Mar 31, 2023
Your directors are pleased to present the 24th Report of Directors of your Company and the audited financial statements for the year ended March 31, 2023.
''in million |
||||
Particulars |
Standalone Consolidated |
|||
2022-23 |
2021-22 |
2022-23 |
2021-22 |
|
The working of your Company for the year under review resulted in |
||||
Revenue from operations |
2,75,775 |
3,07,731 |
2,78,154 |
3,10,618 |
Other income |
742 |
337 |
731 |
355 |
Total Income |
2,76,517 |
3,08,068 |
2,78,885 |
3,10,973 |
Total expenses |
2,65,333 |
2,96,393 |
2,67,849 |
2,98,455 |
Share of net loss in associate |
14 |
|||
Profit before exceptional items and tax |
11,184 |
11,675 |
11,022 |
12,518 |
Exceptional items, net |
1,709 |
(1,560) |
1,764 |
(1,652) |
Profit before tax |
12,893 |
10,115 |
12,786 |
10,866 |
Total tax expenses |
2,376 |
1,606 |
1,528 |
2,760 |
Profit for the year |
10,517 |
8,509 |
11,258 |
8,106 |
Other Comprehensive Income: |
||||
Exchange differences on translation of foreign operations |
(17) |
1 |
||
Remeasurements of post-employment benefit plans |
(6) |
165 |
(6) |
164 |
Income tax credit / (charge) relating to these items |
1 |
(41) |
1 |
(41) |
Total other comprehensive income for the year, net of tax |
(5) |
124 |
(22) |
124 |
Total comprehensive income for the year |
10,512 |
8,633 |
11,236 |
8,230 |
Total comprehensive income is attributable to: |
||||
Owners |
11,341 |
8,410 |
||
Non-controlling interests |
(105) |
(180) |
||
Profit/(loss) available for appropriation |
(510) |
(11,022) |
(3,080) |
(13,544) |
EPS-Basic & Diluted ('') |
14.46 |
11.70 |
16.01 |
11.68 |
During the current year revenue from operations decreased by 10.4% on standalone basis and by 10.5% on consolidated basis. Profit after tax has increased by 23.6 % on standalone basis and by 38.9% on consolidated basis. The challenges which United Spirits Limited (''USL'' / ''Company'') faced during the year and the environment in which the Company operates have been detailed is Management Discussion and Analysis Report which is forming part of this Annual Report (''Report'').
During the year under review, your Company''s sales volume was 72.5 million cases resulting in a drop of 8.4% compared to previous year. This is largely on account of the slump sale of the business undertaking associated with 32 brands and franchising of 11 Popular brands to an unrelated party. The transaction was a conclusion of the strategic review of the select popular segment brands and was approved by the Board on 27 May 2022. Net sales/income from operations (net of duties and taxes) of your Company increased by 10.1% in the financial year ended March 31, 2023 which stood at ''103,737 million (previous year ''94,237 million).
With continuous focus on premiumization, overall Prestige & Above segment represented 66% of total volumes (Vs 54% in the previous year) and 81% of total net sales (Vs 72% in the previous year) during the financial year ended March 31, 2023. The Prestige and Above segment''s net sales were up 22.8% with strong double-digit growth across the higher value sub-segments. The Popular segment represented 34% (Vs 46% in the previous year) of total volumes and 18% (Vs 26% in the previous year) of total net sales during the financial year ended March 31, 2023. The Popular segment''s net sales declined by 25% during the financial year ended March 31, 2023. The decline this year was on account of the slump sale and franchising transaction mentioned above.
2. Material changes and commitments / events subsequent to the date of the financial statements
There are no material changes and commitments, affecting the financial position of the Company which has occurred between the close of the Financial Year as on March 31, 2023, to which the Financial Statement relate and the date of this Report.
3. Change in nature of business, if any
The details of change in nature of business, if any, are provided under Management Discussion and Analysis Report and the Report on Risk Management forming part of this Report.
In view of the accumulated losses of the preceding years, your directors could not recommend any dividend.
During the year under review, there was no amount transferred to reserves of the Company.
At the beginning of the year, the authorised capital was ''7,19,20,00,000 (2,74,00,00,000 Equity shares of ''2 each and 17,12,00,000 Preference Shares of ''10 each). The National Company Law Tribunal, Bengaluru Bench ("NCLTâ) approved Scheme of Amalgamation and Arrangement of United Spirits Limited ("USLâ) with Pioneer Distilleries Limited ("PDLâ) and their respective shareholders and creditors vide order dated
4th November 2022. Pursuant to the NCLT order, the authorized share capital of PDL is added to the authorized share capital of USL and USL allotted 7,12,138 equity shares of ''2/- each aggerating ''14,24,276 to public shareholders of PDL in the ratio as per the Scheme.
The revised Share Capital is as below:
7. Details of subsidiary companies and associate companies and their financial position
The performance of subsidiaries and associate Companies and their contribution to the overall performance of the Company is covered as part of the consolidated financial statement and form AOC-1 annexed as part of this Report as Annexure-1. Out of 9 subsidiary companies, 8 subsidiary companies are non-operative.
i. As mentioned in the Annual Report of 2021-22, the Board of Directors ("Boardâ) of Pioneer Distilleries Limited, a listed subsidiary of the Company ("PDLâ) and of the Company at their meetings held on December 2, 2019 considered and approved a scheme of amalgamation and arrangement in relation to the proposed merger of PDL with the Company under Sections 230 - 232 and other applicable provisions of the Companies Act, 2013 and the rules thereunder. The National Company Law Tribunal, Bengaluru Bench ("NCLTâ), vide Order dated November 4, 2022 approved the Scheme of
Amalgamation and Arrangement and certified copy of the order was received on November 17, 2022. The merger was effective from December 30, 2022.
Pursuant to the scheme on January 13, 2023, the Company allotted 7,12,138 number of fully paid up equity shares to PDL shareholders as on record date (January 06, 2023) in the ratio of 10 (ten) fully paid-up equity shares of face value ''2 (Rupees two only) each of the Transferee Company, for every 47 (forty-seven) fully paid-up equity shares of face value ''10 (Rupees ten only). These shares were listed with National Stock Exchange of India Ltd.("NSEâ) & BSE Limited ("BSEâ) effective 21st February 2023. The shareholding of Diageo Relay BV (the holding Company, a subsidiary of Diageo PLC) in the Company has changed from 55.94% to 55.88%.
Particulars |
'' |
Authorized Capital |
|
2,82,75,00,000 Equity Shares of ''2 /- each |
5,65,50,00,000 |
17,37,00,000 Preference Shares of ''10 /- each |
1,73,70,00,000 |
Total |
7,39,20,00,000 |
Issued, Subscribed and Paid-up Capital |
|
72,73,50,853 equity shares of ''2/- each |
1,45,47,01,706 |
ii. During the year, Your Company made an investment of ''315 million in Nao Spirits & Beverages Private Limited ("NAOâ). Your Company has acquired 8,094 Compulsory Convertible Preference Shares and 4670 equity shares of NAO aggregating to 22.5% of shareholding. Subsequent to this investment, NAO is associate company of your Company. Further, on January 24, 2023, Board of Directors have approved further investment of ''150 million. This investment will be made upon satisfaction of condition precedents.
Company has complied with the FEMA Regulations with respect to the downstream investment made in NAO Spirits & Beverages Private Limited.
iii. During the year, Sovereign Distilleries Limited (SDL) ceased to be subsidiary of your Company. Your Company has sold all equity shares held in SDL for consideration of ''320 million, pursuant to approval of board of directors of the Company at their meeting held on 24th January 2023. SDL was a non-operative, wholly owned subsidiary company and consequently did not have any turnover or revenue or income. It had a net worth of approximately ''174 million representing 0.3% of the Company''s consolidated net-worth as on the aforesaid date.
iv. During the year, United Spirits (Shanghai) Trade Company Limited ("USSTCLâ), wholly owned subsidiary of Company in China stands closed. USSTCL was a non-operative company and consequently did not have any turnover or revenue or operating income. It had a negative net worth of approximately RMB 1.81 million million. Since USSTCL was a non-operative company, its de-registration will not have any impact on the Company''s business.
v. During the year, United Spirits Singapore Pte. Ltd. ("USSPLâ), wholly owned subsidiary of Asian Opportunities and Investments Limited [Company''s wholly owned subsidiary], in Singapore stands dissolved. USSPL was a non-operative company and consequently did not have any turnover or revenue or operating income. Since USSPL was a non-operative company, its voluntary winding up will not have any impact on the Company''s business.
vi. Royal Challengers Sports Private Limited (RCSPL), a wholly owned subsidiary of your Company, reported a revenue from operations of ''2442 million during the year which has degrew by 16.3%, primarily on account of reduction in central rights income from BCCI (change in IPL standing position and reduced number of matches played in current year). During the current year, RCSPL reported a loss of '' (116) million against the profit of '' 893 million in previous year, primarily on account of loss from Women''s Premier League.
RCSPL participated in the tender conducted by the BCCI and won the bid for the Bangalore team for the Women''s Premier League ("WPLâ) for ''9010 million. This was one of the 5 successful bids for a WPL franchise and Team RCB finished 4th in the inaugural 2023 season.
The Company''s policy for determining material subsidiaries is available at the Company''s website at https://media.diageo. com/diageo-corporate-media/media/fcap5yuo/policy-on-material-subsidiary.pdf
In accordance with the third proviso to Section 136(1) of the Companies Act, 2013 the annual report and financial statements of each of the subsidiary companies have also been placed on the website of the Company https://www. diageoindia.com/en/investors/subsidiaries-financial
The details about prospects/outlook of your Company are provided under the Management Discussion and Analysis Report, forming part of this Report.
9. Board meetings, board of directors, key managerial personnel & committees of directors:A. i) Resignation of Mr. Randall Ingber
Mr. Randall Ingber, Director of the Company, resigned as a non-executive director of the Company effective from end of the day January 31, 2023.
ii) Appointment of Mr. Pradeep Jain
Mr. Pradeep Jain, Chief Financial Officer was appointed as Whole Time Director designated as an "Executive Director and Chief Financial Officerâ of the Company with effect from February 01, 2023. He continues to be Chief Financial Officer and Key Managerial Personnel of the Company.
iii) Appointment of Ms. Mamta Sundara
Ms. Mamta Sundara was appointed as a nonexecutive non-independent director of the Company with effect from February 01, 2023.
iv) Re-appointment of Mr. Mark Sandys
As per the provisions of the Companies Act, 2013, Mr. Mark Sandys retires by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offered himself for re-appointment.
Members may please note that Mr. Mark Sandys, was appointed as a director on April 01, 2022. Mr. Mark Sandys is not debarred from holding the directorship under any statutory regulations. Details about Mr. Mark Sandys is provided in the Notice of the 24th annual general meeting of the Company.
Your Company did not appoint any new Independent Director in the financial year 2022-23. Criteria for selection/ appointment or re-appointment of Independent Directors include skills, expertise of the Director, qualifications, experience, and domain knowledge. The required skills of Independent Directors are leadership, managerial experience, diversity, risk management and corporate governance. All our Independent Directors viz., Mr. Mahendra Kumar Sharma, Mr. V K Viswanathan, Mr. D Sivanandhan, Mr. Rajeev Gupta and Dr. (Mrs.) Indu Shahani possess the aforesaid skills.
C. Declaration by Independent Directors
Independent Directors have given a declaration pursuant to sub-section (6) of Section 149 of the Companies Act, 2013. In the opinion of the Board, Independent Directors fulfill the conditions specified in Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI (LODR) Regulations) and are independent of the management.
D. Number of meetings of the Board
The details of the Board Meetings and other Committee Meetings held during the financial year 2022-23 are stated in the Corporate Governance Report which is forming part of this Report.
The Company has the following committees of the Board:
⢠Audit Committee
⢠Risk Management Committee
⢠Nomination and Remuneration Committee
⢠Stakeholders Relationship and General Committee
⢠Corporate Social Responsibility and Environmental, Social and Governance Committee
The composition of each of the above Committees, their respective roles and responsibilities are provided in the Corporate Governance Report which forms part of this Report.
The Company has adopted all policies as required under the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations. The same are uploaded on the website of the Company. Policy on directors and senior appointments and Remuneration and rewards policy were merged and renamed as Nomination and Remuneration Policy.
Further, certain changes were made to the policy to align with the Company''s guidelines and practices as required under section 178 of the Companies Act, 2013.
The revised policy was recommended by the Nomination and Remuneration Committee and was approved by the Board. The policy is uploaded on the website at https:// media.diaqeo.com/diaqeo-corporate-media/media/ chwfdoiQ/nomination-remuneration-policy.pdf
The salient features of the revised policy are:
⢠The Scope of the policy is appointment and remuneration of the Directors, Key Managerial Personnel ("KMPâ), Senior Management Personnel ("SMPâ) and other employees.
⢠The policy lays down the appointment criteria, qualifications, relevant expertise etc. and that the appointment of directors including managing directors, whole time directors, non-executive directors and independent directors shall be in accordance with the provisions of the Companies Act, including schedule IV and V of the Act and the rules made thereunder and the provisions of the SEBI Listing Regulations.
⢠The appointment of Directors, KMP and SMP shall be recommended by the NRC to the Board and appointment of directors is subject to approval of shareholders. Additionally, approval of the audit committee is required for the appointment of the Chief Financial Officer.
⢠The remuneration philosophy of the Company is designed on following principles:
i. the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the Company successfully
ii. relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and
iii. remuneration to directors, SMP and KMP involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.
iv. the Company will benchmark the ratio of remuneration of senior leaders to the median remuneration of all employees with its peer group companies on a periodic basis.
v. the benchmark compensation positioning will be the market median based on a periodic market benchmarking study
undertaken by an external firm. For specific niche functions, skills and roles, a higher benchmark positioning may be targeted to attract and retain talent.
⢠The policy details the approval process for the remuneration payable to:
a) Managing Director/Chief Executive Officer/Whole time director;
b) Remuneration to independent directors
c) KMPs, SMPs and other employees
⢠The Non-executive Non-Independent Director shall not be entitled to receive any sitting fees and commission.
⢠The policy provides a brief note on familiarisation of the independent directors and succession policy for orderly succession for appointments of members of the Board and for appointments of senior management personnel.
G. Recommendations of the audit committee and other committees
All the recommendations of the Audit Committee and of the other Committees were accepted by the Board.
H. Details of remuneration to directors
As required under section 197(12) of the Companies Act, 2013 information relating to remuneration paid to Directors during the financial year 2022-23 is provided in the Corporate Governance Report.
As stated in the Corporate Governance Report, sitting fees is paid to Independent Directors for attending Board/Committee meetings. They are also entitled to reimbursement of actual travel expenses, boarding and lodging, conveyance and incidental expenses incurred in attending such meetings. In addition, the Independent Directors are also eligible for commission every year as may be recommended by the Nomination and Remuneration Committee and approved by the Board within the overall limit of ''4 Crore or 1% of the net profits of the Company calculated in accordance with section 198 of the Companies Act, 2013, whichever is higher, as approved by the shareholders in twenty third Annual General Meeting held on August 09, 2022. Criteria for payment of remuneration to Independent Directors are as given below:
i. Membership of Committees
ii. Chairmanship of the Committees/Board
iii. Benchmarking with other companies
The Board of Directors have approved payment of commission of ''20 million to five independent directors after applying the criteria stated above for the financial year 2022-23.
The criteria for payment of remuneration to executive directors is determined by the Nomination and Remuneration Committee based on various criteria including performance criteria. Nomination and Remuneration Policy is available on the Company''s website https://media.diageo.com/diageo-corporate-media/media/chwfdoiQ/nomination-remuneration-policy.pdf
Pursuant to the provisions of the Companies Act, 2013 and regulation 17 of the SEBI (LODR) Regulations, the Board has carried out an annual performance evaluation, based on parameters which, inter alia, include performance of the Board on deciding strategy, rating the composition & mix of Board members, discharging of their duties, handling critical issues etc. The parameters for the performance evaluation of the Directors include contribution made at the Board meeting, attendance, instances of sharing information on best practices applied in other industries, domain knowledge, vision, strategy and engagement with senior management, etc.
The Independent Directors at their separate meetings, review the performance of non-independent directors and the Board as a whole. Chairperson of the Company after taking into account the views of executive directors and non-executive directors, reviews the quality, quantity and timeliness of flow of information between the management and the Board for the Board to effectively and reasonably perform their duties. Based on the outcome of the performance evaluation exercise, areas have been identified for the Board to engage itself with and the same would be acted upon.
The details of the evaluation process are set out in the Corporate Governance Report which forms part of this Report.
J. Meeting amongst Independent Directors
Schedule IV of the Companies Act, 2013, SEBI (LODR) Regulations and Secretarial Standard - 1 on Meetings of the Board of Directors mandates that the Independent Directors of the Company hold at least one meeting in a year, without the attendance of Non-Independent Directors.
The Independent Directors met amongst themselves without the presence of any other persons on May 27, 2022, July 25, 2022, October 20, 2022, January 23, 2023.
Your Company has established whistle-blower mechanism known as SpeakUp, which is being independently operated by a third-party agency. We encourage our employees or representatives acting on behalf of the Company, to raise their compliance concerns through this mechanism, apart from other internal reporting channels viz. Line Manager, HR Business Partner, Legal Business Partner and Business Integrity partner.
The SpeakUp channel is available on the Company''s website at https://www.diageoindia.com/en/about-us/corporate-governance/speak-up, with services available in English and 5 other regional languages, and compliance concerns can be raised by any aggrieved person through web page or toll-free number.
The quality of investigation reports and remedial actions are reviewed and monitored by the Global Business Integrity team and Diageo India Business Integrity team. The decision on sanctions on the reported breaches are determined and monitored by a Compliance Committee for significant breaches and the Grievance Committee for other breaches, ensuring there is a collective, transparent and an unbiased decisionmaking process and that consistent action is undertaken in a timely manner to resolve the identified breaches.
A structured Breach Management Standard is in place which is in line with the Global Standard, for timely and conclusive resolution of compliance concerns raised through the whistle blower mechanism.
This vigil mechanism has been established to provide adequate safeguards against the victimization of employees, who avail this mechanism for reporting complaints and grievances in good faith and without fear of being punished for doing so. Access to the Chairman of the Audit Committee is provided as required under the Companies Act, 2013 and the SEBI (LODR) Regulations.
11. Related party transactions
The Company''s policy on dealing with related party transactions was adopted by the Board on June 15, 2015 and further amended from time to time. This policy is available on the Company''s website at https://www.diageoindia.com/en/ investors/shareholder-centre/policies.
Form AOC-2 pursuant to Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out in the Annexure-2 to this Report.
All related party transactions that were entered into during the financial year, were at arm''s length basis and were in the ordinary course of business. There are no material significant
related party transactions entered into by the Company with promoters, directors, key managerial personnel or other designated persons which may have a conflict of interest with the Company at large.
12. Auditorsi) Financial audit
M/s. Price Waterhouse & Co. Chartered Accountants LLP (FRN 304026E / E-300009) Statutory Auditors of your Company, were appointed as Auditors of your Company from the conclusion of the 22nd AGM for a period of 5 years. Since the appointment is not subject to ratification of the appointment by the members at every AGM, no resolution is proposed at this AGM pursuant to the provisions of Companies (Amendment) Act, 2017.
The statutory auditors have given unqualified opinion on the financial for the financial year ended March 31, 2023.
ii) Secretarial Audit and Board''s responses to observations, qualifications and adverse remarks in auditor''s report
Pursuant to section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Secretarial Audit has been carried out by Mr. Sudhir V Hulyalkar, Practicing Company Secretary (FCS: 6040 and CP No. 6137) and his report is annexed as Annexure-3.
In the Secretarial Audit report, the Secretarial Auditor has reported that the gap between two consecutive meetings of the Risk Management Committee in terms of Regulation 21 (3C) of the Listing Regulations was exceeded on account of delay of 8 days. It is clarified that inadvertently the gap between two Risk Committee meetings exceeded by 8 days. The Company has taken note of this and the future meetings have been rescheduled to ensure compliance. Further the Company and the Board of Directors are serious about ensuring compliances and Company has a robust Risk Management framework including functional risk committees and national risk committee at an executive level which meets on a quarterly basis . The detailed report on Risk Management is enclosed in Annexure-5.
The secretarial auditor has also mentioned in his report that the Company needs to strengthen the process with regard to obtaining the prior approval of Audit Committee in all cases of related party transactions, whether it relates to renewal or modification of limits although such related party transactions have been subsequently ratified by the Audit Committee. It is clarified that the Company has taken note of the suggestion and the process has been strengthened.
In addition, Pursuant to Regulation 24A of the SEBI (LODR) Regulation, the Secretarial Compliance Report for the financial year ended March 31, 2023, in relation to compliance of all applicable SEBI Regulations/ circulars/guidelines issued thereunder, is annexed as Annexure-3A. The Secretarial Compliance Report has been voluntarily disclosed as part of this Report as good disclosure practice. The said report has been submitted to the stock exchanges and is also available on the Company''s website at https://media.diageo. com/diaqeo-corporate-media/media/qvqhqpqt/se_ ascr_2023sd.pdf
Consequent to the merger of Pioneer Distilleries Limited, the Company is required to make and maintain cost records for extra neutral alcohol (ENA) product as specified by the Central Government under sub-section (1) of section 148 of the Act. Accordingly, the Company has been making and maintaining the records as required.
13. Reporting of fraud by Auditors
During the year under review, neither the statutory auditors nor the secretarial auditor have reported to the Audit Committee or the Board, under section 143(12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in this Report.
A Corporate Governance Report for the year under review is annexed separately which forms part of this annual report. Board confirms compliance with Secretarial Standards.
15. Management discussion and analysis report
The Management Discussion and Analysis Report for the year under review is annexed separately which forms part of this annual report.
As reported in the earlier annual reports, your Company discontinued accepting fixed deposits from the public and shareholders effective January 1, 2014. In addition, pursuant to section 74(1)(b) of the Companies Act, 2013, the Board of Directors at their meeting held on August 1, 2014, decided to repay all fixed deposits maturing on or after March 31, 2015, by March 31, 2015, by paying additional interest of 1% per annum on those fixed deposits repaid before the maturity date pursuant to the contract entered into with the Fixed Deposit holders. During the year the Company
has transferred the unclaimed deposits of ''2,942,789 to Investor Education and Protection Fund (IEPF) and the balance as on March 31, 2023 was NIL.
In accordance with section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, a draft annual return in e-form MGT-7 for financial year 2022-23 uploaded on Company''s website https://www. diageoindia.com/en/investors/financials/results-reports-and-presentations. Members may also note that the annual return uploaded on the website is a draft and the final annual return will be uploaded after the same is filed with the Ministry of Corporate Affairs (''MCA'').
18. Transfer to Investor Education and Protection Fund (IEPF)
The details of unclaimed/unpaid dividends and fixed deposits which have not been transferred to the IEPF account as the period of seven years have not been completed is given below pursuant to the provisions of the Companies Act, 2013 and the applicable rules there under.
The Company has not declared any dividend from financial year 2013-14 onwards.
No unclaimed dividend, shares were required to be transferred to IEPF during the year ended March 31, 2023 to Investor Education and Protection Fund pursuant to section 124(6) of the Companies Act, 2013.
1. |
Accepted during the year |
NIL |
2. |
Remained unpaid or unclaimed as at the end of the year |
NIL |
3. |
Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved |
NIL |
4. |
The details of deposits which |
Not |
are not in compliance with the requirements of Chapter V of the Companies Act, 2013 |
Applicable |
Necessary compliance under rule 3 of the Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, has been ensured.
Employee relations remained cordial at all the locations of the Company. Particulars of employees drawing an aggregate remuneration of ''1,02,00,000/- or above per annum or ''8,50,000/- or above per month, as well as additional information on employee remuneration as required under the provisions of rule 5(1), 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as part of this Report in Annexure-4 hereto.
20. Employees stock option scheme
Your Company has not offered any stock options to its employees during the year 2022-23 within the meaning of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021.
21. Particulars of loans, guarantees and investments
Loans, guarantees and investments covered under section 186 of the Companies Act, 2013 are detailed in Notes to the financial statements under Note 4, relating to investments and Note 5 relating to loans given as per the standalone financial statements for the year ended March 31, 2023.
Details on Risk Management is annexed as Annexure-5 to this Report.
23. Internal financial controls
During the year under review, Governance Risks and Controls (GRC) team has conducted detailed review of policies as per the direction of the management of the Company, to simplify the process and ensuring adherence. The GRC team also undertook comprehensive review of existing controls (SOX & non-SOX controls) and added attributes wherever required to ensure that controls are in alignment with the laid down policies and practices and meeting the global benchmark. It has been shared with the statutory auditors who have confirmed their alignment. The controls with additional attributes have been tested both by Management tester and by the Statutory auditors for its effectiveness. The Board after considering the materials placed before it reviewed the confirmation received from external parties and reviewed the effectiveness of the policies and procedures adopted by the Company for ensuring orderly and efficient conduct of its business, including adherence to Company''s policy, safeguarding its assets, prevention and detection of frauds and errors and completeness of accounting records and timely preparation of financial statements. The Board has satisfied itself that the Company has laid down internal financial controls which are commensurate with the size of the Company and that such internal financial controls are broadly adequate and are operating effectively. The
certification by the statutory auditors on internal financial control forms part of the audit report. A statement to this effect is also appearing in the Directors'' Responsibility Statement.
24. Corporate social responsibility
Information on the composition of the Corporate Social Responsibility and Environmental, Social and Governance Committee (CSR & ESG) is provided in the Corporate Governance Report that forms part of this Report. Furthermore, as required by Section 135 of the Companies Act, 2013 and the rules made thereunder, additional information on the policy and implementation of CSR activities by your Company during the year are provided in Annexure-6 to this Report.
25. Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars prescribed under section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, are set out in Annexure-7 to this Report.
26. Details of significant and material orders passed by the regulators or courts impacting the going concern status and Company''s operations in future pursuant to Rule 8(5)(vii) of Companies (Accounts) Rules, 2014
The Company has not received any significant or material order passed by regulators or courts or tribunals impacting the Company''s going concern status or the Company''s operations in future. The details of notices received from regulatory authorities and related matters have been disclosed as part of note no. 40 to the audited standalone financial statements for the year ended March 31, 2023 and as note no. 42 of the consolidated financial statements for the year ended March 31, 2023.
27. Disclosure as required under section 22 of Sexual Harassment of Women at Workplace (prevention, prohibition and redressal) Act, 2013
As per requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (SHWWA), the Company has designed and implemented a comprehensive policy and framework to promote a safe and secure work environment, where every person at the workplace is treated with dignity and respect. Moreover, the Company''s policy is inclusive and gender neutral. Further, the complaint redressal mechanism detailed in the policy ensures complete anonymity and confidentiality to the parties.
Internal Committees (IC) have been constituted and each Internal Committee has appointed members who are employees of the Company and an independent external member, having extensive experience in the field. The Internal Committees meet on a half yearly basis to discuss matters on policy awareness, best practices, judicial trends, etc. During the
year, Internal Committees have also been trained on nuances of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
The Internal Committees'' role is to consider and resolve the complaints reported on sexual harassment at workplace. Investigation is conducted and decisions are made by the Internal Committees at the respective location, and a senior woman employee is the presiding officer on every case.
i) Number of complaints filed during the financial year: 2 (Two) complaints received
ii) Number of complaints disposed off during the financial year: 1 (One)
iii) Number of complaints pending as on end of the financial year: 1 (One) under progress
To build awareness in this area, the Company has been publishing newsletters, emailers, posters, conducting online training modules and monthly induction training for newly joined employees. Besides the refresher, virtual training programmes are conducted in the organization on a continuous basis for employees (including blue collared employees), consultants, contractual employees and permanent/contractual workers in regional languages. The Internal Committee has also conducted informal sessions to check the pulse at the grassroot levels.
28. Business Responsibility and Sustainability Report (BRSR)
In accordance with the SEBI (LODR) Regulations, 2015, the BRSR for the year under review is annexed separately which forms part of this annual report.
29. Other Disclosures
a. The Company has not issued equity shares with differential rights as to dividend, voting or otherwise.
b. The Company has not issued any sweat equity shares to its directors or employees.
c. No application has been made under the Insolvency and Bankruptcy Code; hence the requirement to disclose the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year is not applicable.
d. The requirement to disclose the details of difference between amount of the valuation done at the time of onetime settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof, is not applicable.
30. Directors'' responsibility report
Pursuant to section 134 (5) of the Companies Act, 2013 in relation to financial statements (together with the notes to such financial statements) for the financial year 2022-23, the Board of Directors report that:
(i) in the preparation of the annual accounts for the financial year ended March 31, 2023, the applicable accounting standards have been followed and there are no material departures;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2023 and of the profit of the Company for year ended on that date;
(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the financial statements on a going concern basis;
(v) the Directors have laid down internal financial controls to be followed by the Company commensurate with the size and nature of its business and the complexity of its operations and that such internal financial controls are adequate and are operating effectively.
(vi) Proper systems have been devised to ensure compliance with the provisions of all applicable laws by implementing an automated process having comprehensive systems and securing reports of statutory compliances periodically from the functional units and that such systems are adequate and are operating effectively.
The Board of Directors place on record sincere gratitude and appreciation for all the employees at all levels for their hard work, solidarity, cooperation and dedication during the year.
The Board conveys its appreciation for its customers, shareholders, suppliers as well as vendors, bankers, business associates, regulatory and government authorities for their continued support.
By Order of the Board Mahendra Kumar Sharma
Place : Mumbai Chairman
Date : May 18, 2023 DIN: 00327684
Mar 31, 2022
Your directors are pleased to present the 23rd Report of Directors of your Company and the audited financial statements for the year ended March 31, 2022.
'' in Million |
||||
Particulars |
Standalone |
Consolidated |
||
2021-22 |
2020-21 |
2021-22 |
2020-21 |
|
The working of your Company for the year under review resulted in |
||||
Revenue from operations |
3,07,311 |
271,764 |
3,10,618 |
274,185 |
Profit / Loss from operations |
14,873 |
8,697 |
15,556 |
9,035 |
Exceptional and other non-recurring |
(2,091) |
(1,514) |
(1,652) |
(643) |
Less: |
||||
Depreciation |
2,542 |
2,493 |
3,038 |
2,991 |
Taxation (including deferred tax) |
2,542 |
1,587 |
2,760 |
1,779 |
Profit / (Loss) after tax |
7,698 |
3,103 |
8,106 |
3,621 |
Profit B/F from previous year |
(18,463) |
(21,623) |
(21,954) |
(25,840) |
Reinstated Profit B/F from previous year |
(18,463) |
(21,623) |
(21,954) |
(25,840) |
Minority Interest appropriation |
- |
180 |
217 |
|
Foreign Currency Translation Reserve Considered separately |
- |
(1) |
(15) |
|
Total Comprehensive Income |
123 |
57 |
124 |
63 |
Transfer between reserves |
- |
- |
||
Profit / (Loss) available for appropriation |
(10,642) |
(18,463) |
(13,544) |
(21,954) |
Your Directors have made the following appropriations: |
||||
General Reserve |
NIL |
NIL |
NIL |
NIL |
Dividend paid in respect to previous years |
NIL |
NIL |
NIL |
NIL |
Proposed dividend |
NIL |
NIL |
NIL |
NIL |
Balance carried to the Balance Sheet |
(10,642) |
(18,463) |
(13,544) |
(21,954) |
EPS-Basic & Diluted (Rupees) |
10.59 |
4.27 |
11.68 |
5.41 |
Balance carried to the Balance Sheet |
(18,463) |
(21,623) |
(21,954) |
(25,840) |
EPS-Basic & Diluted (Rupees) |
10.59 |
4.27 |
11.68 |
5.41 |
As can be seen from the above table, the revenue from operations increased by 13.08% during the year on standalone basis and increased by 13.29% on consolidated basis. Profit after tax has increased during the year by 148.08 % on standalone basis and increased by 123.86% on consolidated basis. The challenges which United Spirits Limited (''USL'' / ''Company'') faced during the year and the environment in which the Company operates have been detailed in Management Discussion and Analysis Report which is forming part of this Annual Report (''Report'').
During the year under review, your Company''s sales volume was about 79.1 million cases resulting in a volume increase of 11.9% compared to previous year. Net sales/income from operations (net of duties and taxes) of your Company increased by 18.9% in the financial year ended March 31, 2022 which stood at '' 93,817 million (previous year '' 78,890 million). Adjusting one-off sale of bulk Scotch, net sales/income from operations increased by 18.4% for the year. Sales volume of the Company''s brands in the ''Prestige and Above'' segment increased by 14.6% in the financial year ended March 31, 2022 which stood at 42.6 million cases (previous year 37.2 million cases). Net sales of the ''Prestige and Above'' segment increased by 23.6% which stood at '' 68,050 million net of duties and taxes (previous year '' 55,035 million). The ''Prestige and Above'' segment represented 72.5% of total net sales and 53.9% of total sale volume during the year.
2. Board''s responses to observations, qualifications and adverse remarks in auditor''s report
The statutory and secretarial auditors have given unqualified opinion on the financial statements and in the secretarial audit report for the year ended March 31, 2022 and hence this is not applicable.
3. Material changes and commitments / events subsequent to the date of the financial statements
There are no material changes and commitments/events subsequent to the date of financial statements. Management has determined that COVID-19 is not likely to materially impact the future operations of the Company considering a large section of the population has been vaccinated and based on Company''s own past experience with the pandemic,. The Company continues to maintain a positive outlook for the next financial year and will continue to monitor changes in future economic conditions.
4. Change in nature of business, if any
The details of change in nature of business, if any, are provided under Management Discussion and Analysis Report and the Report on Risk Management forming part of this Report.
In view of the accumulated losses of the preceding years, your directors could not recommend any dividend.
During the year under review, there was no amount transferred to reserves of the Company.
The authorized share capital of your Company remains unchanged at 2,740,000,000 equity shares of '' 2/- each and 171,200,000 preference shares of '' 10/- each. The issued, subscribed and paid-up capital of the Company is 726,638,715 equity shares of '' 2/- each aggerating '' 1,453,277,430. There was no change in the issued, subscribed and paid-up capital of the Company during the year under review.
8. Details of subsidiary companies and associate companies and their financial position
The performance of subsidiaries and associate Companies and their contribution to the overall performance of the Company is covered as part of the consolidated financial statement and form AOC-1 annexed as part of this Report as Annexure - 1. The Company has 13 subsidiary companies. Out of 13 subsidiary companies, 12 subsidiary companies are non-operative.
As mentioned in the Annual Report of 2020-21, during the year, Montrose International (S.A.), Panama, a wholly owned overseas subsidiary of your Company was liquidated effective April 16, 2021 and thus ceased to be a subsidiary.
During the year, Hip Bar Private Limited ceased to be an associate company of your Company. On 3rd August 2021, a share purchase agreement has been executed with Hip Bar Private Limited for sale of the entire stake of the Company [Equity Shares (4,567,568 Nos.) and Compulsory Convertible Preference Shares (1,950,000 Nos.) in Hip Bar Private Limited for INR 5.2 million. Amount received on account of disposal amounting to INR 5.2 million has been presented as gain on disposal of associate under Exceptional item. Pursuant to the sale, the Company has also received all rights, title, and interest in the trademarks ''CloudBar'' and ''BarOnTheCloud'' from Hip Bar Private Limited, which have been valued at INR Nil
The Board of Directors ("Boardâ) of Pioneer Distilleries Limited, a listed subsidiary of the Company ("PDLâ) and of the Company at their meetings held on December 2, 2019 considered and approved a scheme of amalgamation and arrangement (the "Schemeâ) in relation to the proposed merger of PDL with the Company under Sections 230 - 232 and other applicable provisions of the Companies Act, 2013 and the rules thereunder. Upon completion of the merger, the non-promoter shareholders of PDL will receive 10 equity shares of the Company (face value of '' 2 each) for every 47 equity shares of PDL (face value of '' 10 each), held by them as on the record date. Post the merger, the Company''s issued capital is expected to expand by 712,138 shares and the revised shareholding of Relay BV (the holding Company, a subsidiary of Diageo PLC) in the Company will change from 55.94% to 55.88%. The Scheme is subject to the receipt of requisite approvals from the relevant statutory authorities and the respective shareholders and
creditors of PDL and of the Company. The BSE Limited and the National Stock Exchange of India Limited have issued their no-objection to the draft scheme and related documents filed, vide observation letters dated October 21, 2020 and October 22, 2020, respectively. The Company jointly with PDL have filed application under Sections 230 to 232 of the Companies Act, 2013 on November 27, 2020 with the National Company Law Tribunal, Bangalore ("NCLTâ) and again an Interlocutory Application was filed before NCLT on April 07, 2021. Based on the order of the NCLT received on August 18, 2021, the Company and PDL convened meetings of their respective equity shareholders, and the Company also convened a meeting of its unsecured creditors, on September 30, 2021. The Scheme was approved with requisite majority at these meetings. Subsequently, a joint petition to sanction the Scheme has been filed by USL and PDL with the NCLT on October 02, 2021. Company''s petition was heard by the NCLT on January 12, 2022. Next hearing is scheduled for May 27, 2022.
Royal Challengers Sports Private Limited (RCSPL), a wholly owned subsidiary of your Company, reported a revenue from operations of '' 2916 million during the year which was mainly attributed to the increase in central rights income from Board of Cricket Control of India (BCCI) and as a result of Royal Challengers Bangalore, a franchisee team of Indian Premier League (IPL), securing fourth position in the IPL Season 2021 similar to season 2020. RCSPL also accounted a profit of 661 million with an increase of 119 million during the year.
The Company''s policy for determining material subsidiaries is available at the Company''s website at https://www. diageoindia.com/investors/shareholder-centre/policies/ policy-for-determining-material-subsidiaries/
In accordance with the third proviso to Section 136(1) of the Companies Act, 2013 the annual report and financial statements of each of the subsidiary companies have also been placed on the website of the Company https://www.diageoindia.com/ investors/subsidiaries-financial/.
The details about prospects/outlook of your Company are provided under the Management Discussion and Analysis Report, forming part of this Report.
10. Appointment/reappointment and resignation/ retirement/step down of Executive Directors and Key Managerial Personnel during the financial year:
A. i) Step down of Mr. Anand Kripalu as Managing Director and Chief Executive Officer (MD & CEO )& appointment of Ms. Hina Nagarajan as Managing Director and Chief Executive Officer - Key Managerial Personnel (KMP)
As already updated in the annual report for the year ended 2020-21, The Board at its meeting held on December 10, 2020 approved the appointment of Ms. Hina Nagarajan as an Additional Director and MD & CEO with effect from July 01, 2021 in the place of Mr. Anand Kripalu, erstwhile MD & CEO who stepped down as MD & CEO effective end of day June 30, 2021.
Mr. Vinod Rao, Director of the Company, resigned as a non-executive director of the Company effective from end of day December 15, 2021 and the Board noted the same.
Mr. Mark Dominic Sandys was appointed as a Director of the Company with effect from April 01, 2022.
Apart from the aforesaid appointment, there was no appointment of executive director during the year.
As per the provisions of the Companies Act, 2013, Mr. Randall Ingber (Mr. Ingber) retires by rotation at the ensuing annual general meeting (AGM) and being eligible, offered himself for re-appointment.
Members may please note that Mr. Ingber, who was appointed as a director at the 21st AGM held on August 26, 2020. Mr. Ingber is not debarred from holding the directorship under any statutory regulations. Details about Mr. Ingber is provided in the Notice of the 23rd annual general meeting of the Company.
Your Company did not appoint any new Independent Director in the financial year 2021-22. Criteria for selection/ appointment or re-appointment of Independent Directors include skills, expertise of the Director, qualifications, experience, and domain knowledge. The required skills of Independent Directors are leadership, managerial experience, diversity, risk management and corporate governance. All our Independent Directors viz., Mr. Mahendra Kumar Sharma, Mr. V K Viswanathan, Mr. D Sivanandhan, Mr. Rajeev Gupta and Dr. (Mrs.) Indu Shahani possess the aforesaid skills.
Independent Directors have given a declaration pursuant to sub-section (6) of Section 149 of the Companies Act, 2013. In the opinion of the Board, Independent Directors fulfill the conditions specified in Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI (LODR) Regulations) and are independent of the management.
The details of the Board Meetings and other Committee Meetings held during the financial year 2021-22 are stated in the Corporate Governance Report which is forming part of this Report.
E. Board Committees
The Company has the following committees of the Board:
⢠Audit Committee
⢠Risk Management Committee
⢠Nomination and Remuneration Committee
⢠Stakeholders Relationship and General Committee
⢠Corporate Social Responsibility Committee (Committee was renamed as "Corporate Social Responsibility and Environmental, Social and Governance Committeeâ w.e.f. April 1, 2022)
The composition of each of the above Committees, their respective roles and responsibilities are provided in the Corporate Governance Report which forms part of this Report.
F. Policies
The Company has adopted all policies as required to be maintained by the Company under the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations and the same are uploaded on the website of the Company wherever required and the salient features of the policies are detailed in Corporate Governance Report.
All the recommendations of the Audit Committee and of the other Committees were accepted by the Board.
H. Details of remuneration to directors
As required under section 197(12) of the Companies Act, 2013 information relating to remuneration paid to
Directors during the financial year 2021-22 is provided in the Corporate Governance Report. The Company has also prepared a draft annual return in revised e-form MGT-7 for FY 2021-22 and uploaded the same on Company''s website at https://www.diageoindia. com/investors/financials/annual-and-financial-reports/ annual-return-2021-22/. Members may also note that the annual return uploaded on the website is a draft and the final annual return will be uploaded after the same is filed with the Ministry of Corporate Affairs (''MCA'').
As stated in the Corporate Governance Report, sitting fees is paid to Independent Directors for attending Board/Committee meetings. They are also entitled to reimbursement of actual travel expenses, boarding and lodging, conveyance and incidental expenses incurred in attending such meetings in accordance with the travel policy for directors. In addition, the Independent Directors are also eligible for commission every year as may be recommended by the Nomination and Remuneration Committee and approved by the Board within the overall limit of '' 4 Crore or 1% of the net profits of the Company calculated in accordance with section 198 of the Companies Act, 2013, whichever is higher, as approved by the shareholders through Postal Ballot Resolution effective January 18, 2019. Criteria for payment of remuneration to Independent Directors are as given below:
i. Membership of Committees
ii. Chairmanship of the Committees/Board
iii. Benchmarking with other companies
The Board of Directors have approved payment of commission of '' 20 million to five independent directors after applying the criteria stated above for the financial year 2021-22.
The criteria for payment of remuneration to executive directors is determined by the Nomination and Remuneration Committee based on various criteria including performance criteria. Remuneration Policy is available on the Company''s website at https:// www.diageoindia.com/investors/shareholder-centre/policies/remuneration-reward-policy/.
I. Board evaluation criteria
Pursuant to the provisions of the Companies Act, 2013 and regulation 17 of the SEBI (LODR) Regulations, the Board has carried out an annual performance evaluation, based on parameters which, inter alia, include performance of the Board on deciding strategy, rating the composition
& mix of Board members, discharging of their duties and handling critical issues etc. The parameters for the performance evaluation of the Directors include contribution made at the Board meeting, attendance, instances of sharing information on best practices applied in other industries, domain knowledge, vision, strategy and engagement with senior management, etc.
The Independent Directors at their separate meetings, review the performance of non-independent directors and the Board as a whole. Chairperson of the Company after taking into account the views of Executive Director and non-executive directors, reviews the quality, quantity and timeliness of flow of information between the management and the Board for the Board to effectively and reasonably perform their duties. Based on the outcome of the performance evaluation exercise, areas have been identified for the Board to engage itself with and the same would be acted upon.
The details of the evaluation process are set out in the Corporate Governance Report which forms part of this Report.
Your Company has established whistle-blower mechanism known as SpeakUp, which is being independently operated by a third-party agency. We encourage our employees or representatives acting on behalf of the Company, to raise their compliance concerns through this mechanism, apart from other internal reporting channels viz. Line Manager, HR Business Partner, Legal Business Partner and Business Integrity partner.
The SpeakUp channel is available on the Company''s website at https://www.diageoindia.com/about-us/corporate-governance/speak-up/, with services available in English and 5 other regional languages, and compliance concerns can be raised by any aggrieved person through web page or toll-free number. During the year, we have introduced QR code to facilitate the access to SpeakUp channel.
The quality of investigation reports and remedial actions are reviewed and monitored by the Global Business Integrity team and Diageo India Business Integrity team. The decision on sanctions on the reported breaches are determined and monitored by a Compliance Committee for significant breaches and the Grievance Committee for other breaches, ensuring there is a collective, transparent and an unbiased decision-making process and that consistent action is undertaken in a timely manner to resolve the identified breaches.
A structured Breach Management Standard is in place which is in line with the Global Standard, for timely and conclusive resolution of compliance concerns raised through the whistle blower mechanism.
This vigil mechanism has been established to provide adequate safeguards against the victimization of employees, who avail this mechanism for reporting complaints and grievances in good faith and without fear of being punished for doing so. Access to the Chairman of the Audit Committee is provided as required under the Companies Act, 2013 and the SEBI (LODR) Regulations.
The Company''s policy on dealing with related party transactions was adopted by the Board on June 15, 2015 and further amended from time to time. This policy is available on the Company''s website at https://www.diageoindia.com/investors/shareholder-centre/policies/policy-on-related-party-transactions/.
Form AOC-2 pursuant to Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out in the Annexure-2 to this Report.
All related party transactions that were entered into during the financial year, were at arm''s length basis and were in the ordinary course of business. There are no material significant related party transactions entered into by the Company with promoters, directors, key managerial personnel or other designated persons which may have a conflict of interest with the Company at large.
Schedule IV of the Companies Act, 2013, SEBI (LODR) Regulations and Secretarial Standard - 1 on Meetings of the Board of Directors mandates that the Independent Directors of the Company hold at least one meeting in a year, without the attendance of Non-Independent Directors.
The Independent Directors met amongst themselves without the presence of any other persons on May 20, 2021 and October 26, 2021.
i) Financial audit
M/s. Price Waterhouse & Co. Chartered Accountants LLP (FRN 304026E / E-300009) Statutory Auditors of your Company, were appointed as Auditors of your Company from the conclusion of the 22nd AGM for a period of 5 years. Since the appointment is not subject to ratification of the appointment by the members at every AGM, no resolution is proposed at this AGM pursuant to the provisions of Companies (Amendment) Act, 2017.
Pursuant to section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a Secretarial Audit has been carried out by Mr. Sudhir V Hulyalkar, Practicing Company Secretary (FCS: 6040 and CP No. 6137) and his report is annexed as Annexure - 3.
In addition, Pursuant to Regulation 24A of the SEBI (LODR) Regulation, the Secretarial Compliance Report for the financial year ended March 31, 2022, in relation to compliance of all applicable SEBI Regulations/ circulars/guidelines issued thereunder, is annexed as Annexure - 3A. The Secretarial Compliance Report has been voluntarily disclosed as part of this Report as good disclosure practice. The said report has been submitted to the stock exchanges and is also available on the Company''s website at https://www.diageoindia. com/investors/shareholder-centre/notice-board/annual-secretarial-compliance-report-2022/
The Company is not covered by the requirement of maintenance of cost records, as specified under subsection (1) of section 148 of the Companies Act, 2013.
12. Reporting of fraud by Auditors
During the year under review, neither the statutory auditors nor the secretarial auditor have reported to the Audit Committee or the Board, under section 143(12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in this Report.
A Corporate Governance Report is annexed separately as part of this Report. Board confirms compliance with Secretarial Standards.
14. Management discussion and analysis report
The Management Discussion and Analysis Report is annexed separately as part of this Report.
As reported in the earlier annual reports, your Company discontinued accepting fixed deposits from the public and shareholders effective January 1, 2014. In addition, pursuant to section 74(1)(b) of the Companies Act, 2013, the Board of Directors at their meeting held on August 1, 2014 decided to repay all fixed deposits maturing on or after March 31, 2015 by March 31, 2015 by paying additional interest of 1% per annum on those fixed deposits repaid before the maturity date pursuant to the contract entered into with the Fixed Deposit holders. Fixed Deposits from the public and shareholders which remained unclaimed and for which no discharge certificates were received from the depositors as on March 31, 2022 stood at '' 10,98,000. Unclaimed amount was transferred into a separate non-interest bearing escrow account opened specifically for the purpose of re-payment pursuant to the provisions of the Companies Act, 2013 and the rules made thereunder. Out of this amount, a sum of '' 4,40,000/- has since been paid as per instructions received after the year end and balance unclaimed amount as of May 27, 2022 is '' 6,58,000/-.
The draft Annual Return of the Company as on March 31, 2022 in E-Form MGT - 7 in accordance with section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, is available on the website of the Company at https://www.diageoindia.com/ investors/financials/annual-and-financial-reports/annual-return-2021-22/
17. Transfer to Investor Education and Protection Fund (IEPF)
The details of unclaimed/unpaid dividends and fixed deposits which have not been transferred to the IEPF account as the period of seven years have not been completed is given below pursuant to the provisions of the Companies Act, 2013 and the applicable rules there under.
The Company has not declared any dividend from financial year 2013-14 onwards owing to accumulated losses. Hence, there are no unclaimed/unpaid dividends from financial year 2013-14 onwards.
No shares were transferred during the year ended March 31, 2022 to Investor Education and Protection Fund pursuant to section 124(6) of the Companies Act, 2013.
1. |
Accepted during the year |
NIL |
2. |
Remained unpaid or unclaimed as at the end of the year |
10,98,000 |
3. |
Whether there has been any default in repayment of deposits or payment of |
|
interest thereon during the year and if so, number of such cases and the total amount involved |
NIL |
|
4. |
The details of deposits which are not |
Not |
in compliance with the requirements of Chapter V of the Companies Act, 2013 |
Applicable |
Necessary compliance under rule 3 of the Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, has been ensured.
18. Human resources
Employee relations remained cordial at all the locations of the Company. Particulars of employees drawing an aggregate remuneration of '' 1,02,00,000/- or above per annum or '' 8,50,000/- or above per month, as well as additional information on employee remuneration as required under the provisions of rule 5(1), 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as part of this Report in Annexure - 4 hereto.
19. Employees stock option scheme
Your Company has not offered any stock options to its employees during the year 2021-22 within the meaning of SEBI (Share Based Employee Benefit) Regulations, 2014.
20. Particulars of loans, guarantees and investments
Loans, guarantees and investments covered under section 186 of the Companies Act, 2013 are detailed in Notes to the financial statements under Note 4, relating to investments and Note 5 relating to loans given as per the standalone financial statements for the year ended March 31, 2022. The Company has not given any guarantee to any Company as on March 31, 2022.
21. Risk management
Details on Risk Management is annexed as Annexure - 5 to this Report.
22. Internal financial controls
During the year Governance Risks and Controls (GRC) team has conducted detailed review of policies as per the direction of the management of the Company, to simplify the process and ensuring adherence. The GRC team also undertook
comprehensive review of existing controls (SOX & non-SOX controls) & added attributes wherever required to ensure that controls are in alignment with the laid down policies and practices and meeting the global benchmark. It has been shared with the statutory auditors who have confirmed their alignment. The controls with additional attributes have been tested both by Management tester and by the Statutory auditors for its effectiveness. The Board after considering the materials placed before it, reviewed the confirmation received from external parties and reviewed the effectiveness of the policies and procedures adopted by the Company for ensuring orderly and efficient conduct of its business, including adherence to Company''s policy, safeguarding its assets, prevention and detection of frauds and errors and completeness of accounting records and timely preparation of financial statements. The Board has satisfied itself that the Company has laid down internal financial controls which are commensurate with the size of the company and that such internal financial controls are broadly adequate and are operating effectively. The certification by the auditors on internal financial control forms part of the audit report. A statement to this effect is also appearing in the Directors'' Responsibility Statement.
23. Corporate social responsibility
Information on the composition of the Corporate Social Responsibility (CSR) Committee is provided in the Corporate Governance Report that forms part of this Report. Furthermore, as required by Section 135 of the Companies Act, 2013 and the rules made thereunder, additional information on the policy and implementation of CSR activities by your Company during the year are provided in Annexure - 6 to this Report.
24. Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars prescribed under section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, are set out in Annexure - 7 to this Report.
25. Details of significant and material orders passed by the regulators or courts impacting the going concern status and Company''s operations in future pursuant to Rule 8(5)(vii) of Companies (Accounts) Rules, 2014
The Company has not received any significant or material order passed by regulators or courts or tribunals impacting the Company''s going concern status or the Company''s operations in future. The details of notices received from regulatory authorities and related matters have been disclosed as part of note no. 40 to the audited standalone financial statements for the year ended March 31, 2022 and as note no. 40 of the consolidated financial statements for the year ended March 31, 2022.
26. Disclosure as required under section 22 of Sexual Harassment of Women at Workplace (prevention, prohibition and redressal) Act, 2013
As per requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (SHWWA), the Company has designed and implemented a comprehensive policy and framework to promote a safe and secure work environment, where every person at the workplace is treated with dignity and respect. Moreover, the Company''s policy is inclusive and gender neutral. Further, the complaint redressal mechanism detailed in the policy ensures complete anonymity and confidentiality to the parties.
Internal Committees (IC) have been constituted as per the requirement. Maintaining the highest governance norms, each Internal Committee has appointed members who are employees of the Company and an independent external member, having extensive experience in the field. The ICs meet on a half yearly basis to discuss matters on policy awareness, best practices, judicial trends, etc. During the year, ICs have also been trained on nuances of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
The Internal Committees role is to consider and resolve the complaints reported on sexual harassment at workplace. Investigation is conducted and decisions are made by the IC at the respective location, and a senior woman employee is the presiding officer on every case.
i) Number of complaints filed during the financial year: 1 (One) complaint received
ii) Number of complaints disposed of during the financial year: NIL
iii) Number of complaints pending as on end of the financial year: 1 (One) under progress
To build awareness in this area, the Company has been publishing newsletter, emailers, posters, conducting online training module and monthly induction training for newly joined employees. Besides the refresher, virtual training programmes are conducted in the organization on a continuous basis for employees (including blue collared employees), consultants, contractual employees and permanent/contractual workers in regional languages. The Internal Committee has also conducted informal sessions to check the pulse at the grassroot levels.
27. Business Responsibility Report (BRR)
In accordance with the SEBI (LODR) Regulations, 2015, the BRR has been placed on the Company''s website at https://www. diageoindia.com/investors/financials/annual-and-financial-reports/business-responsibility-report-2021-22/
a) The Company has not issued equity shares with differential rights as to dividend, voting or otherwise.
b) The Company has not issued any sweat equity shares to its directors or employees.
c) No application has been made under the Insolvency and Bankruptcy Code; hence the requirement to disclose the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year is not applicable.
d) The requirement to disclose the details of difference between amount of the valuation done at the time of onetime settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof, is not applicable.
29. Directors'' responsibility report
Pursuant to section 134 (5) of the Companies Act, 2013 in relation to financial statements (together with the notes to such financial statements) for the year 2021-22, the Board of Directors report that:
(i) in the preparation of the annual accounts for the financial year ended March 31, 2022, the applicable accounting standards have been followed and there are no material departures;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2022 and of the profit of the Company for year ended on that date;
(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the financial statements on a going concern basis;
(v) the Directors have laid down internal financial controls to be followed by the Company commensurate with the size and nature of its business and the complexity of its operations and that such internal financial controls are adequate and are operating effectively.
(vi) Proper systems have been devised to ensure compliance with the provisions of all applicable laws by implementing an automated process having comprehensive systems and securing reports of statutory compliances periodically from the functional units and that such systems are adequate and are operating effectively.
The Board of Directors place on record sincere gratitude and appreciation for all the employees at all levels for their hard work, solidarity, cooperation and dedication during the year.
The Board conveys its appreciation for its customers, shareholders, suppliers as well as vendors, bankers, business associates, regulatory and government authorities for their continued support.
By Order of the Board Mahendra Kumar Sharma
Chairman DIN: 00327684
Place : Mumbai Date : May 27, 2022
Mar 31, 2021
Dear Members,
Your directors are pleased to present the 22nd Report of Directors of your Company and the audited financial statements for the year ended March 31, 2021.
'' in Million |
||||
Particulars |
Standalone |
Consolidated |
||
2020-21 |
2019-20 |
2020-21 |
2019-20 |
|
The working of your Company for the year under review resulted in |
||||
Revenue from operations |
271,764 |
285,892 |
274,185 |
288,237 |
Profit / Loss from operations |
8,697 |
13,609 |
9,033 |
13,790 |
Exceptional and other non-recurring |
(1,514) |
13 |
(643) |
666 |
Less: |
||||
Depreciation |
2,493 |
2,275 |
2,991 |
2,853 |
Taxation (including deferred tax) |
1,587 |
4,300 |
1,778 |
5,397 |
Profit / (Loss) after tax |
3,103 |
7,047 |
3,621 |
6,206 |
Profit B/F from previous year |
(21,623) |
(28,396) |
(25,840) |
(32,159) |
Impact of change in Revenue Recognition policy on adoption of IND AS 115 |
- |
- |
- |
- |
Reinstated Profit B/F from previous year |
(21,623) |
(28,396) |
(25,840) |
(32,159) |
Minority Interest appropriation |
- |
- |
217 |
382 |
Foreign Currency Translation Reserve Considered separately |
- |
- |
(15) |
(49) |
Total Comprehensive Income |
57 |
(274) |
63 |
(220) |
Transfer between reserves |
- |
- |
- |
- |
Profit / (Loss) available for appropriation |
(18,463) |
(21,623) |
(21,954) |
(25,840) |
Your Directors have made the following appropriations: |
||||
General Reserve |
NIL |
NIL |
NIL |
NIL |
Dividend paid in respect to previous years |
NIL |
NIL |
NIL |
NIL |
Proposed dividend |
NIL |
NIL |
NIL |
NIL |
Balance carried to the Balance Sheet |
(18,463) |
(21,623) |
(21,954) |
(25,840) |
EPS-Basic & Diluted (Rupees) |
4.27 |
9.70 |
5.41 |
9.29 |
Balance carried to the Balance Sheet |
(21,623) |
(28,396) |
(25,840) |
(32,159) |
EPS-Basic & Diluted (Rupees) |
4.27 |
9.70 |
5.41 |
9.29 |
As can be seen from the above table, the revenue from operations decreased by 4.94% during the year on standalone basis and decreased by 4.88% on consolidated basis. Profit after tax has decreased during the year by 55.97% on standalone basis and decreased by 41.64% on consolidated basis. The challenges which the Company faced during the year and the environment in which the Company operates have been detailed in Management Discussion and Analysis Report which is forming part of this Annual Report (''Report''). |
During the year under review, your Company''s sales volume was about 70.7 million cases resulting in a volume decline of 11.3% compared to previous year. Net sales/income from operations (net of duties and taxes) of your Company declined by 13.2% in the financial year ended March 31, 2021 which stood at '' 78,890 million (previous year '' 90,908 million). Adjusted one-off sale of bulk Scotch, net sales/ income from operations declined by 10.8% for the year. Sales volume of the Company''s brands in the ''Prestige and Above'' segment declined by 9% in the financial year ended March 31, 2021 which stood at 37.2 million cases (previous year 40.9 million cases). Net sales of the ''Prestige and Above'' segment declined by 7.2% which stood at '' 55,035 million net of duties and taxes (previous year '' 59,311 million). The ''Prestige and Above'' segment represented 69.8% of total net sales and 52.6% of total sale volume during the year.
The statutory and secretarial auditors have given unqualified opinion on the financial statements and in the secretarial audit report for the year ended March 31,2021 and hence this is not applicable.
Secretarial Audit Report for financial year 2020-21 is annexed as Annexure - 3.
Certain events arising out of COVID-19 Virus Pandemic having impact on businesses worldwide have been covered in detail in the Management Discussion and Analysis Report forming part of this Report. The sharp rise in COVID-19 cases across India has led to implementation of lockdown order at most of the states in the country, while some states have imposed strict lockdown orders, others are partial in nature. Out of the 47 manufacturing sites including tie-up manufacturing units, 3 factories are not in operation currently due to complete lockdown while 6 factories are operating with government restrictions.
The details of change in nature of business, if any, are provided under Management Discussion and Analysis Report and the Report on Risk Management forming part of this Report.
In view of the accumulated losses of the preceding years, your directors could not recommend any dividend.
During the year under review, there was no amount transferred to reserves of the Company.
The authorized share capital of your Company remains unchanged at 2,740,000,000 equity shares of '' 2/- each and 171,200,000 preference shares of '' 10/- each. The issued, subscribed and paid-up capital of the Company is 726,638,715 equity shares of '' 2/- each aggerating '' 1,453,277,430. There was no change in the issued, subscribed and paid-up capital of the Company during the year under review.
The performance of subsidiaries and associate Companies and their contribution to the overall performance of the Company is covered as part of the consolidated financial statement and form AOC-1 annexed as part of this Report as Annexure - 1. The Company has 14 subsidiary companies and 1 associate company. Out of 14 subsidiary companies, 12 subsidiary companies are non-operative.
During the year, 3 companies ceased to be subsidiary viz., (i) UB Sports Management Overseas Limited, a wholly owned overseas subsidiary consequent upon its merger with Palmer Investment Group Limited, another wholly owned overseas subsidiary; (ii) Liquidity Inc, an overseas subsidiary, consequent upon the sale of entire stake held by the Company and (iii) Tern Distilleries Private Limited, a wholly owned subsidiary, consequent upon sale of entire stake held by the Company.
After the end of financial year 2020-21, Montrose International (S.A.), Panama, a wholly owned overseas subsidiary of your Company was liquidated effective April 16, 2021 and thus ceased to be a subsidiary.
On June 25, 2018, the Company had subscribed to 4,567,568 equity shares of Hip Bar Private Limited ("Hip Bar"), constituting 26% of the paid-up equity share capital of Hip Bar. In April 2020, compulsory convertible preference shares (CCPS) were issued by Hip Bar to Hip Bar''s promoter Group for '' 3 crore, to which the Company did not subscribe. While the exact conversion ratio of these CCPS would be fixed at a later date, the dilution of Company''s equity in Hip Bar consequent to the aforesaid CCPS issuance is expected to be in the range of 2.4% to 3.4%. Further, in October 2020, the Company made an investment of '' 1.95 crore in CCPS of Hip Bar which is expected to be 2.4% to 3.4% based on the valuation at the
time of conversion. The shareholding of the Company in Hip Bar on fully diluted basis including the existing shareholding is expected to be 26% when the CCPS is exercised. During the year, investment in Hip Bar has been impaired, as the operations have been closed.
Highlights
The Board of Directors ("Board") of Pioneer Distilleries Limited, a listed subsidiary of the Company ("PDL") and of the Company at their meetings held on December 2, 2019 considered and approved a scheme of amalgamation and arrangement (the "Scheme") in relation to the proposed merger of PDL with the Company under Sections 230 - 232 and other applicable provisions of the Companies Act, 2013 and the rules thereunder. Upon completion of the merger, the non-promoter shareholders of PDL will receive 10 equity shares of the Company (face value of '' 2 each) for every 47 equity shares of PDL (face value of '' 10 each), held by them as on the record date. Post the merger, the Company''s issued capital is expected to expand by 712,138 shares and the revised shareholding of Relay BV (the holding Company, a subsidiary of Diageo PLC) in the Company will change from 55.94% to 55.88%. The Scheme is subject to the receipt of requisite approvals from the relevant statutory authorities and the respective shareholders and creditors of PDL and of the Company. The BSE Limited and the National Stock Exchange of India Limited have issued their no-objection to the draft scheme and related documents filed, vide observation letters dated October 21, 2020 and October 22, 2020, respectively. The Company jointly with PDL have filed application under Sections 230 to 232 of the Companies Act, 2013 on November 27, 2020 with the National Company Law Tribunal, Bangalore ("NCLT") and again an Interlocutory Application was filed before NCLT on April 07, 2021.
Royal Challengers Sports Private Limited (RCSPL), a wholly owned subsidiary of your Company, reported a revenue from operations of '' 272 million during the year which was mainly attributed to the increase in central rights income from Board of Cricket Control of India (BCCI) and as a result of Royal Challengers Bangalore, a franchisee team of Indian Premier League (IPL), securing fourth position in the IPL Season 2020. RCSPL also accounted for a profit of '' 541 million with an increase of '' 504 million accounting to 326% of increase during the year.
The Company''s policy for determining material subsidiaries is available at the Company''s website at https://www. diageoindia.com/investors/shareholder-centre/policies/ policy-for-determining-material-subsidiaries/.
In accordance with the third proviso to Section 136(1) of the Companies Act, 2013 the annual report and financial
statements of each of the subsidiary companies have also been placed on the website of the Company https://www. diageoindia.com/investors/subsidiaries-financial/.
9. Prospects/Outlook
The details about prospects/outlook of your Company are provided under the Management Discussion and Analysis Report, forming part of this Report.
10. Appointment/reappointment and resignation/ retirement/step down of Executive Directors and Key Managerial Personnel during the financial year:
A. i) Retirement of Mr. V Ramachandran as Company Secretary & appointment of Mr. Mital Sanghvi as Company Secretary (CS) - Key Managerial Personnel (KMP)
As already updated in the annual report for the year ended 2019-20, the Board at its meeting held on January 27, 2020 appointed Mr. Mital Sanghvi as CS of the Company with effect from June 01, 2020 in the place of Mr. V Ramachandran, erstwhile CS who retired from the services of the Company effective end of day May 31, 2020.
ii) Resignation of Executive Director and Chief Financial Officer (ED & CFO) - Key Managerial Personnel (KMP)
The Board at its meeting held on September 18, 2020 noted the resignation of Mr. Sanjeev Churiwala as ED & CFO of the Company effective end of day September 30, 2020. Mr. Sanjeev Churiwala resigned as an ED & CFO as he was promoted within Diageo group at Singapore.
iii) Appointment of Chief Financial Officer (CFO)
The Board at its meeting held on September 18, 2020 appointed Mr. Pradeep Jain as CFO of the Company with effect from October 01, 2020.
iv) Stepping down of Mr. Anand Kripalu as Managing Director and Chief Executive Officer (MD & CEO) - Key Managerial Personnel (KMP)
The Board at its meeting held on December 10, 2020 approved the stepping down of Mr. Anand Kripalu as MD & CEO of the Company effective end of day June 30, 2021. Mr. Anand Kripalu is stepping down as MD & CEO owing to his retirement.
v) Appointment of Managing Director and Chief Executive Officer (MD & CEO)
The Board at its meeting held on December 10, 2020 approved the appointment of Ms. Hina Nagarajan (Ms. Nagarajan) as Additional Director and MD &
CEO with effect from July 01, 2021. Ms. Nagarajan assumed office as Chief Executive Officer - Designate with effect from April 01, 2021 and continue in that position till June 30, 2021. Details about Ms. Nagarajan is provided in the Notice of the 22nd annual general meeting of the Company.
Apart from the aforesaid appointment, there was no appointment of executive director during the year.
vi) Re-appointment of Mr. John Thomas Kennedy
As per the provisions of the Companies Act, 2013, Mr. John Thomas Kennedy (Mr. Kennedy) retires by rotation at the ensuing annual general meeting (AGM) and being eligible, offered himself for reappointment.
Members may please note that Mr. Kennedy, who is a nominee of Relay B V, was appointed as a director at the 19th AGM held on September 07, 2018. Mr. Kennedy is not debarred from holding the directorship under any statutory regulations. Details about Mr. Kennedy is provided in the Notice of the 22nd annual general meeting of the Company.
vii) Appointment of Mr. Vegulaparanan Kasi Viswanathan as an Independent Director of the Company for the second term.
The tenure of office of Mr. Vegulaparanan Kasi Viswanathan (Mr. V K Viswanathan), who was appointed as an Independent Director of the Company on October 17, 2016 and whose first term of 5 years expires on October 16, 2021. The Board of Directors at their meeting held on May 21, 2021 has accepted the recommendation of the Nomination & Remuneration Committee for re-appointment of Mr. V K Viswanathan as an Independent Director for a further period of 5 years with effect from October 17, 2021. Details about Mr. V K Viswanathan is provided in the Notice of the 22nd annual general meeting of the Company.
viii) Continuation of Mr. Mahendra Kumar Sharma as Director of the Company on completion of 75 years of age.
Mr. Mahendra Kumar Sharma (Mr. M K Sharma), non-executive Chairman, was re-appointed as an Independent Director at the Annual General Meeting of the Company held on August 21, 2019 for a further period of 5 years. During his tenure in the Office, he will be attaining the age of 75 years. Details about Mr. M K Sharma is provided in the Notice of this 22nd annual general meeting of the Company.
Your Company did not appoint any new Independent Director or Nominee Director in the financial year 2020-21. Criteria for selection/appointment or reappointment of Independent Directors include skills, expertise of the Director, qualifications, experience and domain knowledge. The required skills of Independent Directors are leadership, managerial experience, diversity, risk management and corporate governance. All our Independent Directors viz., Mr. Mahendra Kumar Sharma, Mr. V K Viswanathan, Mr. D Sivanandhan, Mr. Rajeev Gupta and Dr. (Mrs.) Indu Shahani possess the aforesaid skills.
Independent Directors have given a declaration pursuant to sub-section (6) of Section 149 of the Companies Act, 2013. In the opinion of the Board, Independent Directors fulfill the conditions specified in Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI (LODR) Regulations) and are independent of the management.
The details of the Board Meetings and other Committee Meetings held during the financial year 2020-21 are stated in the Corporate Governance Report which is forming part of this Report.
The Company has the following committees of the Board:
⢠Audit Committee
⢠Risk Management Committee
⢠Nomination and Remuneration Committee
⢠Stakeholders Relationship and General Committee
⢠Corporate Social Responsibility Committee.
The composition of each of the above Committees, their respective roles and responsibilities are provided in the Corporate Governance Report which forms part of this Report.
F. Policies
The Company has adopted all policies as required to be maintained by the Company under the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations and the same are uploaded on the website of the Company wherever required and the salient features of the policies are detailed in Corporate Governance Report.
All the recommendations of the Audit Committee and of the other Committees were accepted by the Board.
As required under Section 197(12) of the Companies Act, 2013 information relating to remuneration paid to Directors during the financial year 2020-21 is provided in the Corporate Governance Report. The Company has also prepared a draft annual return in revised e-form MGT-7 for FY 2020-21 and uploaded the same on Company''s website at https://www.diageoindia.com/investors/financials/ annual-and-financial-reports/annual-return-2020-21. Members may also note that the annual return uploaded on the website is a draft and the final annual return will be uploaded after the same is filed with the Ministry of Corporate Affairs (''MCA'').
As stated in the Corporate Governance Report, sitting fees is paid to Independent Directors for attending Board/Committee meetings. They are also entitled to reimbursement of actual travel expenses, boarding and lodging, conveyance and incidental expenses incurred in attending such meetings in accordance with the travel policy for directors. In addition, the Independent Directors are also eligible for commission every year as may be recommended by the Nomination and Remuneration Committee and approved by the Board within the overall limit of '' 4 Crore or 1% of the net profits of the Company calculated in accordance with Section 198 of the Companies Act, 2013, whichever is higher, as approved by the shareholders through Postal Ballot Resolution effective January 18, 2019. Criteria for payment of remuneration to Independent Directors are as given below:
i. Membership of Committees
ii. Chairmanship of the Committees/Board
iii. Benchmarking with other companies
The Board of Directors have approved payment of commission of '' 20 million to five independent directors after applying the criteria stated above for the financial year 2020-21.
The criteria for payment of remuneration to executive directors is determined by the Nomination and Remuneration Committee based on various criteria including performance criteria. Remuneration Policy is available on the Company''s website at https://www.diageoindia.com/investors/shareholder-centre/policies/remuneration-reward-policy/.
Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of the SEBI (LODR) Regulations, the Board has carried out an annual performance evaluation, based on parameters which, inter alia, include performance of the Board on deciding strategy, rating the composition & mix of Board members, discharging of their duties and handling critical issues etc. The parameters for the performance evaluation of the Directors include contribution made at the Board meeting, attendance, instances of sharing information on best practices applied in other industries, domain knowledge, vision, strategy, engagement with senior management, etc. The Independent Directors at their separate meetings, review the performance of non-independent directors and the Board as a whole. Chairperson of the Company after taking into account the views of Executive Director and non-executive directors, reviews the quality, quantity and timeliness of flow of information between the management and the Board for the Board to effectively and reasonably perform their duties. Based on the outcome of the performance evaluation exercise, areas have been identified for the Board to engage itself with and the same would be acted upon. The details of the evaluation process are set out in the Corporate Governance Report which forms part of this Report.
The Company has a whistle blower mechanism known as SpeakUp, which is independently operated by a third-party agency. The Company encourage the employees/ representatives acting on behalf of the Company to raise their compliance concerns through this mechanism, apart from other internal reporting channels viz. Line Manager or HR Business Partner, Legal Business Partner and Business Integrity partner. A structured Breach Management Standard is in place which is in line with the Global Standard, for timely and conclusive resolution of compliance concerns raised through the whistle blower mechanism.
The quality of investigation reports and remedial actions are reviewed and monitored by the Global Business Integrity team. The decision on sanctions on the reported breaches are determined and monitored by a Compliance Committee, in order to ensure that there is a collective and a fair decision-making process and consistent action is undertaken in resolving the breaches.
This mechanism also provides for adequate safeguards against the victimization of employees who avail the vigil mechanism for reporting the compliance complaint
in good faith and without fear of being punished for raising that concern. Access to the Chairman of the Audit Committee is provided as required under the Companies Act, 2013 and the SEBI (LODR) Regulations.
The SpeakUp channel is available on the Company''s website at https://www.diageoindia.com/about-us/ corporate-governance/speak-up/, and the toll-free number is available in english and other prominent regional languages.
The Company''s policy on dealing with related party transactions was adopted by the Board on June 15, 2015 and further amended from time to time. This policy is available on the Company''s website at https://www. diageoindia.com/investors/shareholder-centre/policies/ policy-on-related-party-transactions/.
Form AOC-2 pursuant to Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out in the Annexure-2 to this Report.
All related party transactions that were entered into during the financial year, were at arm''s length basis and were in the ordinary course of business. There are no material significant related party transactions entered into by the Company with promoters, directors, key managerial personnel or other designated persons which may have a conflict of interest with the Company at large.
Schedule IV of the Companies Act, 2013, SEBI (LODR) Regulaions and Secretarial Standard - 1 on Meetings of the Board of Directors mandates that the Independent Directors of the Company hold at least one meeting in a year, without the attendance of Non-Independent Directors.
The Independent Directors met amongst themselves without the presence of any other persons on May 27, 2020, July 27, 2020 and November 04, 2020.
i) Financial audit
M/s Price Waterhouse & Co Chartered Accountants LLP, (FRN 304026E/E-300009) were appointed as Statutory Auditors of your Company at the 17th AGM of the Company for a period of 5 years and their term comes to an end at the conclusion of the 22nd AGM of the Company. The Audit Committee at their
meeting held on May 20 & 21, 2021, recommended the re-appointment of M/s Price Waterhouse & Co Chartered Accountants LLP, (FRN 304026E/E-300009) (''PWC'') who have given their consent and willingness to be re-appointed as Auditors of your Company. PWC, being one of the reputed international audit firm and given their expertise in the field of audit, the Board of Directors at their meeting held on May 21, 2021, approved the recommendation of the Audit Committee and proposed to re-appoint PWC as Auditors of your Company for a period of 5 years, from the conclusion of the ensuing 22nd AGM till the conclusion of the 27th AGM of the Company subject to the approval of the members of the Company at the ensuing AGM.
Pursuant to Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a Secretarial Audit has been carried out by Mr. Sudhir V Hulyalkar, Practicing Company Secretary (FCS: 6040 and CP No. 6137) and his report is annexed as Annexure - 3.
In addition, Pursuant to Regulation 24A of the SEBI (LODR) Regulation, the Secretarial Compliance Report for the financial year ended March 31, 2021, in relation to compliance of all applicable SEBI Regulations/ circulars/guidelines issued thereunder, is annexed as Annexure - 3A. The Secretarial Compliance Report has been voluntarily disclosed as part of this Report as good disclosure practice. The said report has been submitted to the stock exchanges and is also available on the Company''s website at https://www.diageoindia.com/ investors/shareholder-centre/notice-board/annual-secretarial-compliance-report-2021/.
The Company is not covered by the requirement of maintenance of cost records, as specified under subsection (1) of Section 148 of the Companies Act, 2013.
During the year under review, neither the statutory auditors nor the secretarial auditor have reported to the Audit Committee or the Board, under Section 143(12) of the Companies Act 2013, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in this Report.
A Corporate Governance Report is annexed separately as part of this Report. Board confirms compliance with Secretarial Standards.
The Management Discussion and Analysis Report is annexed separately as part of this Report.
As reported in the earlier annual reports, your Company discontinued accepting fixed deposits from the public and shareholders effective January 1, 2014. In addition, pursuant to section 74(1)(b) of the Companies Act, 2013, the Board of Directors at their meeting held on August 1, 2014 decided to repay all fixed deposits maturing on or after March 31, 2015 by March 31, 2015 by paying additional interest of 1% per annum on those fixed deposits repaid before the maturity date pursuant to the contract entered into with the Fixed Deposit holders. Fixed Deposits from the public and shareholders which remained unclaimed and for which no discharge certificates were received from the depositors as on March 31, 2021 stood at ^17,97,000. Unclaimed amount was transferred into a separate non-interest bearing escrow account opened specifically for the purpose of re-payment pursuant to the provisions of the Companies Act, 2013 and the rules made thereunder. Out of this amount, a sum of ^1,15,000/- has since been paid as per instructions received after the year end and balance unclaimed amount as of May 21, 2021 is ?16,82,000/-. The balance unclaimed fixed deposits continue to remain in the escrow account as on May 21, 2021.
The draft Annual Return of the Company as on March 31, 2021 in E-Form MGT - 7 in accordance with Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, is available on the website of the Company at https://www.diageoindia.com/investors/financials/annual-and-financial-reports/annual-return-2020-21.
The details of unclaimed/unpaid dividends and fixed deposits which have not been transferred to the IEPF account as the period of seven years have not been completed is given
below pursuant to the provisions of the Companies Act, 2013 and the applicable rules there under.
The Company has not declared any dividend from financial year 2013-14 onwards owing to accumulated losses. Hence, there are no unclaimed/unpaid dividends from financial year 2013-14 onwards.
No shares were transferred during the year ended March 31, 2021 to Investor Education and Protection Fund pursuant to Section 124(6) of the Companies Act, 2013.
1. Accepted during the year NIL
2. Remained unpaid or unclaimed as at the ^17,97,000 end of the year
3. Whether there has been any default
in repayment of deposits or payment of NIL interest thereon during the year and if so, number of such cases and the total amount involved
4. The details of deposits which are not
in compliance with the requirements of Not Applicable Chapter V of the Companies Act, 2013
Necessary compliance under rule 3 of the Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, has been ensured.
Employee relations remained cordial at all the locations of the Company. Particulars of employees drawing an aggregate remuneration of '' 1,02,00,000/- or above per annum or '' 8,50,000/- or above per month, as well as additional information on employee remuneration as required under the provisions of rule 5(1), 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as part of this Report in Annexure - 4 hereto.
Your Company has not offered any stock options to its employees during the year 2020-21 within the meaning of SEBI (Share Based Employee Benefit) Regulations, 2014.
Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 are detailed in Notes to the financial statements under Note 4, relating to investments and Note 5 relating to loans given as per the standalone
financial statements for the year ended March 31, 2021. The Company has not given any guarantee to any Company as on March 31, 2021.
21. Risk management
Details on Risk Management is annexed as Annexure - 5 to this Report.
22. Internal financial controls
During the year Controls, Compliance & Ethics (CC&E) team have implemented a detailed plan under the direction of the Executive Committee of the Company, to reinforce the code of business conduct and to further embed compliance across the business. The CC&E team also undertook comprehensive review of existing controls (SOX & non-SOX controls) & added additional attributes in the existing controls. The same has been shared with the statutory auditors who have confirmed that they are aligned with the same. The controls with additional attributes have been tested both by Management tester (Deloitte) and by the Statutory auditors in March 2021 for its effectiveness. The Board after considering the materials placed before it, reviewed the confirmation received from external parties and the effectiveness of the policies and procedures adopted by the Company for ensuring orderly and efficient conduct of its business, including adherence to Company''s policy, safeguarding its assets, prevention and detection of frauds and errors and completeness of accounting records and timely preparation of financial statements. The Board has satisfied itself that the Company has laid down internal financial controls which are commensurate with the size of the Company and that such internal financial controls are broadly adequate and are operating effectively. The certification by the auditors on internal financial control forms part of the audit report. A statement to this effect is also appearing in the Directors'' Responsibility Statement.
23. Corporate social responsibility
Information on the composition of the Corporate Social Responsibility (CSR) Committee is provided in the Corporate Governance Report that forms part ofthis Report. Furthermore, as required by Section 135 of the Companies Act, 2013 and the rules made thereunder, additional information on the policy and implementation of CSR activities by your Company during the year are provided in Annexure - 6 to this Report.
24. Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars prescribed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, are set out in Annexure - 7 to this Report.
25. Details of significant and material orders passed by the regulators or courts impacting the going concern status and Company''s operations in future pursuant to Rule 8(5)(vii) of Companies (Accounts) Rules, 2014
The Company has not received any significant or material order passed by regulators or courts or tribunals impacting the Company''s going concern status or the Company''s operations in future. The details of notices received from regulatory authorities and related matters have been disclosed as part of note no. 40(e) to the audited standalone financial statements for the year ended March 31,2021 and as note no. 40(e) of the consolidated financial statements for the year ended March 31, 2021.
26. Disclosure as required under Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
As per requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (SHWWA), the Company has implemented the policy and framework. Moreover, the Company''s policy is all gender inclusive and the process ensures complete anonymity and confidentiality to the parties.
Internal Committees (IC) have been constituted for all locations. While maintaining the highest governance norms, the various Internal Committee has appointed internal members and an external member who have extensive experience in the field. The IC''s meet on quarterly basis to discuss the matters on policy awareness, best practices, judicial trends, etc. During the year, IC has also been trained on nuances of the SHWWA.
The IC''s role is to consider and resolve the complaints reported on sexual harassment at workplace. Investigation is conducted and decisions are made by the IC at the respective location, and a senior woman employee is the presiding officer over every case.
i) Number of complaints filed during the financial year: 1
ii) Number of complaints disposed of during the financial year : 1
iii) Number of complaints pending as on end of the financial year: NIL
To build awareness in this area, the Company has been publishing newsletter, emailers, posters, conducting online training module and IBegin-induction training for newly joined employees. Besides the refresher, virtual training programmes are conducted in the organisation on a continuous basis for employees, consultants, contractual employees and permanent/contractual workers in regional
languages. The IC has also conducted informal sessions to check the pulse at the grassroot levels.
27. Business Responsibility Report (BRR)
In accordance with the SEBI (LODR) Regulations, 2015, the BRR has been placed on the Company''s website at https:// www.diageoindia.com/investors/financials/annual-and-financial-reports/business-responsibility-report-2020-21.
28. Other Disclosures
a) The Company has not issued equity shares with differential rights as to dividend, voting or otherwise.
b) The Company has not issued any sweat equity shares to its directors or employees.
c) No application has been made under the Insolvency and Bankruptcy Code; hence the requirement to disclose the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year is not applicable.
d) The requirement to disclose the details of difference between amount of the valuation done at the time of onetime settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof, is not applicable.
29. Directors'' responsibility report
Pursuant to Section 134 (5) of the Companies Act, 2013 in relation to financial statements (together with the notes to such financial statements) for the year 2020-21, the Board of Directors report that:
(i) in the preparation of the annual accounts for the financial year ended March 31, 2021, the applicable accounting standards have been followed and there are no material departures;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as
to give a true and fair view of the state of affairs of the Company as at March 31, 2021 and of the profit of the Company for year ended on that date;
(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the financial statements on a going concern basis;
(v) the Directors have laid down internal financial controls to be followed by the Company commensurate with the size and nature of its business and the complexity of its operations and that such internal financial controls are adequate and are operating effectively.
(vi) Proper systems have been devised to ensure compliance with the provisions of all applicable laws by implementing an automated process having comprehensive systems and securing reports of statutory compliances periodically from the functional units and that such systems are adequate and are operating effectively.
The Board of Directors place on record sincere gratitude and appreciation for all the employees at all levels for their hard work, solidarity, cooperation and dedication during the year. The Board conveys its appreciation for its customers, shareholders, suppliers as well as vendors, bankers, business associates, regulatory and government authorities for their continued support.
By Order of the Board
Chairman DIN:00327684
Dear Members,
Your directors are pleased to present the 22nd Report of Directors of your Company and the audited financial statements for the year ended March 31, 2021.
'' in Million | ||||
Particulars | Standalone | Consolidated | ||
2020-21 | 2019-20 | 2020-21 | 2019-20 | |
The working of your Company for the year under review resulted in | ||||
Revenue from operations | 271,764 | 285,892 | 274,185 | 288,237 |
Profit / Loss from operations | 8,697 | 13,609 | 9,033 | 13,790 |
Exceptional and other non-recurring | (1,514) | 13 | (643) | 666 |
Less: | ||||
Depreciation | 2,493 | 2,275 | 2,991 | 2,853 |
Taxation (including deferred tax) | 1,587 | 4,300 | 1,778 | 5,397 |
Profit / (Loss) after tax | 3,103 | 7,047 | 3,621 | 6,206 |
Profit B/F from previous year | (21,623) | (28,396) | (25,840) | (32,159) |
Impact of change in Revenue Recognition policy on adoption of IND AS 115 | - | - | - | - |
Reinstated Profit B/F from previous year | (21,623) | (28,396) | (25,840) | (32,159) |
Minority Interest appropriation | - | - | 217 | 382 |
Foreign Currency Translation Reserve Considered separately | - | - | (15) | (49) |
Total Comprehensive Income | 57 | (274) | 63 | (220) |
Transfer between reserves | - | - | - | - |
Profit / (Loss) available for appropriation | (18,463) | (21,623) | (21,954) | (25,840) |
Your Directors have made the following appropriations: | ||||
General Reserve | NIL | NIL | NIL | NIL |
Dividend paid in respect to previous years | NIL | NIL | NIL | NIL |
Proposed dividend | NIL | NIL | NIL | NIL |
Balance carried to the Balance Sheet | (18,463) | (21,623) | (21,954) | (25,840) |
EPS-Basic & Diluted (Rupees) | 4.27 | 9.70 | 5.41 | 9.29 |
Balance carried to the Balance Sheet | (21,623) | (28,396) | (25,840) | (32,159) |
EPS-Basic & Diluted (Rupees) | 4.27 | 9.70 | 5.41 | 9.29 |
As can be seen from the above table, the revenue from operations decreased by 4.94% during the year on standalone basis and decreased by 4.88% on consolidated basis. Profit after tax has decreased during the year by 55.97% on standalone basis and decreased by 41.64% on consolidated basis. The challenges which the Company faced during the year and the environment in which the Company operates have been detailed in Management Discussion and Analysis Report which is forming part of this Annual Report (''Report''). |
During the year under review, your Company''s sales volume was about 70.7 million cases resulting in a volume decline of 11.3% compared to previous year. Net sales/income from operations (net of duties and taxes) of your Company declined by 13.2% in the financial year ended March 31, 2021 which stood at '' 78,890 million (previous year '' 90,908 million). Adjusted one-off sale of bulk Scotch, net sales/ income from operations declined by 10.8% for the year. Sales volume of the Company''s brands in the ''Prestige and Above'' segment declined by 9% in the financial year ended March 31, 2021 which stood at 37.2 million cases (previous year 40.9 million cases). Net sales of the ''Prestige and Above'' segment declined by 7.2% which stood at '' 55,035 million net of duties and taxes (previous year '' 59,311 million). The ''Prestige and Above'' segment represented 69.8% of total net sales and 52.6% of total sale volume during the year.
The statutory and secretarial auditors have given unqualified opinion on the financial statements and in the secretarial audit report for the year ended March 31,2021 and hence this is not applicable.
Secretarial Audit Report for financial year 2020-21 is annexed as Annexure - 3.
Certain events arising out of COVID-19 Virus Pandemic having impact on businesses worldwide have been covered in detail in the Management Discussion and Analysis Report forming part of this Report. The sharp rise in COVID-19 cases across India has led to implementation of lockdown order at most of the states in the country, while some states have imposed strict lockdown orders, others are partial in nature. Out of the 47 manufacturing sites including tie-up manufacturing units, 3 factories are not in operation currently due to complete lockdown while 6 factories are operating with government restrictions.
The details of change in nature of business, if any, are provided under Management Discussion and Analysis Report and the Report on Risk Management forming part of this Report.
In view of the accumulated losses of the preceding years, your directors could not recommend any dividend.
During the year under review, there was no amount transferred to reserves of the Company.
The authorized share capital of your Company remains unchanged at 2,740,000,000 equity shares of '' 2/- each and 171,200,000 preference shares of '' 10/- each. The issued, subscribed and paid-up capital of the Company is 726,638,715 equity shares of '' 2/- each aggerating '' 1,453,277,430. There was no change in the issued, subscribed and paid-up capital of the Company during the year under review.
The performance of subsidiaries and associate Companies and their contribution to the overall performance of the Company is covered as part of the consolidated financial statement and form AOC-1 annexed as part of this Report as Annexure - 1. The Company has 14 subsidiary companies and 1 associate company. Out of 14 subsidiary companies, 12 subsidiary companies are non-operative.
During the year, 3 companies ceased to be subsidiary viz., (i) UB Sports Management Overseas Limited, a wholly owned overseas subsidiary consequent upon its merger with Palmer Investment Group Limited, another wholly owned overseas subsidiary; (ii) Liquidity Inc, an overseas subsidiary, consequent upon the sale of entire stake held by the Company and (iii) Tern Distilleries Private Limited, a wholly owned subsidiary, consequent upon sale of entire stake held by the Company.
After the end of financial year 2020-21, Montrose International (S.A.), Panama, a wholly owned overseas subsidiary of your Company was liquidated effective April 16, 2021 and thus ceased to be a subsidiary.
On June 25, 2018, the Company had subscribed to 4,567,568 equity shares of Hip Bar Private Limited ("Hip Bar"), constituting 26% of the paid-up equity share capital of Hip Bar. In April 2020, compulsory convertible preference shares (CCPS) were issued by Hip Bar to Hip Bar''s promoter Group for '' 3 crore, to which the Company did not subscribe. While the exact conversion ratio of these CCPS would be fixed at a later date, the dilution of Company''s equity in Hip Bar consequent to the aforesaid CCPS issuance is expected to be in the range of 2.4% to 3.4%. Further, in October 2020, the Company made an investment of '' 1.95 crore in CCPS of Hip Bar which is expected to be 2.4% to 3.4% based on the valuation at the
time of conversion. The shareholding of the Company in Hip Bar on fully diluted basis including the existing shareholding is expected to be 26% when the CCPS is exercised. During the year, investment in Hip Bar has been impaired, as the operations have been closed.
Highlights
The Board of Directors ("Board") of Pioneer Distilleries Limited, a listed subsidiary of the Company ("PDL") and of the Company at their meetings held on December 2, 2019 considered and approved a scheme of amalgamation and arrangement (the "Scheme") in relation to the proposed merger of PDL with the Company under Sections 230 - 232 and other applicable provisions of the Companies Act, 2013 and the rules thereunder. Upon completion of the merger, the non-promoter shareholders of PDL will receive 10 equity shares of the Company (face value of '' 2 each) for every 47 equity shares of PDL (face value of '' 10 each), held by them as on the record date. Post the merger, the Company''s issued capital is expected to expand by 712,138 shares and the revised shareholding of Relay BV (the holding Company, a subsidiary of Diageo PLC) in the Company will change from 55.94% to 55.88%. The Scheme is subject to the receipt of requisite approvals from the relevant statutory authorities and the respective shareholders and creditors of PDL and of the Company. The BSE Limited and the National Stock Exchange of India Limited have issued their no-objection to the draft scheme and related documents filed, vide observation letters dated October 21, 2020 and October 22, 2020, respectively. The Company jointly with PDL have filed application under Sections 230 to 232 of the Companies Act, 2013 on November 27, 2020 with the National Company Law Tribunal, Bangalore ("NCLT") and again an Interlocutory Application was filed before NCLT on April 07, 2021.
Royal Challengers Sports Private Limited (RCSPL), a wholly owned subsidiary of your Company, reported a revenue from operations of '' 272 million during the year which was mainly attributed to the increase in central rights income from Board of Cricket Control of India (BCCI) and as a result of Royal Challengers Bangalore, a franchisee team of Indian Premier League (IPL), securing fourth position in the IPL Season 2020. RCSPL also accounted for a profit of '' 541 million with an increase of '' 504 million accounting to 326% of increase during the year.
The Company''s policy for determining material subsidiaries is available at the Company''s website at https://www. diageoindia.com/investors/shareholder-centre/policies/ policy-for-determining-material-subsidiaries/.
In accordance with the third proviso to Section 136(1) of the Companies Act, 2013 the annual report and financial
statements of each of the subsidiary companies have also been placed on the website of the Company https://www. diageoindia.com/investors/subsidiaries-financial/.
9. Prospects/Outlook
The details about prospects/outlook of your Company are provided under the Management Discussion and Analysis Report, forming part of this Report.
10. Appointment/reappointment and resignation/ retirement/step down of Executive Directors and Key Managerial Personnel during the financial year:
A. i) Retirement of Mr. V Ramachandran as Company Secretary & appointment of Mr. Mital Sanghvi as Company Secretary (CS) - Key Managerial Personnel (KMP)
As already updated in the annual report for the year ended 2019-20, the Board at its meeting held on January 27, 2020 appointed Mr. Mital Sanghvi as CS of the Company with effect from June 01, 2020 in the place of Mr. V Ramachandran, erstwhile CS who retired from the services of the Company effective end of day May 31, 2020.
ii) Resignation of Executive Director and Chief Financial Officer (ED & CFO) - Key Managerial Personnel (KMP)
The Board at its meeting held on September 18, 2020 noted the resignation of Mr. Sanjeev Churiwala as ED & CFO of the Company effective end of day September 30, 2020. Mr. Sanjeev Churiwala resigned as an ED & CFO as he was promoted within Diageo group at Singapore.
iii) Appointment of Chief Financial Officer (CFO)
The Board at its meeting held on September 18, 2020 appointed Mr. Pradeep Jain as CFO of the Company with effect from October 01, 2020.
iv) Stepping down of Mr. Anand Kripalu as Managing Director and Chief Executive Officer (MD & CEO) - Key Managerial Personnel (KMP)
The Board at its meeting held on December 10, 2020 approved the stepping down of Mr. Anand Kripalu as MD & CEO of the Company effective end of day June 30, 2021. Mr. Anand Kripalu is stepping down as MD & CEO owing to his retirement.
v) Appointment of Managing Director and Chief Executive Officer (MD & CEO)
The Board at its meeting held on December 10, 2020 approved the appointment of Ms. Hina Nagarajan (Ms. Nagarajan) as Additional Director and MD &
CEO with effect from July 01, 2021. Ms. Nagarajan assumed office as Chief Executive Officer - Designate with effect from April 01, 2021 and continue in that position till June 30, 2021. Details about Ms. Nagarajan is provided in the Notice of the 22nd annual general meeting of the Company.
Apart from the aforesaid appointment, there was no appointment of executive director during the year.
vi) Re-appointment of Mr. John Thomas Kennedy
As per the provisions of the Companies Act, 2013, Mr. John Thomas Kennedy (Mr. Kennedy) retires by rotation at the ensuing annual general meeting (AGM) and being eligible, offered himself for reappointment.
Members may please note that Mr. Kennedy, who is a nominee of Relay B V, was appointed as a director at the 19th AGM held on September 07, 2018. Mr. Kennedy is not debarred from holding the directorship under any statutory regulations. Details about Mr. Kennedy is provided in the Notice of the 22nd annual general meeting of the Company.
vii) Appointment of Mr. Vegulaparanan Kasi Viswanathan as an Independent Director of the Company for the second term.
The tenure of office of Mr. Vegulaparanan Kasi Viswanathan (Mr. V K Viswanathan), who was appointed as an Independent Director of the Company on October 17, 2016 and whose first term of 5 years expires on October 16, 2021. The Board of Directors at their meeting held on May 21, 2021 has accepted the recommendation of the Nomination & Remuneration Committee for re-appointment of Mr. V K Viswanathan as an Independent Director for a further period of 5 years with effect from October 17, 2021. Details about Mr. V K Viswanathan is provided in the Notice of the 22nd annual general meeting of the Company.
viii) Continuation of Mr. Mahendra Kumar Sharma as Director of the Company on completion of 75 years of age.
Mr. Mahendra Kumar Sharma (Mr. M K Sharma), non-executive Chairman, was re-appointed as an Independent Director at the Annual General Meeting of the Company held on August 21, 2019 for a further period of 5 years. During his tenure in the Office, he will be attaining the age of 75 years. Details about Mr. M K Sharma is provided in the Notice of this 22nd annual general meeting of the Company.
Your Company did not appoint any new Independent Director or Nominee Director in the financial year 2020-21. Criteria for selection/appointment or reappointment of Independent Directors include skills, expertise of the Director, qualifications, experience and domain knowledge. The required skills of Independent Directors are leadership, managerial experience, diversity, risk management and corporate governance. All our Independent Directors viz., Mr. Mahendra Kumar Sharma, Mr. V K Viswanathan, Mr. D Sivanandhan, Mr. Rajeev Gupta and Dr. (Mrs.) Indu Shahani possess the aforesaid skills.
Independent Directors have given a declaration pursuant to sub-section (6) of Section 149 of the Companies Act, 2013. In the opinion of the Board, Independent Directors fulfill the conditions specified in Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI (LODR) Regulations) and are independent of the management.
The details of the Board Meetings and other Committee Meetings held during the financial year 2020-21 are stated in the Corporate Governance Report which is forming part of this Report.
The Company has the following committees of the Board:
⢠Audit Committee
⢠Risk Management Committee
⢠Nomination and Remuneration Committee
⢠Stakeholders Relationship and General Committee
⢠Corporate Social Responsibility Committee.
The composition of each of the above Committees, their respective roles and responsibilities are provided in the Corporate Governance Report which forms part of this Report.
F. Policies
The Company has adopted all policies as required to be maintained by the Company under the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations and the same are uploaded on the website of the Company wherever required and the salient features of the policies are detailed in Corporate Governance Report.
All the recommendations of the Audit Committee and of the other Committees were accepted by the Board.
As required under Section 197(12) of the Companies Act, 2013 information relating to remuneration paid to Directors during the financial year 2020-21 is provided in the Corporate Governance Report. The Company has also prepared a draft annual return in revised e-form MGT-7 for FY 2020-21 and uploaded the same on Company''s website at https://www.diageoindia.com/investors/financials/ annual-and-financial-reports/annual-return-2020-21. Members may also note that the annual return uploaded on the website is a draft and the final annual return will be uploaded after the same is filed with the Ministry of Corporate Affairs (''MCA'').
As stated in the Corporate Governance Report, sitting fees is paid to Independent Directors for attending Board/Committee meetings. They are also entitled to reimbursement of actual travel expenses, boarding and lodging, conveyance and incidental expenses incurred in attending such meetings in accordance with the travel policy for directors. In addition, the Independent Directors are also eligible for commission every year as may be recommended by the Nomination and Remuneration Committee and approved by the Board within the overall limit of '' 4 Crore or 1% of the net profits of the Company calculated in accordance with Section 198 of the Companies Act, 2013, whichever is higher, as approved by the shareholders through Postal Ballot Resolution effective January 18, 2019. Criteria for payment of remuneration to Independent Directors are as given below:
i. Membership of Committees
ii. Chairmanship of the Committees/Board
iii. Benchmarking with other companies
The Board of Directors have approved payment of commission of '' 20 million to five independent directors after applying the criteria stated above for the financial year 2020-21.
The criteria for payment of remuneration to executive directors is determined by the Nomination and Remuneration Committee based on various criteria including performance criteria. Remuneration Policy is available on the Company''s website at https://www.diageoindia.com/investors/shareholder-centre/policies/remuneration-reward-policy/.
Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of the SEBI (LODR) Regulations, the Board has carried out an annual performance evaluation, based on parameters which, inter alia, include performance of the Board on deciding strategy, rating the composition & mix of Board members, discharging of their duties and handling critical issues etc. The parameters for the performance evaluation of the Directors include contribution made at the Board meeting, attendance, instances of sharing information on best practices applied in other industries, domain knowledge, vision, strategy, engagement with senior management, etc. The Independent Directors at their separate meetings, review the performance of non-independent directors and the Board as a whole. Chairperson of the Company after taking into account the views of Executive Director and non-executive directors, reviews the quality, quantity and timeliness of flow of information between the management and the Board for the Board to effectively and reasonably perform their duties. Based on the outcome of the performance evaluation exercise, areas have been identified for the Board to engage itself with and the same would be acted upon. The details of the evaluation process are set out in the Corporate Governance Report which forms part of this Report.
The Company has a whistle blower mechanism known as SpeakUp, which is independently operated by a third-party agency. The Company encourage the employees/ representatives acting on behalf of the Company to raise their compliance concerns through this mechanism, apart from other internal reporting channels viz. Line Manager or HR Business Partner, Legal Business Partner and Business Integrity partner. A structured Breach Management Standard is in place which is in line with the Global Standard, for timely and conclusive resolution of compliance concerns raised through the whistle blower mechanism.
The quality of investigation reports and remedial actions are reviewed and monitored by the Global Business Integrity team. The decision on sanctions on the reported breaches are determined and monitored by a Compliance Committee, in order to ensure that there is a collective and a fair decision-making process and consistent action is undertaken in resolving the breaches.
This mechanism also provides for adequate safeguards against the victimization of employees who avail the vigil mechanism for reporting the compliance complaint
in good faith and without fear of being punished for raising that concern. Access to the Chairman of the Audit Committee is provided as required under the Companies Act, 2013 and the SEBI (LODR) Regulations.
The SpeakUp channel is available on the Company''s website at https://www.diageoindia.com/about-us/ corporate-governance/speak-up/, and the toll-free number is available in english and other prominent regional languages.
The Company''s policy on dealing with related party transactions was adopted by the Board on June 15, 2015 and further amended from time to time. This policy is available on the Company''s website at https://www. diageoindia.com/investors/shareholder-centre/policies/ policy-on-related-party-transactions/.
Form AOC-2 pursuant to Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out in the Annexure-2 to this Report.
All related party transactions that were entered into during the financial year, were at arm''s length basis and were in the ordinary course of business. There are no material significant related party transactions entered into by the Company with promoters, directors, key managerial personnel or other designated persons which may have a conflict of interest with the Company at large.
Schedule IV of the Companies Act, 2013, SEBI (LODR) Regulaions and Secretarial Standard - 1 on Meetings of the Board of Directors mandates that the Independent Directors of the Company hold at least one meeting in a year, without the attendance of Non-Independent Directors.
The Independent Directors met amongst themselves without the presence of any other persons on May 27, 2020, July 27, 2020 and November 04, 2020.
i) Financial audit
M/s Price Waterhouse & Co Chartered Accountants LLP, (FRN 304026E/E-300009) were appointed as Statutory Auditors of your Company at the 17th AGM of the Company for a period of 5 years and their term comes to an end at the conclusion of the 22nd AGM of the Company. The Audit Committee at their
meeting held on May 20 & 21, 2021, recommended the re-appointment of M/s Price Waterhouse & Co Chartered Accountants LLP, (FRN 304026E/E-300009) (''PWC'') who have given their consent and willingness to be re-appointed as Auditors of your Company. PWC, being one of the reputed international audit firm and given their expertise in the field of audit, the Board of Directors at their meeting held on May 21, 2021, approved the recommendation of the Audit Committee and proposed to re-appoint PWC as Auditors of your Company for a period of 5 years, from the conclusion of the ensuing 22nd AGM till the conclusion of the 27th AGM of the Company subject to the approval of the members of the Company at the ensuing AGM.
Pursuant to Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a Secretarial Audit has been carried out by Mr. Sudhir V Hulyalkar, Practicing Company Secretary (FCS: 6040 and CP No. 6137) and his report is annexed as Annexure - 3.
In addition, Pursuant to Regulation 24A of the SEBI (LODR) Regulation, the Secretarial Compliance Report for the financial year ended March 31, 2021, in relation to compliance of all applicable SEBI Regulations/ circulars/guidelines issued thereunder, is annexed as Annexure - 3A. The Secretarial Compliance Report has been voluntarily disclosed as part of this Report as good disclosure practice. The said report has been submitted to the stock exchanges and is also available on the Company''s website at https://www.diageoindia.com/ investors/shareholder-centre/notice-board/annual-secretarial-compliance-report-2021/.
The Company is not covered by the requirement of maintenance of cost records, as specified under subsection (1) of Section 148 of the Companies Act, 2013.
During the year under review, neither the statutory auditors nor the secretarial auditor have reported to the Audit Committee or the Board, under Section 143(12) of the Companies Act 2013, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in this Report.
A Corporate Governance Report is annexed separately as part of this Report. Board confirms compliance with Secretarial Standards.
The Management Discussion and Analysis Report is annexed separately as part of this Report.
As reported in the earlier annual reports, your Company discontinued accepting fixed deposits from the public and shareholders effective January 1, 2014. In addition, pursuant to section 74(1)(b) of the Companies Act, 2013, the Board of Directors at their meeting held on August 1, 2014 decided to repay all fixed deposits maturing on or after March 31, 2015 by March 31, 2015 by paying additional interest of 1% per annum on those fixed deposits repaid before the maturity date pursuant to the contract entered into with the Fixed Deposit holders. Fixed Deposits from the public and shareholders which remained unclaimed and for which no discharge certificates were received from the depositors as on March 31, 2021 stood at ^17,97,000. Unclaimed amount was transferred into a separate non-interest bearing escrow account opened specifically for the purpose of re-payment pursuant to the provisions of the Companies Act, 2013 and the rules made thereunder. Out of this amount, a sum of ^1,15,000/- has since been paid as per instructions received after the year end and balance unclaimed amount as of May 21, 2021 is ?16,82,000/-. The balance unclaimed fixed deposits continue to remain in the escrow account as on May 21, 2021.
The draft Annual Return of the Company as on March 31, 2021 in E-Form MGT - 7 in accordance with Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, is available on the website of the Company at https://www.diageoindia.com/investors/financials/annual-and-financial-reports/annual-return-2020-21.
The details of unclaimed/unpaid dividends and fixed deposits which have not been transferred to the IEPF account as the period of seven years have not been completed is given
below pursuant to the provisions of the Companies Act, 2013 and the applicable rules there under.
The Company has not declared any dividend from financial year 2013-14 onwards owing to accumulated losses. Hence, there are no unclaimed/unpaid dividends from financial year 2013-14 onwards.
No shares were transferred during the year ended March 31, 2021 to Investor Education and Protection Fund pursuant to Section 124(6) of the Companies Act, 2013.
1. Accepted during the year NIL
2. Remained unpaid or unclaimed as at the ^17,97,000 end of the year
3. Whether there has been any default
in repayment of deposits or payment of NIL interest thereon during the year and if so, number of such cases and the total amount involved
4. The details of deposits which are not
in compliance with the requirements of Not Applicable Chapter V of the Companies Act, 2013
Necessary compliance under rule 3 of the Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, has been ensured.
Employee relations remained cordial at all the locations of the Company. Particulars of employees drawing an aggregate remuneration of '' 1,02,00,000/- or above per annum or '' 8,50,000/- or above per month, as well as additional information on employee remuneration as required under the provisions of rule 5(1), 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as part of this Report in Annexure - 4 hereto.
Your Company has not offered any stock options to its employees during the year 2020-21 within the meaning of SEBI (Share Based Employee Benefit) Regulations, 2014.
Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 are detailed in Notes to the financial statements under Note 4, relating to investments and Note 5 relating to loans given as per the standalone
financial statements for the year ended March 31, 2021. The Company has not given any guarantee to any Company as on March 31, 2021.
21. Risk management
Details on Risk Management is annexed as Annexure - 5 to this Report.
22. Internal financial controls
During the year Controls, Compliance & Ethics (CC&E) team have implemented a detailed plan under the direction of the Executive Committee of the Company, to reinforce the code of business conduct and to further embed compliance across the business. The CC&E team also undertook comprehensive review of existing controls (SOX & non-SOX controls) & added additional attributes in the existing controls. The same has been shared with the statutory auditors who have confirmed that they are aligned with the same. The controls with additional attributes have been tested both by Management tester (Deloitte) and by the Statutory auditors in March 2021 for its effectiveness. The Board after considering the materials placed before it, reviewed the confirmation received from external parties and the effectiveness of the policies and procedures adopted by the Company for ensuring orderly and efficient conduct of its business, including adherence to Company''s policy, safeguarding its assets, prevention and detection of frauds and errors and completeness of accounting records and timely preparation of financial statements. The Board has satisfied itself that the Company has laid down internal financial controls which are commensurate with the size of the Company and that such internal financial controls are broadly adequate and are operating effectively. The certification by the auditors on internal financial control forms part of the audit report. A statement to this effect is also appearing in the Directors'' Responsibility Statement.
23. Corporate social responsibility
Information on the composition of the Corporate Social Responsibility (CSR) Committee is provided in the Corporate Governance Report that forms part ofthis Report. Furthermore, as required by Section 135 of the Companies Act, 2013 and the rules made thereunder, additional information on the policy and implementation of CSR activities by your Company during the year are provided in Annexure - 6 to this Report.
24. Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars prescribed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, are set out in Annexure - 7 to this Report.
25. Details of significant and material orders passed by the regulators or courts impacting the going concern status and Company''s operations in future pursuant to Rule 8(5)(vii) of Companies (Accounts) Rules, 2014
The Company has not received any significant or material order passed by regulators or courts or tribunals impacting the Company''s going concern status or the Company''s operations in future. The details of notices received from regulatory authorities and related matters have been disclosed as part of note no. 40(e) to the audited standalone financial statements for the year ended March 31,2021 and as note no. 40(e) of the consolidated financial statements for the year ended March 31, 2021.
26. Disclosure as required under Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
As per requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (SHWWA), the Company has implemented the policy and framework. Moreover, the Company''s policy is all gender inclusive and the process ensures complete anonymity and confidentiality to the parties.
Internal Committees (IC) have been constituted for all locations. While maintaining the highest governance norms, the various Internal Committee has appointed internal members and an external member who have extensive experience in the field. The IC''s meet on quarterly basis to discuss the matters on policy awareness, best practices, judicial trends, etc. During the year, IC has also been trained on nuances of the SHWWA.
The IC''s role is to consider and resolve the complaints reported on sexual harassment at workplace. Investigation is conducted and decisions are made by the IC at the respective location, and a senior woman employee is the presiding officer over every case.
i) Number of complaints filed during the financial year: 1
ii) Number of complaints disposed of during the financial year : 1
iii) Number of complaints pending as on end of the financial year: NIL
To build awareness in this area, the Company has been publishing newsletter, emailers, posters, conducting online training module and IBegin-induction training for newly joined employees. Besides the refresher, virtual training programmes are conducted in the organisation on a continuous basis for employees, consultants, contractual employees and permanent/contractual workers in regional
languages. The IC has also conducted informal sessions to check the pulse at the grassroot levels.
27. Business Responsibility Report (BRR)
In accordance with the SEBI (LODR) Regulations, 2015, the BRR has been placed on the Company''s website at https:// www.diageoindia.com/investors/financials/annual-and-financial-reports/business-responsibility-report-2020-21.
28. Other Disclosures
a) The Company has not issued equity shares with differential rights as to dividend, voting or otherwise.
b) The Company has not issued any sweat equity shares to its directors or employees.
c) No application has been made under the Insolvency and Bankruptcy Code; hence the requirement to disclose the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year is not applicable.
d) The requirement to disclose the details of difference between amount of the valuation done at the time of onetime settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof, is not applicable.
29. Directors'' responsibility report
Pursuant to Section 134 (5) of the Companies Act, 2013 in relation to financial statements (together with the notes to such financial statements) for the year 2020-21, the Board of Directors report that:
(i) in the preparation of the annual accounts for the financial year ended March 31, 2021, the applicable accounting standards have been followed and there are no material departures;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as
to give a true and fair view of the state of affairs of the Company as at March 31, 2021 and of the profit of the Company for year ended on that date;
(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the financial statements on a going concern basis;
(v) the Directors have laid down internal financial controls to be followed by the Company commensurate with the size and nature of its business and the complexity of its operations and that such internal financial controls are adequate and are operating effectively.
(vi) Proper systems have been devised to ensure compliance with the provisions of all applicable laws by implementing an automated process having comprehensive systems and securing reports of statutory compliances periodically from the functional units and that such systems are adequate and are operating effectively.
The Board of Directors place on record sincere gratitude and appreciation for all the employees at all levels for their hard work, solidarity, cooperation and dedication during the year. The Board conveys its appreciation for its customers, shareholders, suppliers as well as vendors, bankers, business associates, regulatory and government authorities for their continued support.
By Order of the Board
Chairman DIN:00327684
Mar 31, 2019
REPORT OF THE DIRECTORS
Dear Members,
Your Directors are pleased to present the 20* Report of Directors of your Company and the audited financial statements for the year ended March 31,2019.
INR in Million
Particulars |
Standalone |
Consolidated |
||
2018-19 |
2017-18 |
2018-19 |
2017-18 |
|
The working of your Company for the year under review resulted in |
||||
Revenue from operations |
2,85,123 |
2,60,691 |
288725 |
2,65,559 |
Profit / Loss from operations |
11,626 |
9,664 |
12,256 |
11,486 |
Exceptional and other non-recurring |
(267) |
90 |
(26) |
445 |
Less: |
||||
Depreciation |
1,445 |
1,351 |
2,147 |
1,923 |
Taxation (including deferred tax) |
3,328 |
2,786 |
3,281 |
2,599 |
Profit / (Loss) after tax |
6,586 |
5,617 |
6,836* |
6519* |
Profit B/F from previous year |
(34,624) |
(40,324) |
(38,802) |
(45,248) |
Impact of Change in Revenue Recognition policy on adoption of IND AS115 |
(368) |
(368) |
||
Reinstated Profit B/F from previous year |
(34,992) |
(40,324) |
(39,170) |
(45,248) |
Minority Interest appropriation |
- |
- |
166 |
(181) |
Foreign Currency Translation Reserve Considered separately |
- |
- |
(20) |
71 |
Total Comprehensive Income |
10 |
83 |
28 |
17 |
Transfer between reserves - |
||||
Profit /(Loss) available for appropriation |
(28,396) |
(34,624) |
(32,159) |
(38,802) |
Your Directors have made the following appropriations: |
||||
General Reserve |
NIL |
NIL |
NIL |
NIL |
Dividend paid in respect to previous years |
NIL |
NIL |
NIL |
NIL |
Proposed dividend |
NIL |
NIL |
NIL |
NIL |
Balance carried to the Balance sheet |
(28,396) |
(34,624) |
(32,159) |
(38,802) |
EPS-Basic & Diluted (Rupees) |
9.06 |
7.73** |
9.87 |
8.94** |
Balance carried to the Balance sheet |
(34,624) |
(40,324) |
(38,802) |
(45,248) |
EPS-Basic & Diluted (Rupees) |
38.65 |
11.69 |
44.68 |
7.06 |
* Excluding minority interest.
** EPS has been revised considering the effect of Share Split.
*- As can be seen from the above table, the revenue from operations increased by 9.37% during the year on standalone basis and 8.72% on consolidated basis. Profit after tax has also improved during the year by 17.25% on standalone basis and 4.86% on consolidated basis. The challenges which the company faced during the year and the environment in which the company operates have been detailed in Management Discussion and Analysis Report which is forming part of this Report.
1. Performance of the Company
During the year under review, your Company has achieved a sales volume of about 81.6 million cases, and this resulted in a growth of 4.0% compared to prior period. After adjusting for the franchise model changes in Popular segment, underlying volume grew 5.4% compared to prior period. Net sales/income from operations of your Company grew 9.9% in the financial year ended March 31, 2019 and stood at INR 89,806 million net of duties and taxes (previous year INR 81,701 million). Adjusted for the franchise model changes. Net sales/income from operations grew 10.5% for the year. Sales volume of the Company''s brands in the ''Prestige and Above'' segment grew 11.8% in the financial year ended March 31, 2019 and stood at 41.6 million cases (previous year 37.2 million cases). Net sales of the ''Prestige and Above''segment grew 15.2% and stood at INR 59,095 million net of duties and taxes (previous year INR 51,276 million). The ''Prestige and Above'' segment represented 71% of total net sales and 50.9% of total sale volume during the year.
2. Subsidiary Companies
In accordance with section 129(3) of the Companies Act, 2013, (''Companies Act) a statement containing salient features of the financial statements of the subsidiary companies in Form AOC-1 is provided as Annexure -1 to this report.
3. Board''s Responses to Observations, Qualifications and Adverse Remarks in Auditor''s Report
The Statutory Auditors have given unqualified opinion on the Financial Statements for the year ended March 31, 2019 and hence this is not applicable.
The Secretarial Auditor has given an unqualified opinion in the Secretarial Audit Report for the year ended March 31, 2019, and the Secretarial Audit Report is annexed as Annexure - 3.
4. Material Changes and Commitments/Events Subsequent to the date of the Financial Statements
During the year, the company has sub-divided 548,000,000 equity shares of face value of Rs 10/- per equity share into 2,740,000,000 equity share of Rs 2/- per equity share and also 1,200,000 preference shares of face value of Rs 100/-per preference share into 12,000,000 preference shares of Rs 10/- per preference share of the company. There are no other material changes and commitments/Events subsequent to the date of the Financial Statements.
5. Change in nature of Business, if any
The details of change in nature of business are provided under Management Discussion and Analysis Report and the Report on Risk Management forming part of this Annual Report.
6. Dividend
In view of the accumulated losses of the preceding years, your directors could not recommend any dividend. No amount is proposed to be carried to reserves.
7. Capital
The total authorized share capital of your Company remains unchanged however the Face Value of 548,000,000 equity shares of Rs 10/- per share have been sub-divided into 2,740,000,000 equity shares of Rs 2/- each and brought uniformity between two classes of preference shares resulting in 171,200,000 Preference Shares of Rs 10/-each.
8. Details of Subsidiary Companies, Joint Ventures and Associate Companies and their Financial Position
Your Company currently has 17 subsidiary companies and one Associate Company. During the financial year, the entire stake of the company in one of the subsidiary viz.. Four Seasons Wines Limited was divested on January 16, 2019. On June 25, 2018, the Company subscribed to 4,567,568 equity shares of Hip Bar Private Limited ("Hip Bar"), constituting 26% of the paid-up equity share capital of Hip Bar . The information required under the first proviso to section 129(3) of the Companies Act, 2013 is given in form AOC- 1 in Annexure - 1. The Company''s policy for determining material subsidiaries is available at Company''s website www.diageoindia.com.
Performance of Associates, Subsidiaries and Joint Ventures and their contribution to overall performance of the Company is covered as part of the Consolidated Financial statements and in form AOC-1 in Annexure -1, annexed and forming part of this Annual Report.
In accordance with the third proviso to section 136(1) of the Companies Act, 2013 the annual report and financial statements of each of the subsidiary companies have also been placed on the website of the Company www. diageoindia.com
9. Prospects/Outlook
The details about prospects/outlook of your Company are provided under the Management Discussion and Analysis Report forming part of this Annual Report.
10. Depository System
The trading in the equity shares of your Company is under compulsory dematerialisation mode. As on March 31, 2019, equity shares representing 99.23% of the equity share capital are in dematerialised form. As the depository system offers numerous advantages, members are requested to take advantage of the same and avail the facility of dematerialisation of the Company''s shares. Moreover, transfer of shares of the company by physical means has been barred from April 01, 2019 pursuant to SEBI''s Notification dated 3rd December, 2018.
11. Board Meetings, Board of Directors, Key Managerial Personnel & Committees of Directors.
A. Appointment, change in designation and resignation
Details on appointments, changes in designation, resignation of Directors, key managerial personnel, and Committees of Directors as well as on Board and Committee meetings of your Company and the matters required to be specified pursuant to sections 134, 177 and 178 of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI (LODR) Regulations) are provided in the Corporate Governance Report that is annexed to and forming part of this Annual Report.
B. Re-appointment
As per the provisions of the Companies Act, 2013, Mr Vinod Rao retires by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offered himself for re-appointment.
Members may please note that Mr Vinod Rao, who is a nominee of Relay BV, was appointed as a Director at the 17th Annual General Meeting (AGM).
A brief profile of Mr Vinod Rao is provided as an Annexure to the Notice convening 20th AGM.
Mr. Anand Kripalu was appointed as Managing Director and Chief Executive Officer effective August 14, 2014 for a period of five years which is ending on August 13, 2019. Nomination and Remuneration Committee and Board of Directors have approved his re-appointment for a further period of three years effective August 14, 2019 to August 13, 2022 which is subject to the approval of the members at the 20th Annual General Meeting
Re-Appointment of Independent Directors
On the recommendation of the Nomination and Remuneration Committee (NRC) and apporoval by the Board of Directors, following Independent Directors will be re-appointed as Independent Directors. The first term of the following independent directors are ending on the following dates:
Dr (Mrs) Indu Shahani - September 29,2019 ⢠Mr. DSivanandan-September 29,2019 Mr. Rajeev Gupta - December 22,2019 Mr. Mahendra Kumar Sharma - March 31,2020.
It is being proposed to re-appoint the aforesaid independent directors for a second term of five years, which are as follows:
a. Dr (Mrs.). Indu Shahani be and is hereby re-appointed as an Independent Director of the Company for a period of 5 years with effect from September 30, 2019 to September 29, 2024 subject to approval of the Members at the ensuing general meeting.
b. Mr. D Sivanandan be and is hereby re-appointed as an Independent Director of the Company for a period of 5 years with effect from September 30, 2019 to September 29, 2024 subject to approval of the Members at the ensuing general meeting.
c. Mr. Rajeev Gupta be and is hereby re-appointed as an Independent Director of the Company for a period of 5 years with effect from December 23, 2019 to December 22, 2024 subject to approval of the Members at the ensuing general meeting.
d. Mr. Mahendra Kumar Sharma be and is hereby re-appointed as an Independent Director of the Company for a period of 5 years with effect from April 01,2020 to March 31,2025 subject to approval of the Members at the ensuing general meeting.
C. Independent Directors and Nominee Directors
Your Company did not appoint any new Independent Director or Nominee Director in the Financial Year 2018-2019. Criteria for selection of Independent Directors include skills, expertise of the Director, qualifications, experience and domain knowledge. Independent Directors are also expected to have the following skills, expertise and competencies:
i. Bringing objectivity and independence to board discussions and to provide essential leadership to the Company''s strategy, performance, risk management as well as ensuring high standards of financial probity and corporate governance.
ii. Fulfil the role and duties including the ones assigned by the Board from time to time and as stated in Schedule IV of the Companies Act, 2013
Executive Director
Your company did not appoint any new Executive Director for the Company for the year 2018-19.
D. Independent Directors
Independent Directors have given a declaration pursuant to sub-section (6) of Section 149 of the Companies Act, 2013. In the opinion of the Board, Independent Directors fulfill the conditions specified in SEBI (LODR) Regulations and are independent of the management.
E. Number of Meetings of the Board
The details of the Board Meetings and other Committee Meetings held during the financial Year 2018-19 are stated in the Corporate Governance Report which forms part of this Annual Report.
F. Board Committees
The Company has setup the following committees of the Board:
Audit and Risk Management Committee
Nomination and Remuneration Committee
Stakeholders Relationship and General
Committee
Corporate Social Responsibility Committee.
The composition of each of the above Committees, their respective roles and responsibilities are provided in the Corporate Governance Report which forms part of this Annual Report.
G. Recommendations of the Audit and Risk Management Committee and other Committees All the recommendations of the Audit and
Risk Management Committee and of the other Committees from time to time were accepted by the Board.
H. Details of remuneration to Directors
As required under Section 197(12) of the Companies Act, 2013 information relating to remuneration paid to Directors during the financial year 2018-19 is provided in the Corporate Governance Report and in form MGT 9, that is annexed to and forming part of this Annual Report as Annexure-4.
As stated in the Corporate Governance Report, sitting fees are paid to Independent Directors for attending Board/Committee meetings. They are also entitled to reimbursement of actual travel expenses, boarding and lodging, conveyance and incidental expenses incurred in attending such meetings in accordance with the travel policy for Directors. In addition, the Independent Directors are also eligible for commission every year as may be recommended by the Nomination and Remuneration Committee and approved by the Board within the overall limit of higher of Rs 4 Crores or 1% of the net profits of the Company calculated in accordance with Section 198 of the Companies Act, 2013, whichever is higher, as approved by the shareholders at the AGM held on September 30, 2014 and Postal Ballot Resolution effective January 18, 2019. Criteria for payment of remuneration to Independent Directors are as given below:
1. Membership of Committees
2. Chairmanship of the Committees/Board
3. Benchmarking with other companies
Pursuant to the provisions of the Companies Act, 2013, the Commission payable by the Company to the Independent Directors for the FY 2018-19 is INR 20 Million.
The criteria for payment of remuneration to executive directors is determined by the Nomination and Remuneration Committee which includes various criteria including performance criteria.
I. Board Evaluation Criteria
Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of the SEBI (LODR) Regulations,
the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the Committees of the Board. The evaluation process considered the effectiveness of the Board and the committees with special emphasis on the performance and functioning of the Board and the Committees. The evaluation of the Directors was based on the time spent by each of the Board Members, their core competencies, expertise and contribution to the effectiveness and functioning of the Board and its Committees which was carried out through a peer feedback mechanism.
The Board and the Nomination and Remuneration Committee identified certain aspects and areas to make the Board''s functioning even better. The Board also reviewed the achievements during the year against those observations arising from the evaluation in earlier years.
J. Vigil Mechanism
Your Company has a well-established vigil mechanism named as ''SpeakUp'' in place, which is overseen by the compliance & ethics team.''SpeakUp''is a confidential service available to employees and others to make a report of any breach of the code, policies or applicable laws. ''SpeakUp'' is managed by an external agency with staff who are trained to deal with the calls and translators who are immediately available to assist if required. The details of establishment of Speak Up is disclosed in the website of the Company www. diageo.com. Access to the Chairman of the Audit Committee is provided in appropriate/exceptional cases, as required under the Companies Act, 2013 and the SEBI (LODR) Regulations. All complaints are investigated by the compliance and ethics team and appropriate action taken in accordance with your Company''s policies.
K. Related Party Transactions
The Company''s policy on dealing with related party transactions was adopted by the Board on June 15, 2015 and further amended from time to time last one being on January 23, 2019 effective April 01, 2019.
This policy has been amended from time to time and is available on the Company''s website www.diageoindia. com.
All related party transactions that were entered into during the financial year, were at arm''s length basis and were in the ordinary course of business. There are no material significant related party transactions entered into by the Company with promoters, directors, key managerial personnel or other designated persons which may have a conflict of interest with the Company at large.
The details of related party transactions required under section 134(3)(h) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 are given in form AOC-2 and the same is enclosed as Annexure - 2.
L. Meeting amongst Independent Directors
The Independent Directors met amongst themselves without the presence of any other persons on May 24, 2018 and July 23,2018 respectively.
12. Auditors
Financial Audit
M/s. Price Waterhouse & Co. Chartered Accountants LLP (FRN 304026E/E-300009) Statutory Auditors of your Company, were appointed as Auditors of your Company from the conclusion of the 17th AGM for a period of 5 years. Since the appointment is not subject to ratification of the appointment by the members at every AGM, no resolution is proposed at this AGM pursuant to the provisions of Companies (Amendment) Act, 2017. Fees paid to the statutory auditors and their network of firms/ entities in India during the year by the Company and its subsidiaries are as follows;
By United Spirits Limited - Rs 49 Million
By the subsidiaries of United Spirits Limited - Rs 5 Million
Further details on fees to statutory auditors are disclosed in the Standalone and Consolidated Financial Statements.
Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a Secretarial Audit has been carried out by Mr Sudhir V Hulyalkar, Practicing Company Secretary (PCS: 6040 [CP No. 6137]) and his report is annexed as Annexure - 3.
In addition, the company has also obtained Secretarial Compliance Report for the year ended March 31,2019 in terms of the SEBI Circular issued on February 08,2019.The said report has been submitted to the stock exchanges and is also available on the Company''s website viz., www.diageoindia.com.
Cost Audit
The Company is not covered by the requirement of maintenance of cost records, as specified under subsection (1) of Section 148 of the Companies Act, 2013.
13. Listing of Shares of the Company
The equity shares of your Company continue to be listed with the BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). No Listing fees are due as on date.
14. Corporate Governance
A Corporate Governance Report is annexed separately as part of this report.
15. Management Discussion and Analysis Report
The Management Discussion and Analysis Report is annexed separately as part of this report.
16. Fixed Deposits
As reported in the previous year''s annual report, your Company discontinued accepting fixed deposits from the public and shareholders effective January 1, 2014. In addition, pursuant to section 74(1)(b) of the Companies Act, 2013 the Board of Directors at their meeting held on August 1, 2014 decided to repay all fixed deposits maturing on or after March 31, 2015 by March 31, 2015 by paying additional interest of 1% per annum on those fixed deposits before the maturity date pursuant to the contract entered into with the Fixed Deposit holders. Fixed Deposits from the public and shareholders which remained unclaimed and for which no discharge certificates were received from the depositors as on March 31, 2019 stood at Rs 67,59,000. This amount was transferred into a separate non-interest bearing escrow account opened specifically for the purpose of re-payment, has been re-paid consistent with the provisions of the Companies Act, 2013 and the rules made thereunder. Of this amount, a sum of Rs 6,13,000 (as of May 29, 2019) has since been paid as per instructions received after the year end. The balance unclaimed fixed deposits continue to remain in the escrow account as on May 29, 2019.
17. Extract of Annual Return
The extract of the Annual Return in Form MGT-9 is annexed as Annexure-4.
18. Transfer to Investor Education and Protection Fund (IEPF)
The details of unclaimed/unpaid Dividends and Fixed Deposits which have not been transferred to the IEPF account as the period of seven years have not been completed is given below pursuant to the provisions of the Companies Act, 2013 and the applicable Rules there under.
Dividend:
Financial Year For which the divided is declared |
No. of Members who have not claimed their dividend |
Unclaimed dividend as on March 31, 2019 (Amount in INR) |
Unclaimed dividend as % to total dividend |
Date of declaration |
Last date for claiming the dividend prior to its transfer to IEPF |
2011-12 |
16,215 |
3,056,067.50 |
0.93 |
25-Sep-2012 |
14-Nov-2019 |
2012-13 |
10,866 |
2,214,265.00 |
0.61 |
24-Sep-2013 |
15-Sep-2020 |
The Company has not declared any dividend from financial year 2013-14 onwards. Hence, the aforesaid details do not include unpaid dividends from financial year 2013-14 onwards.
The number of Unclaimed equity shares transferred during the year ended March 31, 2019 to Investor Education and Protection Fund pursuant to section 124(6) of the Companies Act, 2013 is 580975.
Fixed Deposits:
1. |
Accepted during the year |
NIL |
2. |
Remained unpaid or unclaimed as at the end of the year |
Rs 67,59,000 |
3. |
Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved |
NIL |
4. |
The Details of deposits which are not in compliance with the requirements of Chapter V of the Companies Act, 2013 |
Not Applicable |
Necessary compliance under Rule 3 of the Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, has been ensured.
19. Human Resources
Employee relations remained cordial at all the locations of the Company. Particulars of employees drawing an aggregate remuneration of Rs 1,02,00,000/- or above per annum or Rs 8,50,000/- or above per month, as well as additional information on employee remuneration as required under the provisions of rule 5(1), 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial personnel) Rules, 2014 is annexed as part of this report in Annexure - 5 hereto.
20. Employees Stock Option Scheme
Your Company has not offered any stock options to its employees during the year 2018-19.
21. Particulars of Loans, Guarantees and Investments
Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 are detailed in Notes to the financial statements, which are as follows:
Note 4 is relating to investments. Note 5 is relating to loans given as per the standalone financial statements for the year ended March 31,2019 include these disclosures.The Company has not given any guarantee to any company as on March 31,2019.
22. Risk Management
Details on Risk Management are annexed as part of this report in Annexure - 6 hereto. The Company has not done any commodity hedging.
23. Internal Financial Controls
Please refer to note no 48 of Standalone financial Statements and Note no 50 of Consolidated Financial Statements for the year ended March 31, 2019. During the year Controls, Compliance & Ethics (CC&E) team have commenced implementation of a detailed plan agreed with the Executive Committee of the Company, to reinforce the code of business conduct and to further embed compliance across the business. The CC&E team also undertook comprehensive review of existing controls (Sox & non-Sox controls) & added additional attributes in the existing controls. The same has been shared with the statutory auditors who have confirmed that they are aligned with the same. The controls with additional attributes have been tested both by Management tester (Deloitte) and by the Statutory auditors in March 19 for its effectiveness. The Board after considering the materials placed before it, reviewed the confirmation received from external parties and reviewing the effectiveness of the policies and procedures adopted by the Company for ensuring orderly and efficient conduct of its business, including adherence to Company''s policy, safeguarding its assets, prevention and detection of frauds and errors and completeness of accounting records and timely preparation of financial statements, the Board has satisfied itself that the Company has laid down internal financial controls which are commensurate with size of the company and that such internal financial controls are broadly adequate and are operating effectively. The certification by the auditors on internal financial control forms part of the audit report. A statement to this effect is also appearing in the Directors ''Responsibility Statement.
24. Corporate Social Responsibility
Information on the composition of the Corporate Social Responsibility (CSR) Committee is provided in the Corporate Governance Report that forms part of this Annual Report. Furthermore.as required by section 135 of the Companies Act, 2013 and the rules made thereunder, additional information on the policy and implementation of CSR activities by your Company during the year are provided in Annexure - 7 to this report. Business Responsibility Report under Regulation 34(2) of the SEBI (LODR) Regulations has been enclosed as Annexure - 9 and also uploaded on to the Company''s website www.diageoindia.com.
25. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
The particulars prescribed under section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, are set out in Annexure - 8 to this report.
26. Details of Significant and Material Orders Passed by the Regulators or Courts Impacting the Going Concern Status and Company''s Operations in Future pursuant to Rule 8(5)(vii) of Companies (Accounts) Rules, 2014
The Company has not received any significant or material order passed by regulators or courts or tribunals impacting the Company''s going concern status or the Company''s operations in future. The Management Discussion and Analysis Report read with the report on Risk Management contains impact on the business due to regulatory changes. The details of notices received from regulatory authorities and related matters have been disclosed as part of Note No. 45 to the Audited Standalone Financial statements for the year ended March 31,2019 and as Note No. 47 of the Consolidated Financial Statements for the year ended March 31,2019.
27. Disclosure as required Under Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has implemented a prevention of sexual harassment policy and constituted an internal complaints committee in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (SHWWA). An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment and on-going training is provided to employees in compliance with the requirements of SHWWA. During the financial year 2018-19 one complaint was received and resolved.
28. Highlights of performance of subsidiaries, associates and joint venture companies of the Company
The highlights of performance of subsidiaries, associates and joint venture companies of the Company and their contribution to the overall performance of the Company is covered as part of the Consolidated Financial Statement and form AOC-1 annexed as part of this report. Out of 17 subsidiary companies and 1 associate company, 15 subsidiary companies are non-operative companies.
29. Directors'' Responsibility Statement
Pursuant to section 134 (5) of the Companies Act, 2013 in relation to financial statements (together with the notes to such financial statements) for the year 2018-19, the Board of Directors report that:
(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit/loss of the Company for that period;
(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the financial statements on a going concern basis;
(v) the Directors have laid down internal financial controls to be followed by the Company commensurate with the size and nature of its business and the complexity of its operations and that such internal financial controls are adequate and are operating effectively.
(vi) the Company has a system of securing reports of statutory compliances periodically from the units and has implemented an automated process having comprehensive systems to ensure compliance with the provisions of all applicable laws which is adequate and is operating effectively.
Your Directors place on record their sincere appreciation for the continued support from the shareholders, customers, suppliers, government, banks and financial institutions and other business associates.
A particular note of thanks to all employees of your Company, without whose contribution, your Company could not have achieved the year''s performance.
By Order of the Board |
|
Anand Kripalu |
Mahendra Kumar Sharma |
MD & CEO |
Chairman |
Bengaluru |
|
May 29, 2019 |
Mar 31, 2018
The Directors are pleased to present the 19th Annual Report of your Company and the audited financial statements for the year ended March 31, 2018.
1. Financial Results
INR in Million
Particulars |
Standalone |
Consolidated |
||
2017-18 |
2016-17 |
2017-18 |
2016-17 |
|
The working of your Company for the year under review resulted in |
||||
Profit / Loss from operations |
9,664 |
7,131 |
11,486 |
7,194 |
Exceptional and other non-recurring items |
(90) |
3,262 |
445 |
3,681 |
Less: |
||||
Depreciation |
1,351 |
1,323 |
1,923 |
1,886 |
Taxation (including deferred tax) |
2,786 |
847 |
2,599 |
697 |
Profit / (Loss) after tax |
5,617 |
1,699 |
6519* |
930* |
Profit B/F from previous year |
(40,324) |
(42,590) |
(45,248) |
(46,815) |
Minority Interest appropriation |
- |
- |
(181) |
71 |
Foreign Currency Translation Reserve Considered separately |
- |
- |
71 |
29 |
Total Comprehensive Income |
83 |
499 |
17 |
468 |
Transfer between reserves |
- |
68 |
- |
68 |
Profit / (Loss) available for appropriation |
(34,624) |
(40,324) |
(38,802) |
(45,248) |
Your Directors have made the following appropriations: |
||||
General Reserve |
- |
- |
- |
- |
Dividend paid in respect to previous years |
- |
- |
- |
- |
Proposed dividend |
- |
- |
- |
- |
Corporate Tax on Proposed Dividend |
- |
- |
- |
- |
Corporate Tax on Dividend paid |
- |
- |
- |
- |
Balance carried to the Balance sheet |
(34,624) |
(40,324) |
(38,802) |
(45,248) |
EPS-Basic & Diluted (Rupees) |
38.65 |
11.69 |
44.68 |
7.06 |
* Excluding minority interest
1.1 Subsidiary Companies
In accordance with section 129(3) of the Companies Act, 2013, (âCompanies Actâ) a statement containing salient features of the financial statements of the subsidiary companies in Form AOC-1 is provided as Annexure - 1 to this report.
In accordance with the third proviso to section 136(1) of the Companies Act, 2013 the annual report and financial statements of each of the subsidiary companies have also been placed on the website of the Company www.diageoindia.com
2. Boardâs Responses to Observations, Qualifications and Adverse Remarks in Auditorâs Report
The Statutory Auditors have given unqualified opinion on the Financial Statements for the year ended March 31, 2018 and hence this is not applicable.
The Secretarial Auditor has given an unqualified opinion in the Secretarial Audit Report for the year ended March 31, 2018, and the Secretarial Audit Report is annexed as Annexure - 3.
3. Material changes and commitments/Events subsequent to the date of the Financial statements
The company has Sub-Divided 548,000,000 Equity Shares of Face Value of Rs.10/- per Equity Share into 2,740,000,000 equity share of Rs.2/- per Equity Share and also 1,200,000 Preference Shares of face value of Rs.100/- per preference share into 12,000,000 preference shares of Rs.10/- per preference share of the company subsequent to the end of the Financial Year 2017-18.
4. Change in nature of Business, if any
The details of change in nature of business is provided under Management Discussion and Analysis Report and the Report on Risk Management forms part of this Annual Report.
5. Dividend
In view of the accumulated losses of the preceding years, your directors could not recommend any dividend. No amount is proposed to be carried to reserves.
6. Capital
The authorized share capital of your Company remains unchanged however the Face Value of 548,000,000 equity shares of Rs.10/- per share have been sub-divided into 2,740,000,000 equity shares of Rs.2/- each and brought uniformity between two classes of preference shares resulting in 171,200,000 Preference Shares of Rs.10/- each.
7. Performance of the company
During the year under review, your Company has achieved a sales volume of about 78.5 million cases and this resulted in a decline of 13% compared to prior period (90 million cases previous year, that included volume from states where the Popular segment has been franchised). After adjusting for the franchise model changes, underlying volume declined 2% compared to prior period. Net sales/ income from operations of your Company declined 4% in the financial year ended March 31, 2018 and stood at INR 81,701 million net of duties and taxes (INR 85,476 million previous year). This was as a result of franchising our Popular segment in a few states. Adjusted for the operating model changes, net sales/income from operations grew 1% for the year. Sales volume of the Companyâs brands in the âPrestige and Aboveâ segment grew 1% in the financial year ended March 31, 2018 and stood at 37.2 million cases (previous year 36.8 million cases). Net sales of the âPrestige and Aboveâ segment grew 3% and stood at INR 51,280 million net of duties and taxes (previous year INR 49,660 million). The âPrestige and Aboveâ segment represented 63% of total net sales and 47% of total sale volume during the current year.
8. Details of subsidiary companies, Joint Ventures and Associate companies and their Financial position
Your Company currently has 18 subsidiary companies, the entire stake of the company in one of the subsidiary, viz., United Spirits Nepal Private Limited was sold during the Financial Year 2017-18. The information required under the first proviso to section 129(3) of the Companies Act, 2013 is given in form AOC- 1 in Annexure - 1. The Companyâs policy for determining material subsidiaries is available at Companyâs website www.diageoindia.com.
Performance of Associates, Subsidiaries and Joint Ventures and their contribution to overall performance of the Company is covered as part of the Consolidated Financial statements and in form AOC-1 in Annexure - 1, annexed and forming part of this Annual Report.
9. prospects/outlook
The details about prospects/outlook of your Company are provided under the Management Discussion and Analysis Report forming part of this Annual Report.
10. Depository system
The trading in the equity shares of your Company is under compulsory dematerialisation mode. As on March 31, 2018, equity shares representing 99.02% of the equity share capital are in dematerialised form. As the depository system offers numerous advantages, members are requested to take advantage of the same and avail the facility of dematerialisation of the Companyâs shares. Moreover transfer of shares of the company will be allowed only if they are in dematerialization mode with effect from December 5th, 2018 as per SEBIâs Notification dated 8th June, 2018.
11. Board Meetings, Board of Directors, Key Managerial Personnel & committees of Directors.
11.1 A. Appointment, change in designation and resignation
Details on appointments, changes in designation, resignation of Directors, key managerial personnel, and Committees of Directors as well as on Board and Committee meetings of your Company and the matters required to be specified pursuant to sections 134, 177 and 178 of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI (LODR) Regulations) are provided in the Corporate Governance Report that is annexed to and form part of this Annual Report.
B. Re-appointment
As per the provisions of the Companies Act, 2013, Mr John Thomas Kennedy retires by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offered himself for re-appointment.
Members may please note that Mr John Thomas Kennedy, who is a nominee of Relay B V, was appointed as a Director at the 18th Annual General Meeting (AGM).
A brief profile of Mr John Thomas Kennedy is provided as an Annexure to the Notice convening 19th AGM.
C. independent Directors and Nominee Directors
Your Company did not appoint any new Independent Director or Nominee Director in the Financial Year 2017-2018. Criteria for selection of Independent Directors include skills, expertise of the Director, qualifications, experience and domain knowledge.
D. Executive Director
Your company appointed Mr Sanjeev Churiwala as the Executive Director and Chief Financial Officer of the Company with effect from April 1, 2017.
E. Number of Meetings of the Board
The details of the Board Meetings and other Committee Meetings held during the financial Year 2017-18 are stated in the Corporate Governance Report which forms part of this Annual Report.
F. Board committees
The Company has setup the following committees of the Board:
Audit and Risk Management Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and General Committee and Corporate Social Responsibility Committee.
The composition of each of the above Committees, their respective roles and responsibilities are provided in the Corporate Governance Report which forms part of this Annual Report.
G. Recommendations of the Audit and Risk Management committee
All the recommendations of the audit and Risk Management Committee were accepted by the Board.
H. Details of remuneration to Directors
As required under Section 197(12) of the Companies Act, 2013 information relating to remuneration paid to Directors during the financial year 2017-18 is provided in the Corporate Governance Report and in form MGT 9, that is annexed to and forming part of this Annual Report as Annexure-4.
As stated in the Corporate Governance Report, sitting fees are paid to Non-Executive Directors for attending Board/Committee meetings. They are also entitled to reimbursement of actual travel expenses, boarding and lodging, conveyance and incidental expenses incurred in attending such meetings in accordance with the travel policy for Directors. In addition, the Non-Executive Directors are also eligible for commission every year as recommended by the Nomination and Remuneration Committee and approved by the Board within the overall limit of 1% of the net profits of the Company calculated in accordance with Section 198 of the Companies Act, 2013 as approved by the shareholders at the AGM held on September 30, 2014. Criteria for payment of remuneration to Non- Executive Directors is as below:
1. Membership of Committees
2. Chairmanship of the Committees/Board
3. Benchmarking with other companies
The Company has paid commission of INR 20.2 million for the Financial Year 2017-18 to the Non Executive Directors pursuant to the provisions of the Companies Act, 2013.
The criteria for payment of remuneration to executive directors is determined by the Nomination and Remuneration Committee which includes performance criteria.
i. Board Evaluation Criteria
Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of the SEBI (LODR) Regulations, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the Board Committees. The evaluation process considered the effectiveness of the Board and the committees with special emphasis on the performance and functioning of the Board and the Committees. The evaluation of the Directors was based on the time spent by each of the Board Members, their core competencies, expertise and contribution to the effectiveness and functioning of the Board and its Committees which was carried out through a peer feedback mechanism.
J. Vigil Mechanism
Your Company has a well-established vigil mechanism named as âSpeakUpâ in place, which is overseen by the compliance & ethics team. âSpeakUpâ is a confidential service available to employees to make a report of any breach of the code, policies or applicable laws. âSpeakUpâ is managed by an external agency with staff who are trained to deal with the calls and translators who are immediately available to assist if required. Access to the Chairman of the Audit Committee is provided in appropriate/exceptional cases, as required under the Companies Act, 2013 and the SEBI (LODR) Regulations. All complaints are investigated by the compliance and ethics team and appropriate action taken in accordance with your Companyâs policies.
K. Related party Transactions
The Companyâs policy on dealing with related party transactions was adopted by the Board on June 15, 2015.
This policy has been amended from time to time and is available on the Companyâs website www.diageoindia. com.
All related party transactions that were entered into during the financial year, were at armâs length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with promoters, directors, key managerial personnel or other designated persons which may have a conflict of interest with the Company at large.
The details of related party transactions required under section 134(3)(h) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is given in form AOC-2 and the same is enclosed as Annexure - 2.
L. Meeting amongst independent Directors
The Independent Directors met amongst themselves without the presence of any other persons on May 30, 2017 and July 23, 2017 respectively.
12. Auditors Financial Audit
M/s. Price Waterhouse & Co. Chartered Accountants LLP (FRN 304026E / E-300009) Statutory Auditors of your Company, were appointed as Auditors of your Company from the conclusion of the 17th AGM for a period of 5 years. Since the appointment is not subject to ratification of the appointment by the members at every AGM, no resolution is proposed at this AGM pursuant to the provisions of Companies (Amendment) Act, 2017.
Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a Secretarial Audit has been carried out by Mr Sudhir V Hulyalkar, Practicing Company Secretary (FCS: 6137), and his report is annexed as Annexure - 3.
13. Listing of shares of the company
The equity shares of your Company continue to be listed with the BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). No Listing fees are due as on date.
14. Corporate Governance
A Corporate Governance Report is annexed separately as part of this report.
15. Management Discussion and Analysis Report
The Management Discussion and Analysis Report is annexed separately as part of this report.
16. Fixed Deposits
As reported in the previous yearâs annual report, your Company discontinued accepting fixed deposits from the public and shareholders effective January 1, 2014. In addition, pursuant to section 74(1)(b) of the Companies Act, 2013 the Board of Directors at their meeting held on August 1, 2014 decided to repay all fixed deposits maturing on or after March 31, 2015 by March 31, 2015 by paying additional interest of 1% per annum on those fixed deposits before the maturity date pursuant to the contract entered into with the Fixed Deposit holders. Fixed Deposits from the public and shareholders which remained unclaimed and for which no discharge certificates were received from the depositors as on March 31, 2018 stood at Rs.80,36,000. This amount was transferred into a separate non-interest bearing escrow account opened specifically for the purpose of re-payment, has been re-paid consistent with the provisions of the Companies Act, 2013 and the rules made thereunder. Of this amount, a sum of Rs.7,81,000 (as of June 30, 2018) has since been paid as per instructions received after the year end. The balance unclaimed fixed deposits continue to remain in the escrow account as on 30th June, 2018.
17. Extract of Annual Return
The extract of the Annual Return in Form MGT-9 is annexed as Annexure - 4.
18. Transfer to investor education and protection fund (iepf)
The details of unclaimed/unpaid Dividends and Fixed Deposits which have not been transferred to the IEPF account as the period of seven years have not been completed is given below pursuant to the provisions of the Companies Act, 2013 and the applicable Rules there under.
Dividend:
Financial Year |
No. of Members who have not claimed their dividend |
Unclaimed dividend as on March 31, 2018 (Amount in INR) |
Unclaimed dividend as % to total dividend |
Date of declaration |
Last date for claiming the dividend prior to its transfer to iepf |
2010-11 |
14,336 |
2,818,290.41 |
0.86 |
29-Sep-2011 |
4-Dec-2018 |
2011-12 |
16,331 |
3,102,085 |
0.95 |
25-Sep-2012 |
30-Nov-2019 |
2012-13 |
10,301 |
2,009,965 |
0.55 |
24-Sep-2013 |
29-Nov-2020 |
2013-14 |
Not applicable |
Not applicable as no dividend was declared for the year 2013-14. |
Not applicable |
||
2014-15 |
Not applicable |
Not applicable as no dividend was declared for the year 2014-15. |
Not applicable |
||
2015-16 |
Not applicable |
Not applicable as no dividend was declared for the year 2015-16. |
Not applicable |
||
2016-17 |
Not applicable |
Not applicable as no dividend was declared for the year 2016-17. |
Not applicable |
The number of Unclaimed equity shares transferred during the year ended 31st March, 2018 to Investor Education and Protection Fund pursuant to section 124(6) of the Companies Act, 2013 is 565,206.
Fixed Deposits:
1. |
Accepted during the year |
NIL |
|
2. |
Remained unpaid or unclaimed as at the end of the year |
YEAR |
AMOUNT in â |
2017-18 |
Not Applicable |
||
2016-17 |
Not Applicable |
||
2015-16 |
Not Applicable |
||
2014-15 |
1,558,934 |
||
2013-14 |
2,376,745 |
||
2012-13 |
3,003,196 |
||
2011-12 |
459,892 |
||
3. |
Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved |
NIL |
|
4. |
The Details of deposits which are not in compliance with the requirements of Chapter V of the Companies Act, 2013 |
Not Applicable |
Necessary compliance under Rule 3 of the Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, has been ensured.
19. Human Resources
Employee relations remained cordial at all the locations of the Company. Particulars of employees drawing an aggregate remuneration of Rs.1,02,00,000/- or above per annum or Rs.850,000/- or above per month, as well as additional information on employee remuneration as required under the provisions of rule 5(1), 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial personnel) Rules, 2014 is annexed as part of this report in Annexure - 5 hereto.
20. Employees stock option scheme
Your Company has not offered any stock options to its employees during the year 2017-18.
21. particulars of Loans, Guarantees and investments
Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 are detailed in Notes to the financial statements, which are as follows:
Note 6 is relating to investments, Note 4 is relating to loans given and Note 36 is relating to guarantee given as per the standalone financial statements for the year ended March 31, 2018 include these disclosures.
22. Risk Management
Details on Risk Management are annexed as part of this report in Annexure - 6 hereto.
23. Internal Financial controls
The Board after considering the materials placed before it, reviewed the confirmation received from external parties and reviewing the effectiveness of the policies and procedures adopted by the Company for ensuring orderly and efficient conduct of its business, including adherence to Companyâs policy, safeguarding its assets, prevention and detection of frauds and errors and completeness of accounting records and timely preparation of financial statements, the Board has satisfied itself that the Company has laid down internal financial controls which are commensurate with size of the company and that such internal financial controls are broadly adequate and are operating effectively. The certification by the auditors on internal financial control forms part of the audit report. A statement to this effect is also appearing in the Directorsâ Responsibility Statement.
24. Corporate social Responsibility
Information on the composition of the Corporate Social Responsibility (CSR) Committee is provided in the Corporate Governance Report that forms part of this Annual Report. Furthermore, as required by section 135 of the Companies Act, 2013 and the rules made thereunder, additional information on the policy and implementation of CSR activities by your Company during the year are provided in Annexure - 7 to this report. Business Responsibility Report under Regulation 34(2) (f) of the SEBI (LODR) Regulations has been enclosed as Annexure - 9 and also uploaded on to the Companyâs website www.diageoindia.com
25. Conservation of energy, Technology Absorption, Foreign Exchange Earnings and outgo
The particulars prescribed under section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, are set out in Annexure - 8 to this report.
26. Details of significant and Material orders passed by the Regulators or courts impacting the Going concern status and companyâs operations in Future
The Company has not received any significant or material order passed by regulators or courts impacting the Companyâs going concern status or the Companyâs operations in future pursuant to Rule 8(5)(vii) of Companies (Accounts) Rules, 2014. The Management Discussion and Analysis Report read with the report on Risk Management contains impact on the business due to regulatory changes.
27. Disclosure as required Under section 22 of sexual Harassment of Women at Workplace (prevention, prohibition and Redressal) Act, 2013
The Company has implemented a prevention of sexual harassment policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (SHWWA). An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment and on-going training is provided to employees as required by the SHWWA. During the financial year 2017-18 two complaints were received and resolved.
28. Highlights of performance of subsidiaries, associates and joint venture companies of the company
The highlights of performance of subsidiaries, associates and joint venture companies of the Company and their contribution to the overall performance of the Company is covered as part of the Consolidated Financial Statement and form AOC-1 annexed as part of this report. Out of 18 subsidiary/ associate companies, 15 are inoperative companies.
29. Directorsâ Responsibility statement
Pursuant to section 134 (5) of the Companies Act, 2013 in relation to financial statements (together with the notes to such financial statements) for the year 2017-18, the Board of Directors report that:
(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit/ loss of the Company for that period;
(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the financial statements on a going concern basis;
(v) the Directors have laid down internal financial controls to be followed by the Company commensurate with the size and nature of its business and the complexity of its operations and that such internal financial controls are adequate and are operating effectively.
(vi) the Company has a system of getting reports of compliance periodically from the units and has substantially implemented a process having comprehensive systems to ensure compliance with the provisions of all applicable laws and is operating effectively.
Your Directors place on record their sincere appreciation for the continued support from the shareholders, customers, suppliers, government, banks and financial institutions and other business associates.
A particular note of thanks to all employees of your Company, without whose contribution, your Company could not have achieved the yearâs performance.
By Authority of the Board
Anand Kripalu Mahendra Kumar sharma
MD & CEO Chairman
Edinburgh, Scotland July 23, 2018
Mar 31, 2017
The Directors are pleased to present the 18th Annual Report of your Company and the audited financial statements for the year ended March 31, 2017.
1. Financial Results#
Rs. Million
Standalone |
Consolidated |
|||
2016-17 |
2015-16 |
2016-17 |
2015-16 |
|
The working of your Company for the year under review resulted in |
||||
Profit / Loss from operations |
7,131 |
5,452 |
7,194 |
5,508 |
Exceptional and other non-recurring items |
3,262 |
1,280 |
3,681 |
274 |
Less: |
||||
Depreciation |
1,323 |
1,017 |
1,886 |
1,572 |
Taxation (including deferred tax) |
847 |
1,936 |
697 |
2,228 |
Profit / (Loss) after tax |
1,699 |
1,219 |
9301 |
1,434* |
Profit B/F from previous year |
(42,590) |
(52,244) |
(46,815) |
(56,621) |
Minority Interest appropriation |
- |
- |
71 |
-52 |
Foreign Currency Translation Reserve Considered separately |
- |
- |
29 |
-215 |
Total Comprehensive Income |
499 |
86 |
468 |
290 |
Transfer between reserves |
68 |
8,349 |
68 |
8,349 |
Profit / (Loss) available for appropriation |
(40,324) |
(42,590) |
(45,248) |
(46,815) |
Your Directors have made the following appropriations: |
||||
General Reserve |
- |
- |
- |
- |
Dividend paid in respect to previous years |
- |
- |
- |
- |
Proposed dividend |
- |
- |
- |
- |
Corporate Tax on Proposed Dividend |
- |
- | |
- |
- |
Corporate Tax on Dividend paid |
- |
- |
- |
- |
Balance carried to the Balance sheet |
(40,324) |
(42,590) |
(45,248) |
(46,815) |
EPS-Basic & Diluted(Rupees) |
11.69 |
8.39 |
7.06 |
9.75 |
* Excluding minority interest
# Previous year''s figures varies compared to 17th Annual Report in view of the implementation of Indian Accounting Standard (Ind AS) effective April 1, 2016.
1.1 Subsidiary Companies
In accordance with section 129(3) of the Companies Act, 2013, (''Companies Act1) a statement containing salient features of the financial statements of the subsidiary companies in Form AOC1 is provided as Annexure - 1 to this report.
In accordance with the third proviso to section 136(1) of the Companies Act, the annual report and financial statements of each of the subsidiary companies have also been placed on the website of the Company www.diageoindia.com
2. Board''s Responses to Observations, Qualifications and Adverse Remarks in Auditor''s Report
The Statutory Auditors have given unqualified opinion on the Financial Statements for the year ended March 31, 2017 and hence this is not applicable.
The Secretarial Auditor has given an unqualified opinion in the Secretarial Audit Report for the year ended March 31, 2017, referred to in Annexure 3 and hence this item is not applicable.
3. Material Changes and Commitments/ Events Subsequent to the date of the Financial Statements
The details of material changes and commitments/ event subsequent to the date of the financial statement is provided under Management Discussion and Analysis Report and the report on Risk Management forming part of this Annual Report.
4. Change in nature of Business, if any
The details of change in nature of business is provided under Management Discussion and Analysis Report and the Report on Risk Management forming part of this Annual Report.
5. Dividend
In view of the accumulated losses of the preceding years, your directors have not recommended any dividend. No amount is proposed to be carried to reserves.
6. Capital
The authorized share capital of your Company remains unchanged at Rs.7,192,000,000 divided into 548,000,000 equity shares of Rs. 10/- each amounting to Rs.5,480 million, 159,200,000 Preference shares of Rs.10/- each amounting to Rs.1,592.0 million and 1,200,000 7% non-cumulative redeemable Preference Shares of Rs.100/- each amounting to Rs.120 million.
The issued, subscribed and paid-up equity share capital of your Company remain unchanged at Rs.1,453,277,430/divided into 145,327,743 equity shares of Rs.10/- each.
7. Global Depository Shares
During the financial year 2005-06, the Company had issued 17,502,762 global depository shares (GDSs) representing 8,751,381 equity shares with 2 GDSs representing 1 equity share of face value of Rs.10/- each at US$ 7.4274 per GDS, aggregating to US$ 130 million, listed on the Luxembourg stock exchange. These GDSs did not carry any voting rights. The Company, as mentioned in its letter dated September 22, 2016 addressed to Deutsche Bank Trust Company Americas, Depository for the GDS, had elected to terminate the deposit agreement in respect of the GDSs and the same was communicated to the Luxembourg Stock Exchange with the objective of delisting these GDSs listed with Luxembourg stock exchange. The Company vide its letter dated January 09, 2017, extended the termination date to February 10, 2017 and eventually the Depository for global depository shares (GDSs), was terminated by virtue of which the GDSs have been cancelled. Notwithstanding this development, the number of shares outstanding or issued and subscribed in the share capital of the Company remains unchanged at Rs.1,453 million being 145,327,743 equity shares of Rs.10 each fully paid up and the Company''s shares continue to be listed with the National Stock Exchange of India Limited and BSE Limited. Consequent to this, the GDS listed with the Luxembourg Stock Exchange had been delisted.
8. Performance of the Company
During the year under review, your Company has achieved a sales volume of over 90 million cases and this resulted in decline of 3.2% compared to prior period (previous year 93 million cases, excluding royalty / franchise markets). Net sales/income from operations of the Company''s brands grew 3.6% in the financial year ended March 31, 2017 and stood at Rs.85,476 million net of duties and taxes (previous year Rs.82,482 million). Sales volume of the Company''s brands in the ''Prestige and Above'' segment grew 7.7% in the financial year ended March 31, 2017 and stood at 37 million cases (previous year 34 million cases). Net sales of the ''Prestige and Above'' segment grew 13% and stood at Rs.49,660 million net of duties and taxes (previous year Rs.46,013 million). The ''Prestige and Above'' segment represents 41% of total sales volumes and 58% of total net sales with 4 basis points and 5 basis points improvement respectively compared to previous year.
9. Details of Subsidiary Companies, Joint Ventures and Associate Companies and their Financial Position
Your Company continues to have 19 subsidiary companies in the financial year ended on March 31, 2017. The information required under the first proviso to section 129(3)of the Companies Act is given inform AOC- 1 in Annexure 1. The Company''s policy for determining material subsidiaries is available at Company''s website www.diageoindia.com.
Performance of Associates, Subsidiaries and Joint Ventures and their contribution to overall performance of the Company is covered as part of the Consolidated Financial statement and in form AOC-1, annexed to and forming part of this Annual Report.
10. Prospects/Outlook
The details about prospects/ outlook of your Company are provided under the Management Discussion and Analysis Report forming part of this Annual Report.
11. Depository System
The trading in the equity shares of your Company is under compulsory dematerialisation mode. As on March 31, 2017, equity shares representing 98.77% of the equity share capital are indematerialised form. As the depository system offers numerous advantages, members are requested to take advantage of the same and avail of the facility of dematerialisation of the Company''s shares.
12. Board Meetings, Board of Directors, Key Managerial Personnel & Committees of Directors.
12.1 A. Appointment, change in designation and resignation
Details on appointments, changes in designation, resignation of Directors, key managerial personnel, and Committees of Directors, as well as on Board and Committee meetings of your Company, and the matters required to be specified pursuant to sections 134 and 178 of the Companies Act, 2013 and the SEBI (Listing Obligations And Disclosure Requirements) Regulations, 2015 (SEBI (LODR) Regulations) are provided in the Corporate Governance Report that is annexed to and form part of this Annual Report.
B. Re-appointment
As per the provisions of the Companies Act, Mr Vinod Rao retires by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re- appointment.
Members may please note that Mr Vinod Rao, who is a nominee of Relay B V, was appointed as a Director at the 17th Annual General Meeting (AGM).
A brief profile of Mr Vinod Rao is provided in the Notice convening 18th AGM.
C. Independent Directors and Nominee Directors
Mr Sudhakar Rao, an Independent Director of the Company resigned as director with effect from May 19, 2016.
Mr Ravi Rajagopal, a Non-Executive Director of the Company resigned as director with effect from October 13, 2016.
Dr Nicholas Bodo Blazquez, a Non-Executive Director of the Company resigned as director with effect from January 22, 2017.
Your directors place on record their sincere appreciation of the valuable services rendered by Mr Sudhakar Rao, Mr Ravi Rajagopal and Dr Nicholas Bodo Blazquez during their tenure as directors of the Company.
Mr V K Viswanathan was appointed as an Independent Director with effect from October 17, 2016
Pursuant to nominations received from Relay B.V., the holding company of your Company, Mr Vinod Rao, Mr John Thomas Kennedy and Mr Randall Ingber, were appointed as Directors of the Company with effect from May 24, 2016, August 17, 2016 and February 2, 2017 respectively.
Brief profiles of Mr V K Viswanathan, Mr Vinod Rao, Mr John Thomas Kennedy and Mr Randall Ingber are provided in the Notice convening 18th AGM.
D. Executive Director
Mr Sanjeev Churiwala, Chief Financial Officer, was nominated by Relay B V, for appointing him as an Executive Director and accordingly the Board of Directors of the Company appointed him as an Executive Director and Chief Financial Officer of the Company with effect from April 1, 2017.
A brief profile of Mr Sanjeev Churiwala is provided in the Notice convening 18th AGM.
E. Number of Meetings of the Board
The details of the Board Meetings and other Committee Meetings held during the financial Year 2016-17 are stated in the Corporate Governance.
F. Board Committees
The Company has setup the following committees of the Board:
Audit and Risk Management Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Corporate Social Responsibility Committee and General Committee of Directors.
The composition of each of the above Committees, their respective roles and responsibilities are provided in the Corporate Governance Report.
G. Recommendations of the Audit and Risk Management Committee
All the recommendations of the audit and risk managment committee have been accepted by the Board.
H. Details of remuneration to Directors
As required under Section 197(12) of the Companies Act, information relating to remuneration paid to Directors during the financial year 2016-17 is provided in the Corporate Governance Report and in form MGT 9, that is annexed to and forming part of this Annual Report as Annexure-4.
As stated in the Corporate Governance Report, sitting fees are paid to Non-Executive Directors for attending Board/ Committee meetings. They are also entitled to reimbursement of actual travel expenses, boarding and lodging, conveyance and incidental expenses incurred in attending such meetings, in accordance with the travel policy for Directors. In addition, the Non-Executive Directors are also eligible for commission every year, not exceeding 1% of the net profits of the Company calculated in accordance with Section 198 of the Companies Act, as approved by the shareholders at the AGM held on September 30, 2014. Such approval remain in force until revoked. The payment of Commission is to be decided by the Board of Directors, based on the recommendation of the Nomination and Remuneration Committee. Criteria for payment of remuneration to Non-Executive Directors is as below:
1. Membership of Committees
2. Chairmanship of the Committees/Board
3. Benchmarking with other companies
The Company has made a provision of '' 21.5 million for paying commission to the Non-Executive Directors pursuant to the provisions of the Companies Act, 2013.
The criteria for payment of remuneration to executive directors is determined by the Nomination and Remuneration Committee.
I. Board Evaluation Criteria
Pursuant to the provisions of the Companies Act and Regulation 17 of the SEBI (LODR) Regulations, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the Board Committees. The evaluation process considered the effectiveness of the Board and the committees with special emphasis on the performance and functioning of the Board and the Committees. The evaluation of the Directors was based on the time spent by each of the Board Members, core competencies, expertise and contribution to the effectiveness and functioning of the Board and the Committees.
12.2 Vigil Mechanism
Your Company has a well-established vigil mechanism in place, which is managed by the compliance & ethics team. ''SpeakUp'' is a confidential service available to employees to make a report when they believe there to be a potential breach of the code, policies or applicable laws. ''SpeakUp'' is managed by an external agency with staff who are trained to deal with the calls and translators who are immediately available to assist if required. Access to the Chairman of the Audit Committee is provided for in appropriate/ exceptional cases, as required under the Companies Act and the SEBI (LODR) Regulations. All complaints are investigated by the compliance and ethics team and appropriate action taken in accordance with your Company''s policies.
12.3 Related Party Transactions
The Company''s policy on dealing with related party transactions was adopted by the Board on June 15, 2015. This policy has been amended from time to time and is available on the Company''s website www.diageoindia. com.
All related party transactions that were entered into during the financial year, were on an arm''s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with promoters, directors, key managerial personnel or other designated persons which may have a potential conflict of interest with the Company at large.
The details of related party transactions required under section 134(3)(h) of the Companies Act read with Rule 8 of the Companies (Accounts) Rules, 2014 is given in form AOC-2 and the same is enclosed as Annexure-2.
13. Auditors
13.1 Financial Audit
M/s. Price Waterhouse & Co Chartered Accountants LLP (FRN 304026E/ E-300009) Statutory Auditors of your Company, were appointed as Auditors of your Company from the conclusion of the 17th AGM for a period of 5 years subject to ratification of the appointment by the members at every AGM.
13.2 Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a Secretarial Audit has been carried out by Mr Sudhir V Hulyalkar, Practising Company Secretary, and his report is annexed as Annexure 3.
14. Listing of Shares of the Company
The equity shares of your Company continue to be listed with the BSE Limited and the National Stock Exchange of India Limited (NSE). The listing fees due as on date have been paid to the respective stock exchanges. The GDS listed with Luxembourg Stock Exchange had been delisted consequent upon the termination of the Depository Agreement entered into with the Depository namely Deutsche Bank Trust Company Americas.
15. Corporate Governance
A Corporate Governance Report is annexed separately as part of this report.
16. Management Discussion and Analysis Report
The Management Discussion and Analysis Report is annexed separately as part of this report.
17. Fixed Deposits
As reported in the previous year''s annual report, your Company discontinued accepting fixed deposits from the public and shareholders effective January 1, 2014. In addition, pursuant to section 74(1)(b) of the Companies Act, the Board of Directors at their meeting held on August 1, 2014 decided to repay all fixed deposits maturing on or after March 31, 2015 by March 31, 2015. Fixed Deposits from the public and shareholders which remained unclaimed and for which instructions had not been received from the depositors as on March 31, 2017 stood at Rs.1,12,05,419. This amount was transferred into a separate non-interest bearing escrow account opened specifically for the purpose of re-payment, has been re-paid consistent with the provisions of the Companies Act and the rules made thereunder. Of this amount, a sum of Rs.49,02,310 (as of June 30, 2017) has since been paid as per instructions received after the year end. The balance unclaimed fixed deposits continue to remain in the escrow account.
18. Extract of Annual Return
The extract of the Annual Return in Form MGT-9 is annexed as Annexure 4.
19. Transfer to Investor Education and Protection Fund (IEPF)
An amount of Rs.27,77,294/- and Rs.5,60,826/- in respect of the unclaimed/unpaid dividend and fixed deposits respectively, during the financial year 2009-10 have been transferred to Investors Education and Protection Fund pursuant to the provisions of Sections 124 of the Companies Act read with Rule 8 of the Companies (Accounts) Rules, 2014. The details of the shareholders and Fixed Deposit holders with the names of those shareholders and deposit holders are available on the website of the Company.
The details of unclaimed/unpaid Dividends and Fixed Deposits which have not been transferred to the IEPF account as the period of seven years has not been completed is given below pursuant to the provisions of the Companies Act and the applicable Rules there under.
Dividend:
Financial Year |
No. of Members who have not claimed their dividend |
Unclaimed dividend as on March 31, 2017 (Amount in '') |
Unclaimed dividend as% to total dividend |
Date of declaration |
Last date for claiming the dividend prior to its transfer to IEPF |
2009-10 |
12,416 |
2690870 |
0.86 |
29-Sep-2010 |
4-Dec-2017 |
2010-11 |
14,390 |
2833572 |
0.86 |
29-Sep-2011 |
4-Dec-2018 |
2011-12 |
16,459 |
3138447 |
0.96 |
25-Sep-2012 |
30-Nov-2019 |
2012-13 |
10,356 |
2030605 |
0.56 |
24-Sep-2013 |
29-Nov-2020 |
2013-14 |
- |
Not applicable |
- |
Not applicable as no dividend was declared for the year 2013-14. |
Not applicable |
2014-15 |
- |
Not applicable |
- |
Not applicable as no dividend was declared for the year 2014-15. |
Not applicable |
2015-16 |
- |
Not applicable |
- |
Not applicable as no dividend was declared for the year 2015-16. |
Not applicable |
Fixed Deposits:
1. |
Accepted during the year |
NIL |
|
2. |
Remained unpaid or unclaimed as at the end of the year |
YEAR |
AMOUNT in '' |
2016-17 |
Not Applicable |
||
2015-16 |
Not Applicable |
||
2014-15 |
2850572.00 |
||
2013-14 |
2527021.00 |
||
2012-13 |
3526798.00 |
||
2011-12 |
1076345.00 |
||
2010-11 |
796623.00 |
||
3. |
Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved |
NIL |
|
4. |
The Details of deposits which are not in compliance with the requirements of Chapter V of the Companies Act |
Not Applicable |
Necessary compliance under Rule 3 of the Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, has been ensured.
20. Human Resources
Employee relations remained cordial at all the locations of the Company. Particulars of employees drawing an aggregate remuneration of Rs.1,02,00,000/- or above per annum or Rs.850,000/- or above per month, as well as additional information on employee remuneration as required under the provisions of rule 5(1), 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial personnel) Rules, 2014 is annexed as part of this report in Annexure 5 hereto.
21. Employees Stock Option Scheme
Your Company has not offered any stock options to its employees during the year 2016-17. During the year 2015-16, the Board approved a Stock Appreciation Rights (SAR) plan for grant of 500,000 SARs and authorized the Nomination and Remuneration Committee to decide the criteria for grant and vesting of the SARs to employees and eligible directors. Since there will be no fresh issue of shares as a result of the SARs, there will be no dilution of equity and earning per share.
22. Particulars of Loans, Guarantees and Investments
Loans, guarantees and investments covered under Section 186 of the Companies Act, are detailed in Notes to the financial statements, which are as follows:
Notes 4.1 and 4.2 relating to investments, Notes 5, 6 and 9 relating to loans given and Note 37 relating to guarantee given as per the standalone financial statements for the year ended March 31, 2017 include these disclosures.
23. Risk Management
Details on Risk Management are annexed as part of this report in Annexure 6 hereto.
24. Internal Financial Controls
The Board considered materials placed before it and after reviewing the confirmation from external parties and reviewing the effectiveness of the policies and procedures adopted by the Company for ensuring orderly and efficient conduct of its business, including adherence to Company''s policy, safeguarding its assets, prevention and detection of frauds and errors and completeness of accounting records and timely preparation of financial statements, the Board has satisfied itself that the Company has laid down internal financial controls which commensurate with size of the company and that such internal financial controls are broadly adequate and are operating effectively. The certification by the auditors on internal financial control forms part of the audit report. A statement to this effect is also appearing in the Directors'' Responsibility Statement.
25. Corporate Social Responsibility
Information on the composition of the Corporate Social Responsibility (CSR) Committee is provided in the Corporate Governance Report that forms part of this Annual Report. Furthermore, as required by section 135 of the Companies Act and the rules made thereunder, additional information on the policy and implementation of CSR activities by your Company during the year are provided in Annexure 7 to this report. Business Responsibility Report under Regulation 34(2) (f ) of the SEBI (LODR) Regulations has been enclosed as Annexure 9 and also uploaded on to the Company''s website www.diageoindia.com
26. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
The particulars prescribed under section 134(3)(m) of the Companies Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, are set out in Annexure 8 to this report.
27. Details of Significant and Material Orders Passed by the Regulators or Courts Impacting the Going Concern Status and Company''s Operations in Future
The Company has not received any significant or material order passed by regulators or courts impacting the Company''s going concern status or the Company''s operations in future. The Management Discussion and Analysis Report read with the report on Risk Management contains impact on the business due to regulatory changes.
28. Disclosure as required Under Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has implemented a prevention of sexual harassment policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (SHWWA). An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment and ongoing training is provided to employees as required by the SHWWA. During the financial year 2016-17 no complaint was received.
29. Highlights of performance of subsidiaries, associates and joint venture companies of the Company
The highlights of performance of subsidiaries, associates and joint venture companies of the Company and their contribution to the overall performance of the Company is covered as part of the Consolidated Financial Statement and form AOC-1 annexed as part of this report. Out of 20 subsidiary/associate companies, 13 are inoperative companies.
30. Directors'' Responsibility Statement
Pursuant to section 134 (5) of the Companies Act, in relation to financial statements (together with the notes to such financial statements) for the year 2016-17, the Board of Directors report that:
(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit/ loss of the Company for that period;
(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the financial statements on a going concern basis;
(v) the Directors have laid down internal financial controls to be followed by the Company commensurate with the size and nature of its business and the complexity of its operations and that such internal financial controls are adequate and are operating effectively and the control gaps noticed in invoicing has since been appropriately addressed; and
(vi) the Company has a system of getting reports of compliance periodically from the units and has substantially implemented a process having comprehensive systems to ensure compliance with the provisions of all applicable laws and is operating effectively.
Your Directors place on record their sincere appreciation for the continued support from the shareholders, customers, suppliers, banks and financial institutions and other business associates.
A particular note of thanks to all employees of your Company, without whose contribution, your Company could not have achieved the year''s performance.
By Authority of the Board
Anand Kripalu Mahendra Kumar Sharma
MD & CEO Chairman
Bengaluru July 23, 2017
Mar 31, 2015
The Directors are pleased to present the Annual Report of your company
and the audited accounts for the year ended March 31, 2015.
1. Financial Results
Rupees (Millions)
Standalone Consolidated
2014-15 2013-14 2014-15 2013-14
The working of your
company for the year
under review resulted
in Profit/Loss from
operations 532.68 (6,210.53) (5,732.63) (7,742.06)
Exceptional and other
non-recurring items (18,716.68) (43,216.26) (8,391.56) (32,357.35)
(18,184.00) (49,426.79) (14,124.19) (40,099.41)
Less:
Depreciation 1,097.40 855.03 (2,228.74) (2,026.13)
Taxation (including
deferred tax) 283.35 746.40 (520.40) (2,762.31)
Profit/(Loss) after tax (19,564.75) (51,028.22) (16,873.33) (44,887.85)
Profit B/f from
previous year (30,835.13) 20,233.81 (38,852.41) 6,030.31
Minority interest
appropriation - - (3.82) (3.07)
Net impact of Profit
of demerged unit 24.91 - 24.91 -
Transitional depreciation (79.55) - (667.39) -
Transfer between reserves - - - 48.92
Profit/(Loss) available
for appropriation (50,454.52) (30,794.41) (56,372.04) (38,811.69)
Your Directors have
made the following
appropriations:
General Reserve - - - -
Dividend paid in
respect to previous
years - (36.32) - (36.32)
Proposed dividend - - - -
Corporate tax on
proposed Dividend - - - -
Corporate tax on
Dividend paid - (4.39) - (4.39)
Balance carried to
the Balance sheet (50,454.52) (30,835.13) (56,372.04) (38,852.41)
EPS - Basic &
Diluted (Rupees) (134.62) (356.60) (116.13) (316.86)
1.1. Subsidiary Companies
In accordance with section 129(3) of the companies Act, 2013, a
statement containing salient features of the financial statements of
the subsidiary companies in form Aoc 1 is provided as Annexure - 1 to
this report.
In accordance with third proviso to section 136(1) of the companies
Act, 2013, the annual report and financial statements of each of the
subsidiary companies have also been placed on the website of the
company www. unitedspirits.in
2. Board's Responses to Observations, Qualifications and Adverse
Remarks In Auditor's Report the statutory Auditors (Auditors) have
qualified their opinion in relation to the matters specified in Notes
24(d), 26(a), 26(e) and 45 of the financial statements for the year
ended March 31, 2015 (statements). the Board's responses to the
qualifications and other observations or adverse remarks are as
follows.
2.1. Auditor's observations under paragraph 1 of the Auditor's Report
to the Statements
As stated in Notes 26(a) and 26(e) to the financial statements, during
the year ended 31 March 2014, certain parties who had previously given
the required undisputed balance confirmations for the year ended 31
March 2013, claimed in their balance confirmations to the Company for
the year ended 31 March 2014 that they had advanced certain amounts to
certain alleged UB Group entities and that the dues owed by such
parties to the Company would, to the extent of the amounts owing by
such alleged UB Group entities to such parties in respect of such
advances, be paid / refunded by such parties to the Company only upon
receipt of their dues from such alleged UB Group entities. These dues
of such parties to the Company were on account of advances by the
Company in the earlier years under agreements for enhancing capacity,
obtaining exclusivity and lease deposits in relation to Tie-up
Manufacturing Units ("TMUs"); agreements for specific projects; or dues
owing to the Company from customers. In response to these claims, under
the instruction of the Board of Directors of the Company ("Board"), a
preliminary internal inquiry was initiated by the Management. Based on
the findings of the preliminary internal inquiry by the Management,
under the instructions of the Board; and Management's assessment of
recoverability, an aggregate amount of Rs. 6,495.5 million (including
interest claimed) was provided in the financial statements for the
financial year ended 31 March 2014 and was disclosed as prior period
items. During the year ended 31 March 2015, an additional provision of
Rs. 216 million was made for interest claimed during the year. The
Company has not made provision for any unclaimed interest on these
amounts.
During the year ended 31 March 2014, the Board had also directed a
further detailed and expeditious inquiry in relation to the above
matter, the role of individuals involved and potential non-compliance
(if any) with the provisions of the Companies Act, 1956 and other
regulations applicable to the Company in relation to such transactions,
and the possible existence of any other transaction of a similar nature
("Inquiry"). While the Inquiry has since been completed, with regard to
the possible existence of any other transaction of a similar nature,
the Inquiry identified references to certain additional parties
("Additional Parties") in various documents, which documents dealt with
transactions involving the counterparties referred to above. The
Inquiry also identified certain additional matters ("Additional
Matters") where the documents identified concerns as to the propriety
of the underlying transactions.
Based on its current knowledge, the Management believes that the
provisions made with respect to the above matters are adequate and no
additional material adjustments are likely to be required in relation
thereto. The Board has directed the Management to expeditiously review
the Additional Matters and transactions with the Additional Parties and
report to the Board on Management's conclusions on the transactions and
any further impact on the Company's financial statements. Pending such
review of the Additional Matters and transactions with Additional
Parties, we are unable to comment on the nature of these transactions;
the provisions established; or any further impact on the financial
statements including the impact on the opening balances for the year.
Further, pending resolution of the above disputes, we are unable to
comment on whether the provision established for interest is
appropriate
Board's Response: Detailed information and explanation on the
qualification in paragraph 1 of the audit report are provided in Notes
26(a) and 26(e) to the statement. in particular, as stated in Note
26(a) an aggregate amount of Rs. 649.55 crores (including interest
claimed) was provided in the financial statements for the financial
year ended March 31, 2014 and was disclosed as a prior period item.
During the year ended March 31, 2015, an additional provision of Rs.
21.60 crores was made for interest claimed. the Management has
determined that in light of these provisions, no additional material
adjustments to the financial statements are required in respect of the
dues owing to the company from such parties. in connection with the
recovery of the above funds, pursuant to the decision of the Board at
its meeting held on April 25, 2015, the company is in the process of
initiating steps for recovery against the relevant parties, so as to
seek to expeditiously recover the company's dues from such parties, to
the extent possible.
In relation to the transactions with the Additional parties and the
Additional Matters referred to above, as stated in Note 26(e) to the
statement, Management has made the following provisions with respect to
such transactions:
(a) Rs. 67.81 crores made in the company's financial statements for the
financial year ended March 31, 2015,
(b) Rs. 44.54 crores made in the company's subsidiaries' financial
statements for the financial year ended March 31, 2015, (c) Rs. 15.70
crores made in the previous year in the company's financial statements,
and (d) Rs. 108.71 crores made in the previous year in the company's
consolidated financial statements. the Management believes these
provisions are adequate and no additional material adjustments are
likely to be required in relation thereto. the Board has directed the
Managing Director and chief executive officer (MD & ceo) to
expeditiously further review the Additional Matters and transactions
with the Additional parties during the period covered by the inquiry
and report to the Board his conclusions on the transactions and any
further impact on the company's financial statements.
2.2. Auditor's observations under paragraph 2 of the Auditor's Report
to the Statements
As stated in Note 24(d) to the financial statements, as per the
requirements of the equity listing agreements entered into by the
Company with various stock exchanges in India and various circulars and
regulations issued by the Securities and Exchange Board of India
("SEBI") and applicable provisions of the Act, the Company sought
approval of its equity shareholders for certain agreements in the
extraordinary general meeting ("EGM") held on 28 November 2014. Some of
the agreements, as detailed in the aforesaid note, were not approved by
the equity shareholders in the aforesaid EGM. The Company has sought
clarification/direction from SEBI with respect to the implications
arising from the non-approval of the said agreements. Pending the
clarification/direction from the SEBI, during the year ended 31 March
2015, the Company has recognised the underlying expenses pursuant to
these agreements up to 28 November 2014 aggregating Rs. 1,357 million.
The Company has not recognised charges arising out of non-approved
agreements aggregating Rs. 486 million for the period from 29 November
2014 to 31 March 2015 and has disclosed the same as contingent
liability. Further, subsequent to 28 November 2014, in response to the
letters received by the Company from some of the concerned
counterparties, the Company has made payments amounting to Rs. 74
million to such counterparties with respect to the dues for services
received prior to 28 November 2014 specifically stating that the said
amounts would be refundable to the Company if it is determined that
such amounts were not payable by the Company in view of the
shareholders not having approved the respective agreements. Pending
the resolution of this matter, we are unable to comment on the
accounting treatment of the expenses under the agreement, balance due
to/from the respective counterparties and any other implications
resulting from such non-approval.
Board's response: Detailed information and explanation on the
qualification in paragraph 2 of the audit report is provided in Note
24(d) to the statement. pending the clarification/ direction from SEBI,
the company has recognized the charges up to November 28, 2014, in
respect of the agreements listed in (c) to (g) and (i) specified in
Note 24(d) above, amounting to Rs. 135.73 crores during the financial
year ended March 31, 2015 (Rs. 138.22 crores for the financial year
ended March 31, 2014). in light of the fact that the company's
shareholders have not approved the said agreements on November 28,
2014, the company has not recognized the charges amounting to Rs. 48.62
crores from November 29, 2014 to March 31, 2015 payable under the
agreements listed in (c) to (g) and (i) specified in Note 11 above. the
company has informed the respective counterparties that the contracts
mentioned above have not been approved by the shareholders. further,
subsequent to November 28, 2014, in response to the letters received by
the company from the concerned counterparties, the company has made
payments amounting to Rs. 7.43 crores to some of these counterparties
with respect to the dues for services received prior to November 28,
2014, specifically stating that the said amounts would be refundable to
the company if it is determined that such amounts were not payable by
the company in view of the shareholders not having approved the
respective agreements. pending the clarifications/ directions from
SEBI, the company has not made any payments to the respective
counterparties under the agreements in (c) to (g) and (i) specified in
Note 24(d) above for the period subsequent to November 28, 2014 and has
considered these amounts as contingent liabilities. Also see Note
26(b) of the statement in relation to the loan agreement listed in (a)
of Note 24(d). pending any clarifications/ directions from SEBI, the
company is unable to determine whether there could be any impact on the
financial statements.
2.3. Auditor's observations under paragraph 3 of the Auditor's Report
to the Statements
As stated in Note 45 to the financial statements, the Managerial
remuneration for the year ended 31 March 2015 aggregated Rs. 65 million
and Rs.153 million towards remuneration of the Managing Director and
Chief executive Officer (MD & CEO) and the Executive Director and Chief
Financial Officer (ED & CFO), respectively. The aforesaid amounts
include remuneration in excess of the limits prescribed under the
provisions of Schedule V to the Act. The Company is in the process of
obtaining the requisite approval from the Central Government for such
excess remuneration. In the absence of the required approval, we are
unable to assess the impact of such excess remuneration on the
financial statements of the Company.
Board's response: information and explanation on the qualification in
paragraph 3 of the audit report is provided in Note 45 to the
statement. in particular, as stated in Note 45, the company is in the
process of obtaining the requisite approval from the central Government
for such excess remuneration. pending such approval, the company is
unable to determine whether there could be any impact on the financial
statements.
2.4. A. Auditor's observations under paragraphs (iii), (iii) (a) and
(iii)(b) of the Annexure to the Auditor's Report to the Statements
According to the information and explanation given to us, the Company
has granted loans to eleven companies, firms or other parties covered
in the Register maintained under Section 189 of the Companies Act, 2013
("the Act"). These loans include loan to United Breweries (Holdings)
Limited ("UBHL" ) by way of conversion of certain pre-existing loans/
advances/ deposits due to the Company and its subsidiaries (refer
Paragraph 1 under 'Emphasis of Matter').
Further, as stated in Note 26, the Board had directed a detailed and
expeditious inquiry in relation to certain transactions identified
during the year ended 31 March 2014. The Inquiry stated that between
2010 and 2013, funds involved in many of these transactions were
diverted from the Company and/ or its subsidiaries to certain UB Group
companies, including in particular, Kingfisher Airlines Limited
("KFA"), which is a party covered in the register maintained under
Section 189 of the Act.
Additionally, pending the completion of the review of the Additional
Matters and transactions with Additional Parties identified through the
Inquiry as disclosed in Paragraph 1 under 'Basis for Qualified
Opinion', we are unable to comment whether any such arrangements
represent transactions with any body corporate covered in the register
maintained under Section 189 of the Act.
(a) As stated in Paragraph 2 under 'Basis for Qualified Opinion', in
the case of the loan granted to UBHL, a company covered in the Register
maintained under Section 189 of the Act, the loan agreement was not
approved by the Equity Shareholders in the Extraordinary General
Meeting held on 28 November 2014. We have been informed by the
Management that, the Company has sought clarification/ direction from
the SEBI with respect to the implications arising from the non-approval
of the said agreement. The Company is evaluating steps for recovery of
the loan. Further, as stated in Paragraph 1 under 'Emphasis of Matter',
the Company has not received the first instalment of interest amounting
to Rs. 1,911 million (gross of tax) with respect to the loan. No
interest has been received on this loan to date. The loan has been
fully provided for in the financial statements.
With respect to loans given to other companies, firms or other parties
covered in the Register maintained under Section 189 of the Act, the
principal and interest are repayable either on demand or the repayment
terms are not stipulated. According to the information and explanation
given to us, we understand that no amounts were demanded by the Company
during the year.
(b) According to information and explanation provided to us, the
Company is evaluating the required steps for the recovery of the
principal and interest due in respect of the loan granted to UBHL.
Further, as stated in Note 26(a), the Company is also in the process of
initiating recovery proceedings with respect to the funds that may have
been diverted from the Company and/ or its subsidiaries to certain UB
Group companies.
Board's response: information and explanation on the qualification in
paragraph (iii) of the Annexure to the audit report is provided in
Notes 24(d), 26(a), 26(b) and 26(e) to the statement.
in particular, Note 24(d) provides information in connection with the
non-approval by the shareholders of the company of the loan agreement
with UBHL (and of other potential related party transactions).
furthermore, as stated in Note 26(b), the inquiry report stated that
prima facie, between 2010 and July 2013, certain transactions appear to
have been undertaken and certain accounting entries appear to have been
made to show a lower exposure of the company (and its subsidiaries) to
UBHL than the exposure that actually existed at that time. prima
facie, this indicates various improprieties and potential violations of
provisions, inter alia, of the companies Act, 1956, and the listing
agreement signed by the company with various stock exchanges in India
on which its securities are listed (Listing Agreement). the company is
in the process of evaluating its rights and remedies in relation to
such violations.
in addition, as stated in Note 26(b), during the previous year, as a
matter of prudence, the company had not recognized interest income of
Rs. 96.31 crores and had provided Rs. 330.32 crores towards the
principal outstanding as at March 31, 2014. the notes to accounts for
the previous year had recorded the Management's belief that it should
be able to recover, and that no further provision is required for the
balance amount of Rs. 995.46 crores. the said notes also mentioned that
the Management would continue to assess the recoverability of the said
loan on an on-going basis. As per the terms of the said loan agreement,
an amount of Rs. 191.10 crores (gross of tax) was payable by UBHL to
the company towards the interest payable as of January 2015 under the
loan agreement. however, the company is yet to receive such interest
payment from UBHL. the company received a letter from UBHL stating that
it is involved in litigations with various creditors of KFA in
different courts all over the country, and that some of the winding up
petitions fled against UBHL have been admitted by the high court of
Karnataka. As a result of the above and other relevant factors, as a
matter of prudence, the company has provided a further amount of Rs.
995.46 crores towards the entire balance principal amount (i.e., the
entire principal amount due under the loan agreement less the amount
already provided in the accounts for the financial year ended March 31,
2014) and has not recognized interest income of Rs. 120.70 crores.
As stated in Notes 26(a) and 26(b), the company is in the process of
pursuing its rights and claims to recover the entire amount of the loan
together with accrued interest from UBHL and the other counterparties
referred to in the said Notes to the statements.
With regard to the Additional Matters and transactions with Additional
parties, as stated in Note 26(e), the Board has directed the MD & CEO
to expeditiously further review the Additional Matters and transactions
with the Additional parties during the period covered by the inquiry
and report to the Board his conclusions on the transactions and any
further impact on the company's financial results.
B. Auditor's observations under paragraph (viii) of the Annexure to the
Auditor's Report to the Statements
The accumulated losses of the Company at the end of the year are not
less than fifty per cent of its net worth. The Company has incurred
cash losses in the current and previous financial year.
Board's response: the Board notes that the accumulated losses of the
company at the end of the year is 86.3% of its peak net worth in the
previous four financial years. therefore, the company will be required
to file a report under section 23 of the sick industrial companies
(special provisions) Act, 1985 (SICA). the Board believes this report
under section 23 would arise as technical requirement under SICA and
does not reflect upon the long term prospects of the company given the
Profitable nature of its business and as the accumulated losses are
principally on account of exceptional items.
C. Auditor's observations under paragraph (ix) of the Annexure to the
Auditor's Report to the Statements
In our opinion and according to the information given to us, the
Company has not defaulted in the repayment of dues to a bank or to any
financial institution except that in case of loans due to banks,
principal amounting to Rs. 25.78 million and interest aggregating Rs.
69.24 million were repaid with a delay of up to 1 day and 5 days,
respectively. The Company did not have any outstanding debentures
during the year.
Board's response: the Management has informed the Board that as of 31
March 2015, there were no outstanding defaults by the company of any
dues to a bank or financial institution. As stated in note 25(a) to the
financial statements for the year ended March 31, 2015, the company has
disputed a demand made by a bank.
D. Auditor's observations under paragraphs (xi), (xii) (a), (xii)(b)
and (xii)(c) of the Annexure to the Auditor's Report to the Statements
In our opinion and according to the information and explanations given
to us, the term loans taken by the Company and applied during the year
were for the purpose for which they were raised. The Inquiry referred
to in Paragraph 1 of the 'Basis for Qualified Opinion' and Paragraph 1
of the 'Emphasis of Matter', stated that certain funds were diverted to
other UB Group entities in earlier years. Such diversions may indicate
application of term loans for purposes other than for which they were
raised.
(xii)(a) As stated in Note 26 and Paragraph 1 of the Basis for
Qualified Opinion, the Board had directed a detailed and expeditious
inquiry in relation to certain transactions identified during the year
ended 31 March 2014. The Inquiry stated that between 2010 and 2013,
funds involved in many of these transactions were diverted from the
Company and/or its subsidiaries to certain UB Group companies. The
Inquiry Report also indicated that the manner in which certain
transactions were conducted, prima facie, indicates various
improprieties and legal violations.
(b) As stated in Note 26(b), with regard to the prior transactions that
were consolidated into the single loan due from UBHL on 3 July 2013,
the Inquiry stated that, prima facie, between 2010 and July 2013,
certain transactions appear to have been undertaken and certain
accounting entries appear to have been made to show a lower exposure of
the Company to UBHL than that which actually existed at that time. The
inquiry also indicates that the manner in which these transactions were
conducted and these entries made, prima facie, indicates various
improprieties and legal violations.
(c) As discussed in Note 26(c), the Inquiry indicated that an agreement
signed with an Alleged Claimant for a lien on certain investments of
the Company, to secure an advance by the Alleged Claimant to KFA, was
entered into without appropriate Board authorisation or approval.
We have submitted a report under Section 143(12) of the Companies Act,
2013 and the relevant rules thereunder, seeking the Audit Committee's
reply/observations to the matters listed in (a) to (c) above. As at the
date of this report, we are awaiting a reply/observations from the
Audit Committee.
Additionally, pending the completion of the review of the Additional
Matters and transactions with Additional Parties identified through the
Inquiry as disclosed in Paragraph 1 under 'Basis for Qualified
Opinion', we are unable to comment whether any arrangements covered by
such review can be terms as 'fraud' and whether there are other
instances of a similar nature.
Board's response: see responses to paragraph 1 of the Auditor's Report
to the statements and to paragraphs (iii), (iii)(a) and (iii)(b) of the
Annexure to the said Auditor's Report. subsequent to the balance sheet
date, and as indicated in Note 30 to the statements, the Board's Audit
committee has provided its reply and observations to the auditor's
report under section 143(12) of the companies Act, 2013 (Act) and the
relevant rules thereunder. the said reply and observations to the
Auditors include the following observations.
(i) the Board is not in a position to make (and has not made) any final
determinations with regard to the roles of any individuals involved.
the Board has therefore directed that the company report such
transactions to the authorities as required under applicable law.
Accordingly, the company has duly reported the transactions and
associated facts to the relevant authorities, and has also responded /
is in the process of responding, as the case may be, to requests for
clarifications on the inquiry that have been sought by the Regional
Director of the Ministry of corporate Affairs, the income-tax
Department and the stock exchanges.
(ii) in addition, as noted above, pursuant to the Board's directions, a
copy of the MD & CEO'S inquiry report, including the inputs and expert
advice of the independent advisers and specialists, as well as the
communications received from a concerned director have been provided to
the company's auditors.
(iii) in connection with the recovery of funds that appear to have been
diverted from the company, the Board passed a resolution that the
company should take the necessary steps to pursue all rights and claims
against, and expeditiously recover its dues from, the relevant parties,
to the extent possible. the Board has also authorized the MD & CEO to
temper these actions, if considered appropriate, bearing in mind
imperatives of business continuity with vendors/ distributors. the
company has initiated discussions to assist with such recovery and the
Board is being updated on this matter.
(iv) in light of the above, and without making any determination as to
fault or culpability, at their meeting on April 25, 2015, the directors
noted that they had lost confidence in Dr Vijay Mallya continuing in
his role as a director and as chairman and therefore, the Board called
upon Dr Mallya to resign forthwith as a director and as the chairman of
the Board and step down from his positions in the company's
subsidiaries. in the event Dr Mallya declines to step down, the Board
also resolved that it would recommend to the shareholders of the
company, the removal of Dr Mallya as a director and as the chairman of
the Board.
(v) As previously announced by the company's majority shareholder,
Relay B V., an indirect wholly owned subsidiary of Diageo plc (Diageo),
following the re- appointment of Dr Mallya at the company's annual
general meeting on September 30, 2014, Diageo has contractual
obligations to support Dr Mallya continuing as non-executive director
and chairman of the company, subject to certain conditions. therefore,
in the event Dr Mallya declines to step down, the Board resolved to
request Diageo to expeditiously review the position in relation to its
contractual obligations and authorised sharing with Diageo a copy of
the inquiry report and all the materials relating to the company's
inquiry. As Dr Mallya has not heeded the Board's request to step down
as director and chairman, the Board has requested Diageo to
expeditiously review the position in relation to its contractual
obligations and the company has provided Diageo a copy of the inquiry
report and the materials relating to the company's inquiry as directed
by the Board.
(vi) in respect of the other employees of the company who appear to
have been involved in certain transactions covered by the inquiry, the
Board directed the company's MD & CEO to initiate necessary internal
proceedings in accordance with the applicable rules and policies of the
company. the company has made significant progress with these internal
proceedings and the Board is being updated on these proceedings
regularly.
(vii) the Board, at its meeting on April 25, 2015, noted that the
control systems of the company have been strengthened after July 2013.
in addition, the Board directed the company's management to continue
with the development and strengthening of the robust controls
environment that is currently underway to prevent such transactions
from occurring in the future.
(viii) following its review of the inquiry report, the Board reframed
its commitment to the highest standards of corporate governance and
resolved that the company would cooperate with all relevant authorities
in relation to these matters.
(ix) furthermore, the company has received letters from its previous
auditors (i.e. who served as the company's auditors during the period
covered by the inquiry), seeking consultation to discuss their prior
audit reports. the company has responded to these letters scheduling
time for such meetings and have also met with the previous auditors.
the company will consider any remedial actions proposed in this regard,
in light of applicable legal provisions.
With regard to the review of the Additional Matters and transactions
with Additional parties identified through the inquiry, as stated in
Note 26(e) to the statements, the Board has directed the MD & CEO to
expeditiously further review the Additional Matters and transactions
with the Additional parties during the period covered by the inquiry
and report to the Board his conclusions on the transactions and any
further impact on the company's financial statements. Based on the
outcome of such review, the company will take appropriate action in
respect of the underlying Additional Matters and transactions with
Additional parties, as is ft and necessary in the circumstances.
2A. Board's Responses to Observations/Qualifications in Secretarial
Auditor's Report
the Board's responses to the qualifications and other observations are
as follows.
the secretarial Auditors (Auditors) have submitted their report in form
No.MR3 and qualified their opinion/observations in respect of the
secretarial Audit conducted for the financial year 2014- 15 as under
and the Board's responses are given against each qualification/
observation as follows:
1. the company is required to take the central Government approval for
payment of managerial remuneration in excess of limits prescribed under
section 197 read with schedule V of the Act, in absence of Profits
during the year.
Board's Response: the inadequacy of Profits came to the knowledge of
the Board upon the approval of the audited financial statements for the
financial year 2014- 15. Necessary application has been made to the
central Government in respect of the remuneration paid to Mr. Anand
Kripalu, Managing Director and chief executive officer and shortly
application will also be submitted to the central Government in respect
of the remuneration paid to Mr. P.A. Murali, former executive Director,
who ceased to be in the employment of the company with effect from
April 22, 2015.
2. As required under clause 41 of the Listing Agreement, the company
has not submitted standalone and consolidated audited financial results
for the entire financial year and quarter ended on 31.03.2014 within
sixty days of the end of said year and also unaudited financial results
for the quarter ended on June 30, 2014, within 45 days of the end of
said quarter period.
Board's Response: the delay was due to the internal inquiry initiated
by the Board of Directors during the year and the stock exchanges have
accepted our delayed submission with fine and the issue stands closed.
3. As required under clause 49 ii of the listing agreement, the
company did not have the requisite number of independent directors on
its board with effect from October 1, 2014 till the appointment of a
independent director was made on April 1, 2015 and as required under
this clause, the vacancy of independent directors was not filled at the
next board meeting or three months from the date of vacancy whichever
is later.
Board's Response: the vacancies arose on September 30, 2014 consequent
upon the resignation/ exit of three independent Directors at the
conclusion of the Annual General Meeting held on September 30, 2014 and
was partially filled within the period stipulated under the Listing
Agreement. As per the Listing Agreement in force on September 30, 2014,
a period of 180 days was available to fill up the vacancy which expired
on March 31, 2015. the contention of the secretarial Auditor that the
period available is 90 days pursuant to the new Listing Agreement,
which came into effect from October 10, 2014 is not tenable. since,
the vacancy was filled up on April 1, 2015 instead of March 31, 2015,
there was a delay of one day and that the delay of 1 day has been
reported in our fling with the stock exchanges as well.
4. there was a non-compliance of pollution control Board order at
companies Unit in Malakajgiri, Andhra pradesh, as this unit was
manufacturing the more number of cases than permitted number of cases.
Board's Response: currently, processes have been put in place to ensure
compliance.
3. Material Changes and Commitments/ Events Subsequent to the date of
the Financial Statements
3.1. Inquiry into Prior Year's Audit Qualifications
During the previous financial year, the Board had directed a detailed
and expeditious inquiry in relation to certain matters referred to
below, the role of individuals involved and potential non-compliance
(if any) with the provisions of the companies Act, 1956, and other
regulations applicable to the company in relation to such transactions,
and the possible existence of any other transaction of a similar nature
(inquiry). pursuant to the directions of the Board, the inquiry was
headed by the MD & CEO of the company. the Board also directed the MD &
CEO to engage independent advisers and specialists as required.
At its meeting held on April 25, 2015 (April 25 Meeting), the Board
discussed and considered in detail the report (inquiry Report)
submitted by the MD & CEO in relation to the inquiry, the inputs and
expert advice of the independent advisers and specialists and other
relevant inputs. the Board promptly informed the stock exchanges of the
outcome of its April 25 Meeting, including the various decisions taken
by the Board as a result of its consideration of the inquiry Report.
the following paragraphs provide further updates on these decisions.
With regard to steps taken in relation to the recovery, directed by the
Board at its April 25 Meeting, of funds that appear to have been
diverted, your company has commenced discussions with counterparties in
connection with recovering funds that may have been diverted, and will
take appropriate action as directed by the Board in this regard.
With regard to the Board's recommendations made at the April 25
Meeting, concerning the chairman, Diageo has announced that it noted
the recommendation of the USL Board and would consider its position
under its agreements with Dr. Mallya and United Breweries (holdings)
Limited, in light of the inquiry Report and materials provided to it.
in this regard, the company has also not received any special notice
under section 169 of the Act.
With regard to other employees who appear to have been involved in
certain transactions covered by the inquiry, as directed by the Board
at the April 25 Meeting necessary internal proceedings have been
completed, in accordance with applicable rules and policies of the
company, and the MD & CEO has updated the Board on actions taken in
accordance with the applicable rules and policies of the company.
As was also directed by the Board at its April 25 Meeting, the company
is continuing to cooperate with the authorities and provide information
being requested, including in relation to the additional letters/
notices referred to in Note 30 to the financial statements for year
ended March 31, 2015.
3.2. Sale of shares of United Breweries Limited held by the Company.
further to the approval of the Board of Directors of the company and
final clearance of the individual directors authorised by the Board to
monitor the process, on July 7, 2015, the company placed an order for
sale by way of a block trade on National stock exchange of India
Limited (Nse) of 85,00,000 equity shares held by the company in United
Breweries Limited (UBL) (constituting 3.21% of the paid up equity share
capital of UBL) to heineken international B.V. at a price of Rs. 1,030
per share. the sale consideration, net of brokerage, was Rs. 872 crores
(against book value of Rs. 15 crores) resulting in Profit on this
transaction (which is to be determined after taking into account other
transaction costs and taxes). following the completion of this sale on
July 9, 2015, the company holds no shares in UBL and has ceased to be a
promoter in UBL. this divestment was a part of the process of
monetising certain non-core assets of the company (as previously
disclosed to the stock exchanges on October 20, 2014), in the ordinary
course of the company's business.
3.3. Changes/Restructuring of business/subsidiaries:
During the financial year, the company's manufacturing unit situated at
poonamalle, chennai was hived-of to enrica enterprises private Limited
in terms of section 391 to 394 of the companies Act, 1956 pursuant to
the approval of the hon'ble high courts of Karnataka and Madras. in
addition, the company's entire holding in its wholly owned subsidiary
Whyte and Mackay Group Limited along with its subsidiaries were
transferred during the year to emperador inc.
Subsequent to the financial year 2014-15, SW finance co. Limited, a
wholly owned subsidiary of the company, was amalgamated with the
company pursuant to the orders of the hon'ble high courts being fled
with the Registrar of companies.
3.4. Delay in Convening Annual General Meeting
following the provision of the inquiry Report to various authorities,
USL has received multiple requests for clarifications and submission of
additional documents from multiple authorities, as stated in Note 30 to
the statements. Because of the sheer volume of these on-going
requests, USL has been heavily burdened and has had to dedicate its
corporate legal, finance and secretarial resources to assisting and
submitting responses to these governmental authorities in a timely
manner. As a result, and for these special reasons, between May and
August 2015, sufficient time could not be devoted to the preparation of
the Directors' Report under section 134 of the Act and the disclosures
thereunder.
in view of these special reasons, and the unusual and exceptional
circumstances, in early August 2015, USL requested the Registrar of
companies to allow an extension of the date by which USL must hold its
next AGM, pursuant to the provisions of section 96(1) of the Act. the
Registrar replied on September 5, 2015 denying this request. the
Registrar's response did not explain why the reasons provided by USL
were found to be not tenable.
in light of the relatively recent rejection of its request for
extension, received two weeks ago, your company has sought to compile
the necessary documents and convene the AGM by the earliest date
feasible.
the Directors regret the delay that has resulted because of these
exceptional reasons, and the Board has directed the company to file
necessary applications for condonation/ compounding of this delay under
applicable law.
4. Change in nature of Business, if any
the details of change in nature of business is provided under
Management Discussion and Analysis Report and the Report on Risk
Management forming part of this Annual Report.
5. Dividend
in view of the loss incurred in the financial year ended March 31,
2015, your Directors do not recommend any dividend.
6. Capital
the authorised capital of your company remained unchanged at Rs.
5,542,000,000/- divided into 395,000,000 equity shares of Rs. 10/- each
and 159,200,000 preference shares of Rs. 10/- each.
the issued, subscribed and paid-up equity share capital of your company
stands unchanged at Rs. 1,453,277,430/- divided into 145,327,743 equity
shares of Rs. 10/- each.
7. Global Depository Shares
the 17,502,762 global depository shares (GDSS) issued, representing
8,751,381 equity shares ranking pari-passu in all respects with the
existing paid-up equity shares, with 2 GDSS representing 1 equity share
of par value of Rs. 10/- each at Us$7.4274 per GDSS, aggregating to Us$
130 million, continue to be listed on the Luxembourg stock exchange.
8. Performance of the Company
During the year under review, your company has achieved a sales volume
of over 117.06 million cases (previous year 120.70 million cases).
sales of the company's brands in the 'prestige and Above' segment grew
8% in the financial year ended March 31, 2015 and stood at 35 million
cases (previous year 33 million cases). imputed turnover, i.e., the
price at which the company's brands were billed from its manufacturing
facilities (owned/ leased/ contracted) and its warehouses, stood at Rs.
98,733.30 million net of duties and taxes (previous year Rs. 97,990.63
million) constituting a rise of 1%. the growth in imputed turnover of
the company's brands in the 'prestige and Above' category during the
year was Rs. 46,195 million, up by 9% from the Rs. 42,570 million
recorded in the previous year.
9. Details of Subsidiary Companies, Joint Ventures and Associate
Companies, and Their Financial Position
Your company had 22 subsidiary companies in the financial year ended on
March 31, 2015. the information required under the first proviso to
section 129(3) of the Act is given in form Aoc- 1 in Annexure 1. the
company's policy for determining material subsidiaries is available at
www.unitedspirits.in.
As stated in Note 24(a) to the statements, consequent to the sale of
Whyte and Mackay, Whyte & Mackay Group Limited, and all its
subsidiaries ceased to be the company's subsidiaries with effect from
October 31, 2014.
10. Prospects/ Outlook
the details about prospects/ outlook of your company are provided under
the Management Discussion and Analysis Report, forming part of this
Annual Report.
11. Depository System
the trading in the equity shares of your company is under compulsory
dematerialisation mode. As on March 31, 2015, equity shares
representing 98.65% of the equity share capital are in dematerialised
form. As the depository system offers numerous advantages, members are
requested to take advantage of the same and avail of the facility of
dematerialisation of the company's shares.
12. Board Meetings, Board of Directors, Key Managerial Personnel &
Committees of Directors
12.1. A. Appointment, change in designation and resignation
Details on appointments, changes in designation, and resignation of
Directors, key managerial personnel, and committees of Directors, as
well as on Board and committee meetings of your company are provided in
the corporate Governance Report that is annexed to, and forms part of
this Annual Report.
B. Re-appointment
As per the provisions of the Act, Mr. Ravi Rajagopal retires by
rotation and, being eligible, offers himself for re- appointment.
C. Independent Directors
As stated in the corporate Governance Report, the following independent
Directors were appointed at 15th annual general meeting (AGM) of your
company for a period of 5 years from the date of that AGM.
Mr. sudhakar Rao
Mr. D. sivanandhan
Dr. (Mrs). indu shahani
the following independent Directors are proposed to be appointed at the
16th AGM of the company for a period of 5 years from the date of their
appointment as Additional Director.
Mr. Rajeev Gupta
Mr. Mahendra Kumar sharma
As required by clause 49 of the Listing Agreement, familiarisation
exercise forms part of the policy on Directors/ senior Appointments and
is available on the companyÂs website www.unitedspirits.in. the company
familiarized the independent Directors, at the time of joining, about
the company, their roles, rights, responsibilities in the company,
nature of the industry in which the company operates, business model of
the company, etc. the company also familiarizes the independent
directors, from time to time, with the company's business, nature of
the industry and the challenges through a detailed strategy
presentation of the business and the environment in which it operates.
the company has received declarations from independent Directors under
149(6) of the companies Act, 2013.
in addition, Dr. Nicholas Bodo Blazquez who was appointed as an
Additional Director as a Nominee of Relay B V, is proposed to be
appointed as a Director at the forthcoming 16th AGM.
D. Key managerial personnel
consequent upon the retirement of Mr. Ashok capoor, Managing Director
on April 30, 2014, Mr. Anand Kripalu was appointed as the chief
executive officer with effect from May 1, 2014 and as Managing Director
& chief executive officer with effect from August 14, 2014.
consequent upon the resignation of Mr. p. A. Murali, executive Director
and chief financial officer with effect from April 22, 2015, Mr. Vinod
Rao was appointed as the interim head of finance with effect from April
25, 2015.
consequent upon the retirement of Mr. V. s. Venkataraman, company
secretary, on March 31, 2015, Mr. V Ramachandran was appointed as the
company secretary with effect from May 1, 2015.
E. Number of Meetings of the Board
the details of the Board Meetings and other committee Meetings held
during the financial Year 2014-15 are stated in corporate Governance
Report.
F. Board Committees
the company has set up the following committees of the Board.
Audit committee
Nomination and Remuneration committee
stakeholders Relationship committee
corporate social Responsibility committee
Risk Management committee
General committee of Directors
the composition of each of the above committees, and their respective
roles and responsibilities are detailed in the corporate Governance
Report.
F. Recommendations of the Audit Committee
All the recommendations of the audit committee have been accepted by
the Board,
G. Policies on Directors / Senior Appointments
the policy on Directors / senior Appointments is enclosed as Annexure
2.
H. Details of remuneration to Directors
As required under section 197(12) of the Act, information relating to
remuneration paid to Directors is provided in the corporate Governance
Report and in form MGT 9, that is annexed to and forms part of this
Annual Report as Annexure 5. furthermore, as stated in the corporate
Governance Report, the company is in the process of obtaining the
requisite approval from the central Government for remuneration paid in
excess of the limits prescribed under the provisions of schedule V to
the Act.
As stated in the corporate Governance Report, sitting fees are paid to
non-executive Directors for attending Board/ committee meetings. they
are also entitled to reimbursement of actual travel expenses, boarding
and lodging, conveyance and incidental expenses incurred in attending
such meetings, in accordance with the travel policy for Directors. in
addition, the Non-executive Directors are also eligible for commission
every year, not exceeding 1% of the net Profits of the company,
calculated in accordance with section 198 of the Act, as approved by
the shareholders at the AGM held on September 30, 2014, such approval
to remain in force until revoked. such commission may be apportioned
amongst the directors in any manner they deem ft. No commission is
proposed to be paid for the year ended March 31, 2015 due to absence of
Profits. criteria for payment of remuneration to Directors including
non-executive directors is disclosed in the reward policy enclosed as
Annexure 2.
I. Board Evaluation Criteria
pursuant to the provisions of the Act, and clause 49 of the Listing
Agreement, the Board has carried out an annual performance evaluation
of its own performance, the Directors individually, as well as the
Board committees. the evaluation process considered the effectiveness
of the Board and the committees with special emphasis on the
performance and functioning of the Board and the committees. the
evaluation of the Directors were based on the time spent by each of the
Board Members, core competencies, expertise and contribution to the
effectiveness and functioning of the Board and the committees:
12.2 Vigil Mechanism
Your company has a well-established vigil mechanism in place, which is
managed by the compliance & ethics team. ispeak is a confidential
service available to employees to make a report when they believe there
to be a potential breach of the code, policies or applicable law.
ispeak is managed by an external company, with staff who are trained to
deal with the calls, and translators who are immediately available to
assist if required. Access to the chairman of the Audit committee is
made available in exceptional cases, as required under the Act and the
Listing Agreement. All complaints are investigated by the compliance
and ethics team and appropriate action taken in accordance with your
company's policies.
12.3 Related Party Transactions
the company's policy on dealing with Related party transactions was
adopted by the Board on June 15, 2015 and is available on website link
http://unitedspirits.in/ policy/1125135202policy%20on%20Rpt.pdf.
All related party transactions that were entered into during the
financial year were on an arm's length basis and were in the ordinary
course of business. there are no materially significant related party
transactions made by the company with promoters, Directors, key
managerial personnel or other designated persons which may have a
potential conflict with the interest of the company at large.
the details of related party transactions required under section
134(3)(h) read with rule 8 of the companies (Accounts) Rules, 2014, is
given in form Aoc 2 and the same is enclosed as Annexure 3.
As stated in Note 24(d) to the statements, the company, on or prior to
July 3, 2013, entered into certain agreements with entities, which may
be considered as directly or indirectly owned/ controlled/
significantly influenced by the erstwhile promoter group. Details of
these agreements have also been included in Annexure 3, although it is
not clear whether they fall under the purview of related party
transactions under the Act, or the Listing Agreement.
it was stated in the notice to the extraordinary General Meeting on
November 28, 2014 (EGM) that the company was in the process of seeking
confirmations from, and verifying the position in relation to, the
counterparties to the above mentioned agreements as to whether or not
they are related parties of the company, and it was not clear whether
the counterparties to such agreements are indeed related parties of the
company for the purpose of clause 49(Vii) of the Listing Agreement. the
company is continuing to seek such confirmations. to the extent it is
determined, based on materials available and information provided, that
all or any of above mentioned agreements do not qualify as existing
material related party contracts or arrangements, or the counterparties
to all or any of these agreements do not qualify as related parties of
the company, such that approval of the shareholders of the company is
not required in respect of any of the above mentioned contracts or
arrangements then, it follows that there will be no consequences on
such contracts or arrangements or on their validity or on any act or
omission that may have been committed or omitted pursuant thereto, by
reason of the shareholders having approved or not approved any of such
contracts or arrangements.
As further stated in Note 24(d) to the statements, at the EGM, certain
of the said historical agreements were not approved by the shareholders
of the company by requisite majority. consequently, the company has
sought clarifications/ directions from the securities and exchange
Board of India (SEBI) with respect to the implications of the
non-approval of the aforesaid agreements by the shareholders of the
company (to the extent such approval is required under applicable law),
and clarifications are awaited.
13. Auditors
13.1. Financial Audit
M/s. B.S.R. & co. LLP, chartered Accountants, statutory Auditors of
your company, will hold office up to the conclusion of the 20th AGM of
the company, and their appointment is subject to ratification by the
shareholders at each of the intervening AGMs.
13.2. Secretarial Audit
pursuant to the provisions of section 204 of the Act, and the companies
(Appointment and Remuneration of Managerial personnel) Rules, 2014, a
secretarial Audit has been carried out by M/s. sudhir V hulyalkar,
practising company secretary, and his report is annexed as Annexure 4.
14. Listing of Shares of the Company
the equity shares of your company continue to be listed with the BSE
Limited and the NSE. the listing fees for the year 2014-15 have been
paid to these stock exchanges. the company's shares were also listed on
the Bangalore stock exchange Limited, whose operations were closed
during the year.
15. Corporate Governance
A corporate Governance Report is annexed separately as a part of this
report.
16. Management Discussion and Analysis Report the Management Discussion
and Analysis Report is annexed separately as a part of this report.
17. Fixed Deposits
As reported in the previous year's annual report, your company
discontinued accepting fixed deposits from the public and shareholders
effective January 1, 2014. in addition, pursuant to section 74(1)(b) of
the Act, the Board of Directors at their meeting held on August 1, 2014
decided to repay all fixed deposits maturing on or after March 31, 2015
by March 31, 2015. fixed deposits from the public and shareholders,
which remained unclaimed and for which instructions had not been
received from the depositors as on March 31, 2015, stood at Rs. 215.462
million. this amount was repaid by transfer into a separate,
non-interest bearing escrow account opened specifically for the
purpose, consistent with the provisions of the Act, and the rules made
thereunder. of this amount, a sum of Rs. 180.941 million (as of August
31, 2015) has since been paid as per instructions received after the
year end. the balance unclaimed fixed deposits continue to remain in
the escrow account.
18. Extract of Annual Return
the details forming part of the extract of the Annual Return in form
MGT 9 is annexed as Annexure 5.
19. Transfer to Investor Education and Protection Fund (IEPF) pursuant
to the provisions of sections 205A(5) and 205c of the companies Act,
1956, the Unclaimed Dividend and Deposits, remain unclaimed and unpaid
for a period of more than 7 years. the company has accordingly
transferred an amount aggregating to Rs. 41,35,063/- as unpaid dividend
and Rs. 159,301.58 as unclaimed fixed deposits including interests
during the year to the investor education and protection fund.
Due Date for Dividend Unpaid Amt (Rs.)
Transfer to IEPF Declaration Date
8-Jan-16 09-Jan-09 1,468,167.00
8-oct-16 09-oct-09 2,143,560.00
13-oct-17 14-oct-10 2,844,185.00
21-sep-18 22-sep-11 2,986,765.00
15-oct-19 16-oct-12 3,284,965.00
16-sep-20 17-sep-13 2,149,242.50
18-Jan-16 19-Jan-09 387,896.00
Fixed Deposits:
Due Date for Transfer to IEPF Unpaid Amt (Rs.)
2015-16 & 2016-17 397,157.52
2017-18 2,215,880
2018-19 3,018,927
2019-20 894,974
2020-21 705,247
2021-22 36,009,195
Necessary compliance under rule 3 of the investor education and
protection fund (Uploading of information regarding unpaid and
unclaimed amounts lying with companies) Rules, 2012, has been ensured.
20. Human Resources
employee relations remained cordial at all company's locations.
particulars of employees drawing an aggregate remuneration of Rs.
60,00,000/- or above per annum or Rs. 5,00,000/- or above per month, as
well as additional information on employee remuneration as required
under the provisions of rule 5(1), 5(2) and 5(3) of the companies
(Appointment and Remuneration of Managerial personnel) Rules, 2014 is
annexed as part of this report in Annexure 6 hereto.
21. Employees Stock Option Scheme
Your company has not offered any stock options to its employees during
the year 2014-15. During the year 2015Â16, the Board, at its meeting
held on August 20, 2015, approved a stock Appreciation Rights (SAR)
plan for grant of 500,000 SARS and authorised the Nomination and
Remuneration committee to decide the criteria for grant and vesting of
the SARS to employees and eligible directors. since there will be no
fresh issue of shares as a result of the SARS, there will be no
dilution of equity and earning per share.
22. Particulars of Loans, Guarantees and Investments Loans, guarantees
and investments covered under section 186 of the Act, are detailed in
Notes to the financial statements, which are as follows:
Notes 7 and 11.1 relating to investments, Notes 9 and 11.5 relating to
loans given and Note 33 relating to guarantees given.
23. Risk Management
Details on Risk Management are annexed as part of this report in
Annexure 7 hereto.
24. Internal Financial Controls
the Board considered materials placed before it, and after reviewing
the confirmation from external parties and reviewing the effectiveness
of the policies and procedures adopted by the company for ensuring
orderly and efficient conduct of its business, including adherence to
company's policy, safeguarding its assets, prevention and detection of
frauds and errors and completeness of accounting records and timely
preparation of financial statements, the Board has satisfied itself
that the company has laid down internal financial controls,
commensurate with size of the company and that such internal financial
controls are broadly adequate and are operating effectively.
25. Corporate Social Responsibility
information on the composition of the corporate social Responsibility
(CSR) committee is provided in the corporate Governance Report that
forms part of this annual report. furthermore, as required by section
135 of the Act, and the rules made thereunder, additional information
on the policy and implementation of CSR activities by your company
during the year are provided in Annexure 8 to this report. Business
Responsibility Report under clause 55 of the Listing Agreement is not
applicable to the company since it was not among the top 100 listed
companies by market cap as of March 31, 2012.
26. Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo
the particulars prescribed under section 134(3)(m) of the Act, read
with rule 8 of the companies (Accounts) Rules, 2014, are set out in
Annexure 9 to this report.
27. Details of Significant and Material Orders Passed By the
Regulators or Courts Impacting the Going Concern Status and Company's
Operations in Future
the company has not received any significant or material order passed
by regulators or courts impacting the company's going concern status or
the company's operations in future.
28. Disclosure as Required Under Section 22 of Sexual Harassment of
Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
the company has implemented a prevention of sexual harassment policy,
in line with the requirements of the sexual harassment of Women at
Workplace (prevention, prohibition and Redressal) Act, 2013 (SHWWA). An
internal complaints committee (ICC) has been set up to redress
complaints received regarding sexual harassment, and on-going training
is provided to employees as required by the SHWWA. During the financial
year 2014-15 one complaint was received and disposed of by the ICC.
29. Directors' Responsibility Statement
pursuant to section 134 (5) of the Act, in relation to financial
statements (together with the notes to such financial statements) for
the year 2014-15, the Board of Directors report that:
(i) in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
(ii) the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the company at the end of the financial year and of the Profit/ loss
of the company for that period;
(iii) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the company and
for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the financial statements on a going
concern basis;
(v) the Directors have laid down internal financial controls to be
followed by the company commensurate with the size and nature of its
business and the complexity of its operations and that such internal
financial controls are adequate and are operating effectively; and
(vi) the company has a system of getting reports of compliance
periodically from the units and is also in the process of implementing
formal systems to ensure compliance with the provisions of all
applicable laws.
Your Directors place on record their sincere appreciation for the
continued support from shareholders, customers, suppliers, banks and
financial institutions and other business associates. A particular
note of thanks to all employees of your company, without whose
contribution, your company could not have achieved the year's
performance.
By Authority of the Board
Dr. Nicholas Bodo Blazquez Anand Kripalu
Vice chairman Managing Director and
chief executive officer
Bangalore September 23, 2015
Mar 31, 2014
Dear Members,
The Directors have pleasure in presenting the Annual Report of your
Company and the audited accounts for the year ended March 31, 2014.
FINANCIAL RESULTS
Rupees in Millions
2013-14 2012-13
The working of your Company for the year
under review resulted in
* Profit/(Loss) from operations (6,210.528) 5,774.717
* Exceptional and other non-recurring items (43,216.262) (216.481)
(49,426.790) 5,558.236
Less:
* Depreciation 855.025 718.269
* Taxation 746.404 1,632.008
(including deferred tax)
* Profit/(Loss) after tax (51,028.219) 3,207.960
Profit B/F from previous year 20,233.807 17,905.879
Profit/(Loss) available for appropriation (30,794.412) 21,113.839
Your Directors have made the following
Appropriations :
General Reserve - 500.000
Dividend paid in respect to previous years 36.322 -
Proposed Dividend - 326.987
Corporate Tax on Proposed Dividend - 53.045
Corporate Tax on Dividend paid 4.385 -
Balance carried to the Balance Sheet (30,835.129) 20,233.807
EPS - Basic & Diluted (Rupees) (356.60) 24.53
In view of Loss, your Directors do not recommend any Dividend on the
equity shares of the Company.
CAPITAL
The authorised capital of your Company remained unchanged at
Rs.5,542,000,000/- divided into 395,000,000 equity shares of Rs.10/-
each and 159,200,000 preference shares of Rs.10/- each.
The issued, subscribed and paid-up equity share capital of your Company
stood increased from Rs.1,307,949,680/- divided into 130,794,968 equity
shares of Rs.10/- each to Rs.1,453,277,430/- divided into 145,327,743
equity shares of Rs.10/- each consequent upon the issue and allotment
of 14,532,775 equity shares of Rs.10/- each at a price of Rs.1,440/-
per equity share on preferential basis to Relay B.V., an indirect
wholly owned subsidiary of Diageo plc.
GLOBAL DEPOSITORY SHARES
Your Company had issued 17,502,762 Global Depository Shares (GDSs)
representing 8,751,381 Equity Shares ranking pari-passu in all respects
with the existing paid-up equity shares, with 2 GDSs representing 1
equity share of par value of Rs.10/- each at US$7.4274 per GDSs
aggregating to US$ 130 mn. These GDSs are listed on the Luxembourg
Stock Exchange.
As on August 29, 2014 there were outstanding GDSs of 13,83,254
representing 691,627 Equity Shares.
PERFORMANCE OF THE COMPANY
During the year under review, your Company has achieved a sales volume
of over 120.7 Million cases (Previous year 123.70 Million cases). Sales
of the Company''s brands in the Prestige and Above segment grew 15% in
the fiscal year ended March 31, 2014 and stood at 33 million cases
(Previous Year 28.7 million). For reasons which have been highlighted
above and in quarterly communication following the declaration of
results, viz. rising cost of inputs, forced curtailment of capacity in
Tamil Nadu etc., your Company deliberately de-emphasised sales of its
popular brands which recorded sales of 87.6 million cases, a drop of 8%
from the previous year''s 95 million cases. Imputed turnover, i.e. the
price at which the Company''s brands were billed from its manufacturing
facilities (own/leased/contracted) and its warehouses, stood at Rs.
97,990.63 Million net of duties and taxes (Previous Year Rs. 93,862.90
Million) a rise of 4%. The growth in imputed turnover of the Company''s
brands in the Prestige and Above category during the year was Rs.42,570
Million, up by 17% from the Rs. 35,806 Million recorded in FY 2012-13.
SUBSIDIARIES
As stated in the Annual Report 2012-13, Tern Distilleries Private
Limited ("Tern") has made a reference to the Board for Industrial and
Financial Reconstruction ("BIFR") under Section 15 of Sick Industrial
Companies (Special Provisions) Act, 1985 ("SICA"), in view of the
erosion of the entire net worth of Tern. The BIFR at the hearing held
on May 30, 2013 has declared Tern as a sick industrial company and
asked Tern to submit a draft rehabilitation scheme ("DRS"). Tern has
filed a DRS along with Scheme of Amalgamation for amalgamation of Tern
with your Company, which was subsequently approved by the shareholders
of Tern and your Company at their respective Extraordinary General
Meetings held on March 18, 2014. The BIFR had directed Tern to submit a
revised DRS, which has since been submitted by Tern and the matter is
pending before the BIFR.
As stated in the Annual Report 2012-13, Sovereign Distilleries Limited
("SDL"), a wholly owned subsidiary of the Company has made a reference
to the BIFR under Section 15 of SICA, in view of the erosion of the
entire net worth of SDL. The BIFR has appointed IDBI Bank Limited to
conduct a Special Investigative Audit ("SIA") of SDL as per the
provisions of Section 16(2) of SICA. M/s. Dagliya & Company, appointed
by IDBI Bank Limited, have conducted the SIA and submitted its report
and the matter is pending before the BIFR.
As stated in the Annual Report 2012-13, Pioneer Distilleries Limited
("PDL"), a subsidiary of the Company has made a reference to the BIFR
under Section 15 of SICA, in view of the erosion of the entire net
worth of PDL. The BIFR has appointed IDBI Bank Limited to conduct a SIA
of PDL as per the provisions of Section 16(2) of SICA. IDBI Bank
Limited has appointed M/s. Dagliya & Company to conduct the SIA ordered
by BIFR and the SIA is in process.
During the year under review, Relay B.V. (as acquirer) along with
Diageo plc and your Company (as persons acting in concert) made an open
offer to the public shareholders of PDL for the acquisition of up to
2,466,168 equity shares representing 18.42% of the paid-up capital of
PDL at a price of Rs.64.02 in compliance with the provisions of
Regulations 3(1), 4 and 5 of the Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
However, the total equity shares validly tendered by the public
shareholders were only 639,185 constituting 4.77% of the equity shares,
which were acquired by your Company. Consequently, the shareholding of
your Company in PDL increased from 81.58% to 86.35%. As per the listing
agreement, your Company is required to bring down its shareholding to a
level of 75% of the total paid up capital of PDL before September 25,
2014. Your Directors are taking necessary steps to bring down the
shareholding to 75%.
The Board of Directors have decided to amalgamate SW Finance Co.
Limited, a wholly owned subsidiary of the Company, with your Company
and necessary applications have been submitted to BSE Limited, National
Stock Exchange of India Limited and Bangalore Stock Exchange Limited
pursuant to the provisions of the Listing Agreement with the Stock
Exchanges for obtaining their observation letter / approval for the
amalgamation. While observation letter from Bangalore Stock Exchange
Limited has been received, observation letters from other two Stock
Exchanges are awaited.
During the year under review, your Directors recommended to the board
of directors of United Spirits (Great Britain) Limited ("USGBL"), an
indirect wholly owned subsidiary of the Company, to consider approving
the sale of the entire issued share capital of Whyte and Mackay Group
Limited, that is presently owned by USGBL, to Emperador UK Limited, a
subsidiary of Emperador Inc., for an enterprise value of £430 million,
in accordance with the terms and subject to the conditions set out in a
share sale and purchase agreement between USGBL, Emperador UK Limited
and Emperador Inc. The board of directors of USGBL has, on May 9, 2014,
approved the sale and entered into the share sale and purchase
agreement with Emperador UK Limited and Emperador Inc. Pursuant to
Section 180 of the Companies Act, 2013, postal ballot was conducted by
the Company to seek the approval of the members in this regard by way
of a special resolution. The estimated aggregate net proceeds of sale
are approximately £408 million, however the actual proceeds of sale
could fluctuate depending upon the adjustments to be made pursuant to
the said share sale and purchase agreement. The net proceeds of the
sale will be utilised by USGBL to repay facilities and also the
associated costs of the sale. However, the net proceeds will be
insufficient to repay an intra-USL group loan (owing to USL). As per
the mandatorily applicable accounting standards, your Company has
provided in its books of accounts regarding impairment of its
investment in USL Holdings Limited, BVI, a wholly owned overseas
subsidiary of your Company, and also for a part of the said intra-USL
group loan, and subject to prior approval of the RBI, your Company will
be required to write-off the amounts so provided for upon completion of
the sale. The said provisioning inter alia has resulted in erosion of
fifty two per cent of the Company''s peak net worth during the
immediately preceding four financial years, and consequently the Board
is required to file a report in relation to the Company under Section
23 of the SICA. However, the Board believes that this report, if
required to be filed, would arise as a technical requirement under SICA
principally due to the exceptional and one-time write off and does not
reflect upon the long term prospects of the Company. The special
resolution was passed with requisite majority and the result of the
postal ballot was announced on July 4, 2014.
Post the financial year under review, Whyte and Mackay Singapore Pte
Limited, an indirect wholly owned overseas subsidiary of your Company,
has changed its name to United Spirits Singapore Pte Limited.
In terms of Circular No.2/2011 dated February 8, 2011 issued by the
Ministry of Corporate Affairs, Government of India, a general exemption
has been granted from the compliance of Section 212 of the Companies
Act, 1956, requiring holding companies to attach with their balance
sheet, a copy of the balance sheet, profit and loss account and other
documents of each of its subsidiaries, provided the Board of Directors
of such holding companies give consent, by way of a resolution, for not
attaching the balance sheet of their subsidiary companies and certain
other conditions prescribed by the Ministry in this regard are complied
with.
The Board of Directors of your Company, at their meeting held on
September 03, 2014 have given their consent for not attaching, inter
alia, the balance sheet, profit and loss account etc. of its subsidiary
companies since your Company has complied with all the conditions
prescribed by the Ministry vide its circular dated February 8, 2011, in
this regard.
In view of the above, the balance sheet, statement of profit and loss
and other documents/details of the subsidiary companies, which are
required to be attached with the balance sheet of the Company, are not
attached. The annual accounts of the subsidiary companies and the
related detailed information will be made available to any shareholder
of the Company and subsidiary companies seeking such information at any
point in time. The annual accounts of the subsidiary companies will
also be kept for inspection by any shareholder at the respective
registered offices of the Company and the subsidiary companies
concerned, during the business hours on any working day.
The accounting year of United Spirits Nepal Private Limited ("USNPL"),
your Company''s subsidiary in Nepal, is from mid- July to mid-July every
year. Accordingly, accounting year of 2012-13 of USNPL ended on July
15, 2013 and the accounting year 2013-14 ended on July 15, 2014 i.e.,
after the end of the close of the financial year of the Company, which
ended on March 31, 2014. For the purpose of compliance under Accounting
Standard - 21, relating to "Consolidated Financial Statement," the
Accounts of USNPL has been drawn up to March 31, 2014.
For the purpose of compliance under Accounting Standard - 21,
"Consolidated Financial Statement" presented by the Company includes
the financial information of its subsidiaries.
HIVING OFF OF THE COMPANY''S DISTILLERY AT POONAMALLEE, IN TAMIL NADU
During the year under review, your Company has decided to hive-off the
Company''s Distillery Unit situated at Poonamallee, Chennai, Tamil Nadu
to Enrica Enterprises Private Limited, Chennai. Your Company has
received the necessary observation letters/approvals from the concerned
stock exchanges. The Company Petitions, along with the Scheme of
Arrangement ("Scheme"), have been filed before the Hon''ble High Court
of Karnataka at Bangalore and Hon''ble High Court of Madras, Tamil Nadu
pursuant to Sections 391 to 394 and other relevant provisions of the
Companies Act, 1956. While sanction from the Hon''ble High Court of
Madras has been received, the sanction from the Hon''ble High Court of
Karnataka at Bangalore is awaited. The hive-off, however, will be
effective only after the Scheme is sanctioned by both the Hon''ble High
Courts.
INVESTMENT IN THE EQUITY CAPITAL OF THE COMPANY BY RELAY B.V.,
NETHERLANDS
As stated in the last year''s Directors'' Report, Relay B.V., an indirect
wholly owned subsidiary of Diageo plc, had acquired 14,532,775 equity
shares of Rs.10/- each at a price of Rs.1,440/- per equity share by way
of subscribing to a preferential allotment of equity shares in the
Company in accordance with the terms of a Preferential Allotment
Agreement entered into between Diageo plc, Relay B.V. and the Company
on November 9, 2012. Separately, Relay B.V. acquired 58,668 equity
shares of the Company from the public shareholders of the Company
pursuant to an open offer made by Relay B.V. together with Diageo plc
and others as persons acting in concert, in accordance with the
provisions of the Securities and Exchange Board of India (Substantial
Acquisition of Shares and Takeovers) Regulations, 2011. On July 4,
2013, Relay B.V. acquired a further 21,767,749 equity shares from
United Breweries (Holdings) Limited, Kingfisher Finvest India Limited,
SWEW Benefit Company, Palmer Investment Group Limited and UB Sports
Management Overseas Limited in accordance with the terms of a Share
Purchase Agreement ("SPA") dated November 9, 2012. As on July 4, 2013,
Relay B.V. held 36,359,192 equity shares representing 25.02% of the
paid up equity capital of the Company.
Further, Relay B.V. acquired 1,967,940 equity shares constituting 1.35
% and 3,500,000 equity shares constituting 2.41% of the paid-up equity
capital of the Company by way of on-market purchases on November 28,
2013 and February 4, 2014 respectively. Relay B.V. further acquired
37,785,214 equity shares constituting 26% of the paid-up equity capital
of the Company from the public shareholders of the Company pursuant to
an open offer made by Relay B.V. together with Diageo plc as a person
acting in concert (which open offer completed on July 2, 2014). With
these acquisitions, Relay B.V. now holds 54.78% of the paid up equity
capital of your Company.
Consequent to the above acquisitions, your Company has become the
direct subsidiary of Relay B.V. and an indirect subsidiary of Diageo
plc.
The acquisition by Relay B.V. of 3,459,090 equity shares representing
2.38% of the paid up equity capital of the Company held by USL Benefit
Trust (of which the Company is the sole beneficiary) in terms of the
SPA has not yet been completed, due to refusal of one of the lenders of
the Company (IDBI Bank Limited) to instruct the security trustee to
release the pledge over those shares, in spite of repayment of entire
outstanding loan by the Company. The Company has filed a writ petition
against IDBI Bank Limited and the security trustee before the Hon''ble
High Court of Karnataka at Bangalore seeking appropriate reliefs in
this matter (including release of pledge over the said shares) and the
matter is pending before the Hon''ble High Court.
ASSET PURCHASE AGREEMENT WITH JP IMPEX INCORP
Your Company has entered into an Asset Purchase Agreement with JP Impex
Incorp ("Firm"), a partnership firm having its principal place of
business at #219/11, J P Corp, Bellary Road, Sadashivanagar, Bangalore
- 560 080 and factory at Plot No.82/3 and 82/2 in Survey No.95 in the
Nandur Kesaratagi Industrial Area, Nandur Hobli, Kesaba Teluka,
Gulbarga District, Gulbarga, Karnataka ("Factory"), inter alia, for
purchasing from the Firm, the building, plant and machinery, licences,
transfer of lease hold rights on the land, all relating to the Factory.
The purchase of the above assets would facilitate an increase in the
Company''s licensed Indian Made Foreign Liquor production capacity in
the State of Karnataka, which the Company proposes to use for Tetra Pak
production and availing logistical advantage. The closing of the
transaction is subject to the fulfilment of certain conditions
precedents by the Firm.
PROSPECTS
With over half of the Indian population under the age of 25 and more
and more young Indians joining the work force with more disposable
income in their hands at ages earlier than the previous generation, the
Indian spirits industry is expected to see a large increase in its
target consumers and hence continue on the growth path. The increasing
affluence at early stages of the working life of the average Indian
reinforces our confidence that premiumization in all spheres including
in our industry is here to stay. The only hindrance to such continued
growth and moving up the value chain could be the unbridled efforts of
the State Governments to continue enhancing duties and taxes.
In a scenario where nearly three out of every four cases is sold by the
Company to parastatal organisations, price increases are not easy to
come by. However, your Company continues to be in the forefront of
discussions with these agencies to push through price increases.
Notwithstanding this, your Company has managed price increases in
various states through a mix of upgraded product launches at higher
price points and judicious price corrections in certain markets as also
through reduced trade spends.
Your Company has also been in the forefront of discussions with the
Central Government seeking coverage of the Alcoholic Beverages Industry
under GST and has made out a strong case for such inclusion. The new
Government in power at the Centre seems committed to resolving the
impasse with the States on the question of compensation arising from
the introduction of GST. In all probability the Government may push
through a Constitutional Amendment for the introduction of an
all-encompassing GST - what is unclear, however, is whether the States
have the financial muscle to follow suit and introduce an
all-encompassing GST rules and regulations. If the Alcobev industry is
excluded from levy of the tax on its finished product, it will end up
with cost pressures owing to an increased input cost which will now be
subject to 20% GST compared to a 12-odd % excise duty and a 2% CST.
Input costs, particularly of the key ingredient - Extra Neutral Alcohol
- are likely to harden in a mandatory 10% ethanol blending scenario and
with price increases not easy to come by, margins will continue to be
under pressure. Your Company is however confident that it is best
poised even in this difficult scenario to push its premiumization
agenda and drive up margins through innovative strategies.
DEPOSITORY SYSTEM
The trading in the equity shares of your Company is under compulsory
dematerialisation mode. As on August 29, 2014, equity shares
representing 98.58% of the equity share capital are in dematerialised
form. As the depository system offers numerous advantages, members are
requested to take advantage of the same and avail of the facility of
dematerialisation of the Company''s shares.
DIRECTORS
As per the provisions of the Companies Act, 2013, Dr. Vjay Mallya
retires by rotation and being eligible, offers himself for
re-appointment. Mr. Gilbert Ghostine who retires by rotation at the
forthcoming Annual General Meeting, has not offered himself for
re-appointment. For the time being, the vacancy caused by such
retirement has not yet been filled up. Mr. G.N. Bajpai, who was
earlier appointed as Independent Director of the Company and liable for
retirement by rotation under the Companies Act, 1956, and proposed to
be appointed as Independent Director, not liable to retire by rotation,
at the forthcoming Annual General Meeting, pursuant to the provisions
of Sections 149, 150(2) and 152 read with Schedule IV and other
applicable provisions of the Companies Act, 2013 and rules made
thereunder, has not offered himself for re-appointment. For the time
being, such vacancy caused has not yet been filled up.
Mr. Ashok Capoor tendered his resignation as Managing Director and
Director on the Board of the Company with effect from May 1, 2014 and
has assumed the role of President
- Strategy of the Company with effect from May 01, 2014 and your
Directors place on record their appreciation of the valuable services
rendered by Mr. Ashok Capoor during his tenure as Managing Director of
your Company.
Ms. Renu Sud Karnad, an Independent Director appointed at the Board
Meeting held on July 4, 2013 has tendered her resignation as a Director
of the Company with effect from February 25, 2014 and the Directors
place on record their appreciation of the valuable services rendered by
Ms. Renu Sud Karnad during her tenure as an Independent Director of the
Company.
Dr.(Mrs.) Indu Shahani was appointed as an Additional Director in the
capacity of Independent Director at the Board Meeting held on August
14, 2014, who will hold office in terms of Section 161 of the Companies
Act, 2013 up to the forthcoming Annual General Meeting. A notice in
writing has been received from a Member signifying the intention to
propose the appointment of Dr.(Mrs.) Indu Shahani as a Director at the
forthcoming Annual General Meeting. In terms of Sections 149, 150(2)
and 152 read with Schedule IV and other applicable provisions of the
Companies Act, 2013 and rules made thereunder, she is proposed to be
appointed as an Independent Director of the Company, not liable to
retire by rotation, for a period of five consecutive years from
September 30, 2014 to September 29, 2019.
Mr. Anand Kripalu who was appointed as a Chief Executive Officer (CEO)
of the Company w.e.f. May 1, 2014, was appointed as an Additional
Director of the Company w.e.f. August 14, 2014 and as Managing
Director and Chief Executive Officer of the Company for a period of
five (5) years. The appointment of and remuneration payable to Mr.
Anand Kripalu has been approved and recommended by the Nomination and
Remuneration Committee of Directors and is being placed for the
approval of the Members at the forthcoming Annual General Meeting. Mr.
Anand Kripalu will hold office in terms of Section 161 of the Companies
Act, 2013 up to the date of the forthcoming Annual General Meeting. A
notice in writing has been received from a Member signifying his
intention to propose the appointment of Mr. Anand Kripalu as a Director
at the forthcoming Annual General Meeting.
Mr. Sudhakar Rao and Mr. D. Sivanandhan, who were earlier appointed as
Independent Directors of the Company on July 04, 2013 and were liable
for retirement by rotation under the Companies Act, 1956, are proposed
to be appointed as Independent Directors, not liable to retire by
rotation, pursuant to the provisions of Sections 149, 150(2) and 152
read with Schedule IV and other applicable provisions of the Companies
Act, 2013 and rules made thereunder, for a period of five years from
September 30, 2014 to September 29, 2019. The Company has received
notices from the Members signifying their intention to propose their
appointment as Independent Directors at the forthcoming Annual General
Meeting.
Mr. Arunkumar Ramanlal Gandhi and Mr. Vikram Singh Mehta, who were
earlier appointed as Independent Directors of the Company on July 04,
2013 and August 19, 2013 respectively and were liable for retirement by
rotation under the Companies Act, 1956 and proposed to be appointed as
Independent Directors, not liable to retire by rotation, at the
forthcoming Annual General Meeting pursuant to the provisions of
Sections 149, 150(2) and 152 read with Schedule IV and other applicable
provisions of the Companies Act, 2013 and rules made thereunder, have
not offered themselves for re-appointment. For the time being, such
vacancies caused have not yet been filled up.
In view of loss during the financial year ended March 31, 2014, the
remuneration paid during the financial year under review to Mr. Ashok
Capoor, Managing Director and Mr. P.A. Murali, Executive Director have
been considered as "minimum remuneration" pursuant to Section 269 and
309 read with Schedule XIII of the Companies Act, 1956. As the
effective capital of the Company is positive, there is no necessity for
seeking approval of the Members afresh as payment of "minimum
remuneration" in case of inadequacy / no profit during any financial
year during their tenure of appointments have been approved by the
shareholders earlier. Since Mr. Ashok Capoor and Mr. P.A. Murali both
qualify as "Professional Managerial Persons", the approval of the
Central Government is also not required pursuant to General Circular
No.46/2011 (No.14/03/2011/CL.VII) issued by the Ministry of Corporate
Affairs dated July 14, 2011.
AUDITORS
M/s. B.S.R. & Co. LLP, Chartered Accountants, Statutory Auditors of
your Company, will hold office up to the conclusion of the forthcoming
Annual General Meeting ("AGM") of the Company and are eligible for
re-appointment. In terms of the provisions contained in the Companies
Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, the
appointment of Statutory Auditors is proposed for a period of five
years from the conclusion of the fifteenth Annual General Meeting till
the conclusion of the twentieth Annual General Meeting. Their
appointment during the aforesaid term of five years shall be subject to
ratification by the Members at every subsequent Annual General Meeting.
Your Company has received a written confirmation from them to the
effect that their appointment, if made, would satisfy the criteria
provided in Section 141 of the Companies Act, 2013 for their
appointment. The Board recommends the re-appointment of M/s. B.S.R. &
Co. LLP, Chartered Accountants as the Statutory Auditors of the Company
from the conclusion of the ensuing AGM till the conclusion of the
twentieth AGM subject to the remuneration as may be recommended by the
Audit Committee in consultation with the Auditors and that such
remuneration may be paid on a progressive billing basis to be agreed
upon between the Auditors and the Board of Directors.
BOARD OF DIRECTORS'' RESPONSES TO OBSERVATIONS, QUALIFICATIONS AND
ADVERSE REMARKS IN AUDITOR''S REPORT
The Statutory Auditors have qualified their opinion in relation to the
matters specified in Notes 26(a), 26(b), 26(c) and 30(f) of the
Financial Statement as follows:
1. Auditor''s observations under Paragraph 1 of the Auditor''s report to
the financial statement (Âthe Statement"): As stated in Note 26(a) to
the Statement, certain parties who had previously given the required
undisputed balance confirmations for the year ended 31 March 2013,
alleged during the current year, that they have advanced certain
amounts to certain alleged UB Group entities and linked the
confirmation of amounts due to the Company to repayment of such amounts
to such parties by the alleged UB Group entities. Also, some of these
parties stated that the dues to the Company will be paid / refunded
only upon receipt of their dues from such alleged UB Group entities.
These dues of such parties are on account of advances by the Company in
the earlier years under agreements for enhancing capacity, obtaining
exclusivity and lease deposits in relation to Tie-up Manufacturing
Units; agreements for specific projects; or dues owing to the Company
from customers. These claims received in the current year may indicate
that all or some of such amounts may have been improperly advanced from
the Company to such parties for, in turn, being advanced to the UB
Group entities. However, this can only be confirmed after a detailed
inquiry. Based on the findings of the preliminary internal inquiry by
the Management, under the instructions of the Board of Directors; and
Management''s assessment of recoverability, an aggregate amount of
Rs.6,495.5 million has been provided in the Statement and has been
disclosed as prior period items. Based on its current knowledge, the
Management believes that the aforesaid provision is adequate and no
additional material adjustments to the Statement are likely to be
required in relation to this matter. As stated in paragraph 4 below,
the Board of Directors have instructed the Management to undertake a
detailed inquiry into this matter. Pending such inquiry, we are unable
to comment on the nature of these transactions; the provision
established; or any further impact on the Statement.
Directors'' Response: Information and explanation on the qualification
on paragraph 1 of the audit report is provided in Note 26(a) to the
Statement. In particular, as stated in Note 26(a), the transactions
referred to in the said Note are on account of amounts that were
advanced by the Company in the earlier years and were duly confirmed by
the relevant parties as payable to the Company in such earlier years,
but were disputed by such parties for the first time when the Company
sought balance confirmations from them for the year ended 31 March
2014. This was brought to the attention of the Board after 31 March
2014. Accordingly, as mentioned in Note 26(a), as a matter of prudence,
the amounts mentioned in the Note 26(a) have now been provided for.
Since the transactions referred to in the said Note 26(a) were entered
in to prior to 31 March 2013, they have been reflected as prior period
items in the financial statements.
Further, as mentioned in Note 26(a), the Board has: (i) directed a
detailed and expeditious inquiry into this matter and (ii) authorized
the initiation of suitable action and proceedings as considered
appropriate by the Managing Director and Chief Executive Officer (MD)
for recovering the Company''s dues. Appropriate other action will also
be taken commensurate with the outcome of that inquiry.
2. Auditor''s observations under Paragraph 2 of the Auditor''s report to
the financial statement: As stated in Note 30(f) to the Statement,
subsequent to the balance sheet date, the Company received a letter
dated 5 May 2014 from the lawyers of an entity (Alleged Claimant)
alleging that the Alleged Claimant had advanced loans amounting to
Rs.2,000 million to Kingfisher Airlines Limited (herein after referred
to as "KFA"), a UB Group entity in an earlier year on the basis of
agreements, executed in December 2011 and January 2012, through which
the Company was alleged to have created a lien on certain investments
in favour of the Alleged Claimant as security for the aforesaid loans.
The letter alleged that KFA had defaulted in repayment of the aforesaid
loans as well as interest of Rs.790 million due thereon and demanded
that the Company should pay the aforesaid amounts and pending such
repayments, create a valid pledge on the specified investments. The
Company responded to the aforesaid letter vide its letters dated 3 June
2014 and 28 July 2014, wherein the Company denied knowledge of the
purported loan transactions and the purported agreements for the
creation of security on such investments held by the Company. A letter
dated 31 July 2014 was received from the Alleged Claimant wherein they
have stated that the notice sent earlier did not take into account an
addendum to the loan agreement; and after examining the aforesaid
addendum, they have no claim or demand of any nature against the
Company. In September 2014, scanned copies of the purported agreements
and certain related documents were furnished to the Company. These
documents indicate that while the agreements may have sought to create
a lien on certain investments of the Company; subsequently the Alleged
Claimant and KFA sought to negotiate the release of the lien, which was
formalised vide a second addendum in September 2012.
The Management has represented to us that the Company had no knowledge
of these purported agreements; that the Board of Directors of the
Company have not approved any such purported agreements; and it is not
liable under any such purported agreements. We are unable to conclude
on the validity of these agreements; any required compliance with the
provisions of the Companies Act, 1956; and any consequential impact of
the same.
Directors'' Response: Information and explanation on the qualification
at paragraph 2 of the audit report is provided in Note 30(f) to the
Statement. In particular, as stated in Note 30(f), the claim is based
on documents purportedly executed by the Company in the months of
December 2011 and January 2012. However, the claim was received by the
Company only after the year ended 31 March 2014. This matter was only
thereafter brought to the knowledge of the Board by the Management. A
letter dated 31 July 2014 was received from the Alleged Claimant
wherein they have stated that the notice sent earlier did not take into
account an addendum to the loan agreement; and after examining the
aforesaid addendum, they have no claim or demand of any nature against
the Company. Subsequently, in September 2014, the Company obtained
scanned copies of the purported agreements (including the purported
power of attorney) and various communications between KFA and the
Alleged Claimant. These documents indicate that while the purported
agreements may have sought to create a lien on certain investments of
the Company, subsequently, the Alleged Claimant and KFA sought to
negotiate the release of the purported obligation to create such lien,
which was formalised vide a second addendum in September 2012.
The Management has verified from a perusal of the minutes of meetings
of the board of directors of the Company that the board of directors at
the relevant time had not approved or ratified any such documents.
Accordingly, the Company has, in its responses to the Alleged Claimant,
disputed the alleged claim and denied having created the alleged
security or having executed any document in favour of the Alleged
Claimant. Further, the Management, based on legal advice received, does
not expect any liability or obligation to arise on the Company out of
these allegations.
3. Auditor''s observations under Paragraph 3 of the Auditor''s report to
the financial statement: As stated in Note 26(b) to the Statement, the
Company and its subsidiaries had various pre-existing loans / advances
/ deposits due from United Breweries (Holdings) Limited (hereinafter
referred to as "UBHL"). During the current year, pursuant to a previous
resolution passed by the Board of Directors on 11 October 2012, these
dues (together with interest) were consolidated into an unsecured loan
aggregating Rs.13,374 million vide an agreement dated 3 July 2013. The
loan has been granted for a period of 8 years with a moratorium period
of 6 years. Certain lenders have filed petitions for winding-up against
UBHL. UBHL has provided guarantees to lenders and other vendors of
Kingfisher Airlines Limited, which have been invoked and are currently
being challenged in courts. The Company has also filed its affidavit
opposing the aforesaid winding-up petition and the matter is
sub-judice. Based on its assessment of the recoverability of the loan,
the Company has made a provision of Rs.3,303 million against the loan
outstanding and has not recognised the interest income of Rs.963
million on the loan. Given the various uncertainties involved with
respect to the litigations involving UBHL as aforesaid and the extended
period for repayment of the loan, we are unable to comment on the level
of provision established.
Directors'' Response: Information and explanation on the qualification
at paragraph 3 of the audit report is provided in Note 26(b) to the
Statement. In particular, as stated in Note 26(b), the Management has
performed an assessment of the recoverability of the loan and has
reviewed valuation reports in relation to UBHL prepared by reputed
independent valuers that were commissioned by UBHL, and shared by UBHL
with the Company. As a result of the above mentioned assessment and
review by the Management, in accordance with the recommendation of the
Management, the Company, as a matter of prudence, has not recognized
interest income of Rs.963 Million and has provided Rs.3,303 Million
towards the principal outstanding as at 31 March 2014. The Management
believes that it should be able to recover, and no further provision is
required for the balance amount of Rs.9,957 Million, though the Company
will attempt to recover the entire amount of Rs.14,223 Million.
However, the Management will continue to assess the recoverability of
the said loan on an ongoing basis.
Further, the Board has directed the management to review the underlying
loan agreement(s) and / or other relevant documents ("Loan Documents"),
to inter-alia assess: (i) whether any event of default(s) under the
Loan Documents has occurred on the part of UBHL; (ii) the legal rights
and remedies which the Company has under the Loan Documents; (iii)
whether the Company should invoke any of the remedies available to it
under the Loan Documents (including recalling of the entire loan); and
(iv) whether there is any scope of renegotiating the terms and
conditions under the Loan Documents.
In this regard, the management should expeditiously take all the
necessary steps to fully protect the interest of the Company and
shareholders.
4. Auditor''s observations under Paragraph 4 of the Auditor''s report to
the financial statement: As stated in Note 26(c) to the Statement, the
Board of Directors have instructed the Management to undertake a
detailed inquiry in relation to the matters stated in the paragraphs
above; the possible existence of any other transaction of a similar
nature; the role of individuals involved; and potential non-compliance
(if any) with the provisions of the Companies Act, 1956 and other
regulations applicable to the Company. The Board has also instructed
the Management to engage independent advisers and specialists, as
required, for the inquiry. As the inquiry is yet to be carried out, we
are unable to comment on any further adjustment that could be
identified as a result of the inquiry; its resultant impact on the
Statement; and any potential non-compliances with the provisions of the
Companies Act, 1956 and other regulations.
Directors'' Response: Information and explanation on the qualification
at paragraph 4 of the audit report is provided in Note 26(c) to the
Statement. In particular, as stated in Note 26 (c) above, in addition
to commissioning the inquiry, the Board has also authorized the MD to
take suitable action and proceedings as considered appropriate by him
for recovering the Company''s dues. Appropriate other action will also
be taken commensurate with the outcome of the inquiry commissioned by
the Board. On the basis of the current knowledge and information of the
Management, the Management believes that no additional material
adjustments to the financial statements are likely to be required in
relation to the matters mentioned above in Notes 26(a), 26(b) and
30(f). However, pending completion of the detailed inquiry mentioned
above, the Company is unable to determine whether, on completion of
such detailed inquiry, there could be any impact on the financial
statements.
5. Auditor''s observations under Paragraph 5 of the Auditor''s report to
the financial statement: Though the observations in paragraph 1 above
relate to claims received in the current year, the underlying
transactions were entered into in earlier years. Accordingly, the
financial statements of those earlier years and consequently the
opening balances may be incorrectly stated to that extent. Further, the
detailed inquiry as referred to in paragraph 4 above may result in
further adjustments that may have an impact on the opening balances.
Directors'' Response: Information and explanation on the qualification
at paragraph 5 of the audit report is provided in Note 26(a) to the
Statement. In particular, as stated in Note 26 (a), while the claims
referred to in Note 26(a) were received only when the Company sought
balance confirmations from the relevant parties for the year ended 31
March 2014, the transactions referred to in the said Note were entered
in to prior to 31st March 2013 and therefore, they have been reflected
as prior period items in the financial statements. Further, as stated
in Note 26(a) (iii), the Management has stated to the Board that, on
the basis of their current knowledge, no additional material
adjustments to the financial statements are likely to be required in
relation to the matters mentioned in the said Note. As mentioned in
Note 26(c) to the financial statement, the Board has commissioned the
inquiry referred to in Note 26(c). Upon completion of the inquiry, the
Board will consider impact on the financial statements, if any.
6(a)Auditors observation under Paragraph (iii) (a) of Annexure to the
Auditor''s Report: According to the information and explanations given
to us, the Company has granted an unsecured loan to a company covered
in the register maintained under Section 301 of the Companies Act, 1956
(''the Act'') by way of conversion of certain pre-existing loans /
advances / deposits due to the Company and its subsidiaries (refer
paragraph 3 under ''basis for qualified opinion''). The year-end balance
of the loan and the maximum amount outstanding during the year amounted
to Rs.13,374 million.
Further, as mentioned in paragraph 1 under ''basis for qualified
opinion'', certain parties alleged that they have advanced certain
amounts to certain alleged UB Group entities and linked the
confirmation of amounts due to the Company to repayment of such amounts
to such parties by the alleged UB Group entities. Also, some of these
parties stated that the dues to the Company will be paid / refunded
only upon receipt of their dues from such alleged UB Group entities.
Considering the matters disclosed in paragraphs 1 and 4 of ''basis for
qualified opinion'', we are unable to comment whether any such
arrangements represent transactions with any company/ firm/ other party
covered in the register maintained under Section 301 of the Act.
Directors'' Response: Information and explanation on the qualification
at paragraph (iii)(a) of Annexure to the Auditor''s report is provided
in Note 26(a) to the Statement. Further, the Management has certified
to the Board that, on the basis of the Management''s current
information, particulars of contracts or arrangements that are required
to be entered in the register maintained under section 301 of the
Companies Act, 1956 (the Act) have been so entered. As mentioned in
Note 26(c) to the financial statement, the Board has ordered a detailed
and expeditious inquiry in relation to the matters disclosed in
paragraphs 1 and 4 of ''basis for qualified opinion'' in the auditor''s
report. On completion of such inquiry, appropriate action if any will
be taken.
6(b)Auditor''s observation under Paragraph (iii)(b) of Annexure to
Auditor''s Report :
In our opinion, the rate of interest and other terms and conditions on
which the above unsecured loan has been granted to the company covered
in the register maintained under Section 301 of the Act as stated in
sub-clause (a) above, are prima facie, prejudicial to the interest of
the Company.
Based on its assessment of recoverability, the Company has during the
current year, made a provision of Rs.3,303 million against the loan and
has not recognised any interest income (amounting to Rs.963 million on
the said loan).
Further, as mentioned in paragraph 1 under ''basis for qualified
opinion'', a provision of Rs.6,495.4 million has been made with respect
to amounts due from certain parties who alleged that they have advanced
certain amounts to alleged UB Group entities.
Directors'' Response: Management informed the Board that: (i) pursuant
to a previous resolution passed by the board of directors of the
Company on 11 October 2012, certain dues (together with interest)
aggregating to Rs.13,374 Million were consolidated into, and recorded
as, an unsecured loan by way of an agreement entered into between the
Company and UBHL on 3 July 2013; (ii) the interest rate of 9.5% p.a.
was in accordance with Section 372A of the Companies Act, 1956, read
with the circular issued by the Reserve Bank of India publishing the
bank rate in terms section 49 of the Reserve Bank of India Act, 1934.
The management and the nominee directors of the controlling shareholder
have informed the Board that they will take all the necessary steps
within their power and authority as management and directors of the
Company to fully protect the interest of the shareholders in this
regard.
Further, the Board has directed the management to review the underlying
loan agreement(s) and / or other relevant documents ("Loan Documents"),
to inter-alia assess: (i) whether any event of default(s) under the
Loan Documents has occurred on the part of UBHL; (ii) the legal rights
and remedies which the Company has under the Loan Documents; (iii)
whether the Company should invoke any of the remedies available to it
under the Loan Documents (including recalling of the entire loan); and
(iv) whether there is any scope of renegotiating the terms and
conditions under the Loan Documents.
In this regard, the management should expeditiously take all the
necessary steps to fully protect the interest of the Company and
shareholders.
6(c) Auditor''s observation under Paragraph (iii)(c) of Annexure to
Auditor''s Report: According to the information and explanations given
to us, in case of the unsecured loan granted to the company covered in
the register maintained under Section 301 of the Act as stated in sub-
clause (a) above, no amounts were repayable during the year as per the
terms of the loan agreement.
Considering the matters disclosed in paragraphs 1 and 4 under ''basis
for qualified opinion'', we are unable to comment on the regularity in
the receipt of the principal amount and interest relating to any other
loan, secured or unsecured, that may have been granted to any company/
firm/ other party covered in the register maintained under Section 301
of the Act, as a result of the transactions disclosed in paragraphs 1
and 4 under ''basis for qualified opinion''.
Directors'' Response: The Management has certified to the Board that, on
the basis of the Management''s current information, particulars of
contracts or arrangements that are required to be entered in the
register maintained under section 301 of the Act have been so entered.
As mentioned in Note 8 to the Statement, the Board has ordered a
detailed and expeditious inquiry in relation to the matters disclosed
in paragraphs 1 and 4 of ''Basis for Qualified opinion'' in the auditor''s
report. On completion of such inquiry, appropriate action, if any, will
be taken.
6(d)Auditor''s observations under Paragraph (iii)(d) of Annexure to
Auditors Report: According to the information and explanations given to
us, in case of the unsecured loan granted to the company covered in the
register maintained under Section 301 as stated in sub- clause (a)
above, there is no overdue amount of more than Rupees one lakh in
respect of the said loan.
Considering the matters disclosed in paragraphs 1 and 4 under ''basis
for qualified opinion'', we are unable to comment whether there is
overdue amount of more than Rupees one lakh in respect of any other
loan, secured or unsecured, that may have been granted to any company/
firm/ other party covered in the register maintained under Section 301
of the Act, as a result of the transactions disclosed in paragraphs 1
and 4 under ''basis for qualified opinion''.
Directors'' Response: The Management has certified to the Board that, on
the basis of the Management''s current information, particulars of
contracts or arrangements that are required to be entered in the
register maintained under section 301 of the Act have been so entered.
As mentioned in Note 8 to the Statement, the Board has ordered a
detailed and expeditious inquiry in relation to the matters disclosed
in paragraphs1 and 4 of ''Basis for qualified opinion'' in the auditor''s
report. On completion of such inquiry, appropriate action, if any, will
be taken.
6(e)Auditor''s Observation under Paragraph (iv) of Annexure to the
Auditors Report: In our opinion and according to the information and
explanations given to us, and having regard to the explanation that
purchases of certain items of inventories and fixed assets are for the
Company''s specialised requirements and suitable alternative sources are
not available to obtain comparable quotations, there is an adequate
internal control system commensurate with the size of the Company and
the nature of its business with regard to purchase of inventories and
fixed assets and with regard to the sale of goods and services during
the year.
Except for the matter discussed below, we have not observed any major
weaknesses in the internal control system during the course of the
audit.
Considering the matters stated under ''basis for qualified opinion'', we
are unable to comment on the adequacy of the internal control system of
the Company at certain points in time during the earlier years with
respect to such instances as stated under ''basis for qualified
opinion''.
Directors'' Response: The matters stated under ''basis for qualified
opinion'' relate to the period prior to 1 April 2013. The Management
believes that the Company has an internal control system commensurate
with the size of the Company and the nature of its business. The Board
has instructed the Management that, depending on the outcome of the
inquiry, further strengthening of the internal control system should be
carried out, as may be required.
6(f)Auditor''s observation under Paragraph (v)(a) of Annexure to the
Auditor''s Report: In our opinion and according to the information and
explanations given to us, the particulars of contracts or arrangements
entered into during the year referred to in Section 301 of the Act have
been entered in the register required to be maintained under that
Section.
However, considering the matters stated under ''basis for qualified
opinion'', particularly paragraphs 1 and 4 thereof, we are unable to
comment whether the particulars of any such contracts or arrangements
that may result from the transactions disclosed under ''basis for
qualified opinion'' and that need to be entered in the register
maintained under Section 301 of the Act, have been so entered.
Directors'' Response: The Management has certified to the Board that, on
the basis of the Management''s current information, particulars of
contracts or arrangements that are required to be entered in the
register maintained under section 301 of the Act have been so entered.
As mentioned in Notes 26(a), 26(b) and 30(f) to the Statement, the
Board has ordered a detailed and expeditious inquiry in relation to the
matters disclosed in paragraphs 1 and 4 of ''Basis for qualified
opinion'' in the auditor''s report. On completion of such inquiry,
appropriate action, if any will be taken.
6(g)Auditor''s observation under Paragraph (vii) of Annexure to the
Auditor''s Report: In our opinion, the Company has an internal audit
system commensurate with the size and nature of its business during the
year, except in relation to matters stated under ''basis for qualified
opinion'', where the internal audit system needs to be strengthened.
Directors'' Response: The matters stated under ''basis for qualified
opinion'' relate to the period prior to 1 April 2013. The Management
believes that the Company has an internal audit system commensurate
with the size of the Company and the nature of its business. The Board
has instructed the Management that, depending on the outcome of the
inquiry, further strengthening of the internal audit system should be
carried out, as may be required.
6(h)Auditor''s observation under Paragraph (x) of Annexure to Auditor''s
Report: The accumulated losses of the Company at the end of the year
are not less than fifty percent of its net worth. The Company has
incurred cash losses in the financial year. However, no cash losses
were incurred in the immediately preceding financial year.
Directors'' Response: The Board notes that the accumulated losses of the
Company at the end of the year is 52% of its peak net worth in the
previous four financial years. Therefore, the Company will be required
to file a report under Section 23 of the Sick Industrial Companies
(Special Provisions) Act, 1985 (SICA), The Board believes this report
under Section 23 would arise as a technical requirement under SICA and
does not reflect upon the long term prospects of the Company given the
profitable nature of its business and as the accumulated losses are
principally on account of exceptional items during the year.
6(i) Auditor''s Observation under Paragraph (xi) of Annexure to
Auditor''s Report: In our opinion and according to the information and
explanations given to us, the Company has not defaulted in the
repayment of dues to a bank or to any financial institution except that
in case of loans due to banks, principal amounting to Rs.410 million
and interest amounting to Rs.474 million were repaid with a delay of up
to 67 days and 37 days, respectively. The Company did not have any
outstanding debentures during the year.
Directors'' Response: The Management has informed the Board that as of
31 March 2014, there were no outstanding defaults by the Company of any
dues to a bank or any financial institution.
6(j) Auditor''s Observation under Paragraph (xvi) of Annexure to
Auditor''s Report: In our opinion and according to the information and
explanations given to us, the term loans taken by the Company and
applied during the year were for the purpose for which they were
raised.
However, considering the matters stated under ''basis for qualified
opinion'', particularly paragraphs 1, 3 and 4, we are unable to comment
whether any transactions relating to such matters represent application
of term loans for the purpose for which they were raised.
Directors'' Response: The Management has certified to the Board that, on
the basis of the Management''s current information, the Company has
applied term loans taken by the Company during the year for the purpose
for which they were raised. However, as mentioned in Note 26(c) to the
Statement, the Board has ordered a detailed and expeditious inquiry in
relation to the matters disclosed in paragraphs 1, 3 and 4 of ''basis
for qualified opinion'' in the auditor''s report. On completion of such
inquiry, appropriate action will be taken, as may be required.
6(k)Auditor''s Observation under Paragraph (xxi) of Annexure to
Auditor''s Report: As mentioned in detail in paragraphs 1 and 2 under
''basis for qualified opinion'', wherein it is stated that:
(i) certain parties alleged that they have advanced certain amounts to
certain alleged UB Group entities and linked the confirmation of
amounts aggregating to Rs.5,846.9 million due to the Company to
repayment of such amounts to such parties by the alleged UB Group
entities. Further, some of these parties stated that the dues to the
Company will be paid/refunded only upon receipt of their dues from such
alleged UB Group entities; and
(ii) an alleged instance of a purported agreement to create a lien on
certain investments of the Company as security against loans given by
an Alleged Claimant to Kingfisher Airlines Limited (KFA) in earlier
years was noted. However, in a letter dated 31 July 2014 from the
Alleged Claimant, it was stated that the allegation made earlier did
not take into account an addendum to the loan agreement; and after
examining the aforesaid addendum and the agreement, the Alleged
Claimant does not have any claim or demand of any nature against the
Company. Subsequently, in September 2014, scanned copies of the
purported agreements were furnished to the Management by KFA. The
Management has represented to us that the Company had no knowledge of
these purported agreements; that the Board of Directors of the Company
have not approved any such purported agreements; and it is not liable
under any such purported agreements.
Pending the completion of the inquiry as mentioned in paragraph 4 under
''basis for qualified opinion'', we are unable to conclude whether these
instances can be termed as ''fraud'' and whether there are other
instances of a similar nature.
Directors'' Response: See responses to paragraphs 1 to 3 of the
Auditor''s Report to the Financial Statement. As mentioned in the note
30(f) to the Statement, the Board has directed a detailed and
expeditious inquiry in relation to the matters disclosed in paragraphs
1 to 5 of "basis for qualified opinion" in the Auditors'' Report.
Pending the completion of such inquiry, the Board is unable to conclude
whether there have been any instances of fraud against the Company.
Based on the findings of such inquiry, appropriate action, including
action for recovery of the Company''s assets or amounts owing to the
Company, will be taken.
LISTING OF SHARES OF THE COMPANY
The Equity Shares of your Company continue to remain listed with
Bangalore Stock Exchange Limited, BSE Limited and National Stock
Exchange of India Limited. The listing fees for the year 2014-15 have
been paid to these Stock Exchanges.
CORPORATE GOVERNANCE
A report on the Corporate Governance is annexed separately as part of
this report along with a certificate of compliance from a Company
Secretary in practice. Necessary requirements of obtaining
certifications/declarations in terms of Clause 49 have been complied
with.
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Management Discussion and Analysis Report is annexed and
forms an integral part of the Annual Report.
FIXED DEPOSITS
Fixed Deposits from the public and shareholders, stood at Rs. 3909.371
Million as at March 31, 2014. Matured deposits for which disposal
instructions had not been received from the depositors concerned stood
at Rs.52.504 Million as at March 31, 2014. Of this, a sum of Rs.26.759
Million (as of August 29, 2014) has since been paid as per instructions
received after the year end.
Effective January 1, 2014, your Company has discontinued acceptance /
renewal of fixed deposits from the public and the shareholders.
Pursuant to the provisions of Companies Act, 2013 ("Act"), unless the
Company complies with certain conditions as prescribed under Section 73
of the Act read with the Companies (Acceptance of Deposits) Rules,
2014, Company has to repay the fixed deposits which were accepted under
the erstwhile provisions of the Companies Act, 1956 within a period of
one year from the date of the commencement of the provisions of Section
74 of the Act or from the date on which such payments are due,
whichever is earlier. Section 74 of the Act came into force on April 1,
2014. The Board of Directors at their meeting held on August 1, 2014,
decided to repay all the existing fixed deposits with the Company,
including the fixed deposits which will mature after March 31, 2015
along with the interest as per the contracted terms, on or before March
31, 2015.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the provisions of Section 205A(5) and 205C of the Companies
Act, 1956, the Unclaimed Dividend and Deposits, remaining unclaimed and
unpaid for a period of more than 7 years, have been transferred to the
Investor Education and Protection Fund.
Necessary compliance under Rule 3 of the Investor Education and
Protection Fund (Uploading of information regarding unpaid and
unclaimed amounts lying with companies) Rules, 2012 have been followed.
HUMAN RESOURCES
Employee relations remained cordial at all Company''s locations except
at the Company''s plant at Palakkad in the State of Kerala, where
lock-out for a Limited period was declared due to labour unrest and the
lockout has since been lifted.
Particulars of employees drawing an aggregate remuneration of
Rs.60,00,000/- or above per annum or Rs.5,00,000/- or above per month,
as required under Section 217(2A) of the Companies Act, 1956, as
amended, is annexed.
EMPLOYEE STOCK OPTION SCHEME
The Company has not offered any stock option to the Employees during
the year 2013-14.
CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION, ETC.
In accordance with the provisions of Section 217(1)(e) of the Companies
Act, 1956, read with Companies (Disclosure of Particulars in the Report
of the Board of Directors) Rules, 1988, the required information
relating to Conservation of Energy, Technology Absorption and Foreign
Exchange earnings and outgo is annexed.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 1956, in relation
to financial statements (together with the notes to such financial
statements) for the year 2013-14, the Board of Directors reports that:
* in the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
* accounting policies have been selected and applied consistently and
that the judgements and estimates made are reasonable and prudent so as
to give a true and fair view of the state of affairs of the Company as
at the end of the financial year and of the loss of the Company for the
year ended March 31, 2014;
* proper and sufficient care have been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
* The annual accounts have been prepared on a going concern basis.
* The statutory auditors have issued a qualified opinion on the
financial statements of the Company for the financial year ended 31
March 2014. Such qualifications relate to transactions of earlier
years, which have come to the knowledge of this Board only recently.
The Board has initiated a detailed and independent inquiry as referred
to in Note no 26 (c) of the Financial Statement. All further actions,
including adjustments to the financial statements (including matters
arising out of earlier years), if required, will be made in light of
the result of the inquiry. However, based on the current knowledge and
information of the management, it believes that no additional material
adjustments to the financial statements are likely to be required in
relation to the matters mentioned above. Subject to the foregoing, the
Board has approved the annual financial statements, before the
completion of the inquiry in the interest of the public shareholders.
THANK YOU
Your Directors place on record their sincere appreciation for the
continued support from shareholders, customers, suppliers, banks and
financial institutions and other business associates. A particular note
of thanks to all employees of your Company, without whose contribution,
your Company could not have achieved the year''s performance.
By Authority of the Board
ANAND KRIPALU P.A. MURALI
Managing Executive Director
Mumbai Director and Chief
September 04, 2014 Executive Officer
Mar 31, 2013
The Directors have pleasure in presenting the Annual Report of your
Company and the audited accounts for the year ended March 31, 2013.
FINANCIAL RESULTS
Rupees in Millions
2012-13 2011-12
The working of your Company for the year
under review resulted in
- Profit from operations 5,774.717 5,755.508
- Exceptional and other (216.481) (108.163)
non-recurring items
5,558.236 5,647.345
Less:
- Depreciation 718.268 608.453
- Taxation 1,632.008 1,610.951
(including deferred tax)
- Profit after tax 3,207.960 3,427.941
Profit B/F from previous year 17,905.879 15,357.972
Profit available for appropriation 21,113.839 18,785.912
Your Directors have made the following
Appropriations :
General Reserve 500.000 500.000
Proposed Dividend 326.987 326.987
Corporate Tax on Proposed
Dividend 53.045 53.046
Balance carried to the Balance Sheet 20,233.807 17,905.879
EPS - Basic & Diluted (Rupees) 24.53 26.21
Your Directors propose a Dividend on the equity shares of the Company
at the rate of Rs. 2.50 per share.
CAPITAL
The Authorised Capital of your Company remained unchanged at
Rs.5,542,000,000/- divided into 395,000,000 Equity Shares of Rs.10/-
each and 159,200,000 Preference Shares of Rs. 10/- each.
The issued, subscribed and paid-up Equity Share Capital of your Company
also remained unchanged at Rs.1,307,949,680/- divided into 130,794,968
equity shares of Rs.10/- each.
GLOBAL DEPOSITORY SHARES
Your Company had issued 17,502,762 Global Depository Shares (GDSs)
representing 8,751,381 Equity Shares ranking pari-passu in all respects
with the existing paid up equity shares, 2 GDSs representing 1 equity
share of par value of Rs.10/- each at US$7.4274 per GDSs aggregating to
US$ 130 mn. These GDSs are listed on the Luxembourg Stock Exchange.
As on May 10, 2013, there was an outstanding of GDSs 889,758
representing 444,879 equity shares.
PERFORMANCE OF THE COMPANY
During the year under review, your Company has achieved a sales volume
of over 123.70 Million cases (Previous year 120.18 Million cases),
representing a growth of 3% over the previous year, thus continuing to
maintain its position as the largest distilled spirits marketeer in the
world in terms of volume. Profit from operations stood at Rs.5,774.717
million (previous year Rs.5,755,508 million) registering a marginal
increase over the previous year.
SUBSIDIARIES
During the year under review, Daffodils Flavours & Fragrances Private
Limited, Jasmine Flavours & Fragrances Private Limited, United Vintners
Limited, United Alcobev Limited, McDowell & Company Limited, McDowell
Beverages Limited and BDL Distilleries Limited wholly owned
subsidiaries ceased to be the subsidiaries of the Company consequent to
the divestment of the entire paid up capital held by the Company in
these subsidiaries. Similarly, Ramanreti Investments and Trading
Company Limited, an indirect wholly owned subsidiary of the Company
also ceased to be a subsidiary of the Company consequent to the
divestment of the entire paid up capital held by your subsidiary SW
Finance Co. Limited (formerly Shaw Wallace Breweries Limited) in this
subsidiary. Your Company purchased 16,86,004 equity shares of Rs 10/-
each held by its erstwhile wholly owned subsidiary, Ramanreti
Investments and Trading Company Limited in SW Finance Co. Limited
(formerly Shaw Wallace Breweries Limited), a wholly owned subsidiary of
your Company.
Subsequent to the divestment of its entire equity shareholding in the
Company by R G Shaw & Company Limited, Shaw Scott & Company Limited,
Shaw Darby & Company Limited and Thames Rice Milling Company Limited,
UK based wholly owned subsidiaries of the Company, to Palmer Investment
Group Limited, BVI another wholly owned subsidiary of the Company,
these four UK-based wholly owned subsidiaries have been dissolved.
Accordingly, these four UK-based companies ceased to be the
subsidiaries of the Company during the year under review.
During the year under review, Whyte and Mackay Singapore Pte. Limited,
a wholly owned subsidiary of Whyte and Mackay Limited, became wholly
owned subsidiary of your Company.
During the year under review, JIHL Nominees Limited, a wholly owned
subsidiary of your Company has changed its name to UB Sports Management
Overseas Limited.
In terms of the listing requirements to have minimum public
shareholding, your Company is required to bring down its shareholding
to a level of 75% of the total paid up capital of Pioneer Distilleries
Limited (PDL) from the present holding of 81.58%. During the year under
review, your Company was successful in divesting 55,100 Equity shares
of PDL in the open market through a Stock Exchange mechanism (Offer for
Sale) representing 0.41% of the paid up equity capital of PDL.
Pioneer Distilleries Limited (PDL), Sovereign Distilleries Limited
(SDL) and Tern Distilleries Private Limited (TDPL) subsidiaries of the
Company have made a reference to the Board for Industrial and Financial
Reconstruction (BIFR) under Section 15 of Sick Industrial Companies
(Special Provisions) Act, 1985, in view of the erosion of the entire
net worth of these companies. However, your Company, is considering
various steps, inter alia, infusion of further share capital by way of
conversion of existing loan into equity capital to make the net worth
of its subsidiaries positive.
Four Seasons Wines Limited (FSWL), a subsidiary of the Company has made
a reference to the Board for Industrial and Financial Reconstruction
(BIFR) under Section 23 of Sick Industrial Companies (Special
Provisions) Act, 1985 in view of erosion of more than 50% of its peak
net worth during the immediately preceding four financial years.
In terms of Circular No.2/2011 dated February 8, 2011 issued by the
Ministry of Corporate Affairs, Government of India, a general exemption
has been granted from the compliance of Section 212 of the Companies
Act, 1956, requiring holding companies to attach with their balance
sheet, a copy of the balance sheet, profit and loss account and other
documents of each of its subsidiaries provided the Board of Directors
of such companies give consent, by way of a resolution, for not
attaching the balance sheet of the subsidiary companies concerned with
the balance sheet of the Company and certain conditions prescribed by
the Ministry in this regard are complied with.
The Board of Directors of your Company, at their meeting held on May
15, 2013 have given their consent for not attaching, inter alia, the
balance sheet, profit and loss account etc. of its subsidiary companies
since your Company has complied with all the conditions prescribed by
the Ministry vide its circular dated February 8, 2011, in this regard.
In view of the above, the balance sheet, profit and loss account and
other documents/details of the subsidiary companies, which are required
to be attached with the balance sheet of the Company, are not attached.
The Annual Accounts of the Subsidiaries and the related detailed
information will be made available to any shareholder of the Company
seeking such information at any point in time. The Annual Accounts of
the Subsidiary Companies will also be kept for inspection by any
shareholder of the Company at its Registered Office and that of the
Subsidiary Companies concerned, during the business hours on any
working day.
The Accounting Year of United Spirits Nepal Private Limited (USNPL),
your Company''s subsidiary in Nepal is from mid- July to mid-July every
year. Accordingly, Accounting Year of 2011-12 of USNPL ended on July
15, 2012 and the Accounting Year 2012-13 will end on July 15, 2013
i.e., after the end of the close of the financial year of the Company,
which ended on March 31, 2013. For the purpose of compliance under
Accounting Standard - 21, relating to "Consolidated Financial
Statement," the Accounts of USNPL has been drawn up to March 31, 2013.
For the purpose of compliance under Accounting Standard - 21,
"Consolidated Financial Statement" presented by the Company includes
the financial information of its subsidiaries.
Investment in The Equity Capital of the Company by Relay B.V.,
Netherlands
During the year under review, Palmer Investment Group Limited, UB
Sports Management Overseas Limited (both wholly owned subsidiaries of
the Company), USL Benefit Trust (of which your Company is a
beneficiary), SWEW Benefit Company, United Breweries (Holdings) Limited
and Kingfisher Finvest India Limited (both promoters of the Company)
have entered into a Share Purchase Agreement with Relay B.V., an
indirect wholly owned subsidiary of Diageo Plc and Diageo Plc for sale
of equity shares of the Company constituting up to 19.29% of the
present paid up equity share capital of the Company at a price of Rs.
1440/- per equity share to Relay B.V. Simultaneously, your Company has
also entered into a Preferential Allotment Agreement with Relay B.V.
and Diageo Plc for issue of 14,532,775 equity shares of the face value
of Rs. 10/- each constituting 10% of the post-issue equity share
capital of the Company to Relay B.V. on a preferential allotment basis
at a price of Rs. 1440/- per share. The consummation of the
transactions referred to above, are subject to various conditions
precedent, including receipt of approval from the Competition
Commission of India and in case of the preferential allotment, approval
of the shareholders of the Company by way of a special resolution
through postal ballot. Shareholder approval to the preferential
allotment and approval from the Competition Commission of India, has
since been received. Consequent to the above agreements Relay B.V. has
made an Open Offer to acquire up to 37,785,214 equity shares from the
public shareholders of the Company. Relay B.V. has acquired 58,668
equity shares of the Company pursuant to the Open Offer.
PROSPECTS
Your Company achieved a sales volume of just under 10 Million cases
during the first month of the current financial year and judging by the
continuing growth in the current year, the Company is set to maintain
leadership position in the World''s spirits industry.
With over half of the Indian population under the age of 25 and more
and more young Indiansjoining the workforce with more disposable income
in their hands at ages earlier than the previous generation, the Indian
Spirits Industry is expected to witness a sea change in its target
consumers and hence continue on the growth path. Being an undisputed
leader, by volume in the Spirits Industry, your Company will reap huge
benefits from the above expansion of the target consumers. The only
hindrance to such continued growth could be the unbridled efforts of
the state governments to continue enhancing their revenues by
increasing duties and taxes. To mitigate this partially, as reported
last year, your Company has already embarked upon a strategy to build
supply-side security to protect your Company against fluctuation in
price and availability of its key raw material, Extra Neutral Alcohol
(ENA), by targeting to reach a minimum level of 50% of ENA requirement
through in-house distillation. During the current fiscal year, your
Company has made investments in the creation of additional capacities
in the existing in-house distillation plants.
Though your Company has temporarily heldback its plans to put up a
glass container manufacturing facility for captive consumption, the
prices of glass containers, a major packaging material which is a key
ingredient in the cost of production, has recently dropped by 5% due to
over- capacity in the industry.
With all these measures, your Directors are hopeful that your Company
would achieve a structural improvement in its profitability in the
years to come.
DEPOSITORY SYSTEM
The trading in the equity shares of your Company is under compulsory
dematerialisation mode. As onMay 10, 2013, equity shares representing
98.20% of the equity share capital are in dematerialised form. As the
depository system offers numerous advantages, members are requested to
take advantage of the same and avail of the facility of
dematerialisation of the Company''s shares.
DIRECTORS
Mr. Subhash Raghunath Gupte and Mr Sudhindar Krishan Khanna retire by
rotation and being eligible, offer themselves for re-appointment.
The revision in the terms of remuneration payable to Mr. Ashok Capoor,
Managing Director of the Company, as approved and recommended by the
Compensation Committee of Directors, is being placed for the approval
of the members at this Annual General Meeting.
AUDITORS
M/s. Walker, Chandiok & Co., your Company''s Auditors, are eligible for
re-appointment at the Annual General Meeting and it is necessary to fix
their remuneration.
TAX AUDITORS
Your Directors have appointed M/s. Lodha & Co., Chartered Accountants
as the Tax Auditors of the Company to carry out the tax audit of the
Company for the year ended March 31, 2013.
LISTING OF SHARES OF THE COMPANY
The Equity Shares of your Company continue to remain listed with
Bangalore Stock Exchange Limited, BSE Limited and National Stock
Exchange of India Limited. The listing fees for the year 2013-14 have
been paid to these Stock Exchanges.
CORPORATE GOVERNANCE
A report on the Corporate Governance is annexed separately as part of
this report along with a certificate of compliance from a Company
Secretary in practice. Necessary requirements of obtaining
certifications/declarations in terms of Clause 49 have been complied
with.
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Management Discussion and Analysis Report is annexed and
forms an integral part of the Annual Report.
FIXED DEPOSITS
Fixed Deposits from the public and shareholders, stood at Rs. 4359.83
Million as at March 31, 2013. Matured deposits for which disposal
instructions had not been received from the depositors concerned stood
at Rs. 86.20 Million as at March 31, 2013. Of this, a sum of Rs. 30.128
Million (as of 26.5.2013) has since been paid as per instructions
received after the year-end.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the provisions of Section 205A(5) and 205C of the Companies
Act, 1956, the Unclaimed Dividend and Deposits, remaining unclaimed and
unpaid for a period of more than 7 years, have been transferred to the
Investor Education and Protection Fund.
Necessary compliance under Rule 3 of the Investor Education and
Protection Fund (Uploading of information regarding unpaid and
unclaimed amounts lying with companies) Rules, 2012 have been followed.
HUMAN RESOURCES
Employee relations remained cordial at all Company''s locations.
Particulars of employees drawing an aggregate remuneration of Rs.
60,00,000/- or above per annum or Rs. 5,00,000/- or above per month, as
required under Section 217(2A) of the Companies Act, 1956, as amended,
is annexed.
EMPLOYEE STOCK OPTION SCHEME
The Company has not offered any stock option to the Employees during
the year 2012-13.
CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION, ETC.
In accordance with the provisions of Section 217(1)(e) of the Companies
Act, 1956, read with Companies (Disclosure of Particulars in the Report
of the Board of Directors) Rules, 1988, the required information
relating to Conservation of Energy, Technology Absorption and Foreign
Exchange earnings and outgo is annexed.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 1956, in relation
to financial statements for the year 2012-13, the Board of Directors
reports that:
- in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
- accounting policies have been selected and applied consistently and
that the judgements and estimates made are reasonable and prudent so as
to give a true and fair view of the state of affairs of the Company as
at the end of the financial year and of the profit of the Company for
the year ended March 31, 2013;
- proper and sufficient care have been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
- The annual accounts have been prepared on a going concern basis.
THANK YOU
Your Directors place on record their sincere appreciation for the
continued support from shareholders, customers, suppliers, banks and
financial institutions and other business associates. A particular note
of thanks to all employees of your Company, without whose contribution,
your Company could not have achieved the year''s performance.
By Authority of the Board
Bangalore Dr. VIJAY MALLYA
May 15, 2013 Chairman
Mar 31, 2012
The Shareholders,
The Directors have pleasure in presenting the Annual Report of your
Company and the audited accounts for the year ended March 31, 2012.
FINANCIAL RESULTS
Rupees in Millions
2011-12 2010-11
The working of your Company for
the year under review resulted in
- Profit from operations 5,755.508 5,925.148
- Exceptional and other (108.163) 368.399
non-recurring items
5,647.345 6,293.547
Less:
- Depreciation 608.453 477.470
- Taxation 1,610.951 1,961.365
(including deferred tax)
- Profit after tax 3,427.941 3,854.712
Profit B/F from previous year 15,357.972 12,380.525
Profit transferred on Amalgamation - 4.030
Profit available for appropriation 18,785.912 16,239.267
Your Directors have made the
following Appropriations :
General Reserve 500.000 500.000
Proposed Dividend 326.987 326.987
Corporate Tax on Proposed
Dividend 53.046 54.309
Balance carried to the Balance Sheet 17,905.879 15,357.971
EPS - Basic & Diluted (Rupees) 26.91 29.47
Your Directors propose a Dividend on the equity shares of the Company
at the rate of Rs. 2.50 per share.
CAPITAL
The Authorised Capital of your Company remained unchanged at
Rs.5,542,000,000/- divided into 395,000,000 Equity Shares of Rs.10/-
each and 159,200,000 Preference Shares of Rs. 10/- each.
The issued, subscribed and paid-up Equity Share Capital of your Company
also remained unchanged at Rs.1,307,949,680/- divided into 130,794,968
equity shares of Rs.10/- each.
GLOBAL DEPOSITORY SHARES
Your Company had issued 17,502,762 Global Depository Shares (GDSs)
representing 8,751,381 Equity Shares ranking pari-passu in all respects
with the existing paid up equity shares, 2 GDSs representing 1 equity
share of par value of Rs.10/- each at US$7.4274 per GDSs aggregating to
US$ 130 mn. These GDSs are listed on the Luxembourg Stock Exchange.
As on May 25, 2012, there was an outstanding of 1,284,554 GDSs
representing 642,277 equity shares.
PERFORMANCE OF THE COMPANY
During the year under review, your Company has achieved a sales volume
of over 120 million cases (Previous year 112 Million cases),
representing a growth of 7% over the previous year, thus continuing to
maintain its position as the largest distilled spirits marketeer in the
world in terms of volume. Profit from operations stood at Rs.5,755.508
million (previous year Rs.5,925.148 million) registering a marginal
decrease over the previous year mainly on account of increase in input
costs.
SUBSIDIARIES
During the year under review, Chennai Breweries Private Limited (CBPL),
a wholly owned subsidiary ceased to be the subsidiary of the Company
consequent to its amalgamation with United Breweries Limited (UBL), a
UB group Company in terms of Scheme of Amalgamation. Consequent to the
aforesaid amalgamation of CBPL with UBL, your Company received
8,500,000 equity shares of Rs. 1/- each of UBL for the shares held by
the Company in CBPL.
Whyte and Mackay (Americas) Limited, LLC, a wholly owned subsidiary of
Whyte and Mackay Limited, became an utlimate wholly owned subsidiary of
your Company.
Sovereign Distilleries Limited (SDL) which became a subsidiary during
the year under review became a wholly owned subsidiary of your Company
on April 19, 2012 consequent to the acquisition of the balance 38.47%
equity shares in terms of Share Purchase Agreement (SPA) executed with
the erstwhile promoters of Sovereign Distilleries Limited (SDL).
Your Company is considering various steps including infusion of share
capital to make the net worth of its subsidiaries viz. Pioneer
Distilleries Limited, Sovereign Distilleries Limited and Tern
Distilleries Private Limited, positive.
During the year under review, your Company subscribed to 15,612,245 12%
Non Cumulative Redeemable Optionally Convertible Preference shares of
Rs.10/- each at par in Four Seasons Wines Limited (FSWL), a subsidiary
of the Company. Your Company also subscribed during the current year
8,000,000 12% Cumulative Redeemable Preference shares of Rs.10/- each
at par in FSWL.
In terms of Circular No.2/2011 dated February 8, 2011 issued by the
Ministry of Corporate Affairs, Government of India, a general exemption
has been granted from the compliance of Section 212 of the Companies
Act, 1956, requiring holding companies to attach with their balance
sheet, a copy of the balance sheet, profit and loss account and other
documents of each of its subsidiaries provided the Board of Directors
of such companies give consent, by way of a resolution, for not
attaching the balance sheet of the subsidiary companies concerned with
the balance sheet of the Company and certain conditions prescribed by
the Ministry in this regard are complied with.
The Board of Directors of your Company, at their meeting held on May
29, 2012 have given their consent for not attaching, inter alia, the
balance sheet, profit and loss account etc. of its subsidiary companies
since your Company has complied with all the conditions prescribed by
the Ministry vide its circular dated February 8, 2011, in this regard.
In view of the above, the balance sheet, profit and loss account and
other documents/details of the subsidiary companies, which are required
to be attached with the balance sheet of the Company, are not attached.
The Annual Accounts of the Subsidiaries and the related detailed
information will be made available to any shareholder of the Company
seeking such information at any point in time. The Annual Accounts of
the Subsidiary Companies will also be kept for inspection by any
shareholder of the Company at its Registered Office and that of the
Subsidiary Companies concerned, during the business hours on any
working day.
The Accounting Year of United Spirits Nepal Private Limited (USNPL),
your CompanyÃs subsidiary in Nepal is from mid-July to mid-July every
year. Accordingly, Accounting Year of 2010-11 of USNPL ended on July
16, 2011 and the Accounting Year 2011-12 will end on July 16, 2012
i.e., after the end of the close of the financial year of the Company,
which ended on March 31, 2012. For the purpose of compliance under
Accounting Standard - 21, relating to ÃConsolidated Financial
Statement,Ã the Accounts of USNPL has been drawn up to March 31, 2012.
For the purpose of compliance under Accounting Standard - 21,
ÃConsolidated Financial Statementà presented by the Company includes
the financial information of its subsidiaries.
PROSPECTS
Your Company achieved a sales volume of 10.75 million cases during the
first month of the current financial year and judging by the continuing
growth in the current year, the Company is set to maintain its current
position as the worldÃs largest distilled spirits marketeer by volume.
With the fixation of a more than comfortable floor price for ethanol
supplies for oil blending by the Oil Marketing Companies coupled with
the uncontrolled grant of permissions to export of molasses and spirit,
the potential availability of Extra Neutral Alcohol (ENA), a primary
raw material required in the manufacture of CompanyÃs products, has
been adversely affected. To counter this hardship, as a part of its
business strategy, your Company is continuing with its initiatives of
building up supply side security by integrating backwards into
distillation by way of acquiring substantial interest in Pioneer
Distilleries Limited in Maharashtra and Sovereign Distilleries Limited
in North Central Karnataka, both states rich in sugarcane cultivation.
These will go a long way to reduce the CompanyÃs dependence on external
supplies of ENA.
In order to mitigate the increase in the cost of glass bottles, which
is another key ingredient, as a part of its business strategy
initiatives, your Company has envisaged setting up a glass container
manufacturing facility in south India for captive consumption, besides
developing alternate packaging materials in some of the southern states
of the
Country to reduce the impact of the increased cost of glass bottles.
With all these measures, your Directors are hopeful that your Company
would achieve a structural improvement in its profitability in the
years to come.
DEPOSITORY SYSTEM
The trading in the equity shares of your Company is under compulsory
dematerialisation mode. As on May 25, 2012, equity shares representing
97.64 % of the equity share capital are in dematerialised form. As the
depository system offers numerous advantages, members are requested to
take advantage of the same and avail of the facility of
dematerialisation of the CompanyÃs shares.
DIRECTORS
Mr. Sreedhara Menon and Dr. Vijay Mallya retire by rotation and being
eligible, offer themselves for re-appointment.
Mr. G.N.Bajpai was appointed as Additional Director on January 20, 2012
and will hold office in terms of Section 260 of the Companies Act, 1956
up to the date of the ensuing Annual General Meeting.
A notice in writing has been received by your Company from a member
signifying his intention to propose the appointment of Mr. G.N. Bajpai
as Director at the Annual General Meeting.
AUDITORS
M/s. Walker, Chandiok & Co., your CompanyÃs Auditors, are eligible for
re-appointment at the Annual General Meeting and it is necessary to fix
their remuneration.
TAX AUDITORS
Your Directors have appointed M/s. Lodha & Co., Chartered Accountants
as the Tax Auditors of the Company to carry out the tax audit of the
Company for the year ended March 31, 2012.
LISTING OF SHARES OF THE COMPANY
The Equity Shares of your Company continue to remain listed with
Bangalore Stock Exchange Limited, Bombay
Stock Exchange Limited and National Stock Exchange of India Limited.
The listing fees for the year 2012-13 have been paid to these Stock
Exchanges.
CORPORATE GOVERNANCE
A report on the Corporate Governance is annexed separately as part of
this report along with a certificate of compliance from a Company
Secretary in practice. Necessary requirements of obtaining
certifications/declarations in terms of Clause 49 have been complied
with.
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Management Discussion and Analysis Report is annexed and
forms an integral part of the Annual Report.
FIXED DEPOSITS
Fixed Deposits from the public and shareholders, stood at Rs. 6,387.556
Million as at March 31, 2012. Matured deposits for which disposal
instructions had not been received from the depositors concerned stood
at Rs. 105.338 Million as at March 31, 2012. Of this, a sum of Rs.
55.354 Million has since been paid as per instructions received after
the year-end.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the provisions of Section 205A(5) and 205C of the Companies
Act, 1956, the Unclaimed Dividend and Deposits, remaining unclaimed and
unpaid for a period of more than 7 years, have been transferred to the
Investor Education and Protection Fund.
HUMAN RESOURCES
Employee relations remained cordial at all CompanyÃs locations.
Particulars of employees drawing an aggregate remuneration of Rs.
60,00,000/- or above per annum or Rs. 5,00,000/- or above per month, as
required under Section 217(2A) of the Companies Act, 1956, as amended,
is annexed.
EMPLOYEE STOCK OPTION SCHEME
The Company has not offered any stock option to the Employees during
the year 2011-12.
CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION, ETC.
In accordance with the provisions of Section 217(1)(e) of the Companies
Act, 1956, read with Companies (Disclosure of Particulars in the Report
of the Board of Directors) Rules, 1988, the required information
relating to Conservation of Energy, Technology Absorption and Foreign
Exchange earnings and outgo is annexed.
DIRECTORSÃ RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 1956, in relation
to financial statements for the year 2011-12, the Board of Directors
reports that:
- in the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
- accounting policies have been selected and applied consistently and
that the judgements and estimates made are reasonable and prudent so as
to give a true and fair view of the state of affairs of the Company as
at the end of the financial year and of the profit of the Company for
the year ended March 31, 2012;
- proper and sufficient care have been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
- The annual accounts have been prepared on a going concern basis.
THANK YOU
Your Directors place on record their sincere appreciation for the
continued support from shareholders, customers, suppliers, banks and
financial institutions and other business associates. A particular note
of thanks to all employees of your Company, without whose contribution,
your Company could not have achieved the yearÃs performance.
By Authority of the Board
Mumbai Dr. VIJAY MALLYA
May 29, 2012 Chairman
Mar 31, 2011
Dear Members,
The Directors have pleasure in presenting the Annual Report of your
Company and the audited accounts for the year ended March 31, 2011.
FINANCIAL RESULTS
Rupees in Millions
2010-11 2009-10
The working of your Company for
the year under review resulted in
- Profit from operations 5,925.149 5,123.093
- Exceptional and other
non-recurring items 368.399 699.953
6,293.548 5,823.046
Less:
- Depreciation 477.470 386.302
- Taxation
(including deferred tax) 1,961.365 1,676.529
- Profit after tax 3,854.713 3,760.215
Profit B/F from previous year 12,380.525 9,486.445
Profit transferred on Amalgamation 4.030 -
Profit available for appropriation 16,239.268 13,246.660
Your Directors have made the
following Appropriations :
General Reserve 500.000 500.000
Proposed Dividend 326.987 313.986
Corporate Tax on Proposed
Dividend 54.309 52.149
Balance carried to the Balance Sheet 15,359.972 12,380.525
EPS - Basic & Diluted (Rupees) 29.47 32.51
Your Directors propose a Dividend on the equity shares of the Company
at the rate of Rs. 2.50 per share, including on 5,200,639 Equity Shares
of 10/- each fully paid up allotted during the year to the shareholders
of Balaji Distilleries Limited ("BDL"), since amalgamated with the
Company.
CAPITAL
During the year under review, consequent to amalgamation of Balaji
Distilleries Limited with the Company, the Authorised Capital of your
company stood increased from Rs. 3,292,000,000/- divided into
245,000,000 Equity Shares of Rs.10/- each and 84,200,000 Preference
Shares of Rs.10/- each to Rs. 5,542,000,000/- divided into 395,000,000
Equity Shares of Rs.10/- each and 159,200,000 Preference Shares of
Rs.10/- each. The Issued, Subscribed and Paid-up Equity Share Capital
of the Company stood increased from Rs. 1,255,943,290/- divided into
125,594,329 Equity Shares of Rs.10/- each to Rs.1,307,949,680/- divided
into 130,794,968 Equity Shares of Rs. 10/- each by issue and allotment
of 5,200,639 Equity Shares of Rs.10/- each, fully paid-up, to the
shareholders of Balaji Distilleries Limited consequent to its
amalgamation with your Company.
GLOBAL DEPOSITARY SHARES
Your Company had issued 17,502,762 Global Depositary Shares ("GDSs")
representing 8,751,381 Equity Shares ranking pari-passu in all respects
with the existing paid up equity shares, 2 GDSs representing 1 equity
share of par value of Rs.10/- each at US$7.4274 per GDSs aggregating to
US$ 130 mn. These GDSs are listed on the Luxembourg Stock Exchange.
As on July 29, 2011, there was an outstanding of 1,662,666 GDSs
representing 831,333 equity shares.
PERFORMANCE OF THE COMPANY
During the year under review, the Company has achieved a sales volume
of over 112 million cases, representing a growth of 12% over the
previous year, thus making it the largest distilled spirits marketeer
in the world in terms of volume. Profit from operations at Rs.
5,925.149 millions registered a growth of 16% over the previous year.
Through a combination of premiumization, cost control and increased
effeciency at every stage of its process, the Company has been able to
not only mitigate cost increases but also improve its profitabality.
AMALGAMATION OF BALAJI DISTILLERIES LIMITED WITH THE COMPANY
The Hon'ble Appellate Authority for Industrial and Financial
Reconstruction has sanctioned the Rehabilitation Scheme of Balaji
Distilleries Limited which includes the Scheme of Arrangement between
Balaji Distilleries Limited ("BDL"), Chennai Breweries Private Limited
("CBPL") and United Spirits Limited ("USL") (the "Company") and their
respective Shareholders and Creditors ("the Scheme") vide its order
dated November 29, 2010, and the Scheme became effective from December
27, 2010. In terms of the sanctioned scheme, all the assets and
liabilities of BDL, other than Brewery Division Undertaking, as a going
concern stood transferred to and vested in the Company with effect from
1st April, 2009, being the "Merger Appointed Date" and "BDL" stood
dissolved without winding up. In terms of the Scheme, the shareholders
of BDL were issued and alloted in aggregate 5,200,639 equity shares of
Rs.10/- each of fully paid up in the Company in the ratio of 2 equity
shares of Rs. 10/- each fully paid up in the Company for every 55
equity shares of Rs. 10 /- each fully paid up in BDL.
ACQUISITION OF PIONEER DISTILLERIES LIMITED
In terms of Share Purchase Agreement ("SPA") executed with the
promoters of Pioneer Distilleries Limited ("PDL"), a company listed on
Pune Stock Exchange Limited, National Stock Exchange of India Limited
and Bombay Stock Exchange Limited, your Company acquired 7,322,280
Equity shares constituting 54.69% of the paid up capital of PDL.
Further, 977,212 Equity shares, constituting 7.30% and 2,677,640 Equity
shares, constituting 20.00% of the paid up capital of PDL were acquired
from the open market and through open offer in terms of SEBI Takeover
Regulations, respectively, thereby acquiring a total of 10,977,132
Equity shares, aggregating to 81.99% of the paid up capital of PDL.
Consequently, PDL has become a subsidiary of the Company. PDL is in the
business of manufacture and sale of Extra Neutral Alcohol ("ENA"),
which is the primary ingredient for manufacture of Indian Made Foreign
Liquor ("IMFL") and having a manufacturing plant in Balapur Village,
Dharmabad Taluk, Nanded District, Maharashtra.
Pursuant to the provisions of listing agreements executed with the
concerned stock exchanges, the Company would take necessary steps to
bring down its total shareholding in PDL to 75% of the paid up capital,
in due course.
ACQUISITION OF SOVEREIGN DISTILLERIES LIMITED
In terms of Share Purchase Agreement ("SPA") executed with the
promoters of Sovereign Distilleries Limited ("SDL"), your Company
proposes to acquire 100% of the paid up capital of SDL and has so far
acquired 35,954,280 equity shares constituting 61.53% of the paid up
capital of SDL. Consequently, SDL has become a subsidiary of the
Company. SDL is engaged in the business of manufacturing, sale and /
or marketing of Extra Neutral Alcohol ("ENA"), and Indian Made Foreign
Liquor ("IMFL") and having a manufacturing plant at Village Singapur,
District Raichur, Karnataka.
SUBSIDIARIES
During the year under review, Chennai Breweries Private Limited
("CBPL"), a wholly owned subsidiary of Balaji Distilleries Limited
("BDL") became a wholly owned subsidiary of the Company consequent to
amalgamation of BDL with the Company. CBPL is proposed to be
amalgamated with United Breweries Limited, a UB Group Company in terms
of the Scheme of Amalgamation, subject to the approval of the Hon'ble
High Court of Karnataka and Madras. Upon the Scheme becoming effective,
the Company would receive 8,500,000 equity shares of Rs. 1/- each of
United Breweries Limited for the shares held in CBPL.
Pioneer Distilleries Limited, and Sovereign Distilleries Limited became
subsidiaries of the Company during the current year consequent upon
their acquisition as aforesaid.
During the year under review, Herbertsons Limited and Spring Valley
Investments Holding Inc., have ceased to be subsidiaries of your
Company consequent to the sale of shares and liquidation respectively.
In terms of Circular No.2/2011 dated February 8, 2011 issued by the
Ministry of Corporate Affairs, Government of India, a general exemption
has been granted from the compliance of Section 212 of the Companies
Act, 1956, requiring holding companies to attach with their balance
sheet, a copy of the balance sheet, profit and loss account and other
documents of each of its subsidiaries provided the Board of Directors
of such companies give consent, by way of a resolution, for not
attaching the balance sheet of the subsidiary companies concerned with
the balance sheet of the Company and certain conditions prescribed by
the Ministry in this regard are complied with.
The Board of Directors of your Company, at their meeting held on August
03, 2011 have given their consent for not attaching, inter alia, the
balance sheet, profit and loss account etc. of its subsidiary companies
and have also agreed to comply with the conditions prescribed by the
Ministry vide its circular dated February 8, 2011, in this regard.
In view of the above, the balance sheet, profit and loss account and
other documents/details of the subsidiary companies, which are required
to be attached with the balance sheet of the Company, are not attached.
The Annual Accounts of the Subsidiaries and the related detailed
information will be made available to any shareholder of the Company
seeking such information at any point in time. The Annual
Accounts of the Subsidiary Companies will also be kept for inspection
by any shareholder of the Company at its Registered Office and that of
the Subsidiary Companies concerned, during the business hours on any
working day.
The Accounting year of United Spirits Nepal Private Limited ("USNPL"),
your Company's Subsidiary in Nepal is from mid-July to mid-July every
year. Accordingly, Accounting year of 2009-10 of USNPL ended on July
14, 2010 and the Accounting Year 2010-11 ended on July 16, 2011 i.e.,
after the end of the close of the financial year of the Company, which
ended on March 31, 2011. For the purpose of compliance under Accounting
Standard - 21, relating to "Consolidated Financial Statement," the
Accounts of USNPL has been drawn up to March 31, 2011.
For the purpose of compliance under Accounting Standard - 21,
"Consolidated Financial Statement" presented by the Company includes
the financial information of its subsidiaries.
PROSPECTS
Your Company achieved a sales volume of 30.73 million cases during the
first quarter of the current financial year and judging by continuing
growth in the current year, the Company is set to maintain its current
position as the world's largest spirits marketeer by volume.
The energy inflation prevailing in the market had adversely affected
the cost of Extra Neutral Alcohol ("ENA"), a primary raw material
required in the manufacture of your Company's products. Your Company
presently procures the majority of its ENA requirement from external
suppliers, some of whom are also competitors in the finished product
arena. In order to reduce the dependence on such suppliers, your
Company has acquired two entities having primary distillation units,
during the year, namely Pioneer Distilleries Limited and Sovereign
Distilleries Limited, having plants in Maharashtra and Karnataka
respectively. These also will go a long way to help the Company to gain
the arbitrage over ENA costs.
The price of glass containers also rose substantially due to inflation
and the near monopoly situation existing in the market. In order to
mitigate the cost of glass containers, your Company has developed
alternate packaging materials viz., PET and Tetra Brick Packaging,
which have proved a big success in Karnataka and Andhra Pradesh. Upon
procuring regulatory approvals, such alternative packaging will be
rolled out in other markets too. Apart from these measures, your
Company is evaluating plans to set up a glass manufacturing unit in
South India for captive consumption. With these measures, your
Directors are hopeful that your Company would achieve a structural
improvement in future profitability in the years to come.
DEPOSITORY SYSTEM
The trading in the equity shares of your Company is under compulsory
dematerialisation mode. As on July 29, 2011, equity shares representing
97.49 % of the equity share capital are in dematerialised form. As the
depository system offers numerous advantages, members are requested to
take advantage of the same and avail of the facility of
dematerialisation of the Company's shares.
DIRECTORS
Mr. M.R. Doraiswamy Iyengar and Mr. B.M. Labroo retire by rotation and
being eligible, offer themselves for re-appointment.
Mr. V.K. Rekhi ceased to be the Managing Director of the Company with
effect from April 19, 2011 consequent upon the expiry of his office as
Managing Director and resigned as a Director of the Company with effect
from the close of business hours on April 29, 2011.
Your Directors place on record their appreciation of the valuable
services rendered by Mr. V.K. Rekhi during his tenure as Managing
Director of your Company.
Mr. Ashok Capoor was appointed as an Additional Director of the Company
with effect from April 29, 2011 and as Managing Director of the Company
for a period of 3 (three) years commencing from May 2, 2011 to May 1,
2014. The appointment of and remuneration payable to Mr. Ashok Capoor
as approved and recommended by the Compensation Committee of Directors
is being placed for the approval of the members at this Annual General
Meeting.
Mr. Ashok Capoor will hold office in terms of Section 260 of the
Companies Act, 1956 up to the date of the ensuing Annual General
Meeting. A notice in writing has been received from a member signifying
the intention to propose the appointment of Mr. Ashok Capoor as a
Director at the Annual General Meeting.
Mr. Ashok Capoor's appointment as Director and the appointment and the
remuneration payable to him as Managing Director of the Company, have
been included in the Notice convening this Annual General Meeting for
your approval.
AUDITORS
M/s.Price Waterhouse, your Company's Auditors are not seeking
re-appointment at the forthcoming Annual General Meeting. Your
Directors place on record their appreciation of the valuable services
rendered by them during their tenure as Auditors of your Company. It is
proposed to appoint M/s. Walker, Chandiok & Co., Chartered Accountants,
as the Statutory Auditors to hold office from the conclusion of this
Annual General Meeting till the conclusion of the next Annual General
Meeting.
M/s. Walker, Chandiok & Co., Chartered Accountants, have consented to
be the Auditors of the Company if appointed by the Members at the
Annual General Meeting and have also confirmed that their appointment
would be within the limits specified under section 224(1-B) of the
Companies Act, 1956.
TAX AUDITORS
Your Directors have appointed M/s. Lodha & Co., Chartered Accountants
as the Tax Auditors of the Company to carry out the tax audit of the
Company for the year ended March 31, 2011.
LISTING OF SHARES OF THE COMPANY
The Equity Shares of your Company continue to remain listed with
Bangalore Stock Exchange Limited, Bombay Stock Exchange Limited and
National Stock Exchange of India Limited. The listing fees for the year
2011-12 have been paid to these Stock Exchanges.
5,200,639 Equity Shares issued and allotted to the shareholders of
erstwhile Balaji Distilleries Limited as mentioned above during the
year under review have also been listed on the aforesaid stock
exchanges.
CORPORATE GOVERNANCE
A report on the Corporate Governance is annexed separately as part of
this report along with a certificate of compliance from a Company
Secretary in practice. Necessary requirements of obtaining
certifications/declarations in terms of Clause 49 have been complied
with.
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Management Discussion and Analysis Report is annexed and
forms an integral part of the Annual Report.
FIXED DEPOSITS
Fixed Deposits from the public and shareholders, stood at Rs. 5,412.039
Million as at March 31, 2011. Matured deposits for which disposal
instructions had not been received from the depositors concerned stood
at Rs. 53.819 Million as at March 31, 2011. Of this, a sum of Rs.
24.651 Million has since been paid as per instructions received after
the year-end.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the provisions of Section 205A(5) and 205C of the Companies
Act, 1956, the Unclaimed Dividend, Debentures and Deposits, remaining
unclaimed and unpaid for more than 7 years, have been transferred to
the Investor Education and Protection Fund.
HUMAN RESOURCES
Employee relations remained cordial at all Company's locations.
Particulars of employees drawing an aggregate remuneration of Rs.
60,00,000/- or above per annum or Rs. 5,00,000/- or above per month, as
required under Section 217(2A) of the Companies Act, 1956, as amended,
is annexed.
EMPLOYEE STOCK OPTION SCHEME
The Company has not offered any stock option to the Employees during
the year 2010-11.
CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION, ETC.
In accordance with the provisions of Section 217(1)(e) of the Companies
Act, 1956, read with Companies (Disclosure of Particulars in the Report
of the Board of Directors) Rules, 1988, the required information
relating to Conservation of Energy, Technology Absorption and Foreign
Exchange earnings and outgo is annexed.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 1956, in relation
to financial statements for the year 2010-11, the Board of Directors
reports that:
- in the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
- accounting policies have been selected and applied consistently and
that the judgements and estimates made are reasonable and prudent so as
to give a true and fair view of the state of affairs of the Company as
at the end of the financial year and of the profit of the Company for
the year ended March 31, 2011;
- proper and sufficient care have been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
- The annual accounts have been prepared on a going concern basis.
THANK YOU
Your Directors place on record their sincere appreciation for the
continued support from shareholders, customers, suppliers, banks and
financial institutions and other business associates. A particular note
of thanks to all employees of your Company, without whose contribution,
your Company could not have achieved the year's performance.
By Authority of the Board
New Delhi Dr. VIJAY MALLYA
August 03, 2011 Chairman
Mar 31, 2010
The Directors have pleasure in presenting the Annual Report of your
Company and the audited accounts for the year ended March 31, 2010.
FINANCIAL RESULTS
Rupees in Millions
2009-10 2008-09
The working of your Company for
the year under review resulted in
- Profit from operations 5,123.093 4,953.169
- Exceptional and other
non-recurring items 699.953 --
5,823.046 4,953.169
Less:
- Depreciation 386.302 361.565
- Taxation
(including deferred tax) 1,676.529 1,624.980
- Profit after tax 3,760.215 2,966.624
Profit B/F from previous year 9,486.445 7,018.342
Profit transferred on Amalgamation - 103.983
Profit available for appropriation 13,246.660 10,088.949
Your Directors have made the
following Appropriations:
General Reserve 500.00 350.000
Proposed Dividend 313.986 215.825
Corporate Tax on Proposed
Dividend 52.149 36.679
Balance carried to the Balance Sheet 12,380.525 9,486.445
EPS - Basic & Diluted (Rupees) 32.51 27.49
Your Directors propose a Dividend on the Equity Shares of the Company
at the rate of Rs. 2.50 per share, including on 17,681,952 Equity
Shares of Rs.10/- each fully paid up allotted during the year to the
Qualified Institutional Buyers under a Qualified Institutions
Placement.
CAPITAL
Consequent to amalgamation of Shaw Wallace & Company Limited and Primo
Distributors Private Limited, the Authorised Capital of your Company
stood increased from Rs.1,200,000,000/- divided into 110,000,000 Equity
Shares of Rs.10/- each and 10,000,000 Preference Shares of Rs.10/- each
to Rs.3,292,000,000/- divided into 245,000,000 Equity Shares of Rs.10/-
each and 84,200,000 Preference Shares of Rs.10/- each. During the year
under review, the Issued, Subscribed and Paid-up Equity Share Capital
of the Company stood increased from Rs.1,001,632,560/- divided into
100,163,256 Equity Shares of Rs.10/- each to Rs.1,255,943,290/- divided
into 125,594,329 Equity Shares of Rs.10/- each by issue and allotment
of 7,749,121 Equity Shares of Rs.10/- each, fully paid-up, to the
shareholders of Shaw Wallace & Company Limited consequent to its
amalgamation with your Company and issue and allotment of 17,681,952
Equity Shares of Rs.10/- each, fully paid-up, to certain Qualified
Institutional Buyers under a Qualified Institutions Placement.
GLOBAL DEPOSITARY SHARES
Your Company had issued 17,502,762 Global Depositary Shares (GDSs)
representing 8,751,381 Equity Shares ranking pari-passu in all respects
with the existing paid up equity shares, 2 GDSs representing 1 Equity
Share of par value of Rs.10/- each at US$7.4274 per GDSs aggregating to
US$ 130 mn. These GDSs are listed on the Luxembourg Stock Exchange.
As on August 13, 2010, there was an outstanding of 1,854,454 GDSs
representing 927,227 Equity Shares.
QUALIFIED INSTITUTIONS PLACEMENT
During the year under review, the Company raised funds of US$ 350
Million (equivalent to Rs. 1,615.60 Crores) by issue of 17,681,952
Equity Shares of Rs.10/- each at a price of Rs.913.70 per Share to
certain Qualified Institutional Buyers through a Qualified Institutions
Placement under Chapter VIII of the Securities and Exchange Board of
India (Issue of Capital and Disclosure Requirements) Regulations, 2009.
The funds so raised have been used to reduce part of the debt incurred
for the acquisition of Whyte and Mackay Group Limited, to repay other
debts, for capital expenditure and other corporate purposes.
PERFORMANCE OF THE COMPANY
The Company has turned in a stellar performance despite a challenging
operating environment. Achieving sales of over 100 Million cases is a
major milestone, confirming the Companys place as the No. 2 Spirits
Marketeer in the World.
A difficult cost regime has been substantially mitigated by a
combination of up-selling, cost control and efficiency increases.
AMALGAMATION OF BALAJI DISTRILLERIES LIMITED WITH THE COMPANY
At the Extraordinary General Meeting held on April 21, 2010, the
shareholders have approved, by way of a Special Resolution, the Scheme
of Arrangement between Balaji Distilleries Limited (BDL), Chennai
Breweries Private Limited (CBPL) and the Company (the Scheme) and
the Draft Rehabilitation Scheme (DRS) of BDL as circulated by the
Honble Board for Industrial and Financial Reconstruction (the BIFR)
vide Order dated February 19, 2010. The Scheme envisages transfer of
the Brewery Division Undertaking of BDL to CBPL and merger of BDL other
than the Brewery Division Undertaking into the Company with effect from
April 1, 2009.
The Scheme and the DRS are pending with the Honble BIFR formed under
the provisions of Sick Industrial Companies (Special Provisions) Act,
1985, for approval and the Scheme shall become effective on receipt of
such approval.
SUBSIDIARIES
During the year under review, Tern Distilleries Private Limited having
a unit for manufacture of Extra Neutral Alcohol in Andhra Pradesh,
became a wholly owned subsidiary of your Company consequent upon the
acquisition of its entire paid- up share capital by the Company.
Consequent to allotment of equity shares to another investor and to the
Company, Four Seasons Wines Limited ceased to be a wholly owned
subsidiary but continues to be a subsidiary of the Company.
Shaw Wallace & Company Limited, which was a subsidiary of your Company
and had merged with your Company during the year under review, was
subsequently dissolved without winding up by the order of the Honble
High Court at Calcutta.
In terms of the approval received from the Government of India pursuant
to Section 212 (8) of the Companies Act, 1956, the Balance Sheet,
Profit & Loss Account, Directors Report, Auditors Report and other
particulars of the Subsidiary Companies as on March 31, 2010 have not
been attached with the Accounts of the Company. The Annual Accounts of
the Subsidiaries and the related detailed information will be made
available to any shareholder of
the Company seeking such information at any point in time. The Annual
Accounts of the Subsidiary Companies will also be kept for inspection
by any shareholder of the Company at its Registered Office and that of
the Subsidiary Companies concerned, during the business hours on any
working day.
The Accounting year of United Spirits Nepal Private Limited (USNPL),
your Companys Subsidiary in Nepal is from mid-July to mid-July every
year. Accordingly, Accounting year of 2008-09 of USNPL ended on July
15, 2009 and the Accounting Year 2009-10 ended on July 16, 2010, i.e.,
after the end of the close of the financial year of the Company, which
ended on March 31, 2010. For the purpose of compliance under Accounting
Standard - 21, relating to ÃConsolidated Financial Statement,Ã the
Accounts of USNPL has been drawn up to March 31, 2010.
For the purpose of compliance under Accounting Standard - 21,
ÃConsolidated Financial Statementà presented by the Company includes
the financial information of its subsidiaries.
PROSPECTS
Your Company continues its winning ways in the early months of the
current fiscal reporting strong growth. The Company is set to overtake
the current World leader and seal its position as the Worlds largest
Spirits marketeer in short order.
Input prices, particularly of spirit appear to be softening though
steady increases in cost of glass and paper partially offset these
gains.
DEPOSITORY SYSTEM
The trading in the Equity Shares of your Company is under compulsory
dematerialisation mode. As on August 13, 2010, Equity Shares
representing 97.31% of the equity share capital are in dematerialised
form. As the depository system offers numerous advantages, members are
requested to take advantage of the same and avail of the facility of
dematerialisation of the Companys shares.
DIRECTORS
Mr. Subhash Raghunath Gupte and Mr. Sudhindar Krishan Khanna retire by
rotation and being eligible, offer themselves for re-appointment.
AUDITORS
M/s. Price Waterhouse, your Companys Auditors, are eligible for
re-appointment at the Annual General Meeting and it is necessary to fix
their remuneration.
TAX AUDITORS
Your Directors have appointed M/s. Lodha & Co., Chartered Accountants
as the Tax Auditors of the Company to carry out the tax audit of the
Company for the year ended March 31, 2010.
LISTING OF SHARES OF THE COMPANY
The Equity Shares of your Company continue to remain listed with
Bangalore Stock Exchange Limited, Bombay Stock Exchange Limited and
National Stock Exchange of India Limited. The listing fees for the year
2010-11 have been paid to these Stock Exchanges.
7,749,121 Equity Shares and 17,681,952 Equity Shares issued and
allotted to the shareholders of erstwhile Shaw Wallace & Company
Limited and to certain Qualified Institutional Buyers, respectively as
mentioned above, have also been listed on the aforesaid Stock Exchanges
during the year under review.
CORPORATE GOVERNANCE
A report on the Corporate Governance is annexed separately as part of
this report along with a certificate of compliance from a Company
Secretary in practice. Necessary requirements of obtaining
certifications/declarations in terms of Clause 49 have been complied
with.
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Management Discussion and Analysis Report is annexed and
forms an integral part of the Annual Report.
FIXED DEPOSITS
Fixed Deposits from the public and shareholders, stood at Rs. 2,215.463
Million as at March 31, 2010. Matured Deposits for which disposal
instructions had not been received from the Depositors concerned stood
at Rs. 12.440 Million as at March 31, 2010. Of this, a sum of Rs.3.894
Million has since been paid as per instructions received after the
year-end.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the provisions of Section 205A(5) and 205C of the Companies
Act, 1956, the Unclaimed Dividend, Debentures and Deposits, remaining
unclaimed and unpaid for more than 7 years, have been transferred to
the Investor Education and Protection Fund.
HUMAN RESOURCES
Employee relations remained cordial at all Companys locations.
Particulars of employees drawing an aggregate remuneration of
Rs.2,400,000/- or above per annum or Rs.200,000/- or above per month,
as required under Section 217(2A) of the Companies Act, 1956 are
annexed.
EMPLOYEE STOCK OPTION SCHEME
The Company has not offered any stock option to the employees during
the year 2009-2010 either under the McD ESOP Scheme or McD-Employee
Stock Option Scheme - 2002.
CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION, ETC.
In accordance with the provision of Section 217(1)(e) of the Companies
Act, 1956, read with Companies (Disclosure of Particulars in the Report
of the Board of Directors) Rules, 1988 the required information
relating to Conservation of Energy, Technology Absorption and Foreign
Exchange earnings and outgo is annexed.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 1956, in relation
to financial statements for the year 2009-10, the Board of Directors
reports that:
- in the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
- accounting policies have been selected and applied consistently and
that the judgements and estimates made are reasonable and prudent so as
to give a true and fair view of the state of affairs of the Company as
at the end of the financial year and of the profit of the Company for
the year ended March 31, 2010;
- proper and sufficient care have been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
- The annual accounts have been prepared on a going concern basis.
THANK YOU
Your Directors place on record their sincere appreciation for the
continued support from shareholders, customers, suppliers, banks and
financial institutions and other business associates. A particular note
of thanks to all employees of your Company, without whose contribution,
your Company could not have achieved the years performance.
By Authority of the Board
New Delhi Dr. VIJAY MALLYA
August 18, 2010 Chairman