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

As per the best estimate of the management, contribution of Rs.90 Million is expected to be paid to the plan during theyear ending March 31, 2009.

9. Fixed Assets

a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) –Rs.553.079 Million (2007: Rs.143.818 Million).

b) In view of different sets of environment in which foreign subsidiaries operate in their respective countries, provision fordepreciation is made to comply with local laws and use of management estimate. It is practically not possible to align ratesof depreciation of such subsidiaries with those of the Company. However on review, the management is of the opinionthat provision of such depreciation is adequate.

Accounting policies followed by Whyte and Mackay Group in respect of depreciation on fixed assets are different fromaccounting policies of the Company as mentioned in Note 8(iii) Schedule 18. The proportion of the fixed assets in theconsolidated financial statement to which different accounting policies have been applied are as below:

Gross BlockRs. Million

Proportion%

Building 2,325.689 54%Plant & Machinery 5,361.108 62%Vehicles 31.723 7%


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10. Current Assets, Loans and Advances

a) Loans and Advances include:

An amount of Rs.489.847 Million (2007: Rs. 336.462 Million) due from a Tie-up unit secured by the assets of theTie-up unit.

b) Certain confirmation of balances from Sundry Debtors, Loans and Advances, Deposits and Sundry Creditors are awaitedand the account reconciliations of some parties where confirmations have been received are in progress. Adjustment fordifferences, if any, arising out of such confirmations/reconciliations would be made in the accounts on receipt of suchconfirmations and reconciliation thereof. The Management is of the opinion that the impact of adjustments, if any, isnot likely to be significant. In the opinion of the management, all current assets, loans and advances including advanceson capital accounts would be realised at the values at which these are stated in the accounts, in the ordinary course ofbusiness.

c) Bank balances with schedule bank includes Rs 715.055 Million (2007: Rs.1,092.205 Million) out of the proceeds of thebeer business sold in the earlier year, kept under escrow pending resolution of various taxation matters. Subsequent to theyear end, the taxation matters have been resolved and the escrow amount has been released.

d) The Company has, granted interest free loans in foreign currency aggregating to Rs.13,026.798 Million to USL HoldingsLimited (USL Holdings), BVI and Zelinka Limited, Cyprus, subsidiaries of the Company, for acquisition of long term strategicinvestments. Management is of the view that out of these loans, Rs.10,823.073 Million from the inception of the grantof loans, in substance, form part of the Company’s net investment in these subsidiaries, as the settlement of these loansis neither planned nor likely to occur in the foreseeable future and management intends to convert these loans intoinvestment in share capital of these subsidiaries in near future. Accordingly, in accordance with AS 11, exchange differenceaggregating to Rs.821.948 Million (2007: Rs 144.912 Million) arising on such loans has been accumulated in a foreigncurrency translation reserve, which at the time of the disposal of the net investment in these subsidiaries would berecognised as income or as expense.

11. Prior period, exceptional and other non recurring items [Debit/(Credit)] include: Rs. Million

Sl. No. Particulars 2008 2007Prior period items

i) Provision for Gratuity - (23.739)ii) Provision for leave encashment - 16.492iii) Exchange difference - (140.572)

Total - (147.819)Exceptional and other non recurring items

iv) The surplus being excess of net sale proceeds over corresponding carrying valueof interest in the USL Benefit Trust. - (2,473.735)

v) Provision for doubtful debts written back - (182.920)vi) Contingency Provision (181.258) (330.212)

Total (181.258) (2,986.867)

Grand Total (181.258) (3,134.686)

12. As required under Section 205C of the Companies Act, 1956, the Company has transferred Rs. 10.517 Million (2007: Rs. 2.966Million) to the Investor Education and Protection Fund (IEPF) during the year. On March 31, 2008, no amount was due fortransfer to the IEPF.

F-77


13. Borrowing Costs Rs. Million

2008 2007a) Interest included in the Closing Stock of Malt and Grape Spirit under maturation 38.117 46.145b) Amortisation of Expenditure Incurred for Raising Borrowed Funds 54.049 -

14. Segment Reporting

The Company is primarily organised into two main geographic segments:

India: The ‘India’ segment is engaged in the business of manufacture, purchase and sale of Beverage Alcohol (Spirits andWines) including through Tie-up units/ brand franchisees within India.

Outside India: The ‘Outside India’ segment is engaged in the business of manufacture, purchase and sale of Beverage Alcohol(Spirits and Wines) including through Tie-up units/ brand franchisees outside India.

A. Primary Segmental Reporting Rs. Million

Geographic Segment India Outside India Un allocated / Elimination

Total

2008 2007 2008 2007 2008 2007 2008 2007

(i) Revenue

External 58,607.017 51,148.842 17,631.059 105.930 - - 76,238.076 51,254.772Less: Excise Duty 24,616.008 20,793.869 4,377.741 73.783 - - 28,993.749 20,867.652Inter-segment 38.630 12.647 314.774 - (353.404) (12.647) - -Total Revenue 33,952.379 30,342.326 12,938.544 32.147 (353.404) (12.647) 47,244.327 30,387.120

(ii) Result

Segment Result – Profit/(Loss) 6,541.923 4,774.719 4,303.579 13.931 - - 10,845.502 4,788.650

Unallocated corporateexpenses/ (income)Income from Investments - - - - 94.097 106.632 94.097 106.632Interest and FinanceCharges - - - - 5,447.563 873.405 5,447.563 873.405

Profit/(Loss) before Taxation 6,541.923 4,774.719 4,303.579 13.931 (5,353.466) (766.773) 5,492.036 4,021.877Prior Period, Exceptionaland Other Non-RecurringItems

181.258 3,134.686 - - - - 181.258 3,134.686

Profit before Taxation 5,673.294 7,156.563Provision for taxation 2,661.243 1,049.308 2,661.243 1,049.308Profit/(Loss) after Taxation 3,012.051 6,107.255Total Revenue 47,244.327 30,387.120Income from Investments 94.097 106.632

47,338.424 30,493.752(iii) Other information

Segment Assets 22,991.609 23,796.337 25,734.426 2,368.456 53,259.734 11,324.130 1,01,985.769 37,488.923Segment Liabilities 6,798.504 6,379.355 4,574.720 242.996 67,847.657 15,462.011 79,220.881 22,084.362Capital Expenditure 1,215.284 363.088 1,426.254 39.986 - - 2,641.538 403.074Depreciation 353.793 322.780 387.619 15.081 - - 741.412 337.861Other non cash expenses 197.160 (118.897) 2.889 - - - 200.049 (118.897)

F-78


B. Secondary Segmental Reporting

The Group is engaged in the business of manufacture, purchase and sale of Beverage Alcohol (Spirits and Wines) includingthrough Tie-up units/ brand franchisees, which constitutes a single business segment. The Group’s other operations did notexceed the quantitative threshold for disclosure as envisaged in AS 17- ‘Segment Reporting’ specified in the Companies(Accounting Standard) Rules, 2006.

Notes:a. Segment accounting policies are in line with the accounting policy of the company.b. Segment revenue includes sales and other income directly identifiable with/allocable to the segment including intersegment

revenues.c. Expenses that are directly identifiable with/allocable to segment are considered for determining the segment results.

Expenses which relates to the group as a whole and not allocable to segments, are included under “Unallocable Corporateexpenses”.

d. Income which relates to the group as a whole and not allocable to segments is included in “Unallocable Corporateincome”

e. Segment revenue resulting from transactions with other segments is accounted on the basis of transfer price agreedbetween the segments. Such transfer prices are either determined to yield a desired margin or agreed on a negotiatedbasis.

f. Segment assets and liabilities includes those directly identifiable with the respective segments. Unallocable corporateassets and liabilities represents the assets and liabilities that relates to the company as a whole and not allocable to anysegments. Unallocable assets mainly comprise trade investments in associate companies. Unallocable liabilities includemainly loan funds and proposed dividend.

15. Related Party Disclosures

a) Names of related parties and description of relationship

Associates with whomtransactions have taken placeduring the year

Key Managementpersonnel

Employees' Benefit Plans where there is significantinfluence

(i) Utkal Distillers Limited (Utkal) Mr.V.K.RekhiManaging Director

Mc Dowell & Company Limited Staff Gratuity Fund (McDSGF)

UB Distilleries Limited[Schedule 18 Note 4(b) ]^

Mr.S.D.Lalla, ExecutiveDirector of SWCL

McDowell & Company Limited Officers'Gratuity Fund(McD OGF)

Wine Soc of India Private Limited * SWDL Group Officers Gratuity Fund (SWDL OGF)^SWDL Employees Gratuity Fund (SWDL EGF)^Herbertsons Limited Employees Gratuity Fund (HL EGF)^Phipson & Company Limited Management Staff GratuityFund. (PCL SGF)^Phipson & Company Limited Gratuity Fund. (PCL GF)^Carew & Company Ltd. Gratuity Fund (CCL GF)^Mc Dowell & Company Limited Provident Fund (McD PF)Herbertsons Limited Executives Provident Fund (HL EPF)^The Bengal Distilleries Company Limited Staff ProvidentFund (BD PF)Shaw Wallce & Associated Companies Employees’ Gratuity Fund^Shaw Wallce & Associated Companies Executive StaffGratuity Fund^Shaw Wallce & Associated Companies Provident Fund^Whyte and Mackay Pension Scheme

* Acquired during the year^ No transactions during the year

F-79

15. b) Summary of the transactions with related parties:

Rs. Million

2008 2007

Sl.No. Nature of transactions **

Asso

ciate

s

Key

Man

agem

ent

perso

nnel

Employees’Benefit Planswhere thereis significant

influence

Total

Asso

ciate

s

Key

Man

agem

ent

perso

nnel

Employees’Benefit

Plans wherethere is

significantinfluence

Total

a) Purchase of goods

- Utkal 0.309 - - 0.309 0.079 - - 0.079

b) Sale of goods

- Utkal 6.328 - - 6.328 5.177 - - 5.177

c) Income from sale by Tie-up Units.

- Utkal 125.223 - - 125.223 79.469 - - 79.469

d) Sale/ (Purchase) of fixed assets

- Utkal 0.336 - - 0.336 - - - -

e) Rental Deposit - 2.859 - 2.859 - 2.595 - 2.595

f) Finance (including loans and equitycontributions in cash or in kind)

- Wine Soc of India 2.000 - - 2.000 - - - -

- Utkal (135.830) - - (135.830) (24.384) - - (24.384)

g) Managing Directors’ Remuneration - 31.439 - 31.439 - 22.753 - 22.753

h) Rent - 2.790 - 2.790 - 2.536 - 2.536

i) Contribution to Gratuity Fund

- McD OGF - - 5.984 5.984 - - 38.506 38.506

- McD SGF - - 33.621 33.621 - - 18.311 18.311

- SWDL OGF - - - - - - 15.339 15.339

- SWDL EGF - - - - - - 33.866 33.866

j) Contribution to Provident Fund

-Mcd PF 48.015 48.015 34.772 34.772

-HL EPF - - 1.803 1.803

- BD PF 0.863 0.863 2.454 2.454

k) Contribution to Pension Scheme

Whyte and Mackay Pension Scheme - - 1,584.514 1,584.514 - - - -

l) Amount due from

- Utkal 489.847 - - 489.847 336.462 - - 336.462

** Excludes Reimbursement of Expenses and Cost sharing arrangements.

The above information has been determined to the extent such parties have been identified on the basis of informationprovided by the Company, which has been relied upon by the auditors.


F-80

16. (a) The Company’s significant leasing arrangements in respect of operating leases for premises (residential, office, stores,godown, manufacturing facilities etc), which are not non-cancellable, range between 11 months and 3 years generally (orlonger in certain cases) and are usually renewable by mutual consent on mutually agreeable terms.

Leasing arrangements entered into prior to April 1, 2001 have not been considered for treatment under AS 19 ‘Accountingfor Leases’.

The Whyte and Mackay Group entered into an operating lease agreement in September 2006 to rent a property over a 30year period at an annual cost of Rs.69.31 Million The annual rent payable is subject to review every 5 years. There are nocontingent rent payments.

The aggregate lease rentals payable are charged as Rent under Schedule 15 to the accounts.

Sub-lease payments received Rs. 261.801 Million have been recognised in the statement of Profit and Loss for the year andare included under Schedule 13.

Total of future minimum lease payments under non-cancellable operating leases for each of the following periods:Rs. Million

2008 2007

(i) not later than one year; 8.611 -

(ii) later than one year and not later than five years; 38.514 -

(iii) later than five years; the total of future minimum sublease payments expected tobe received under non-cancellable subleases at the balance sheet date;

69.294 -

116.419 -

(b) The Company has acquired computer equipment and cars on finance leases. The lease agreements are for a primary periodof 48 months for computer equipments and for 36 months to 60 months for cars. The Company has an option to renewthese leases for a secondary period. There are no exceptional/restrictive covenants in the lease agreements.

The minimum lease payments and their present value, for each of the following periods are as follows:

Rs. Million

2008 2007

Particulars Present Value of

payments

Minimumlease

payments

Present Valueof payments

Minimumlease

payments

Later than one year and not later than five years 24.074 26.683 16.850 18.150

Later than five years - - - -

24.074 26.683 16.850 18.150

Not later than one year 17.477 20.304 11.863 13.711

41.551 46.987 28.713 31.861

Less: Finance Charges 5.436 3.148

Present value of net minimum lease payments 41.551 28.713


F-81

17. Earnings Per Share:

2008 2007Nominal Value of equity shares (Rs) 10 10

a) Net Profit after tax and attributable to Minority (Rs. Million) 2,720.584 5,669.523b) Basic number of Equity Shares of Rs.10 each outstanding during the year 88,574,272 82,892,946c) Weighted Average number of Equity Shares of Rs.10 each outstanding during

the year 86,113,691 82,892,946d) Basic Earnings Per Share (Rs.) (a /c) 31.59 68.40e) Dilutive Effect on Profit (Rs Million) * 23.131 -f) Profit attributable to equity shareholders for computing Diluted EPS (Rs. Million)

(a+e) 2,743.715 5,669.523g) Dilutive Effect on Weighted average number of equity shares outstanding during

the year * 2,080,338 -h) Weighted average number of Equity Shares and equity equivalent shares for

computing Diluted EPS (c+g) 88,194,029 82,892,946i) Diluted Earnings Per Share(Rs.) (f / h) 31.11 68.40

* Diluted effect on weighted average number of equity shares and profit attributable is on account of Foreign CurrencyConvertible Bonds.

18. Taxes on Income:

a) Current Taxation Rs. MillionProvision for current taxation includes:

2008 2007

i) Income Tax [including relating to earlier year Rs. Nil (2007: 249.227 Million)and net of excess provision in earlier years written back Rs. 169.123 Million(2007: Rs. Nil) (Refer note below)] 1,828.799 1066.421

ii) Wealth Tax 12.500 11.200Total 1,841.299 1077.621

Note: Consequent to disposal of Income Tax matters in favour of SWCL by the relevant authorities including thoserelating to financial years 2003-2004 to 2005-2006, which were pending before the settlement commission, provisionfor income tax made in earlier years have been reviewed and Rs.169.123 Million being no longer required has beenwritten back in the accounts.

b) Deferred Taxation

The net Deferred Tax (Asset) / Liability as on March 31, 2008 has been arrived at as follows:Rs. Million

Particulars Deferred Tax(Assets) /

Liabilities as on1.4.2007

Acquisition Current Yearcharge /(credit)

TranslationAdjustment

Deferred Tax(Assets) /

Liabilities as on 31.03.2008

Difference between book and taxdepreciation

282.526 (218.089) 418.492 (5.633) 477.296

Provision for Doubtful Debts (73.633) - (58.181) - (131.814)Employee Benefits (63.349) (578.992) 427.824 (6.009) (220.526)Others (126.926) 33.810 (15.006) 1.195 (106.927)

Total 18.618 (763.271) 773.129 (10.447) 18.029


F-82


SOURCES OF FUNDSShareholders' Funds

Share Capital 1 828.930 604.714Share Capital Suspense 1A - 224.216Reserves and Surplus 2 12,863.346 7,588.850

Minority Interest 1,712.285 1,285.164Loan Funds

Secured Loans 3 9,507.589 10,081.142Unsecured Loans 4 5,294.050 5,350.285

Deferred Tax Liability (Net) [Schedule 18 Note 20(b)] 18.618 85.81030,224.818 25,220.181

APPLICATION OF FUNDSa) Fixed Assets 5

Gross Block 6,821.724 6,056.444Less: Depreciation 1,764.466 1,218.172Net Block 5,057.258 4,838.272Capital Work in Progress 133.227 26.106

5,190.485 4,864.378

b) Goodwill on Consolidation 11,324.130 10,835.286Investments 6 2,044.080 2,484.518Current Assets, Loans and Advances

Inventories 7 3,552.856 2,945.268Sundry Debtors 8 3,991.387 3,220.063Cash and Bank Balances 9 5,778.013 3,611.420Other Current Assets 10 1,218.462 727.892Loans and Advances 11 4,389.510 3,908.470

18,930.228 14,413.113Less: Current Liabilities and Provisions 12

Liabilities 6,049.607 6,309.169Provisions 1,214.498 1,067.945

7,264.105 7,377.114Net Current Assets 11,666.123 7,035.999

30,224.818 25,220.181Statement on Significant Accounting Policies 17Notes on Accounts 18

The Schedules referred to above and the notes thereon form an integral part of the Accounts.This is the Consolidated Balance Sheet referred to in our report of even date

VIJAY MALLYA V.K.REKHIChairman Managing Director

J. MAJUMDAR M.R.DORAISWAMY IYENGAR P.A.MURALIPartner Director Chief Financial OfficerFor and on behalf ofPrice Waterhouse V.S.VENKATARAMANChartered Accountants Company Secretary

Bangalore BangaloreOctober 31, 2007 October 31, 2007

Balance Sheet as at March 31, 2007Consolidated Financial Statement

F-85


INCOMESales (Gross) 47,646.449 35,400.085Less : Excise Duty 20,867.652 16,406.439

26,778.797 18,993.646Income arising from Sale by Manufacturers under 'Tie-up'agreements (Tie-up units) 1,531.581 1,716.672Income from Brand Franchise 938.716 774.343Other Income 13 875.518 595.096

30,124.612 22,079.757EXPENDITURE

Materials 14 16,046.969 11,331.911Manufacturing and Other Expenses 15 8,844.500 8,229.663Interest and Finance charges 16 873.405 1,524.206

25,764.874 21,085.780Profit before Prior Period, Exceptional and OtherNon-Recurring Items, Depreciation and Taxation 4,359.738 993.977Depreciation 337.861 425.621Profit before Prior period, Exceptional and OtherNon-Recurring Items and Taxation 4,021.877 568.356Prior period, exceptional and other non recurring items (Net) 3,134.686 -[Schedule 18 Note 14(a)]Profit before Taxation 7,156.563 568.356Provision for Taxation:

Current Tax 1,077.621 130.518Deferred Tax (65.912) (71.277)Fringe Benefit Tax 37.599 63.625

Profit after Taxation and before share in 6,107.255 445.490Profits / (Losses) of AssociatesShare in Profits / (losses) of Associates (Net) (0.254) (4.777)Profit before Minority Interest 6,107.001 440.713Minority Interest in (Profit ) / Loss (437.478) 813.085Net Profit for the year 5,669.523 1,253.798Profit brought forward from previous year 932.348 416.481

6,601.871 1,670.279Appropriations:Proposed Dividend

Equity Shares - Interim 101.163 -Equity Shares - Final 85.596 188.963Corporate Tax on Proposed Dividend 50.119 34.522Transfer to Capital Redemption Reserve - 464.446Transfer to General Reserve 542.648 50.000

Profit carried to Balance Sheet 5,822.34 932.348Basic and Diluted Earnings Per Share (Rs.) 68.40 16.38Statement on Significant Accounting Policies 17Notes on Accounts 18

The Schedules referred to above and the notes thereon form an integral part of the Accounts.This is the Consolidated Profit and Loss Account referred to in our report of even date


J. MAJUMDAR M.R.DORAISWAMY IYENGAR P.A.MURALIPartner Director Chief Financial OfficerFor and on behalf ofPrice Waterhouse V.S.VENKATARAMANChartered Accountants Company Secretary


Profit and Loss Account for the year ended March 31, 2007Consolidated Financial Statement

F-86

Cash Flow Statement for the Year Ended March 31, 2007Consolidated Financial Statement


A. CASH FLOW FROM OPERATING ACTIVITIESNet profit / (loss) before Prior Period, Exceptional and OtherNon-recurring items and Taxation

4,021.877 568.356

Adjustments for :Depreciation 337.861 425.621Unrealised Foreign Exchange Loss / (Gain) (150.466) 56.158Bad Debts/ Advances written off 43.476 37.010Loss/(Gain) on Fixed Assets Sold/Written Off (Net) (79.230) (42.959)Loss/(Gain) on Sale of Investments (Net) (0.794) (91.961)Liabilities no longer required written back (400.537) (177.509)Provision for Doubtful Debts 96.828 137.827Provision for diminution in value of Investments written back (1.098) -Provision - Others 142.434 18.844Interest and Finance Charges 1,230.950 1,772.357Income from investments (106.632) (12.315)Interest Income (357.545) 755.247 (248.151) 1,874.922

Operating profit before working capital changes 4,777.124 2,443.278

(Increase)/decrease in Trade and other receivables (1,590.403) (1,307.635)(Increase)/decrease in Inventories (117.721) (331.671)Increase/(decrease) in Trade payables (151.741) (1,859.865) 402.005 (1,237.301)

Cash generated from operations 2,917.259 1,205.977Direct taxes paid (559.274) (648.822)Fringe Benefit taxes paid (63.787) (36.896)

Cash flow before Prior Period, Exceptional and OtherNon-recurring items

2,294.198 520.259

Prior Period, Exceptional and Other Non-recurring items 3,007.199 -Cash flow before and after extraordinary itemsand net cash from operating activities 5,301.397 520.259

B CASH FLOW FROM INVESTING ACTIVITIESPurchase of fixed assets (403.074) (371.344)Sale of fixed assets 154.564 118.357Finance Lease Payments (7.785) (1.195)Purchase of long terms investments (698.612) (1,004.742)Purchase of current investments (795.468) (327.762)Consideration paid on acquisitions of shares in Subsidiaries (1,070.778) (9,312.913)[net of cash and cash equivalent on the acquisition dateRs. 27.202 Million (2006 : Rs. 7,259.504 Million)Sale of long term investments 754.612 398.292Sale of current investments 700.001 327.200Disposal of Investments in Subsidiaries - 263.339Sale of Preference Shares in Subsidiary - 68.192Loan given to :

Inter Corporate Deposits - (362.107)Interest received 320.638 257.004Dividend received 106.169 12.315

Net cash used in investing activities (939.733) (9,935.364)

F-87

Cash Flow Statement for the Year Ended March 31, 2007 (Contd.)Consolidated Financial Statement


C. CASH FLOW FROM FINANCING ACTIVITIESProceeds from issue of rights shares by a subisidary company - 339.700Proceeds from Preference Shares of a subsidiary company - 500.000Redemption of Preference Shares of a subsidiary company - (1,000.000)Net Proceeds from issue of Global Depositary Shares (GDS) - 5,796.051Net Proceeds from issue of 2% Foreign Currency ConvertibleBonds (FCCB)

- 4,458.500

Expenses incurred on issuance of GDS and FCCB - (242.569)Expenses relating to Amalgamation - (306.192)Proceeds / (Repayment) of long term loans

Proceeds 3,830.041 9,808.849Repayment (4,285.349) (9,059.023)

Proceeds / (Repayment) of fixed deposits (52.283) 15.951Proceeds / (Repayment) of short terms loans (69.507) (1,477.500)Working Capital Loan / Cash Credit from Banks (net) (159.587) 715.495Interest and Finance charges Paid (1,183.813) (1,748.837)Dividends paid (222.927) (177.754)Tax on distributed profit (51.646) (27.039)


Net increase in cash and cash equivalents 2,166.593 (1,819.473)

Cash and cash equivalents as at April 1 (Opening Balance) 3,611.420 5,087.996Cash and Cash Equivalents of Transferor companies as atApril, 2005

- 342.897

Cash and Cash Equivalents as at March 31 (ClosingBalance)

5,778.013 3,611.420

2,166.593 (1,819.473)

Notes :

1. The above Consolidated Cash Flow Statement has been compiled from and is based on the Consolidated Balance Sheet as atMarch 31, 2007 and the related Consolidated Profit and Loss Account for the year ended on that date.

2. The above Consolidated Cash Flow Statement has been prepared under the indirect method as set out in the AccountingStandard - 3 on Cash Flow Statements issued by The Institute of Chartered Accountants of India and reallocation required forthis purpose are as made by the Group.

3. Previous year's figures have been regrouped wherever necessary in order to confirm to this year's presentation.

This is the Consolidated Cash Flow Statement referred to in our report of even date.


J. MAJUMDAR M.R.DORAISWAMY IYENGAR P.A.MURALIPartner Director Chief Financial OfficerFor For and on behalf ofPrice Waterhouse V.S.VENKATARAMANChartered Accountants Company Secretary


F-88

F-88 F-89

Cash Flow Statement for theYear Ended March 31, 2007 (Contd.)Consolidated Financial Statement

Rs.Million2007 2006

C. CASH FLOW FROM FINANCING ACTIVITIESProceeds from issue of rights shares by a subisidary company - 339.700Proceeds from Preference Shares of a subsidiary company - 500.000Redemption of Preference Shares of a subsidiary company - (1,000.000)Net Proceeds from issue of Global Depositary Shares (GDS) - 5,796.051Net Proceeds from issue of 2% Foreign Currency ConvertibleBonds (FCCB)

- 4,458.500

Expenses incurred on issuance of GDS and FCCB - (242.569)Expenses relating to Amalgamation - (306.192)Proceeds / (Repayment) of long term loans

Proceeds 3,830.041 9,808.849Repayment (4,285.349) (9,059.023)

Proceeds / (Repayment) of fixed deposits (52.283) 15.951Proceeds / (Repayment) of short terms loans (69.507) (1,477.500)Working Capital Loan / Cash Credit from Banks (net) (159.587) 715.495Interest and Finance charges Paid (1,183.813) (1,748.837)Dividends paid (222.927) (177.754)Tax on distributed profit (51.646) (27.039)


Net increase in cash and cash equivalents 2,166.593 (1,819.473)

Cash and cash equivalents as at April 1 (Opening Balance) 3,611.420 5,087.996Cash and Cash Equivalents of Transferor companies as atApril, 2005

- 342.897

Cash and Cash Equivalents as at March 31 (ClosingBalance)

5,778.013 3,611.420

2,166.593 (1,819.473)

Notes :

1. The above Consolidated Cash Flow Statement has been compiled from and is based on the Consolidated Balance Sheet as atMarch 31, 2007 and the related Consolidated Profit and Loss Account for the year ended on that date.

2. The above Consolidated Cash Flow Statement has been prepared under the indirect method as set out in the AccountingStandard - 3 on Cash Flow Statements issued by The Institute of Chartered Accountants of India and reallocation required forthis purpose are as made by the Group.

3. Previous year's figures have been regrouped wherever necessary in order to confirm to this year's presentation.

This is the Consolidated Cash Flow Statement referred to in our report of even date.


J.MAJUMDAR M.R.DORAISWAMY IYENGAR P.A.MURALIPartner Director Chief Financial OfficerFor For and on behalf ofPriceWaterhouse V.S.VENKATARAMANChartered Accountants Company Secretary


Schedules forming part of Balance Sheet as at March 31, 2007

Rs.Million2007 2006

1. Share CapitalAuthorised110,000,000 (2006:110,000,000) Equity Shares ofRs.10/- each

1,100.000 1,100.000

10,000,000 (2006:10,000,000) Preference Shares ofRs.10/- each

100.000 100.000

Issued, Subscribed and Paid-up94,481,930 (2006: 60,471,409) Equity Shares of Rs.10/-each fully paid up.

944.819 604.714

Less:-11,588,984 (2006: Nil)Equity Shares held by Subsidiaries 115.889

828.930 604.714

7,750,000 (2006:Nil) 9%, Non Cumulative Non ConvertibleRedeemablePreference Shares of Rs.10/- each fully paid up 77.500 -Less:7,750,000 (2006:Nil) 9%, Non Cumulative Non ConvertibleRedeemablePreference Shares held by a subsidiary 77.500 -

- -Notes :Of the above,1. 51,719,968 (2006: 51,719,968) Equity Shares were allotted as fully

paid upon July 9, 2001 to the shareholders of the erstwhileMcDowell&Co. Ltd., pursuant to the schemes of Amalgamation for considerationother than cash.

2. 34,010,521 (2006: Nil) Equity Shares were alloted as fully paid onNovember 6, 2006 to Equity Shareholders of erstwhile HerbertsonsLimited, Triumph Distillers & Vintners Private Limited, BaramatiGrape Industries Limited, United Distillers India Limited, PhipsonDistillery Limited, United Spirits Limited, McDowell International BrandsLimited and Shaw Wallace Distilleries Limited pursuant to a Scheme ofAmalgamation for consideration other than cash.

3. 8,751,381 (2006: 8,751,381) Equity shares of Rs.10/- each fullypaid up represent 17,502,762 (2006: 17,502,762) Global DepositoryShares issued by the Company on March 29, 2006.

4. 7,750,000 (2006: Nil) 9% Non-Cumulative Non-ConvertibleRedeemable Preference Shares of Rs 10/- each are issued as fullypaid up onNovember 6, 2006 to 9%Non-CumulativeNon-ConvertibleRedeemable Preference Shareholders of erstwhile Shaw WallaceDistilleries Limited pursuant to the scheme of Amalgamation forconsideration other than cash.

The above 7,750,000 (2006: Nil) 9% Non-Cumulative Non-ConvertibleRedeemable Preference Shares of Rs 10/- each have been redeemed atpar on July 11, 2007

Consolidated Financial Statement

F-88 F-89


34,010,521 (2006:Nil) Equity Shares were alloted as fully paid on November 6,2006 to Equity Shareholders of erstwhile Herbertsons Limited, Triumph Distillers & Vintners Private Limited, Baramati Grape Industries Limited, United Distillers India Limited, Phipson Distillery Limited, United Spirits Limited, McDowell International Brands Limited and Shaw Wallace Distilleries Limited pursuant to a Scheme of Amalgamation for consideration other than cash.

Schedules forming part of Balance Sheet as at March 31, 2007


1A. Share Capital Suspense

Equity Share SuspenseNil (2006: 34,010,521) Equity Shares of Rs.10/- each to beissued as fully paid up to the equity shareholders of TransferorCompanies pursuant to theScheme of Amalgamation for consideration other than cashLess: Nil (2006: 11,588,984) Equity shares to be issued toSubsidiaries

- 340.105

- 115.889

- 224.216Preference Share SuspenseNil ( 2006: 7,750,000) 9% Non-Cumulative Non-ConvertibleRedeemablePreference shares of Rs.10/- each to be issued as fully paidup to 9%Non-Cumulative Non-Convertible Redeemable PreferenceShareholders of erstwhile Shaw Wallace Distilleries Limitedpursuantto the Scheme of Amalgamation for consideration other thancash

- 77.500

Less: Preference shares to be issued to Subsidiaries - - (77.500) -

The above 7,750,000 9% Non-Cumulative Non-ConvertibleRedeemablePreference shares of Rs.10/- each to be issued will beredeemable atpar on July 11, 2007. - 224.216


F-90


2. RESERVES AND SURPLUSCentral Subsidy

As per last Balance Sheet 1.500 -Received during the year - 1.500

1.500 1.500Capital Redemption Reserve -

As per last Balance Sheet 464.446Transferred from the Profit and Loss Account onredemption of Preference Shares

- 464.446

464.446 464.446Securities Premium Account

As per last Balance Sheet 5,505.775 -Addition during the year:(a) On issue of Global Depository Shares - 5,708.537(b) On conversion of 6,500,000 9% Cumulative Convertible

Preference shares of Rs. 10/- each fully paid in ShawWallace Distilleries Limited, a Transferor Company - 41.786

5,505.775 5,750.323Less: Adjustments during the year:

(a) Expenses incurred on issuance of Global DepositoryShares (GDS) and 2% Convertible Bonds in ForeignCurrency (FCCB)Legal and Professional Fees - (116.760)Underwriting Fee and Other costs - (141.122)Miscellaneous Income - 15.313

(b) Premiuim payable on Redemption of FCCB (47.964) (1.979)5,457.811 5,505.775

Employee Housing FundAs per last Balance Sheet 0.625 0.625

Foreign Currency Translation Reserve [Schedule 18 Note 7] (107.368) 0.295


General ReserveAs per last Balance sheet 573.861 1,683.868Add: Addition during the year:(a) Reserve arising on appreciation (net of diminuition) in

value of certain assets of the Company- 770.650

(b) Adjustment including reversal of Goodwill and Minorityinterest relating to Subsidiaries and an Associate,on amalgamation / demerger - 116.687

(c) Transferred from Profit and Loss Account 542.648 50.0001,116.509 2,621.205

Less:(a) Adjustments relating to equity share capital to be issued

to Subsidiaries- (1,153.687)

(b) Adjustments relating to Demerger - (435.758)(c) Reserve arising on Amalgamation - (151.707)(d) Expenses relating to Amalgamation - (306.192)(e) Adjustment on adoption of Accounting Standard on

'Employee Benefits'[net of deferred tax credit of Rs 1.280 Million (2006: Nil)][Schedule18 Note 9(a)]

(2.522) -

1,113.987 573.861Surplus in Profit and Loss account 5,822.345 932.348

12,863.346 7,588.850

Schedules forming part of Balance Sheet as at March 31, 2007Consolidated Financial Statement

F-91


3. SECURED LOANSTerm Loans

From Banks [Note (i)] 6,192.267 6,290.225[Repayable within one year: Rs.733.068 Million (2006: Rs.425.318 Million)]From Others [Note (ii)] - 375.000[Repayable within one year: Rs. Nil (2006: Rs.42.500 Million)]

Working Capital Loan / Cash Credit from Banks [Note (iii) ] 3,238.187 3,389.570Finance Lease [Note (iv)] 28.713 12.390Interest accrued and due 48.422 13.957

9,507.589 10,081.142Notes:(i) Out of the above loans:

(a) Secured by charge on certain fixed assets of the Company includingLand and Building 489.910 1,178.527

(b) Secured by charge on certain fixed assets of the Company,pledge of certain shares held by the Company and also by pledge ofcertain shares of other companies. 3,688.816 500.000

(c) Foreign Currency Borrowings secured by charge on fixed assets ofthe company, pledge of certain shares held by the Company and alsoby pledge of investments held by other companies. 282.349 -

(d) Secured by a second charge on certain fixed assets of the Companyincluding Land and Building. 187.500 3,000.000

(e) Secured by charge on a brand 6.600 21.000(f) Foreign Currency External Commercial Borrowings secured by

charge on specific Fixed Assets and a Brand 1,522.850 1,561.350(g) Secured by hypothecation of specific fixed assets acquired under

respective agreements. 14.242 25.999(ii) Out of the above loans:

(a) Secured by a charge on certain fixed assets of the Companyand pledge of certain shares and properties of other companies - 320.000

(b) Secured by charge on certain fixed assets of the Company includingLand and Building - 55.000

(iii) (a) Secured by charge on certain fixed assets of the Company includingLand and Building and hypothecation of inventories, book debts andother current assets. - -

(b) Includes Foreign Currency Non-Resident [FCNR(B)] Loans 396.331 841.515(iv) Secured against assets acquired under lease agreements - -


[Repayable within one year Rs.187.112 Million (2006: Rs. 196.371 Million)]From Banks 117.388 100.000[Repayable within one year Rs.100.000 Million (2006: Rs.100.000 Million)]2% Convertible Bonds in Foreign Currency [Schedule 18 Note 5(a)] 4,423.643 4,461.000From others 43.503 35.000

Interest accrued and due 41.506 41.0815,294.050 5,350.285


F-92

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F-93

6. INVESTMENTSRs. Million


CURRENTQuoted InvestmentsUnits (Fully Paid)Mutual Funds Investments 796.030 0.562

Total Current Investments 796.030 0.562

LONG TERMQuoted Investments

A.TradeFully Paid Equity Shares 0.033 0.033

B. Non-TradeFully Paid Equity Shares 4.554 5.344

4.587 5.377

Units (Fully Paid) (Note 1) 35.317 34.855

Total Quoted Investments (A + B) 39.904 40.232

Unquoted Investments

C.TradeFully paid Equity Shares (Note 2) 2.621 2.648

Associates ** 7.199 7.199 -Add : Accumulated Profits / (Losses) of Associates

(net of dividend received)(3.778) (3.524)

** Including Goodwill on acquisition of Associates 3.421 3.675

Rs. 7.310 Million (2006 : Rs. 7.310 Million)

Fully paid Preference Shares9.3% Cumulative Redeemable Preference Shares of

Rampur Engineering Company Limited 0.250 0.250

6.292 6.573

D. Non-TradeIn Government Securities 1,000.960 1,751.323

In Fully Paid Debentures 0.048 0.009

Fully paid Equity Shares 8.182 1.929

1,009.190 1,753.261


F-94

Rs. Million


E. Others (Note 3) 194.676 687.001

194.676 687.001

Total Unquoted Investments (C+D+E) 1,210.159 2,446.835

Total Long Term Investments (A+B+C+D+E) 1,250.062 2,487.067

Total Current and Long Term Investments 2,046.092 2,487.629

Less: Provision for diminution in the value of investments 2.013 3.111

Total 2,044.080 2,484.518

Aggregate value of Quoted Investments

- Book value 833.921 39.969

- Market value 852.023 131.785

Aggregate Book value of Unquoted Investments 1,210.159 2,444.548

Acquired on acquisition 7.006 2,010.531

Additions during the year 1,495.053 1,332.042

Adjustments to Investments - Demerger - (437.648)

Adjustments to Investments (Note 3(b) below 41.140 -

Sold during the year 1,984.735 984.837

Notes:

1.

2.

3.


F-95


7. INVENTORIESRaw Materials including materials in transit 654.622 585.731Packing Materials, Stores and Spares 412.162 331.010Finished goods including goods in transit 1,063.708 1,267.500Work-in-Progress 1,422.364 761.027

3,552.856 2,945.268

8. SUNDRY DEBTORS(Unsecured)Exceeding six monthsConsidered Good 113.020 124.072Considered Doubtful 108.618 285.141

221.638 409.213Others : Considered Good 3,878.367 3,095.991

4,100.005 3,505.204Less : Provision for Doubtful debts 108.618 285.141

3,991.387 3,220.063

9. CASH AND BANK BALANCESCash on Hand 7.044 6.870Remittance-in-Transit/ Cheques on Hand 8.065 217.903Balances with Scheduled Banks:

On Current Accounts [Note (i)] 490.214 711.687On Unpaid Dividend Account 104.779 18.881On Deposit Account [Notes (ii) 5,167.911 2,656.079

5,778.013 3,611.420

Notes:

(i) includes Rs.27.271 Million (2006: Rs. 28.438 Million) in Exchange Earners Foreign Currency (EEFC) Account andRs.18.052 Million (2006 : Rs. 0.611 Million) in Foreign Currency.

(ii) (a) includes Rs. 0.214 Million (2006: Rs. 3.899 Million) pledged with Government Departments.

(b) includes Rs. Nil (2006 : Rs. 6.433 Million) kept as margin against letter of credit and Rs. 0.550 Million (2006:Rs.0.692 Million) as margin against Bank Guarantee.

(c) includes Rs. Nil (2006 : Rs.1,114.625 Million) deposits in Foreign Currency.

(d) includes Rs. 1,092.205 Million (2006 : 1,066.833 Million) in escrow account in terms of a separate agreementdated May 27, 2005 between SWBL and MBL.


F-96


10. OTHER CURRENT ASSETS(Unsecured, Considered Good except where otherwise stated)Income accrued on Investments and Deposits 45.321 8.414Other Deposits - Considered Good 1,170.351 713.317

- Considered Doubtful 9.999 8.777Fixed assets held for sale 2.790 6.161

1,228.461 736.669Less : Provision for Doubtful Deposits 9.999 8.777

1,218.462 727.892

11. LOANS AND ADVANCES(Unsecured, Considered Good except where otherwise stated)Advances recoverable in cash or in kind or for value to be received:Advances to Tie-up units - Considered Good 643.581 977.955

- Considered Doubtful 21.519 19.448Advance Income Tax (Net of Provisions) - 129.794Advance for Acquisition of Trade Mark (Schedule 18 Note 12(a) (ii)] 217.493 223.030Other Advances - Considered Good 3,528.436 2,577.691

- Considered Doubtful 130.119 42.9814,541.148 3,970.899

Less : Provision for Doubtful Advances 151.638 62.4294,389.510 3,908.470


Acceptances * 643.214 512.486Sundry Creditors 4,439.423 4,639.494Dues to Directors 37.434 5.960Investors Education and Protection Fund [Schedule 18 Note 13]

Unclaimed Debentures 7.997 8.570Unclaimed Dividends 19.757 22.229Unclaimed Fixed Deposits 14.069 21.158

Security Deposit 99.653 235.715Advances Received from Customers 125.192 246.452Interest accrued but not due 71.331 59.083Other Liabilities 591.537 558.022

6,049.607 6,309.169* Includes bills drawn against inland letters of credit of Rs. 113.031 Million

(2006: Rs. 331.696 Million) and secured by a charge on debtors,inventories and other current assets.


Equity Shares - Interim 87.319 -Equity Shares - Final 85.596 188.963

Corporate Tax on Proposed Dividend 30.242 28.715Taxation (net of payments) 388.553 -Fringe Benefit Tax (Net of Payments) 0.541 26.729Provision for redemption premium 49.943 1.979Provision for Contingencies [Schedule 18 Note 4 (c)] 284.788 615.000Employee Benefits 287.516 206.559

1,214.498 1,067.945


F-97

Rs. Million

2007 2006

13. OTHER INCOME

Income from Investments:

Dividend income from trade investments - 2.185

Dividend income from other investments 106.632 10.130

Lease Rent - 1.269

Profit on Sale of Fixed Assets (Net) 94.480 50.945

Profit on Sale of Investments 0.794 91.961

Liabilities no longer required written back 400.537 177.509

Provision for Diminution in Value of Investment written back 1.098 -

Exchange Gain (Net) 60.229 -

Bad debts/advances recovered 18.993 0.591

Scrap Sales 91.355 64.860

Insurance Claims 18.404 0.195

Export Incentive - 7.034


875.518 595.096

14. MATERIALSRaw Materials Consumed 6,689.816 4,869.985

Purchase of Finished Goods 3,554.982 1,571.075

Packing Materials Consumed 5,974.641 4,864.212

Movement in Stocks

Opening Stock:

Work-in-Progress 761.027 545.566

Finished Goods 1,267.500 495.247

2,028.527 1,040.813

Add : Taken over on Amalgamation / Acquisition

Work-in-Progress 484.096 236.250

Finished Goods 5.771 494.721

489.867 730.971

Closing Stock:

Work-in-Progress 1,422.364 761.027

Finished Goods 1,063.708 1,267.500

2,486.072 2,028.527

(Increase)/ Decrease in Stocks 32.322 (256.743)

Excise Duty on Opening/Closing Stock of Finished Goods (Net) (204.792) 283.382

16,046.969 11,331.911

Consolidated Financial StatementSchedules forming part of Profit & Loss Account for the year ended March 31, 2007

F-98


15. MANUFACTURING AND OTHER EXPENSESEmployee Cost :

Salaries, Wages and Bonus 1,655.531 1,385.978Contribution to Provident and Other Funds 271.969 246.090Workmen and Staff Welfare 95.812 97.333Voluntary Retirement Scheme Compensation - 15.600

Power and Fuel 174.774 215.948Stores and Spares Consumed 46.039 75.139Repairs and Maintenance :

Buildings 40.786 15.527Plant and Machinery 59.273 73.683Others 47.163 89.282

Rent 111.876 115.574Rates and Taxes 210.627 198.245Insurance 50.798 51.697Travelling and Conveyance 427.882 543.376Legal and Professional 420.857 328.015Freight Outwards 577.829 541.385Advertisement and Sales Promotion 2,942.247 2,260.893Commission on Sales 215.889 386.364Cash Discount 191.426 221.347Sales Tax 138.243 96.131Fixed Assets Written Off 15.250 7.986Directors' Remuneration:

Sitting Fee 2.633 0.855Commission 36.991 5.517

Exchange Loss (Net) - 185.237Bad Debts and Advances Written Off 43.476 37.010Provision for Doubtful Debts/ Advances/Deposits 96.828 137.827Research and Development 8.004 12.920Others :

Personnel and Administration 357.880 173.207Selling and Distribution 384.270 401.777Miscellaneous 220.147 309.720

8,844.500 8,229.663

16. INTEREST AND FINANCE CHARGESInterest on :

Fixed Loans 866.932 978.680Other Loans 270.147 317.893Finance Charges (Including Bill Discounting charges) 93.871 475.784

1,230.950 1,772.357Less : Interest Income :

On Investments 2.234 2.121On Deposits and Other Accounts (Gross) 351.387 176.104[Tax Deducted at Source Rs. 36.482 Million (2006 : Rs. 14.669 Million)]On Income Tax Refunds 3.924 69.926

873.405 1,524.206


F-99

F-108 F-109F-108

Ahmedabad Stock Exchange Limited and Madras Stock Exchange Limited. Similar permissions are awaited from The Delhi Stock Exchange Association Limited and the Calcutta Stock Exchange Association Limited.

F-120 F-121F-120 F-121

20. a) Taxes on Income

20. Taxes on Income

a) Current Taxation :

Provision for current taxation includes

THE COMPANY

United Spirits Limited UB Tower

#24, Vittal Mallya Road Bangalore – 560 001

India

JOINT GLOBAL COORDINATORS

CLSA India Limited 8/F Dalamal House

Nariman Point Mumbai – 400 021

India

Citigroup Global Markets India Private Limited Bakhtawar

12th Floor, Nariman Point Mumbai – 400 021

India

UBS Securities India Private Limited 2F, 2 North Avenue, Maker Maxity Bandra Kurla Complex, Bandra East

Mumbai – 400 051 India

Morgan Stanley India Private Company Limited Unit 55-56

5th Floor, Free Press House Free Press Journal Marg

Nariman Point Mumbai – 400 021 Maharashtra, India

LEGAL ADVISORS TO THE JOINT GLOBAL COORDINATORS

As to English Law Linklaters LLP One Silk Street

London, EC2Y 8HQ United Kingdom

As to Indian Law Wadia Ghandy & Co. N.M. Wadia Buildings

123 Mahatma Gandhi Road Mumbai – 400 023

India

LEGAL ADVISOR TO THE COMPANY

As to Indian Law Kanga & Co.

Readymorey Mansion 43, Veer Nariman Road

Mumbai – 400 001 India

STATUTORY AUDITORS TO THE COMPANY

Price Waterhouse Chartered Accountants

5th Floor, Tower D The Millennia

1 & 2 Murphy Road Ulsoor

Bangalore - 560 008 India

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