C O N T E N T S

Report of the Directors 1 Report on Corporate Governance 28 Independent Auditors’ Report 41 Balance Sheet 46 Statement of Profit and Loss 47 Cash Flow Statement 48 Notes to the Financial Statements 50 Consolidated Financial Statements 81 UNITED BREWERIES (HOLDINGS) UNITED BREWERIES (HOLDINGS) LIMITED LIMITED

Directors Dr. , Chairman

Mr. Sidhartha V. Mallya, Non Executive Non Independent Director

Mr. N Srinivasan, Non Executive Independent Director

Mr. M S Kapur, Non Executive Independent Director

Dr. Lalit Bhasin, Non Executive Independent Director

Ms. Daljit Mahal, Non Executive Non Independent Director [w.e.f March 28, 2015]

Executive Vice Chairman Mr. S. R. Gupte UB Group

President & Chief Financial Officer Mr. Ravi Nedungadi UB Group

President Mr. V. Shashikanth

Company Secretary and Compliance Officer Mr. Kaushik Majumder

Statutory Auditors M/s Vishnu Ram & Co., Chartered Accountants No.12, Margosa Road, Malleswaram, – 560 003

Internal Auditors M/s B.K. Ramadhyani & Co, Chartered Accountants 68, 4th Floor, Chitrapur Bhavan, 15th Cross, 8th Main Road, Malleswaram, Bangalore – 460 055

Registered Office UB Tower, Level 12, UB City, No. 24, Road, Bangalore – 560 001

Registrars and Transfer Agents Integrated Enterprises () Limited No. 30, Ramana Residency, 4th Cross, Malleswaram, Bangalore – 560 003 1 Report of the Directors UNITED BREWERIES (HOLDINGS) LIMITED Report of the Directors The Exceptional gain of ` 965 crores for the year under review is on account of sale of pledged shares by certain Lenders of the Your Directors present the Annual Report of your Company together with the Audited Accounts for the year ended Company to recover their dues. March 31, 2015. The Company is constrained by various restraint orders of Centenary Year the Hon’ble High Court of as a result of which some proposals to increase operations by franchising out the Your Company completed 100 years of its glorious existence in Kingfisher brand and renting out vacant space at UB City, March 2015. This journey began in 1915 with amalgamation Bangalore could not be implemented. of five breweries and the subsequent incorporation under the Companies Act to create United Breweries Limited which today is United Breweries (Holdings) Limited. This journey is Subsidiaries and Associate Companies undoubtedly one of excellence seizing business opportunities to In accordance with Section 139(3) of the Companies Act 2013, increase Shareholders value over the years. the Company has prepared consolidated financial statements

with four Indian Subsidiary Companies, excluding the seven Financial Performance of the Company Indian Subsidiary Companies (refer to Note no. 39 of the The summary of financial results of the Company for the Consolidated Financial Statement appearing in page no. 106), financial year ended March 31, 2015 is as under: which forms part of the Annual Report. The report on the (` in crores) performance and financial position on each of the subsidiary 2014-2015 2013-2014 companies in the prescribed Form AOC-1 is annexed to this report as Annexure A. The working for the year resulted 42.041 280.729 in Loss from Operations Add: The Company does not have “material non-listed Indian l Provision for doubtful advances 57.895 1,271.705 subsidiary” as defined under Listing Agreement with Stock l Bad advances / debts written off 128.624 2,450.594 Exchanges. l Provision for diminution in 280.962 - value of investment The affairs of the Subsidiaries and Associate Companies are l Depreciation 21.505 8.164 conducted by their respective Board of Directors and audited by Less: their Statutory Auditors. The Consolidated Financial Statement l Exceptional gains 965.001 1,987.890 of the Company and its subsidiaries and associates should Profit / (Loss) for the year therefore be read in conjunction with respective financial carried to the Balance Sheet 433.974 (2,023.302) statements, accounting policies, financial notes, cash flow Dividend statements and Statutory Auditors Reports thereon.

With a view to conserve resources for operational requirements Directors and Key Managerial Personnel and considering the accumulated losses, your Directors do not recommend any dividend for the year ended March 31, 2015. Ms. Daljit Mahal was appointed as an Additional Director of the Company pursuant to the Section 161 and other applicable Operations of the Company provisions of the Companies Act, 2013, Section 149(1) of the The operations of the Company comprise primarily of holding of Companies Act, 2013 and the Rules made thereunder and strategic investments and other securities, international trade, Clause 49 (II) (A) (1) of the Listing Agreement to hold office up development of real estate, sale and rental of constructed to the date of this Annual General Meeting. The Company has premises including residential property of Kingfisher Towers, received a notice as required by Section 160 of the Companies licensing of trade marks, advancing of loans and provision of Act, 2013 and Rules made thereunder from a Member proposing guarantees. the candidature of Ms. Daljit Mahal for the office of Director of For the 20th year in a row, UB Global, export division of the the Company liable to retire by rotation. Company, was awarded the Golden Trophy by Agricultural Products Export Development Authority of India. For the first Mr. Sidhartha V Mallya, Director, retires by rotation and, being time, UB Global also received the Karnataka State Export eligible, offers himself for re-appointment, as a Director liable to Excellence award for overall Merchant Exports. In the year under retire by rotation. review, UB Global recorded a turnover of ` 227 crores despite loss of business from liquor sales for 10 months and a steep fall A brief resume of the Directors proposed to be appointed/ 2 in the apparel business. re-appointed is given in the Annexure to the Notice. Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) The position of Managing Director fell vacant on April 17, 2014 the Company as a going concern - all these have been explained LIMITED and efforts are being made still to identify a successor. in the relevant Financial Notes to Accounts.

The Company presently does not have a Managing Director and In the last Annual General Meeting (AGM) held on September a Chief Financial Officer. The only Key Managerial Personnels 30, 2014, Messrs. Vishnu Ram & Co., Chartered Accountants, of the Company are the President and the Company Secretary. have been appointed Statutory Auditors of the Company for a period of 3 years. Ratification of appointment of Statutory The affairs of the Company are conducted under the directions Auditors is being sought from the Members of the Company at of the Chairman, the President and the Group Chief Financial this AGM. Further, the Statutory Auditors have, under Section Officer. 139(1) of the Act and the Rules framed thereunder, furnished a certificate of their eligibility and consent for appointment. Directors’ Responsibility Statement Corporate Governance and Management Discussion and Despite the absence of the Managing Director and Chief Analysis Report Financial Officer throughout the year, the Chairman of the Board of Directors, the Group Chief Financial Officer and President Pursuant to Clause 49 of the Listing Agreement with the of the Company have collectively conducted the affairs of the Stock Exchanges, a report on Corporate Governance and Company and in view of this, the Directors in compliance with Management Discussion and Analysis Report is attached to this Section 134 (5) of the Companies Act, 2013, state that: Annual Report. (a) in the preparation of the Annual Accounts, the applicable Disclosures accounting standards have been followed along with proper explanation relating to material departures; Board and its Committees (b) accounting policies have been selected and applied The details of the Meetings of the Board and its Committees consistently and the judgments and estimates made are held during the financial year, the composition of the Committee reasonable and prudent so as to give a true and fair view and the details of Committee Meetings are given in the Report of the state of affairs of the Company as at the end of the on Corporate Governance. financial year and of the profit of the Company for that period; Independent Directors Declaration (c) proper and sufficient care have been taken for the All the Independent Directors of the Company have given maintenance of adequate accounting records in accordance declaration in terms of Section 149(6) of the Companies Act, with the provisions of the Companies Act, 2013, for 2013. safeguarding the assets of the Company and for prevention and detection of fraud and other irregularities; Internal Financial Controls (d) the annual accounts have been prepared on a going concern basis; The Company is in compliance with the requirements of the Companies Act, 2013 with regard to the Internal Financial (e) internal financial controls have been laid down to be Controls which embraces adherence to Company’s policies, followed by the Company and that such internal financial safeguarding of assets, prevention and detection of frauds and controls are adequate and operating effectively; errors, accuracy and completeness of accounting records, and (f) proper systems have been devised to ensure compliance timely preparation of financial information. Internal Controls are with the provisions of all applicable laws and that, such designed to cover financial matters, operational areas, besides systems are adequate and operating effectively fraud prevention mechanism. The internal audit function has devised an appropriate audit mechanism and periodically Auditors deployed comprehensive test checks to enable Internal Audit to give reasonable assurance to the Audit Committee that The Statutory Auditor of the Company, Messrs. Vishnu the internal financial controls are adequate and operating Ram & Co., Chartered Accountants, issued separate reports on effectively. the Standalone and Consolidated Financial Statements of the Company and the same are appended here to the Report. Given the above control system in place and involvement of the Chairman of the Board of Directors, Group Chief Financial The qualifications in the Auditors’ Reports relating to Officer and the President of the Company, the Board opines that impairment of certain investments, doubtful recovery of the internal financial controls implemented by the Company advances, enforcement of certain corporate guarantees, various for preparation of financial statements are adequate and 3 legal disputes including winding-up petitions, sustainability of sufficient. Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) LIMITED Risk Management Act, 2013 and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been The Company manages, monitors and reports on the principal appended as Annexure E to this Report. risks and uncertainties that can impact its ability to achieve its strategic objectives through the Audit Committee and Internal Details of employee remuneration as required under provisions Auditors comprising of external firm of Chartered Accountants. of Section 197 of Companies Act, 2013 and Rule 5(2) and The Company is exposed to various legal disputes as stated Rule 5(3) of Companies (Appointment and Remuneration of elsewhere in this Report which are handled by expert legal Managerial Personnel) Rules, 2014 are available at the Registered advisors in consultation with the Chairman of the Board. Office of the Company during working hours before 21 days of the Annual General Meeting and shall be made available to any Particulars of Conservation of Energy, Technology shareholder on request. Absorption The provisions of Section 134 (3) (m) of the Companies Act, Familiarisation programme for Independent Directors 2013 relating to conservation of energy and technology The details of programmes for familiarisation of Independent absorption do not apply to this Company since it is not engaged Directors with the Company, their roles, rights, responsibilities in manufacturing activities. in the Company, nature of the industry in which the Company operates, business model of the Company and related matters Foreign Exchange Earnings and outgo are put up on the website of the Company at the link: http:// The particulars are given in the Notes to the Audited Accounts. theubgroup.com/PDF/UBHL-FAMILIARISATION-PROGRAMME- FOR-INDEPENDENT-DIRECTORS.pdf. Policy on Appointment and Remuneration of Directors Key Managerial Personnel and Senior Employees Particulars of Loans, Guarantees and Investments The Board on the recommendation of the Nomination Particulars of loans and guarantees given and investments made and Remuneration Committee has laid down a policy for are given in the Notes to the Standalone Financial Statement. appointment of Directors and remuneration for the Directors, Key Managerial Personnel and Senior Employees. The same Corporate Social Responsibility is enclosed as Annexure B to this Report. However, no The Company, being an apex holding company of the UB Managing Director and Chief Financial Officer were appointed Group, takes its role as a responsible corporate citizen seriously during the year. and encourages all its constituents of investee companies to pursue their business in a responsive manner. The Company has Performance Evaluation of the Board and Committees in place a Corporate Social Responsibility Committee (CSR) for The details of annual evaluation made by the Board of its own overseeing CSR activities. Since the average net profit of the performance and that of its Committees and Individual Directors Company for the preceding three years was negative, there was and performance criteria for Independent Directors laid down no necessity for the Company to carry out any CSR spending for by the Nomination and Remuneration Committees are enclosed the period under review. as Annexure C to this Report. Secretarial Audit Report Vigil Mechanism Pursuant to the provisions of Section 204 of the Companies Act, The Company has implemented a vigil mechanism to provide 2013 and The Companies (Appointment and Remuneration a framework for the Company’s employees and Directors of Managerial Personnel) Rules, 2014, the Company has to promote responsible and secure whistle blowing. It appointed Mr. Sudhir Hulyalkar, Company Secretary in Practice protects the employees who raise concern about serious to undertake the Secretarial Audit of the Company. The Report irregularities within the Company. A brief summary of the vigil furnished by Auditor in the format prescribed under The mechanism implemented by the Company is annexed under Companies (Appointment and Remuneration of Managerial Annexure D to this Report. This policy is available through Personnel) Rules, 2014 is enclosed as Annexure F to this the weblink: http://theubgroup.com/PDF/UBHL/2014-2015/UBHL- Report. WHISTLE-LOWER-AND-VIGIL-MECHANISM-POLICY.pdf. The material observation in the report relates to the absence Particulars of Employees and related disclosures of Managerial Personnel viz. Managing Director and Chief Financial Officer during the whole of the financial year. The 4 Disclosures with respect to the remuneration of Directors and Employees as required under Section 197 of Companies Board is seized of this matter. Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) Extract of Annual Return Court that the Interim Orders shall continue to operate LIMITED until disposal of the application for temporary injunction The details forming part of the extract of the Annual Return in before the Learned Judge, Mapusa, subject to the right of form MGT -9 is annexed herewith as Annexure G. the Consortium of Banks to proceed under the SARFAESI Act in accordance with law. Major litigations involving the Company Major litigations faced by the Company are as follows: Pursuant to the Order dated July 18, 2014, passed by the Hon’ble Bombay High Court at , the Consortium of (i) The consortium of banks that have advanced facilities to Banks have filed an application under Section 14 of the Kingfisher Airlines Limited (KFA) (Consortium of Banks) SARFAESI Act before the District Magistrate. The Interim have, pursuant to certain purported Corporate Guarantees Orders passed by the Goa Senior Division Court are still given by the Company (the validity of which is disputed as in force and pending adjudication of the suit, the Goa set out hereinafter), demanded from the Company, their property continues to remain with the Company (and alleged dues from KFA amounting to ` 6,203.35 crores with further interest and other dues from June 1,2013 continues to be in the possession of USL) with a purported and have moved the Debt Recovery Tribunal (“DRT”), charge in favour of Consortium of KFA Bankers. Bangalore for recovery of these alleged dues by way of an Original Application (OA). The Interim Application filed (iv) The Consortium of Banks have sold in periodical lots by the Company before the DRT seeking to reject the said certain investments belonging to the Company pursuant OA on the ground of jurisdiction has been dismissed by to a purported Pledge Agreement dated December 21, the DRT vide its Order dated November 12, 2013. The 2010. The Company and others have filed a suit in the Company’s appeal before the DRAT, Chennai challenging Hon’ble Bombay High Court, being Suit No. 311 of 2013 the Order dated November 12, 2013 is pending. (Bombay Suit) against the Consortium of Banks, who have advanced loans to KFA, inter alia, seeking the following (ii) Three lenders who have extended pre-delivery payment reliefs:- (PDP) loans to KFA for purchase of aircrafts from M/s. (a) For a declaration that the Corporate Guarantee dated Airbus S.A.S. and who claim to be beneficiaries of December 21, 2010 given by the Company and the purported Corporate Guarantees of the Company, Pledge Agreement dated December 21, 2010, are have filed proceedings before the DRT for recovery of void ab-initio and non-est; total dues amounting to ` 192.51 crores. By an ex-parte order dated February 4th 2014, in I.A. No.543/2014, the (b) For a permanent order and injunction restraining the Hon’ble DRT has passed an ad-interim order attaching defendants therein, their servants, agents or assigns, pre-delivery payments made by KFA to M/s. Airbus S.A.S. or any other person claiming by, through or under up to ` 192.51 crores. This ad-interim order is still in force. them or any of them, from acting upon, in furtherance The Company is defending the said proceedings. or in any manner giving effect to the impugned Notice dated March 16, 2013, or from taking any other or (iii) In a suit filed by United Sprits Limited (“USL”), the Goa further steps to act upon or in furtherance of the Senior Division Court, by Orders dated April 26, 2013 and Pledge Agreement dated December 21, 2010, save May 4, 2013 (“Interim Orders”) has granted an ad-interim and except in accordance with the procedure set out injunction against any coercive action by the Consortium in clause 8.1 of the MDRA, including issuing a notice of Banks in respect of the Company’s property in Goa, there under. tenanted to USL. USL has also deposited ` 35 crores in the (c) For a permanent order and injunction restraining the Hon’ble Court pursuant to the said orders. defendants therein, their servants, agents or assigns, or any other person claiming by, through or under them Aggrieved by the Interim Orders, the Consortium of Banks or any of them, from acting upon or in furtherance of filed an appeal in the High Court of Bombay at Goa, being the Corporate Guarantee dated December 21, 2010 Appeal from Order No. 76 of 2013 praying inter alia, that given by the Company and the Pledge Agreement the Interim Orders be quashed and set aside. dated December 21, 2010;

On July 18, 2014, the Hon’ble High Court of Bombay at Goa (d) That an order and decree of damages of the sum of disposed off the appeal and held that the Interim Orders ` 3,199.68 crores as set out in the Particulars of Claim do not preclude the Consortium of Banks from initiating be awarded to the plaintiffs therein. proceedings under the Securitisation and Reconstruction The Company has also filed a Notice of Motion in the of Financial Assets and Enforcement of Security Interests 5 Act, 2002 (SARFAESI Act). It has been clarified by the High said Suit, being Notice of Motion 306 of 2014 inter Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) LIMITED alia, for a decree on admission that the extent of the Limited, UBHL and KFIL in the Court of City Civil Judge in liability under the purported Corporate Guarantee is Bangalore, being O.S. No. 25877 of 2013 to enforce their restricted to ` 1601.43 crores based on admissions alleged rights under the purported Release of Residual by the Consortium of Banks. The said Suit and Notice Interest Agreement dated December 21, 2010 in respect of Motion are pending adjudication in the Hon’ble of sale proceeds remaining after appropriation of USL and Bombay High Court. KFA shares. On June 10, 2014, IDBI Trusteeship Services Limited transferred the pledged shares to IGCF who in turn (v) The Division Bench of the Hon’ble High Court of Karnataka, sold 4,937,395 shares of and in USL (“Sold Shares”) held vide its Order dated December 20, 2013 has set aside the by UBHL and KFIL By an Order dated June 20, 2014 in permission granted by the Hon’ble Company Judge under Writ Petition No. 28577 of 2014, filed by the Consortium Section 536(2) of the Companies Act 1956 to dispose of of Banks and which has now been disposed off. IGCF the shares of USL in favour of Plc / Relay BV. The deposited the surplus/balance sales proceeds from the Company and Diageo Plc have approached the Hon’ble Sold Shares with the Hon’ble High Court of Karnataka and Supreme Court by way of SLPs challenging the Order of has been restrained from disposing off the ` 690 crores the Division Bench. Pending disposal of the Company’s retained by it. The Company is defending the aforesaid SLPs, the Hon’ble Supreme Court has, by its Order dated O.S. No. 25877 of 2013 and the ex-parte ad-interim orders February 10, 2014 directed that, status quo be maintained passed therein. in respect of the transaction of sale of shares to Diageo. During the pendency of the Writ Petition No. 28577 (vi) In addition to two winding up petitions instituted by of 2014, the Consortium of Banks filed an application beneficiaries of Corporate Guarantees issued by the seeking to amend the plaint. The amendment application Company, which are being challenged before the Hon’ble was heard and allowed vide Order dated October 15, Supreme Court and the Karnataka High Court respectively, 2014. The Company and KFIL have filed separate Writ six more winding up petitions filed by certain purported Petitions against the said Order allowing the amendment creditors of KFA, who are purported beneficiaries of application. The Company and KFIL have also filed Corporate Guarantees for winding of the Company, have applications for rejection of the suit on account of suit been admitted by the Hon’ble High Court of Karnataka vide being barred by law and insufficient court fee. combined Order dated January 2, 2015. The Company has filed appeals before the Division Bench of the Karnataka The Company, after taking into account, various issues High Court to challenge three of the aforesaid six admission involved, has, as a matter of prudence and without prejudice Orders of the Single Judge and such appeals are pending to the rights and contentions of the Company in the legal admission. proceedings as well as the stand adopted by KFA against the purported recall of its loans by the lenders, pursuant to (vii) The Company has filed a suit for damages claiming an which shares pledged by the Company were sold by the amount of ` 1,319.30 crores against one of the above lenders, has debited a portion of the sale proceeds of the Petitioners who have filed a winding up Petition against IGCF sale of investments of ` 106.30 crores to KFA and the Company in the City Civil Court, Bangalore and the written off the same as unrealizable, along with other dues same is pending adjudication. from KFA. The balance sale proceeds of ` 748.36 crores continues to be disclosed as due from IGCF. (viii) The Company and Kingfisher Finvest India Limited (KFIL) have filed a suit, inter alia, against IDBI Trusteeship Services (ix) The Company filed a Suit (L) No. 290 of 2015 in the Limited (IDBI Trusteeship), Indian Global Competitive Fund High Court of Judicature at Bombay against ICICI Bank (IGCF) and SREI Venture Capital Limited (SREI), in the City Ltd (hereinafter referred to as “ICICI”) and 3i Infotech Civil Court at Calcutta, being T.S. No. 966 of 2013, inter Trusteeship Services Ltd (hereinafter referred to as “3i alia, for a declaration that the Security Trustee Agreement Infotech”) challenging ICICI’s alleged right to sell the dated June 30, 2008 and the Consolidated Deed of Pledge 20,14,000 shares (the “NDU shares”) of United Breweries dated December 21, 2010 (in respect of pledged shares of Limited by their notice dated February 9, 2015 on the Limited and KFA held by the Company and ground that the Loan Purchase Agreement (LPA) dated KFIL) are void, unenforceable and of no effect. The said suit December 21, 2010 entered into with ICICI has ceased to is pending. operate consequent upon ICICI transferring, assigning and/ or novating all its rights and obligations under the MDRA SBICAP Trustee and the Consortium of Banks, which have to a third party and that the claim of ` 146.29 crores by ICICI cannot be proceeded against the 20,14,000 shares 6 advanced loans to KFA have filed a suit, inter alia, against IDBI Trusteeship Services Limited, SREI Venture Capital as the LPA has worked itself out. Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) Accordingly, the following ad-interim reliefs were sought in quo be maintained in respect of the transaction of sale LIMITED the Suit: of shares to Diageo. (a) That, pending the hearing and final disposal of the (b) In addition to two winding up petitions instituted Suit, for a temporary order and injunction restraining by certain purported beneficiaries of Corporate the Defendants (3i Infotech and ICICI), their servants, Guarantees issued by the Company, which are being agents or assigns, or any other person claiming by, challenged before the Hon’ble Supreme Court and the through or under them or any of them, from acting Karnataka High Court respectively, six more winding on the basis or in any manner giving effect to the up petitions filed by certain creditors of KFA, who Power of Attorney dated November 12, 2011, or from are purported beneficiaries of Corporate Guarantees taking any other or further steps to act upon or in issued by the Company for winding of the Company, furtherance of the Non Disposal Arrangement, dated have been admitted by the Hon’ble High Karnataka November 12, 2011. High Court vide combined Order dated January 2, 2015. The Company has since challenged three of (b) That, pending the hearing and final disposal of the these six winding up petitions in the Hon’ble High Suit, for an Order appointing a court receiver to take Court of Karnataka. custody of 20,14,000 shares of United Breweries Limited, held by the Company and which are the (c) The Hon’ble High Court of Karnataka vide its aforesaid subject matter of the Non Disposal Arrangement Order dated December 20, 2013 have ordered that dated November 12, 2011. “the Company shall not in any way sell, transfer, part with possession or do any act in respect of all other By an Order dated April 16, 2015, the Hon’ble Judge assets of the Company including the shares, pending restrained both 3i Infotech and ICICI from selling disposal of the Company Petition on merits”. The the NDU shares and directed ICICI to deposit the Hon’ble Karnataka High Court, by another order dated NDU shares with the Prothonotary & Senior Master September 3, 2013 (which was confirmed by an order of Hon’ble Bombay High Court within a period of dated November 13, 2013) in a writ petition filed by 2 weeks from the date of pronouncement of the the consortium of banks that had advanced facilities judgement. This Order was challenged in an appeal to KFA, has restrained the Company from selling, filed by ICICI before the Division Bench of the Hon’ble transferring, alienating, disposing off or creating any Bombay High Court in which a stay has been granted third party rights on its movable and immoveable only in respect of the portion of the Order which properties. These orders have restricted the Company directs ICICI to deposit the NDU shares with the from borrowing by securitizing its assets and leasing its Prothonotary & Senior Master of Hon’ble Bombay vacant space in UB City,thereby affecting the revenue High Court. However, the restraint Order on ICICI for generation of the Company. sale of NDU shares continues. The suit is continuing. (ii) Order passed by Securities Appellate Tribunal (SAT) Significant and material orders passed by the Regulators/ SEBI in its communication dated April 27, 2015 has advised Courts the Company to restate the Accounts for the Financial The material orders passed by the Regulators / Courts which Years 2012-13 and 2013-14 to address the qualifications may impact the going concern status of the Company and its made in the Report by the Statutory Auditors, despite a future operations are as under: representation that most of the required adjustments have already been made in the accounts for the subsequent (i) Order passed by the Hon’ble High Court of the Financial Year 2013-14. SAT, on an appeal by the Company, Karnataka has by its Order dated May 29, 2015, stayed the operation, (a) The Hon’ble High Court of Karnataka, vide its implementation and effect of the communication dated Order dated December 20, 2013 has set aside the April 27, 2015 till the next date of hearing. permission granted by the Hon’ble Company Judge under Section 536(2) of the Companies Act 1956 Listing requirements to dispose of the shares of USL in favour of Diageo Your Company’s Equity shares are listed on the BSE Limited Plc / Relay BV. The Company and Diageo Plc have (formerly Bombay Stock Exchange Limited) and National Stock approached the Hon’ble Supreme Court by way Exchange of India Limited. The listing fees have been paid to all of Special Leave Petitions (“SLPs”) challenging the these Stock Exchanges for the year 2015-2016. The Bangalore Order of the Division Bench. Pending disposal of the Stock Exchange has been derecognized under the relevant Company’s SLPs, the Hon’ble Supreme Court has by provisions of the Securities and Exchange Board of India Act, its Order dated February 10, 2014 directed that status 1992 and the Securities Contracts (Regulation) Act, 1956. 7 Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) LIMITED Fixed Deposits The Company has adopted a Related Party Transaction Policy which is uploaded on the Company’s website. This policy is The Company has discontinued the acceptance/ renewal of available through the weblink : http://theubgroup.com / PDF / deposits. The existing deposits will run till the date of maturity and will be repaid on the due dates. There have been no defaults UBHL / 2014-2015 / UNITED%20BREWERIES(HOLDINGS)%20LIMITED- in the repayment of fixed deposits during the year. %20RELATED%20PARTY%20TRANSACTIONS%20POLICY.pdf.

The Fixed Deposits accepted from the Public and Shareholders None of the Directors have any material pecuniary relationships stood at ` 10.52 crores as on March 31, 2015. A sum of or transactions vis-à-vis the Company. ` 0.75 crores from Public and Shareholders remained unclaimed as at March 31, 2015. Pursuant to Section 134 of the Companies Act, 2013 and Rules made thereunder, particulars of transactions with related parties Transfer to Investor Education and Protection Fund as required under Section 188(1) of the Companies Act, 2013, in the prescribed Form AOC-2 is annexed under Annexure H Pursuant to the provisions of Section 205A[5] and 205C of the to this Report. Companies Act, 1956, an amount of ` 0.07crores [Previous Year ` 0.03 crores] being the aggregate of the Unclaimed Dividend General and Deposits, remaining unclaimed and unpaid for more than 7 years, have been transferred to the Investor Education and Your Directors state that no disclosure or reporting is required in Protection Fund. respect of the following items as there were no transactions on these items during the year under review: Contracts and Arrangements with related parties 1. Issue of equity shares with differential rights as to dividend, All Related Party Transactions that were entered during the voting or otherwise. financial year were at arm’s length basis and were in the 2. Issue of shares (including sweat equity shares) to employees ordinary course of business and were in compliance with the of the Company under any scheme save and except ESOS applicable provisions of the Companies Act 2013 and the Listing referred to in this Report. Agreement. There are no materially significant Related Party Transactions made by the Company with Promoters, Directors, Sexual Harassment of Women at Workplace (Prevention, Key Managerial Personnel or other designated persons which Prohibition and Redressal) Act, 2013 may have a potential conflict with the interest of the Company Your Directors further state that during the year under review, at large. there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) All Related Party Transactions are placed before the Audit Act, 2013. Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on an annual basis Acknowledgement for those transactions which could not be determined at the beginning of the year. The transactions entered into pursuant Your Directors place on record the support received from Group to the omnibus approval so granted are placed before the Audit Companies, shareholders, depositors, customers, vendors and Committee for ratification on a quarterly basis. employees. By Order of the Board Similarly, all material Related Party Transactions, as defined under Clause 49 of the Listing Agreement, which require approval of the Shareholders through Special Resolution, have Dr. Vijay Mallya been obtained by the Company in the Annual General Meeting May 29, 2015 Chairman held on September 30, 2014.

8 Annexure to Report of the Directors UNITED BREWERIES

(HOLDINGS) LIMITED 0.00 55.00 96.25 68.10 351.25 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 % of Share holding

------61.12 for USD,

`

Dividend Proposed Proposed -

2.254 11.461 (0.068) 45.633 (2.809) (0.188) (0.125) 15.073 (39.446) Profit Profit (232.553) (114.900) 4,280.738 4,499.576 After Tax (3,210.052)

------5.262 0.856 0.134 0.098 for (0.841) Taxation Provision Provision 1,246.387 1,241.110 FCS 3368 Company Secretary Company Secretary Kaushik Majumder

3.110 - 16.723 (0.068) 45.633 (2.809) (0.188) (0.125) 15.073 (39.312) Profit Profit Before Before (233.394) (114.802) 5,527.125 5,740.686 Taxation (3,210.052) dity crunch, resulting in their ability to transfer - - 5.561 0.426 - 11.188 15.280 810.164 249.062 242.470 146.516 244.205 307.444 515.529 1,273.466 Turnover

------7.271 0.056 ments 361.122 353.851 633.595 347.687 389.623 946.078 Invest 1,011.179 Details of

1.415 0.313 93.118 12.841 15.458 37.088 Total Total 546.282 222.907 296.705 153.901 367.535 217.416 824.123 316.230

3,799.421 Liabilities March. st

DIN 00703815 Director M.S. Kapur - 67.605 72.663 63.288 Total Total 155.421 218.115 879.017 291.375 347.687 215.342 946.078 Assets 4,297.285 3,858.917 1,253.327 1,016.914 25.557 61.394 (1.415) 16.215 (88.575) 332.228 (34.737) (258.923) (389.110) (252.574) (530.169) (258.486) Surplus 3,436.901 3,625.510 92.46 as on 31.03.2015 (for Balance sheet items) and average rate at (4,398.368) Reserves & ` Annexure A Annexure FORM - AOC 1 0.909 9.985 0.001 9.985 10.500 29.193 34.425 14.920 291.102 984.040 312.950 250.500 959.373 946.078 Share Share Capital 1,615.861

Rate 2 below

Exchange Refer Note

62.59 and GBP at ` - INR INR INR INR GBP GBP USD USD USD USD USD USD USD USD

DIN 00004195 Director Director N. Srinivasan Currency Reporting

below Period Reporting Refer Note 1 Salient Features of Financial Statements Subsidiaries / Associates as per Companies Act, 2013 Salient Features December as a reporting period and for others the reporting period is 31 period and for others the reporting December as a reporting st

Name of the subsidiary

Indian Subsidiaries City Properties Maintenance Company Bangalore Limited Kingfisher Finvest India Limited UB Electronic Instruments Limited UB Electronic Kingfisher Europe Limited # Kingfisher Beer Europe of America Inc., Delaware# United Breweries Relata Brewing Company LLC # Relata Brewing UB International Trading Limited UB International Trading Inversiones Mirabel, S.A.# Overseas Subsidiaries Mendocino Brewering Company Inc. USA# Mendocino Brewering Rigby International Corp# UB Overseas Limited Rubic Technologies Inc.# Rubic Technologies UBHL (BVI) Limited United Breweries International United Breweries ( UK) Limited# The following associates, namely, UB Engineering Limited and Pixray (India) Limited, have 13 AS with accordance in dealt been have them in investments and consolidation the for been considered been not have they this of view In impaired. significantly being company facing liquidity crunch resulting in their ability to transfer funds to parent - Accounting for Investments. WIE Engineering Limited is under liquidation and UB Pharma (Kenya) has since closed operations. 95.84 for GBP (for P&L account items). ` 1 2 3 6 7 8 4 9 1 2 3 4 5 Sl. 10 No 9 May 29, 2015 Mumbai

DIN 00122890 Chairman Vijay Mallya Dr. Note : 1. Company # having 31 and The Aviation Services Kingfisher following Limited, Training subsidiaries, UB namely, Infrastructure Projects Limited, Limited, Bangalore Kingfisher Beverages Aviation Training Limited, UB Sports Limited, Kingfisher Goodtimes Private Limited and Bestride Consultancy Private Limited have been facing liqui In company view being funds of significantly to this impaired. parent they for have the not consolidation been and considered investments in them have been dealt in accordance with AS 13 - Accounting for Investments. 2. In respect of overseas subsidiaries, USD is valued at Part (A) SUBSIDIARIES Name of Subsidiaries which are yet to commence operations - Nil Name of Subsidiaries which are Name of Subsidiaries which have been liquidated or sold during the year - Nil yet to commence operations - Nil Name of Associates which are Name of Associates which have been liquidated or sold during the year - Nil Part (B) ASSOCIATES 1. 2. Annexure to Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) LIMITED Annexure B Part A — Policy on appointment of Directors

For the Board of a Company to be effective and efficient, it should comprise of individuals who have professional qualifications and proven experience in their respective fields of specialization.

The Nomination and Remuneration Committee evaluates the Directors and recommends the Board for their appointment / reappointment and ensures optimum composition of Board. While recommending appointment of an Individual as a Director on the Board, the committee has to consider the following factors:

Diversity of Board

The Committee shall take into consideration the following to ensure Board diversity:

The ultimate decision will be based on merit and contribution that the selected candidates will bring to the Board.

Qualification and positive attributes

The Committee may also assess the following criteria:

statement of profit and loss, and statement of cash flows. understanding.

Independence of Directors (only in the case of Independent Directors) Any relationship between the Company and Directors other than in the normal course will affect the Independence of Directors in many ways. The Committee shall assure that the candidate proposed for the position of Independent Director meets the minimum criteria for Independence set out under Section 149 of the Companies Act, 2013. It shall also assess if the candidate would be able to meet the standards mentioned in the code for Independent Directors under the Companies Act, 2013.

Part B — Policy on Remuneration to Board of Directors, Key Managerial Personnel and Senior Employees

Introduction

With the view to attract and retain qualified industry professionals for the Board and Management in order to achieve its strategic goals this policy is designed for adopting the highest standards of good corporate governance. The remuneration policy of the Company is aimed at rewarding performance, based on review of achievements on a regular basis and is in consonance with the 10 existing industry practices. Annexure to Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) This policy is now framed to ensure that the requirements of Section 178 of the Companies Act, 2013 is met and it intends to define LIMITED general guidelines for the Company’s pay to the Board of Directors, Key Managerial Personnel and Senior Management and Senior Employees.

Remuneration of Directors The Board of United Breweries (Holdings) Limited comprises of three categories of Directors viz., Managing Director, Non -Executive Directors and Non - Executive Independent Directors.

The Remuneration to Managing Director and Non - Executive Directors are governed by the provisions of Companies Act, 2013 and the rules framed thereunder and the notifications issued by the Ministry of Corporate Affairs from time to time.

Non -Executive Directors The Non -Executive Directors including Non- Executive Independent Directors are eligible for fixed amount of sitting fees for attending meeting of the Board of Directors and its Committees as allowed under the Companies Act 2013.

Reimbursement of expenses All expenses incurred by the Board of Directors for attending the meetings and events of the Company are reimbursed at actuals.

Remuneration to Key Managerial Personnel and Senior Management Personnel The remuneration structure to the Key Managerial Personnel and Senior Management Personnel shall include the following components: (i) Basic Pay (ii) Variable Pay (iii) Perquisites and Allowances (iv) Retrial benefits (v) Performance Evaluation Payment

It is to be ensured that Key Managerial Personnel (KMP) and Senior Management Personnel are paid as per the trend prevalent in the similar industry, nature and size of business and the risks and responsibilities associated for holding such position. The level and components of remuneration is reasonable and sufficient to attract and retain the KMPs and Senior Management.

The Annual Plan and Objectives for Key Managerial Personnel and Senior Management Personnel shall be reviewed by the Nomination and Remuneration Committee and Performance Evaluation Payment will be approved by the Committee based on the achievements against the Annual Plan and Objectives.

Remuneration to Senior Employees To retain trained and committed work force, the management while fixing remuneration to the Senior Employees ensures that it:

In consonance with this well formulated principle, the compensation of employees has been linked to performance. However for compensation above certain limits have variable component in the salary structure and are linked to Key Result Area (KRA) fixed to the employees.

Insurance coverage To protect the interest of the Directors and Employees while carrying out their duties which are exposed to various legal and regulatory requirements, the Company has obtained various insurance policies such as Directors and Officer’s Liability Insurance, etc. The Professional Indemnity policies are intended to protect the Directors and executives from legal action. The policy normally covers 11 legal costs for defending civil suits only. Annexure to Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) LIMITED Annexure C Performance Evaluation Process and Criteria

Nomination and Remuneration Committee of Board of Directors has formulated criteria and questionnaires to evaluate the performance of Board, its Committees and Individual Directors including the Independent Directors. Further, the Independent Directors at their separate meeting formulated the criteria and questionnaire to evaluate the performance of Non Independent Directors and the Chairman of the Board.

The formal annual evaluation has been carried out in the manner given below: and Remuneration Committee. Directors, Board as a whole and performance of the Chairman of the Company. of each Independent Directors by circulating the questionnaires to the other Board members, excluding the Director being evaluated.

Some of the key criteria for performance evaluation are as follows: Evaluation of Non Independent Directors :

Evaluation of Independent Directors (In addition to the criteria for Non Independent Directors)

Annexure D Vigil Mechanism

Committee. Protected Disclosure. regular basis about all Protected Disclosures referred to him/her since the last report together with the results of investigations, if any. Company to take such disciplinary or corrective action as the Ethics Counsellor / Chairman of the Audit Committee deems fit. It is clarified that any disciplinary or corrective action initiated against the Subject as a result of the findings of an investigation pursuant to this Policy shall adhere to the applicable personnel or staff conduct and disciplinary procedures. cases. 12 Annexure to Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) Annexure E LIMITED Statement of Disclosure of Remuneration under Section 197 of Companies Act, 2013 and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 i. Ratio of the remuneration of each Executive Director to the median remuneration of the Employees of the Company for the financial year 2014-15, the percentage increase in remuneration of Chief Executive Officer, Chief Financial Officer and other Executive Director and Company Secretary during the financial year 2014-15.

Ratio of remuneration of Sl. Percentage increase Name of Director/KMP Designation each Director to median No. in Remuneration remuneration of Employees 1 V Shashikanth Managing Director/President (KMP) NIL NIL 2 Kaushik Majumder Company Secretary Not applicable 12%

Note : (a) Mr. V Shashikanth was Managing Director upto April 17, 2014 and thereafter continued as President (KMP) with effective from April 18, 2014. (b) The Non-Executive Directors of the Company are entitled for sitting fee as per the statutory provisions. The ratio of remuneration and percentage increase for Non-Executive Directors Remuneration is therefore not considered for the purpose above. (c) Percentage increase in remuneration is as per the policy of the Company and as approved by the Nomination and Remuneration Committee of the Company during the fnancial year 2014- 15. ii. The percentage increase in the median remuneration of Employees for the financial year was 12%. iii. The Company has 71 permanent Employees on the rolls of Company as on March 31, 2015. iv. Relationship between average increase in remuneration and Company’s performance: The salary increases for the Company are decided on the basis of industry benchmark, performance of the Company and reward structure to retain key personnel as per the requirement of the Company. Variable compensation is an integral part of the total package and is directly linked to individual performance and overall business performance. v. Comparison of the remuneration of the Key Managerial Personnel against the performance of the Company: In line with Company’s reward philosophy and business requirement where there is a necessity to retain Key Managerial Personnel, increase in remuneration and performance linked bonus pay-outs to Employees including Key Managerial Personnel are directly linked to individual performance as well as that of the business. Given the critical business requirements, the performance rating of the Key Managerial Personnel by way of increase in pay have been awarded to the Key Managerial Personnel for the current year. This was duly reviewed and approved by the Nomination & Remuneration Committee of the Company. Although there has been a profit for the year amounting to ` 433.97 crores, the same is attributable due to an Exceptional gain of ` 965 crores on account of sale of pledged shares by certain Lenders. The operational loss for the year 2014-15 is ` 42.04 crores. vi. The Market Capitalisation of the Company as on March 31, 2015 was ` 150.68 as compared to ` 142.66 crores as on March 31, 2014. The price earnings ratio (excluding Exceptional Item) of the Company was (0.28) as at March 31, 2015 and was (0.036) as at March 31, 2014. The closing share price of the Company at BSE Limited on March 31, 2015 being ` 22.55 per equity share of face value of ` 10/- each. vii. Average percentage increase made in the salaries of Employees other than the managerial personnel in the financial year was 12%. The increase in the managerial remuneration was also 12%. In keeping with the Company’s reward policy, the increases this year reflect the market practice. viii. The key parameters for any variable component of remuneration: Variable compensation is an integral part of our total reward package for all Employees including Key Managerial Personnel. Annual Bonus is directly linked to an individual performance rating and business requirements. ix. The ratio of the remuneration of the highest paid Director to that of the Employees who are not Directors but receive remuneration in excess of the highest paid Director during the year: Not Applicable x. It is hereby affirmed that the remuneration paid during the year is as per the Remuneration Policy of the Company.

By Order of the Board

Mumbai Dr. Vijay Mallya 13 May 29, 2015 Chairman Annexure to Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) LIMITED Annexure F Form No. MR-3 SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2015 [Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No. 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

To, The Members, United Breweries (Holdings) Limited Regd. Office: Level 12, UB Tower, UB City 24, Vittal Mallya Road, Bangalore - 560001

I have conducted the secretarial audit of the compliance applicable statutory provisions and the adherence to good corporate practices by United Breweries (Holdings) Limited (hereinafter called the Company). Secretarial Audit was conducted in a manner that provided me a reasonable basis for evaluating the corporate conducts/ statutory compliances and expressing my opinion thereon.

Based on my verification of the Company’s books, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, I hereby report that in my opinion, the Company has, during the audit period covering the financial year ended on March 31, 2015, complied with the statutory provisions listed hereunder and also that the company has proper Board processes and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter. I have examined the books, papers, minute books, forms and returns filed and other records maintained by United Breweries (Holdings) Limited (“the Company”) for the financial year ended on March 31, 2015 according to the provisions of:

i. The Companies Act, 2013 (the Act) and the rules made thereunder; ii. The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder; iii. The Depositories Act, 1996 and the Regulations and Bye-Laws framed thereunder; iv. Foreign Exchange Management Act, 1999 and the Rules and Regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings (No instances for compliance requirements during the year); v. The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI’): (a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; (b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992; (c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (No instances for compliance requirements during the year); (d) The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (No instances for compliance requirements during the year); (e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008; (No instances for compliance requirements during the year); (f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client; (g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; (No instances for compliance requirements during the year); and (h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998, (No instances for compliance requirements during the year). vi. All other Labour, Employee and Industrial Laws to the extent applicable to the Company; vii. I have also examined compliance with the applicable clauses of the Listing Agreements entered into by the Company with BSE Limited and National Stock Exchange of India Limited. During the period under review, the Company has complied with the provisions of the Act, Rules, Regulations and Guidelines as mentioned above wherever applicable subject to the following observations:

1) The Company has filed all the forms and returns as required under the Companies Act, 2013. The Company is generally regular 14 in filing the forms and returns within the prescribed time. Annexure to Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) 2) The Company has not complied with following clauses of listing agreement with stock exchanges: LIMITED i. Clause 41 as to submitting of audited financial results for the quarter and financial year ended on 31/03/2014 within the prescribed period; ii. Clause 49 IX, since the Company has no CEO or CFO, the certificate as required under this clause has been given by the Chairman of the Board. 3) The Company has received notices from Stock Exchanges for non-compliance of Clause 41 of listing agreement as above and the stock exchanges have sent notices imposing penalty. However the Company has made representation giving justification to the stock exchanges against the same and no further action has been taken by the stock exchanges. 4) The Company has also received notice from stock exchanges as one of the independent director of the Company was holding membership of more than 10 committees as prohibited by Clause 49 II D of the listing agreement. However, the said independent director has subsequently complied the requirement before 31st March 2015 5) The Company has not complied the provisions of Section 203 (1) (i) and (iii) of the Companies Act, 2013, requiring the appointment of Managing Director or Chief Executive Officer or Manager or whole-time director and Chief Financial Officer. 6) The Company does not have minimum 9 directors on its Board as required under Article 112 of the Articles of Association of the Company.

I further report that

Subject to my observations as mentioned above, the Board of Directors of the Company is constituted with Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with provisions of the Act.

Adequate notice is given to all Directors to schedule the Board meetings, agenda and detailed note on agenda were sent at least seven days in advance and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

The decisions carried through are recorded in the minutes. I did not find any dissenting views recorded in the minutes. It was informed to me that in the absence of any such dissenting views, it was not required to record any such views in the minutes.

I further report that there are adequate systems and processes in the company commensurate to the size and operations of the company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines. The Company has requisite systems and processes to monitor and ensure compliance with labour and employee related laws, environmental laws as applicable to the Company.

I further report that during the audit period the Company has following specific actions having major bearing on the Company’s affairs in pursuance of the above referred laws, rules, regulations, guidelines referred to above:

1. The Shareholders of the Company at their Annual General Meeting held on September 30, 2014 have authorized the board of directors to borrow and create the mortgage/ charge on the assets of the Company up-to ` 3,000 crores pursuant to Section 180 of the Companies Act, 2013. 2. Some of the creditors of the Kingfisher Airlines Limited, to whom the Company had given corporate guarantee, have filed winding up petition against the Company. The majority of these winding up petitions have since been admitted by the Hon’ble High Court of Karnataka. The Company is defending these suits. 3. One of the lender of Kingfisher Airlines Limited, to whom the Company had given corporate guarantee, had declared the Company as willful defaulter. The Hon’ble High Court of Calcutta has stayed such declaration and the matter is pending. 4. The BSE Limited (BSE) has advised the Company to restate the financial statements for the year 2012-13 by giving effect Hon’ble Securities Appellate Tribunal by its Order dated May 29, 2015, stayed the operation, implementation and effect of the communication dated April 27, 2015 till the next date of hearing on an Appeal being filed by the Company.

Sudhir Vishnupant Hulyalkar Company Secretary in Practice Place: Bangalore FCS No. 6040 Date: May 29, 2015 C P No. : 6137 15 Annexure to Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) LIMITED Annexure G Form No. MGT - 9 EXTRACT OF ANNUAL RETURN as on the financial year ended on March 31, 2015 [Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014]

I. REGISTRATION AND OTHER DETAILS:

i) CIN L85110KA1915PLC000740 ii) Registration Date March 23, 1915 iii) Name of the Company United Breweries(Holdings) Limited iv) Category / Sub-Category of the Company Company having Share Capital v) Address of the Registered office and UB Tower, Level 12, UB City, 24, Vittal Mallya Road, Bangalore 560001; contact details Contact No. : 080-22272808; 080-22275809; 080-398560000; vi) Whether listed company Yes / No Yes vii) Name, Address and Contact details of Integrated Enterprises (India) Limited Registrar and Transfer Agent, if any 30, Ramana Residency, 4th Cross, Sampige Road, Malleswaram, Bangalore – 560 003 Tel.No. : 080 – 23460815 – 18 Fax No. : 080 – 23460819

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY All the business activities contributing 10 % or more of the total turnover of the Company shall be stated:-

Sl. Name and Description of main products / services NIC Code of the % to total turnover No. Product/ service of the Company i) Trading of Beer 220300 63.24 ii) Trading of Leather Shoes 640320 20.70 iii) Real Estate Development and Investment Holding - 16.00

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES -

Sl. Name and Address of the Company CIN/GLN Holding/ % of shares Applicable No. Subsidiary/ held Section Associate 1. Bangalore Beverages Limited Subsidiary U15500KA2008PLC045719 100.00 2(87) UB Tower, Level 12, UB City, 24, Vittal Mallya Road, Bangalore - 560 001, Karnataka 2. Bestride Consultancy Private Limited Subsidiary U74140KA2010PTC053806 100.00 2(87) UB Tower, Level 12, UB City, 24, Vittal Mallya Road, Bangalore - 560 001, Karnataka 3. City Properties Maintenance Company Bangalore Limited Subsidiary U74930KA2006PLC039816 55.00 2(87) UB Tower, Level -1, Basement Floor, UB City,24, Vittal Mallya Road Bangalore - 560 001, Karnataka 4. Kingfisher Finvest India Limited [Formerly Kingfisher Radio Limited] Subsidiary U51900KA1999PLC048529 100.00 2(87) UB Tower, Level 12, UB City, 24, Vittal Mallya Road, Bangalore - 560 001, Karnataka 5. Kingfisher Training and Aviation Services Limited Subsidiary U62100KA2004PLC034399 71.92 2(87) [Formerly Kingfisher Airlines Limited] UB Tower, Level 12, UB City, 24, Vittal Mallya Road, 16 Bangalore - 560 001, Karnataka Annexure to Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) Sl. Name and Address of the Company CIN/GLN Holding/ % of shares Applicable LIMITED No. Subsidiary/ held Section Associate 6. Kingfisher Aviation Training Limited Subsidiary U80103KA2006PLC041079 100.00 2(87) [Formerly Kingfisher Training Academy Limited] UB Tower, Level 12, UB City, 24, Vittal Mallya Road, Bangalore - 560 001, Karnataka 7. Kingfisher Goodtimes Private Limited Subsidiary U92400MH2007PTC174565 71.92 2(87) Kingfisher House, Western Express Highway, Vile Parle (East), Mumbai - 400057, 8. UB Electronic Instruments Limited Subsidiary U29309TG1975PLC001936 98.44 2(87) Plot No 1, Sanjeev Housing Colony, Mahendra Hills, East Marredpally, Secunderabad- 500026, Telangana 9. UB Infrastructure Projects Limited Subsidiary U85110KA1991PLC011845 100.00 2(87) UB Tower, Level 12, UB City, 24, Vittal Mallya Road, Bangalore - 560 001, Karnataka 10. UB International Trading Limited Subsidiary U19202KA2001PLC029428 100.00 2(87) UB Tower, Level 12, UB City, 24, Vittal Mallya Road, Bangalore - 560 001, Karnataka 11. UB Sports Limited Subsidiary U92190KA2010PLC052175 100.00 2(87) UB Tower, Level 12, UB City, 24, Vittal Mallya Road, Bangalore - 560 001, Karnataka 12. Inversiones Mirabel, S.A. Overseas Foreign Company 100.00 2(87) Hong Kong Building, 6th Floor, Samuel Lewis Avenue, Subsidiary P.O. Box 6, 4298, El Dorado 13. Mendocino Brewing Co. Inc, USA Overseas Foreign Company 68.10 2(87) 1601, Airport Road, Ukiah, CA, 95482 Subsidiary 14. Rubic Technologies Inc Overseas Foreign Company 100.00 2(87) 1050, Bridgeway, Sausalito, CA 94965, USA Subsidiary 15. Rigby International Corp. Overseas Foreign Company 100.00 2(87) Vanterpool Plaza, Wickam’s Cay, 1, P.O. Box 873, Subsidiary Road Town, Tortola, British Virgin Islands 16. Releta Brewing Company LLC Overseas Foreign Company 68.10 2(87) 131, Excelsior Ave, Saratoga Springs, NY 12866, USA Subsidiary 17. UB Overseas Limited Overseas Foreign Company 100.00 2(87) 2nd Floor, Geneva Place, 333, Waterfront Drive, Subsidiary Road Town, Tortola, B.V.I. 18. UBHL [BVI] Limited Overseas Foreign Company 100.00 2(87) 2nd Floor, Geneva Place, 333, Waterfront Drive, Subsidiary Road Town, Tortola, B.V.I. 19. United Breweries of America Inc., Delaware Overseas Foreign Company 92.49 2(87) Three Harbor Drive, Suite 115, Sausalito, Subsidiary CA 94965, USA 20. United Breweries International [UK] Limited Overseas Foreign Company 68.10 2(87) Springfield House, Sandling Road, Maidstone, Subsidiary Kent, ME14,2LP 21. Kingfisher Beer Europe Limited (Formerly UBSN Limited) Overseas Foreign Company 68.10 2(87) Springfield House, Sandling Road, Maidstone, Subsidiary Kent, ME14,2LP 22. UB Engineering Limited L32109MH1970PLC014509 Associate 37.18 2(6) Sahyadri Sadan Tilak Road, Pune- 411030, Maharashtra 23. Pixray India Limited U51507WB1967PLC027211 Associate 30.36 2(6) 15/11 Stephen House, - 700001 West Bengal 24. WIE Engineering Limited (Under Liquidation) Associate 25.88 2(6) 25. UB Pharma, (Kenya) Limited Foreign Company Associate 50.00 2(6) Enterprise Road, Nairobi, Kenya 17 Annexure to Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) LIMITED IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity) (i) Category-wise Share Holding

Category of Shareholders No. of Shares held at the beginning of the year No. of Shares held at the end of the year % Change (As on April 1, 2014) (As on March 31, 2015) during the Demat Physical Total % of Total Demat Physical Total % of Total year Shares Shares A. Promoters (1) Indian a) Individual/HUF 5,284,978 - 5,284,978 7.91 5,284,978 - 5,284,978 7.91 NIL b) Central Government/ State ------Government(s) c) Bodies Corp. 12,706,798 - 12,706,798 19.02 12,706,798 - 12,706,798 19.02 NIL d) Financial Institutions/ Banks ------e) Any Other (specify) ------Sub-total (A) (1) 17,991,776 - 17,991,776 26.93 17,991,776 - 17,991,776 26.93 NIL (2) Foreign ------a) Individuals (Non-Resident ------Individuals/ Foreign Individuals) b) Bodies Corp. 16,981,504 - 16,981,504 25.41 16,981,504 - 16,981,504 25.41 NIL c) Institutions ------ ------e) Any Other (specify) ------Sub-total (A) (2) 16,981,504 - 16,981,504 25.41 16,981,504 - 16,981,504 25.41 NIL Total shareholding of Promoter 34,973,280 - 34,973,280 52.34 34,973,280 - 34,973,280 52.34 NIL (A) = (A)(1)+(A)(2) B. Public Shareholding 1. Institutions a) Mutual Funds/ UTI 1,957,695 2,576 1,960,271 2.93 1,969,411 2,576 1,971,987 2.95 0.02 b) Financial Institutions/ Banks 188,555 10,898 199,453 0.30 235,461 10,898 246,359 0.37 0.07 c) Central Government/ - 198 198 0.00 - 198 198 0.00 NIL State Government(s) d) Venture Capital Funds ------e) Insurance Companies 782,424 - 782,424 1.17 132,424 - 132,424 0.20 0.97 f) Foreign Institutional 1,880,984 1,524 1,882,508 2.82 1,127,500 1,524 1,129,024 1.69 1.13 Investors g) Foreign Venture Capital ------Investors ------i) Any Other (specify) ------Sub-total (B)(1):- 4,809,658 15,196 4,824,854 7.22 3,464,796 15,196 3,479,992 5.21 1.87 2. Non-Institutions a) Bodies Corporate 6,481,363 25,766 6,507,129 9.74 5,769,722 25,070 5,794,792 8.67 1.07 b) Individuals i) Individual shareholders holding 13,291,661 1,364,106 14,655,767 21.93 14,605,178 1,322,910 15,928,088 23.84 1.91 nominal share capital upto ` 1 lakh ii) Individual shareholders 4,368,669 14,400 4,383,069 6.56 5,156,052 14,400 5,170,452 7.74 1.18 holding nominal share capital in excess of ` 1 lakh

------d) Others 1,386,456 87,966 1,474,422 2.21 1,387,251 84,666 1,471,917 2.20 0.01 Sub-total (B)(2) 25,528,149 1,492,238 27,020,387 40.44 26,918,203 1,447,046 28,365,249 42.45 1.86

Total Public Shareholding 30,337,807 1,507,434 31,845,241 47.66 30,382,999 1,462,242 31,845,241 47.66 - (B)=(B)(1)+ (B)(2) C. Shares held by ------Custodians and against which Depository Receipts have been issued 18 Grand Total (A+B+C) 65,311,087 1,507,434 66,818,521 100.00 65,356,279 1,462,242 66,818,521 100.00 - Annexure to Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) (ii) Shareholding of Promoters LIMITED

Shareholding at the beginning of the year Shareholding at the end of the year ( As on April 1, 2014) (As on March 31, 2015) % change in Sl. %of Shares %of Shares share holding Shareholder’s Name % of total % of total No. No. of Pledged / No. of Pledged / during the shares of the shares of the shares encumbered shares encumbered year company company to total shares to total shares 1. Dr. Vijay Mallya 40,320 0.06 - 40,320 0.06 - NIL 2. Dr. Vijay Mallya & Sidhartha V 2,825,358 4.23 - 2,825,358 4.23 - NIL Mallya 3. Dr. Vijay Mallya & Ritu Mallya 68,400 0.10 - 68,400 0.10 - NIL 4. Dr. Vijay Mallya 2,350,900 3.52 - 2,350,900 3.52 - NIL 5. Kamsco Industries Private Limited 2,418,100 3.62 3.59 2,418,100 3.62 3.59 NIL 6. The Gem Investment & Trading 1,066,184 1.60 - 1,066,184 1.60 - NIL Company Private Limited 7. Pharma Trading Company Private 519,818 0.78 0.58 519,818 0.78 0.58 NIL Limited 8. Mallya Private Limited 2,418,100 3.62 1.20 2,418,100 3.62 3.59 NIL 9. Devi Investments Private Limited 459,412 0.69 - 459,412 0.69 - NIL 10. McDowell Holdings Limited 5,260,002 7.87 - 5,260,002 7.87 - NIL 11. Vittal Investments Private Limited 101,508 0.15 - 101,508 0.15 - NIL 12. Ganapathy Mallya Investments ------Private Limited 13. Rossi & Associates Private Limited 463,674 0.69 - 463,674 0.69 - NIL 14. VJM Investments Private Limited ------15. Watson Limited 14,159,986 21.19 - 14,159,986 21.19 - NIL 16. FirStart Inc 2,821,518 4.22 - 2,821,518 4.22 - NIL Total 34,973,280 52.34 5.37 34,973,280 52.34 7.76 NIL

(iii) Change in Promoters’ Shareholding

Sl. Change in Promoters’ Shareholding Shareholding at the beginning of Cumulative Shareholding during No. the year ( As on April 1, 2014) the year April 1, 2014 to March 31, 2015) No. of shares % of total No. of shares % of total shares of the shares of the Company Company 1 At the beginning of the year 34,973,280 52.34 - - 2 Date wise Increase / Decrease in Promoters Share holding during the year specifying the reasons for increase No Change * / decrease (e.g. allotment / transfer / bonus/ sweat equity etc): 3 At the end of the year 34,973,280 52.34 - -

*There is no change in the total shareholding of Promoters between April 1, 2014 and March 31, 2015 19 Annexure to Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) LIMITED (iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):

Sl. Name Shareholding Date Increase / Reason Cumulative Shareholding No. Decrease in during the year share (April 1, 2014 to March 31, holding 2015) No. of shares at % of total No. of shares % of total the beginning shares shares of the of the year of the Company (As on April 1, Company 2014)/ end of the year March 31, 2015) 1. ACACIA Institutional 270,000 0.40 1.4.2014 0 Nil movement 270,000 0.40 Partners, LP during 270,000 0.40 31.3.2015 the year 2. ACACIA Partners, LP 605,000 0.91 1.4.2014 0 Nil movement 605,000 0.91 during 605,000 0.91 31.3.2015 the year 3. Ambitious Computech 327,201 0.49 1.4.2014 0 Nil movement 327,201 0.49 (Mumbai) Private Limited during 327,201 0.49 31.3.2015 the year 4. Birla Sun Life Trustee 1,445,599 2.16 2.5.2014 (8,947) Sale 1,436,652 2.15 Company Private Limited 17.10.2014 (19,619) Sale 1,417,033 2.12 A/c 16.1.2015 (19,152) Sale 1,397,881 2.09 1,397,881 2.09 31.3.2015 1,397,881 2.09 5. Derive Trading Private 1,071,000 1.60 1.4.2014 0 Nil 1,071,000 1.60 Limited movement 1,071,000 1.60 31.3.2015 during the year 6. H Parson Private Limited 657,268 0.98 1.4.2014 Nil movement 657,268 0.98 0 during 657,268 0.98 31.3.2015 the year 7. Kalpana S KhandelwaL 216,435 0.32 1.4.2014 27.3.2015 (10,500) Sale 205,935 0.31 205,935 0.31 31.3.2015 205,935 0.31 8. Karvy Stock Broking 300,000 0.45 1.4.2014 Limited (BSE) 4.7.2014 (50,000) Sale 250,000 0.37 8.8.2014 200,000 Purchase 450,000 0.67 22.8.2014 (55,000) Sale 395,000 0.59 9.1.2015 (35,000) Sale 360,000 0.54 30.1.2015 (40,000) Sale 320,000 0.48 320,000 0.48 31.3.2015 320,000 0.48 9. SWEW Benefit Company 245,083 0.37 1.4.2014 0 Nil movement 245,083 0.37 during the year 245,083 0.37 31.3.2015 10. VJM Media Private Limited 255,000 0.38 1.4.2014 0 Nil movement 255,000 0.38 during the year 20 255,000 0.38 31.3.2015 Annexure to Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) (v) Shareholding of Directors and Key Managerial Personnel: LIMITED Sl. Name Shareholding Date Increase / Reason Cumulative Shareholding during No. Decrease in the year shareholding (April 1, 2014 to March 31, 2015) No. of shares at the % of total % of total No. of shares % of total shares beginning of the year shares of the shares of the of the Company (As on April 1, 2014)/ Company Company end of the year March 31, 2015) A. Directors: 1. Dr. Vijay Mallya 5,284,978 7.91 1.4.2014 0 Nil movement Non-Executive Chairman 5,284,978 7.91 5,284,978 7.91 31.3.2015 during the year 2. Mr. Sidhartha V Mallya 0 0.00 1.4.2014 0 Nil movement 0 0.00 Non-Executive Director 0 0.00 31.3.2015 during the year 3. Mr. N Srinivasan 120 0.00 1.4.2014 0 Nil movement 120 0.00 Independent Director 120 0.00 31.3.2015 during the year 4. Mr. M S Kapur 0 0.00 1.4.2014 0 Nil movement 0 0.00 Independent Director 0 0.00 31.3.2015 during the year 5. Dr. Lalit Bhasin 0 0.00 1.4.2014 0 Nil movement 0 0.00 Independent Director 0 0.00 31.3.2015 during the year 6. Ms. Daljit Mahal 0 0.00 1.4.2014 0 Nil movement Non-Executive Director during the year 0 0.00 (Appointed w.e.f. March 28, 2015) 0 0.00 31.3.2015 B. Key Managerial Personnel: 7. Mr. V. Shashikanth 0 0.00 1.4.2014 0 Nil movement President 0 0.00 31.3.2015 during the year 0 0.00 8. Mr. Kaushik Majumder 0 0.00 1.4.2014 0 Nil movement Company Secretary 0 0.00 31.3.2015 during the year 0 0.00

(VI). INDEBTEDNESS Indebtedness of the Company including interest outstanding/accrued but not due for payment (` In crores) Secured Loans excluding Unsecured Loans Deposits Total Indebtedness deposits Indebtedness at the beginning of the financial year i) Principal Amount 1,153.20 1,760.40 21.20 2,934.70 ii) Interest due but not paid 0.30 21.90 2.00 24.20 iii) Interest accrued but not due 2.60 85.20 5.30 93.10 Total (i+ii+iii) 1,156.00 1,867.50 28.50 3,052.10 Change in Indebtedness during the financial year Addition i) Principal Amount - 208.60 - 208.60 ii) Interest due but not paid - 168.60 - 168.60 iii) Interest accrued but not due - - - - Reduction i) Principal Amount 739.50 - 10.70 750.20 ii) Interest due but not paid 0.30 - 0.20 0.50 iii) Interest accrued but not due 1.90 (85.20) 2.60 89.70 Net Change i) Principal Amount (793.50) 208.60 (10.70) (541.60) ii) Interest due but not paid (0.30) 168.60 (0.20) 168.10 iii) Interest accrued but not due (1.90) (85.20) (2.60) (89.70) Indebtedness at the end of the financial year i) Principal Amount 413.70 1,968.90 10.50 2,393.10 ii) Interest due but not paid - 190.60 1.80 192.30 iii) Interest accrued but not due 0.70 - 2.70 3.40 21 Total (i+ii+iii) 414.40 2,159.50 15.00 2,588.90 Annexure to Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) LIMITED VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL A. Remuneration to Managing Director, Whole-Time Directors and/or Manager:

Sl. Particulars of Remuneration V Shashikanth* Total Amount No. Managing Director (` ) 1. Gross salary (a) Salary as per provisions contained in section 694,166 694,166 17(1) of the Income-tax Act, 1961 (b) Value of perquisites u/s 17(2) Income-tax 682,793 682,793 Act, 1961 (c ) Profits in lieu of salary u/s 17(3) Income-tax - - Act, 1961 2. Stock Option - - 3. Sweat Equity - - 4. Commission - as % of profit - - - others, specify… - - 5. Others, please specify - - Total 1,376,960 1,376,960 Ceiling as per the Act As per Notification No. GSR 534(E) dated July 14, 2011 issued by the Ministry of Corporate Affairs a proviso was inserted under Sub-paragraph (C) of Paragraph (1) of Section II of Part II of Schedule XIII to the ActWhere in any financial year during the currency of the tenure of the Managing Director, the Company has no profits or its profits are inadequate, the Managing Director shall be paid the aforesaid Remuneration as “Minimum Remuneration” in the respective financial year(s) notwithstanding that the same may exceed the ceiling limit laid down under Section 198, 309 and Schedule XIII to the Act.

* Mr. V Shashikanth was Managing Director of the Company upto April 17, 2014. The remuneration shown here is remuneration paid to him as Managing Director during the period from April 1, 2014 to April 17, 2014.

B. Remuneration to other Directors: **

Sl. Particulars of Name of Directors Total Amount No. Remuneration Vijay Mallya Sidhartha N. Srinivasan M S Kapur Lalit Bhasin Daljit Mahal (` ) V Mallya ( Appointed w.e.f. March 28, 2015) 1. Independent Directors • Fee for attending board - - 430,000 430,000 180,000 - 1,040,000 / committee meetings • Commission ------• Others, please specify ------Total (1) - - 430,000 430,000 180,000 - 1,040,000 2. Other Non-Executive Directors • Fee for attending board 180,000 60,000 - - - - 240,000 / committee meetings • Commission ------• Others, please specify ------Total (2) 180,000 60,000 - - - - 240,000 Total Managerial 180,000 60,000 430,000 430,000 180,000 - 1,280,000 Remuneration = (1+2) Overall Ceiling as per the Sitting Fees not exceeding Rupees One Lakh per meeting of the Board or Committee thereof in terms of Rule 4 of the Act Companies (Appointment and Remuneration of Managerial Personnel ) Rules, 2014

22 ** None of the Directors are paid any remuneration except sitting fees for attending meetings of the Board and Committee. Annexure to Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD *** LIMITED

Sl. Particulars of Remuneration Key Managerial Personnel Total No. V. Shashikanth Kaushik Majumder (` ) (President) (Company Secretary) 1. Gross salary (a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 15,955,834 4,146,690 20,102,524 1961 (b) Value of perquisites u/s 17(2) Income-tax Act, 1961 13,791,911 3,326,968 17,118,879 (c ) Profits in lieu of salary u/s 17(3) Income tax Act, 1961 - - - 2. Stock Option - - - 3. Sweat Equity - - - 4. Commission - as % of profit - - - - others, specify… - - - Total 29,747,745 7,473,658 37,221,403

*** Mr. V. Shashikanth and Mr. Kaushik Majumder are the only Key Managerial Personnels as the Company does not have a Chief Financial Officer at present.

VI. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:

Type Section of the Brief Details of Penalty Authority [RD / Appeal made, Companies Act Description / Punishment/ NCLT/ COURT] if any (give Compounding fees Details) imposed Penalty Punishment NIL Compounding C. OTHER OFFICERS IN DEFAULT Penalty NIL Punishment Compounding

23 Annexure to Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) LIMITED Annexure H

Form AOC-2 - Material Related Party Transactions

[Pursuant to Clause (h) of Sub-Section (3) of Section 134 of the Act and Rule 8 (2) of the Companies (Accounts) Rules, 2014]

Form for disclosure of particulars of Contracts/Arrangements entered into by the Company with related parties referred to in Sub-Section (1) of Section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto

1. Details of contracts or arrangements or transactions not at arm’s length basis There were no contracts or arrangements or transactions entered into during the year ended March 31, 2015,which were not at arm’s length basis.

2. Details of material contracts or arrangement or transactions at arm’s length basis The details of material contracts or arrangement or transactions at arm’s length basis for the year ended March 31, 2015 are as follows:

Sl. Name of the Amount No. Related Party and Transaction Duration Salient Terms (` in Relationship crores) 1. United Spirits Limited (USL) Receipt of Pegasus Ongoing At arm’s length basis and in 40.38 Logo fee income ordinary course of business 2. United Spirits Limited (USL) Purchase of goods or Up to May, 2014 At arm’s length basis and in 5.08 materials ( IMFL) ordinary course of business 3. United Breweries Limited (UBL) Purchase of goods or Ongoing At arm’s length basis and in 2.90 materials ( Beer) ordinary course of business 4. Chemicals & Repayment of Ongoing At arm’s length basis and in 6.00 Fertilizers Limited (MCF) Pegasus Logo Security ordinary course of business Deposit and Receipt of Pegasus Logo fee income 5. UB International Trading Purchase of goods Ongoing At arm’s length basis and in 29.33 Limited (UBITL) or materials (leather ordinary course of business footwear)

Appropriate approvals have been taken for related party transactions. No advances have been paid or received against the transactions mentioned above.

By Order of the Board

Mumbai Dr. Vijay Mallya May 29, 2015 Chairman

24 Annexure to Report of the Directors (contd.)

UNITED BREWERIES (HOLDINGS) MANAGEMENT DISCUSSION AND ANALYSIS LIMITED

1. OVERVIEW

United Breweries (Holdings) Limited (“UBHL”) is the Investment Holding Company of the UB Group which has over many decades promoted and incubated a number of businesses. Over the last decade or so the Company took a conscious decision to narrow its focus on branded consumer goods. A number of then existing ventures including companies engaged in Engineering, Polymers, etc. were divested as a part of this strategic focus.

In order to realize value from the Company’s strength in building mega consumer brands, as well as operating in highly regulated environments, the Company organized its investment activities into different verticals, with United Breweries Limited being demerged from the then existing company, to become the apex of the beer business. A similar vertical was formed for the spirits business with United Spirits Limited at its apex in 1999. A third vertical, namely civil aviation was identified later and Kingfisher Airlines Limited was promoted in year 2004. The market capitalization of principal group companies stands at ` 78,500 crores at present.

In each of these identified core business areas, the Company provided substantial financial support to the principal operating entity to facilitate investments and growth. As a consequence of this, United Breweries Limited, through a series of acquisitions and new capacity, grew to become the unquestionable leader in the Indian brewing industry. The strategic investment by Scottish & Newcastle Plc of the United Kingdom, subsequently Heineken, which is arguably the world’s best known brand, have led to the Company achieve a sales volume of 139 mio cases representing more than twice the share of its next competitor and a market capitalization of ` 26,675 crores.

Similarly, your Company propelled McDowell & Company Limited (as it then was) to substantially grow through a number of mergers and acquisitions, including the acquisition and merger of Herbertsons Limited, Carew Phipson Limited, & Co. Limited, etc. The rechristened United Spirits Limited, in the process, achieved multiple records, growing to be the world’s largest manufacturer of distilled spirits by volume. To further grow the value of the business and ensure sustainability in the long term, the Company supported USL to acquire Whyte & Mackay Limited, Glasgow, UK, the then 4th largest manufacturer of scotch in the world. This billion plus dollar acquisition would not have been possible without the financial support extended by UBHL.

The Company has, in the year 2013, entered into a strategic agreement with Diageo Plc, the world’s largest spirits company by value who have made investments into USL totaling GBP 1.84 billion equivalent to ` 18,000 crores approximately, ascribing a market capitalization for the Company of about ` 34,367 crores (August 22, 2014).

The opening up of the Indian economy, requiring improved connectivity along with the gradual liberalization of civil aviation norms, encouraged your Company to promote Kingfisher Airlines as a path breaking venture committed to the highest possible levels of customer satisfaction. In a very short time, Kingfisher Airlines not only became the nation’s favourite as measured by satisfaction of air travellers, but also through the processes of organic growth and acquisition of the erstwhile Deccan Aviation Limited grew to be possibly the largest carrier in the country. As with any startup business, Kingfisher Airlines required substantial support. In keeping with the Company’s track record with other businesses, your Company extended financial support to the airline.

While Kingfisher Airlines was an unquestionable success in terms of consumer satisfaction, the still restrictive regulatory environment and prohibitory cost of operations resulted in the entire sector incurring huge losses. As one of the largest players in the industry, Kingfisher Airlines incurred very significant losses. The global financial environment, during this period, triggered by the collapse of Lehman Brothers in 2008 meant that the Company could not raise equity in a timely fashion, thus increasing its dependence on borrowings, some of which necessitated underlying support from the Company.

25 Annexure to Report of the Directors (contd.) UNITED BREWERIES (HOLDINGS) LIMITED Kingfisher Airlines ceased operations in October 2012 primarily on account of suspension of license by the Civil Aviation Regulator in response to constant disruption by crew and staff. Your Company has made sustained efforts to find a suitable investor who could capitalize on the still strong reputation of the brand. Your Company continues to provide lifeline funding to Kingfisher Airlines.

Certain lenders and other creditors have approached the Hon’ble High Court of Karnataka seeking winding up of Kingfisher Airlines and consequently also of the Company, relying upon purported guarantees issued in their favour by your Company. The validity of the guarantees had been challenged by your Company in a suit filed in the Hon’ble Bombay High Court well before the commencement of legal action by lenders and creditors.

2. RISKS, CONCERNS AND MITIGATIONS

(a) (i) Risks & Concerns

The Company follows a risk management process for identification, categorization and prioritization of various risks like operational, financial, legal and other business risks. The Group Chief Financial Officer aided by the Internal Auditor reviews the effectiveness of the process at regular intervals and reports the same to the Audit Committee and the Board.

(ii) Major risks foreseen

The Company is exposed to the following risks and concerns:

i) The Company is exposed to risks due to various legal cases arising out of recovery actions taken by its purported creditors, the details of which have been mentioned in the Report of the Directors.

Further, SEBI has directed the Company to restate its financial results for certain preceding years, which although is under adjudication before the Hon’ble Securities Appellate Tribunal, could potentially give rise to additional tax consequences should the decision go against the Company.

The Company assisted by eminent Counsels are taking all necessary steps to protect its interests .

ii) Dividend distribution by Subsidiaries and Associate Companies would largely depend upon their dividend policy and developments plans. The profitability of the export division of the Company UB Global is subject to world economic scenario, volatility of various currencies including Indian rupees and loss of business consequent to the decision of United Spirits Limited to do direct IMFL business in international destinations. Property values could reflect overall consumer sentiment. All these factors would have some bearing on the Company’s future profitability.

iii) Certain Subsidiaries for reasons beyond their control have incurred financial losses impairing the carrying value of their equity. These investments are strategic in nature and close continuous monitoring is required to improve their performance which would also ensure that the advances given to them together with interest thereon are adequately protected and recoverable over time.

iv) Part of Company’s investments in Subsidiary and Associate Companies are under pledge with lending institutions as collateral security and may be invoked by these Lenders to recover their dues in the event of default.

v) The Company does not presently have a Whole-Time Director or Managing Director or a Manager and a Chief Financial Officer as required under the Companies Act, 2013 and Listing requirements though efforts are being made to fill these vacancies. Continued non-compliance could lead to proceedings against the Company.

vi) Certain leading Banks are attempting to classify the Promoter Chairman and Directors of the Company as “Wilful Defaulter” due to exposure in an erstwhile Associate Company, which is being resisted. In the event that such classification is upheld, it could jeopardize the entire relationship with the banking sector.

26 Annexure to Report of the Directors (contd.)

UNITED BREWERIES (HOLDINGS) vii) The Company has significant exposure on account of guarantees given to lenders and creditors of an erstwhile LIMITED Associate Company which, if invoked, could expose the Company to potential pecuniary loss.

viii) One of the main income stream of the Company is earning rentals from lease of its property in UB City. The risk involved is that the Company will not be able to lease its vacant property as long as the restraint order passed by the Hon’ble High Court of Karnataka continues.

All the above issues of concerns are not uncommon in holding-subsidiary relationships. The Company has in place adequate mechanism of checks and balances supported by effective internal control and audit.

(b) Risk Identification process

The Company has put in place a risk identification and mitigation process involving the following steps:

• Identifying risks inherent in the Group strategy

• Selecting the appropriate risk management plans • Implementing controls to manage the risks • Monitoring the effectiveness of risk management processes and controls • Periodically reviewing the Internal control effectiveness and effecting improvements to give reassurance to the Audit Committee.

(c) Risk Mitigation

The Chairman, the Audit Committee and Internal Audit keep constant vigil over the functioning and performance of individual companies in the Group.

The Audit Committee on recommendation of the Group Chief Financial Officer decides the strategy to monitor internal control systems and processes to mitigate risks.

3. INTERNAL CONTROL SYSTEM

The adequacy of the internal control system is reviewed by the Audit Committee of the Board of Directors. The Internal Audit of the Company, carried out by external firm of Chartered Accountants, evaluates the functioning and quality of internal controls and provides assurance of its adequacy and effectiveness. The efficacy of the internal checks and control systems are verified by the Internal Auditors as well as the Statutory Auditors. The Audit Committee reviews the internal audit plan, adequacy and effectiveness of the internal control system, significant audit observations and monitors the sustainability of remedial measures.

Your Board believes that appropriate procedures, controls and monitoring assessment procedures are in place and considered adequate.

27 Report on Corporate Governance UNITED BREWERIES (HOLDINGS) LIMITED Pursuant to Clause 49 of the Listing Agreement, a Report on Corporate Governance is given below. 1. COMPANY’S POLICY ON CORPORATE GOVERNANCE The Company has always endorsed the principles of good Corporate Governance and has endeavored to follow these principles in their true letter and spirit. The Board of the Company, which is charged with the responsibility of ensuring true Corporate Governance, is constantly striving to ensure that the management protects the long term interests of all the stake-holders of the Company.

2. BOARD OF DIRECTORS Composition and Category of Directors In compliance of Clause 49 of the Listing Agreements with the Stock Exchanges, the Board consists of 3 Independent Directors and 3 Non-Independent Directors (including a Non Executive Chairman). The Company held 5 Board Meetings during 2014-15 and the gap between two meetings did not exceed four months. The Board Meetings were held on May 8, 2014, August 12, 2014, November 14, 2014, February 12, 2015 and February 16, 2015. The details of attendance of Directors at the Board Meetings during the financial year 2014-15 and at the last Annual General Meeting (AGM) held on September 30, 2014, and also the number of other Directorships and Committee positions held by each of the Directors as on date are given below:

No. of No. of Committees Attendance Directorship Board (other than the at the last in Other Name DIN Category Meetings Company) in AGM held on Public Limited Attended which Member/ 30.9.2014 Companies Chairman Dr. Vijay Mallya 00122890 Promoter 5 Yes 8 1 Non-Executive Chairman Mr. Sidhartha V Mallya 00991076 Promoter jointly with Dr. Vijay Mallya Non-Executive Director 2 No 1 Nil Mr. N Srinivasan 00004195 Independent Non-Executive Director 8 5 Yes 9 (Chairman of 3) Mr. M S Kapur 00703815 Independent Non-Executive Director 6 5 Yes 7 (Chairman of 4) Dr. Lalit Bhasin 00001607 Independent Non-Executive Director 9 2 Yes 7 (Chairman of 3)

* Ms. Daljit Mahal 07140099 Non-Executive Director 0 No Nil Nil * appointed w.e.f. March 28, 2015

Notes: 1. Except Dr. Vijay Mallya and Mr. Sidhartha V Mallya none of the other Directors are inter-related. 2. None of the Directors has any business relationships with the Company. 3. The Directorships held by Directors as mentioned above does not include directorship in Foreign Companies, Private Limited Companies, Companies incorporated under Section 8 of the Companies Act 2013, Chamber and Committee. 4. In accordance with Clause 49 of the Listing Agreement, Membership / Chairmanship of only Audit Committee and Stakeholders Relationship Committees in all public limited companies (excluding United Breweries (Holdings) Limited) have been considered. 5. Consequent to the resignation of Mr. V Shashikanth, the Board aided by its Chairman is looking for a suitable person to be appointed as Managing Director / Whole-time Director of the Company.

Directors seeking Appointment / Re-Appointment The brief particulars of the Directors of the Company, seeking appointment / re-appointment at the ensuing Annual General 28 Meeting are given in the Annexure to the Notice. Report on Corporate Governance (contd.) UNITED BREWERIES (HOLDINGS) 3. COMMITTEES OF THE BOARD LIMITED The Board of Directors has constituted the following Committees viz., Audit Committee, Stakeholders Relationship Committee, Nomination and Remuneration Committee and the Corporate Social Responsibility Committee. The functions of these Committees are summarized below.

AUDIT COMMITTEE The composition, terms of reference, powers and role of the Audit Committee meet the requirements of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Members of the Audit Committee possess financial / accounting expertise / exposure. The Committee acts as a link between the Management, the Statutory and the Internal Auditors on one side and the Board of Directors of the Company on the other side and oversees the financial reporting process. The Executive Vice Chairman - UB Group, The Chief Financial Officer - UB Group, the Managing Director and the Internal Auditors are permanent invitees of the Audit Committee. The Statutory Auditors are also invited to attend the meetings. The Internal Auditor reports directly to the Audit Committee. Mr. N Srinivasan, an Independent Director is the Chairman of the Committee. The Company Secretary acts as the Secretary to the Committee. The Chairman of the Audit Committee was present at the last Annual General Meeting held on September 30, 2014. Meeting and Attendance details Five Meetings of the Audit Committee were held during 2014-15 i.e., on May 8, 2014, August 12, 2014, November 6, 2014, November 14, 2014 and February 12, 2015. The composition and attendance of Members at the Meetings of the Audit Committee held during 2014-15 are as follows:

Meetings held during Meetings Name Designation Category 2014 - 15 attended Mr. N Srinivasan Chairman Independent Director 5 5 Mr. M S Kapur Member Independent Director 5 5 Dr. Lalit Bhasin Member Independent Director 5 2

NOMINATION AND REMUNERATION COMMITTEE The constitution, terms of reference and role of the Nomination and Remuneration Committee are in compliance with Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Nomination and Remuneration Committee recommends to the Board from time to time, compensation package for remuneration for the Directors, Key Managerial Personnel and other employees. Mr. M S Kapur, a Non - Executive, Independent Director is the Chairman of the Committee. The Company Secretary acts as the Secretary to the Committee. Meeting and Attendance details One Meeting of the Nomination and Remuneration Committee was held during 2014-15 i.e. on March 20, 2015. The composition and attendance of Members at the Meetings of the Nomination and Remuneration Committee held during 2014 - 15 are as follows: Meetings held during Meetings Name Designation Category 2014 - 15 attended Mr. M S Kapur Chairman Independent Director 1 1 Mr. N Srinivasan Member Independent Director 1 1 Dr. Lalit Bhasin Member Independent Director 1 0

Remuneration Policy The Company’s Remuneration Policy for Directors, Key Managerial Personnel and other employees is annexed as Annexure B to the Report of the Directors. Further, the Company has devised a Policy for performance evaluation of the Board, 29 its Committees and individual Directors including Independent Directors. Report on Corporate Governance (contd.) UNITED BREWERIES (HOLDINGS) LIMITED The Company’s remuneration policy is directed towards rewarding performance based on review of achievements periodically. The remuneration policy is in consonance with the existing industry practice.

Remuneration paid to Managing Director during 2014 - 15 Mr. V. Shashikanth, who ceased to be a Managing Director and Director of the Company w.e.f. April 17, 2014 was paid a remuneration of ` 13.76 lacs for the period from April 1, 2014 to April 17, 2014 as approved by the Members at the Annual General Meeting held on September 12, 2013.

Remuneration to Non-Executive Directors Non-Executive Directors are being paid sitting fees of ` 40,000 per meeting of the Board and Audit Committee and ` 20,000 per meeting of the other Committees attended by them.

The details of sitting fees paid to the Directors of the Company for attending the Board and Committee Meetings for the year 2014-15 are as follows:

Name Fees Paid (`) Dr. Vijay Mallya 180,000 Mr. Sidhartha V Mallya 60,000 Mr. N Srinivasan 430,000 Mr. M S Kapur 430,000 Dr. Lalit Bhasin 180,000 Ms. Daljit Mahal * 0 Total 12,80,000 *appointed w.e.f. March 28, 2015

The particulars of Equity Shares of the Company currently held by the Directors are furnished below:

Number of Shares held Name As on March 31, 2015 As on March 31, 2014 Dr. Vijay Mallya 5,284,978 5,284,978 Mr. Sidhartha V Mallya Nil Nil Mr. N Srinivasan 120 120 Mr. M S Kapur Nil Nil Dr. Lalit Bhasin Nil Nil Ms. Daljit Mahal * Nil Nil *appointed w.e.f. March 28, 2015

STAKEHOLDERS RELATIONSHIP COMMITTEE The composition and terms of reference of the Stakeholders Relationship Committee meet the requirements of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Stakeholders Relationship Committee reviews all matters connected transfer of shares lodged for transfer, transmission, dematerialization, rematerialization, split, consolidation and complaints received from Shareholders and other statutory bodies. The Company’s Registrars and Share Transfer Agents viz., Integrated Enterprises (India) Limited, Bangalore, have adequate infrastructure to process the above mentioned activities. Majority of the complaints from Shareholders are received directly by the Registrars & Share Transfer Agents, and those received by the Company are forwarded to them for immediate redressal. Mr. N Srinivasan, a Non - Executive, Independent Director is the Chairman of the Committee. 30 Report on Corporate Governance (contd.) UNITED BREWERIES (HOLDINGS) Meeting and Attendance details LIMITED 4 Meetings of the Committee were held during 2014 - 15 i.e., on May 8, 2014, August 12, 2014, November 14, 2014 and February 12, 2015. The composition and attendance of Members at the Meetings of the Stakeholders Relationship Committee held during 2014 - 15 are as follows:

Meetings held Name Designation Category Meetings attended during 2014 - 15 Mr. N Srinivasan Chairman Independent Director 4 4 Mr. M S Kapur Member Independent Director 4 4 Dr. Lalit Bhasin Member Independent Director 4 1

Compliance Officer Mr. Kaushik Majumder, the Company Secretary is the Compliance Officer for the purpose of complying with various provisions of Securities and Exchange Board of India Regulations, Listing Agreements with Stock Exchanges, Registrar of Companies and for monitoring the share transfer process etc. His email address is [email protected].

Investor Grievance Redressal Details of complaints resolved during the financial year 2014 - 15 are as follows:

No. of Complaints Received during 2014 - 15 Resolved during 2014 - 15 Closing As per SEBI Category 12 12 Nil Other Correspondences 371 371 Nil

As on March 31, 2015, no complaints were outstanding.

Prohibition of Insider Trading

Pursuant to the requirements of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, the Company adopted a "Code of Conduct for Prevention of Insider Trading" at the meeting of the Board of Directors held on September 30, 2002.

The Company has amended the said Code in terms of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 w.e.f. May 15, 2015 and has made it applicable to all employees and connected persons. The Code ensures prevention of dealing in shares by persons having access to unpublished price sensitive information.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The constitution and terms of reference of the Corporate Social Responsibility Committee meet the requirements of Section 135 of the Companies Act, 2013.

Mr. N Srinivasan, an Independent Director is the Chairman of the Committee. The Company Secretary acts as the Secretary to the Committee. The composition of the Corporate Social Responsibility Committee is as follows:

Name Designation Category Mr. N Srinivasan Chairman Independent Director Mr. M S Kapur Member Independent Director Dr. Lalit Bhasin Member Independent Director

There was no occasion for the Committee to meet during the year 2014 - 15. In the absence of profit computed under Section 135 of Companies Act, 2013, the Company did not have to make any outlay towards corporate social responsibility.

31 Report on Corporate Governance (contd.) UNITED BREWERIES (HOLDINGS) LIMITED 6. GENERAL BODY MEETINGS Annual General Meetings The details of the last three Annual General Meetings (AGMs) of the Company held are furnished as under: Financial Year Date Time Venue Special Resolutions passed 96th Annual General Thursday, 11.30.a.m. Good Shepherd Nil Meeting September Auditorium, April 2011 – March 2012 27, 2012 Opp. St. Joseph’s Pre- University College, Residency Road, Bangalore 560 025 97th Annual General Thursday, 3.15.p.m. Good Shepherd Appointment of Mr. V Shashikanth as Meeting September Auditorium, Managing Director April 2012 – March 2013 12, 2013 Opp. St. Joseph’s Pre-University College, Residency Road, Bangalore 560 025 98th Annual General Tuesday, 12.00. noon Conference Hall, 1. To borrow monies from banks and / or Meeting September 1st Floor, UB Tower, financial institutions and create mortgage / April 2013 – March 2014 30, 2014 UB City, No. 24, charge in connection with such borrowings. Vittal Mallya Road, 2. Contract / Arrangement with United Spirits Bangalore – 560 001 Limited in respect of licensing of the Pegasus logo of the Company under Section 188 of the Companies Act, 2013. 3. Contract / Arrangement with United Spirits Limited in respect of purchase of goods or materials from them under Section 188 of the Companies Act, 2013. 4. Contract / Arrangement with United Breweries Limited in respect of purchase of goods or materials from them under Section 188 of the Companies Act, 2013. 5. Contract / Arrangement with Mangalore Chemicals & Fertilizers Limited in respect of licensing of the Pegasus logo of the Company under Section 188 of the Companies Act, 2013. 6. Contract / Arrangement with UB International Trading Limited in respect of purchase of goods or materials from them under Section 188 of the Companies Act, 2013.

Special Resolution (s) passed through Postal Ballot Pursuant to Section 110 of the Companies Act, 2013 (the “Act”) read with the Companies (Management and Administration) Rules, 2014 (including any statutory modification or re-enactment thereof for the time being in force), the Company had conducted a Postal Ballot exercise for seeking approval of the Shareholders by passing a Special Resolution to give Loans and to make Investments under Section 186 of The Companies Act, 2013.

The Board had appointed Mr. Sudhir V. Hulyalkar, Company Secretary in Whole-Time Practice as Scrutinizer for conducting the 32 Postal Ballot voting process in a fair and transparent manner. Report on Corporate Governance (contd.) UNITED BREWERIES (HOLDINGS) The details of the voting pattern in respect of the Special Resolution passed to give Loans and to make Investments under LIMITED Section 186 of The Companies Act, 2013. are as under:

Promoter/ No. of No. of votes % of Votes No. of Votes No. of Votes % of Votes % of Votes Public shares polled Polled on – in favour – against in favour against on held outstanding on votes votes polled shares polled (1) (2) (3)=[(2) / (1)]* (4) (5) (6)=[(4)/(2)] (7)=[(5)/(2)] 100 *100 *100 Promoter and Promoter Group 3,49,73,280 3,49,73,280 100.00 3,49,73,280 0 100.00 0 Public - Institutional Holders 34,74,146 9,28,001 26.71 0 9,28,001 0.00 100.00 Public - Others 2,83,71,095 6,92,215 2.44 6,59,688 32,527 95.30 4.70 Total 6,68,18,521 3,65,93,496 54.77 3,56,32,968 9,60,528 97.38 2.62

None of the businesses proposed to be transacted at the ensuing Annual General Meeting require passing of resolution through Postal Ballot.

7. DISCLOSURES Materially significant related party transactions

All details relating to financial and commercial transactions where Directors may have a pecuniary interest are provided to the Board, and the interested Directors neither participate in the discussion, nor do they vote on such matters. Transactions with related parties as per the requirements of Accounting Standards 18 issued by The Institute of Chartered Accountants of India are disclosed in the relevant Schedule of Notes to Annual Accounts. The Company’s major related party transactions are generally with its subsidiaries and associates in respect of which necessary approvals have been obtained.

Details of non-compliance There were no instances of non-compliance by the Company with any legal requirements nor have there been any strictures passed by Stock Exchanges or Securities and Exchange Board of India, on any matters relating to the capital market during the last three years.

Whistle Blower Policy The Company believes in the conduct of the affairs of the Company in a fair and transparent manner by adopting high standards of professionalism, honesty, integrity and ethical behavior. It has put in place a mechanism for reporting illegal or unethical behaviour. The Company has a Vigil Mechanism and Whistle Blower Policy under which the employees are free to report violations of applicable laws and regulations and the Code of Conduct. The reportable matters may be disclosed to the Ethics Counsellor / Chairman of the Audit Committee of the Company. During the year under review, no employee was denied access to the Audit Committee.

CEO / CFO Certification The certificate from CEO / CFO to the Board pursuant to Clause 49 (IX) of the Listing Agreement with the Stock Exchanges has been obtained from the Chairman of the Board, since presently the Company has neither a Managing Director or a Manager nor a Chief Financial Officer.

Code of Conduct The Company has adopted a Code of Business Conduct and Ethics for Board Members and Senior Management Personnel.

All the members of the Board and Senior Management Personnel have affirmed compliance with the Code of Conduct as on March 31, 2015.

33 Report on Corporate Governance (contd.) UNITED BREWERIES (HOLDINGS) LIMITED A copy of the said Code of Business Conduct and Ethics for Board Members and Senior Management Personnel is available at the Company’s website - www.theubgroup.com.

Details of compliance with mandatory requirements and adoption of the non mandatory requirements of this clause

The Company has complied with all the mandatory requirements of Clause 49 of the Listing Agreement except to the extent of CEO/CFO certification as mentioned above. The details of these compliances have been given in the relevant sections of this Report. The status of compliance with the Non mandatory requirements is given at the end of the Report.

8. MEANS OF COMMUNICATION Website The Company has its own website and all vital information relating to the Company and its performance, including quarterly results, official press releases and presentation to analysts are posted on the web-site. The Company’s website address is “www.theubgroup.com”.

Other means of communication

Quarterly Results The Company’s quarterly results are published in English and Kannada newspapers. Press Releases are also issued which are carried by other newspapers. Hence, the same are not sent to the residence of Shareholders. Newspapers wherein Results are normally published i) The Financial Express ii) Kannada Prabha (Kannada) [a regional daily published from Bangalore Any website where displayed www.theubgroup.com Whether it also displays official news releases and the Yes presentations made to Institutional Investors or to the analysts: Whether Management Discussion and Analysis is a part of the Yes Annual Report Designated e-mail Address for Investor Services

In terms of Clause 47 (f) of the Listing Agreement, the designated e-mail address for investor complaints is “[email protected]”.

9. GENERAL SHAREHOLDER INFORMATION The particulars of the Annual General Meeting for the year ended March 31, 2015 is as under:

Date of 99th Annual General Meeting Venue Time

Monday, September 28, 2015 Conference Hall, Level 1, UB Tower, UB City, 11.30 a.m. No. 24, Vittal Mallya Road, Bangalore – 560 001

Book Closure From September 25, 2015 To September 28, 2015

The Company’s financial year begins on April 1 and ends on March 31 of the following year:

Financial Calendar Declaration of Unaudited Results

1st Quarter April 1 to June 30 By August 14th 2nd Quarter July 1 to September 30 By November 14th 3rd Quarter October 1 to December 31 By February 14th Audited Financial Results April 1 to March 31 By May 30th 34 Report on Corporate Governance (contd.) UNITED BREWERIES (HOLDINGS) Unclaimed Dividend LIMITED Section 205A of the Companies Act, 1956, mandates Companies to transfer dividend that has been unclaimed for a period of seven years from the unpaid dividend account to the Investor Education and Protection Fund (IEPF).

During the year, the Company has credited a sum of ` 0.07 crores towards unclaimed dividend declared for the financial year 2006 - 07 to the IEPF pursuant to Section 205C of the Companies Act, 1956 read with the Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001.

Pursuant to the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with Companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on September 30, 2014 (date of last Annual General Meeting) on the website of the Company www.theubgroup.com.

In accordance with the following schedule, the dividend for the years mentioned below, if unclaimed within a period of seven years, will be transferred to IEPF.

Financial Type of dividend Dividend per Date of declaration Due date for transfer Year Share (`)

2007-08 Final ` 1.00 per share December 26, 2008 January 25, 2016

2008-09 No Dividend Declared

2009-10 Final ` 1.00 per share September 30, 2010 October 29, 2017

2010-11 Final ` 1.00 per share September 28, 2011 October 27, 2018

2011-12 No Dividend Declared

2012-13 No Dividend Declared

2013-14 No Dividend Declared

The Company has sent communications to the concerned shareholders, advising them to lodge their claims with respect to unclaimed dividend. Shareholders are advised that once unclaimed dividend is transferred to IEPF, no claim shall lie in respect thereof, either against the Company or against IEPF.

Listing on Stock Exchanges and Stock Codes

The Company’s shares are currently listed and traded on the following Stock Exchanges:

Sl. Scrip Name, Scrip Code & Name of the Stock Exchanges Address No. Scrip ID Phiroze Jeejeebhoy Towers, Dalal Street, 1 BSE Limited UBHOLDINGS / 507458 Mumbai 400 001 Exchange Plaza, C-1, Block-G, Bandra Kurla UBHOLDINGS 2 National Stock Exchange of India Limited Complex, Bandra East, Mumbai 400 051

The Annual listing fee for the year 2015 - 2016 has been paid to the above Stock Exchanges. The Bangalore Stock Exchange has been derecognized under the relevant provisions of the Securities and Exchange Board of India Act, 1992 and the Securities Contracts (Regulation) Act, 1956.

35 Report on Corporate Governance (contd.) UNITED BREWERIES (HOLDINGS) LIMITED Market Price Data The details of market price of the shares of the Company at BSE Limited and National Stock Exchange of India Limited during the period from April 1, 2014 to March 31, 2015 are provided in the table hereunder.

BSE NSE Months High Low High Low ` ` Volume ` ` Volume April, 2014 34.60 24.80 31671 34.60 25.00 10547818 May, 2014 42.60 26.60 71749 43.00 26.50 20292489 June, 2014 52.20 35.90 108455 52.20 36.00 27863405 July, 2014 49.55 36.90 68543 49.60 36.60 17212116 August, 2014 43.40 28.55 55807 43.40 28.60 14950291 September, 2014 35.80 22.40 48154 35.75 22.50 12642853 October, 2014 28.40 24.25 23552 28.45 24.30 7169983 November, 2014 28.10 20.40 16186 28.45 19.15 5389313 December, 2014 25.50 16.60 26509 24.80 16.40 9556292 January, 2015 27.60 20.10 37871 27.40 20.00 16520293 February, 2015 24.40 20.75 11297 24.30 20.90 4389397 March, 2015 25.25 18.40 22568 25.35 18.20 9030054

The stock performance in comparison to BSE Sensex and NSE Nifty are provided in the chart below.

36 Report on Corporate Governance (contd.) UNITED BREWERIES (HOLDINGS) Registrars and Share Transfer Agents LIMITED

All matters pertaining to Share Transfers / Transmissions are being handled by Integrated Enterprises (India) Limited,the Registrars and Share Transfer Agents. The Share Transfer requests are processed by them and a Memorandum of Transfer along with relevant documents is sent to the Company for approval. Time taken for processing Share Transfer requests including dispatch of Share Certificates is 21 days, while it takes a minimum of 10 to 12 days for processing dematerialisation requests. The Company regularly monitors and supervises the functioning of the system so as to ensure that there are no delays or lapses in the system.

Share Transfer System The power of approving transfers, transmissions up to 5000 shares has been delegated to the Company Secretary and two Directors. Transfers are approved every fortnight. Share transfers above 5000 shares are approved by the Board of Directors. A summary of transfer/transmission of shares of the Company so approved by the Company Secretary and two Directors is placed at every Board meeting / Stakeholders’ Relationship Committee.

The Company obtains from a Company Secretary in Practice half-yearly certificate of compliance with the share transfer formalities as required under Clause 47 (c) of the Listing Agreement and files a copy of the said certificate with Stock Exchanges.

Dematerialization of shares and liquidity United Breweries (Holdings) Limited shares are tradable compulsorily in electronic form and through Integrated Enterprises (India) Limited, Registrars and Share Transfer Agents of the Company. The Company has established connectivity with both the depositories i.e., NSDL and CDSL. The International Securities Identification Number (ISIN) allotted to the Company’s Shares under the Depository System is INE696A01025. Percentage of Shares held in Physical & Electronic form as on March 31, 2015 Sl. No. Particulars No. of Share Holders No. of Shares % 1 Demat Mode NSDL 27305 49613941 75.24 CDSL 13164 15742338 22.50 Total 40469 65356279 97.74 2 Physical Mode 15139 1462242 2.26 Grand Total 55608 66818521 100.00

Distribution of Shareholding as on March 31, 2015

Category No. of Shareholders % No. of Shares % Up to 5,000 54921 98.76 14797384 22.14 5,001 - 10,000 372 0.67 2759573 4.13 10,001 - 20,000 161 0.29 2255589 3.38 20,001 - 30,000 49 0.09 1178402 1.76 30,001 - 40,000 18 0.03 636801 0.95 40,001 - 50,000 16 0.03 699327 1.05 50,001 - 1,00,000 38 0.07 2536272 3.8 1,00,001 and above 33 0.06 41955173 62.79 Total 55608 100.00 66818521 100.00

Outstanding Global Depository Receipts (GDRs) / American Depository Receipts (ADRs) / Warrants or Convertible Bonds - Not Applicable -

ECS (Electronic Clearing Service) / Mandates / Bank Details Members may please note that ECS details contained in the BENPOS downloaded from the Depositories would be reckoned for payment of dividend when the same is declared by the Company. In order to avoid fraudulent encashment of dividend, they are 37 requested to register either ECS mandate or Bank details for payment of dividend. Report on Corporate Governance (contd.) UNITED BREWERIES (HOLDINGS) LIMITED Shareholding Pattern as on March 31, 2015

Categories of Shareholding %

Indian Promoters

Dr. Vijay Mallya and his relatives 7.91

Kamsco Industries Private Limited 3.62

Mallya Private Limited 3.62

The Gem Investments and Trading Company Private Limited 1.60

Pharma Trading Company Private Limited 0.78

Vittal Investments Private Limited 0.15

Devi Investments Private Limited 0.69

McDowell Holdings Limited 7.87

Ganapathy Mallya Investments Private Limited 0.00

Rossi & Associates Private Limited 0.69

VJM Investments Private Limited 0.00

Foreign Promoters

Watson Limited 21.19

FirStart Inc 4.22

Total Promoters’ Holdings 52.34

Foreign Institutional Investors 1.69

Mutual Funds /UTI 2.95

Financial Institutions / Banks 0.37

Insurance Companies 0.20

Other Bodies Corporate 8.67

Individuals holding up to Rs. 1 lakh in nominal capital 23.83

Individuals holding more than Rs.1 lakh in nominal capital 7.74

Others 1.32

NRIs 0.89

Total Non-Promoter’s Holdings 47.66

38 Grand Total 100.00 Report on Corporate Governance (contd.) UNITED BREWERIES (HOLDINGS) Plant Location LIMITED The Company has no plants.

Address for Correspondence

For any assistance regarding share transfers, transmissions, change of address, non- receipt of dividends, duplicate / misplaced Share Certificates and other relevant matters, Shareholders may write to:

Address for correspondence with Registrars Integrated Enterprises (India) Limited and Share Transfer Agents 30, Ramana Residency, 4th Cross, Sampige Road, Malleswaram, Bangalore – 560 003 Tel.No. : 080 – 23460815 – 18 Fax No. : 080 – 23460819

Contact Persons Mr. S Vijayagopal / Mr. S. Giridhar / Mr. Ramesh Chandra

e-mail address [email protected]; [email protected]; [email protected]; [email protected]

Address for correspondence with the Company The Company Secretary United Breweries (Holdings) Limited “UB Tower”, Level 12, UB City No.24, Vittal Mallya Road, Bangalore 560 001. Tel. No.: 080 - 3985 6079 / 3985 6097 / 3985 6094 ; Fax No.: 080 – 2227 4890

Address for correspondence for Shareholders Shareholders holding shares in dematerialized form should address all holding shares in dematerialised form their correspondence (including change of address, nominations, ECS mandates, bank details to be incorporated on dividend warrants, powers of attorney, etc.) to their Depository Participant.

10. NON MANDATORY REQUIREMENTS Chairman of the Board The Chairman’s Office is maintained by the Company.

Shareholders Rights The Company’s half yearly results are published in English and Kannada newspapers. Hence the same are not sent to the shareholders.

Audit qualifications With regard to Audit qualification necessary explanations are being furnished in the financial notes to accounts.

Separate posts of Chairman and CEO The Board is looking for a suitable person to be appointed as Managing Director / Whole-Time Director of the Company.

Reporting of Internal Auditor The Internal Auditor directly reports to the Audit Committee.

39 Report on Corporate Governance (contd.) UNITED BREWERIES (HOLDINGS) LIMITED Annexure Report on Corporate Governance of United Breweries (Holdings) Limited

Compliance with Code of Business Conduct and Ethics

In accordance with Clause 49 of the Listing Agreements with the Stock Exchanges, the Board Members and Senior Management Personnel of the Company have confirmed compliance with the Code of Business Conduct and Ethics for the financial year ended March 31, 2015.

Mumbai Dr. Vijay Mallya May 29, 2015 Chairman

CERTIFICATE

To the Members of United Breweries (Holdings) Limited

We have examined the compliance of conditions of Corporate Governance by United Breweries (Holdings) Limited (“the Company”), for the year ended on March 31, 2015, as stipulated in Clause 49 of the Listing Agreement of the said Company with Stock Exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the management of the Company. Our examination was limited to a review of the procedures and implementation thereof, adopted by the Company for ensuring the compliance with the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us and representations made by the Directors and the management of the Company, we certify that, it has complied with the conditions of Corporate Governance as stipulated in Clause 49 of the above mentioned Listing Agreement except the following condition:

(i) It has not obtained a certificate required to be obtained from CEO / CFO since it does not have a CEO / CFO. However, the Company has obtained such certificate from its Chairman.

We state that no investor grievance is pending for a period exceeding one month as on March 31, 2015 against the Company as per the records maintained by the Stakeholders Relationship Committee.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

For Vishnu Ram & Co Chartered Accountants

Place : Mumbai (S Vishnumurthy) Date : May 29, 2015 Proprietor Membership No. : 22715 Firm Registration No.004742S 40 Independent Auditors' Report

To

The members of UNITED BREWERIES (HOLDINGS) LIMITED.

1. Report on the Financial Statements We have audited the accompanying stand-alone financial statements of UNITED BREWERIES (HOLDINGS) LIMITED (‘the Company’) which comprise the Balance Sheet as at 31st March 2015, the Statement of Profit and Loss and the Cash Flow Statement, and a summary of the significant accounting policies and other explanatory information for the year then ended. 2. Management’s Responsibility for the Financial Statements The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these stand-alone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the company and for preventing and detecting frauds and irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. 3. Auditor’s Responsibility Our responsibility is to express an opinion on these stand-alone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on whether the company has in place an adequate internal financial control system over financial reporting and the effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the stand-alone financial statements.

4. Basis for qualified opinion a. The company has extended corporate guarantees of ` 87,072 million in favour of lenders / lessors / creditors of Kingfisher Airlines Limited (KFA) (Refer note no. 31 to financial statements). The beneficiaries of such guarantees have invoked the guarantees and are pursuing recovery actions against the company. This may result in loss to the company (Refer note no. 31 to financial statements). No provision has been made in the accounts for such possible loss. b. The company carries investments in certain subsidiaries and an associate company. The carrying value of such investments is ` 2,558 million. There are significant declines in the carrying value of these investments. The company has not provided for such declines. (Refer note 33(e) to financial statements). c. Certain subsidiaries owe to the company ` 754 million. Net-worths of these companies are eroded, impairing the recovery of such loans and advances. Company has not provided for the possible loss on this count. (Refer note 39 to financial statements). d. The company has shown ` 317 million as due from a banker who has unilaterally encashed company’s deposits lying with it and appropriated the amount towards its claims against a group company. The possible loss on account of this development has not been recognised in the financial statements (Refer note 43 to financial statements). e. An amount of ` 8,475 million is shown as dues from a financial company which has sold the company’s investments that were pledged with it and appropriated part of the sale proceeds against dues from KFA (Ref note no. 44). Further, the 41 Independent Auditors' Report (contd.)

said finance company still holds custody of 59,150,000 shares in KFA, belonging to the company (Ref note no. 33(b). The company has petitioned the High Court of Calcutta and High Court of Karnataka challenging the validity of the pledge and for rendering full accounts. Pending outcome of the petitions, the company has shown the above amounts as good and recoverable. Should the company fail to get the reliefs as sought, there would be losses. The company has not provided for any possible losses in this regard. According to the management, it is not possible to estimate the losses and consequently quantify the amount of provision required in the above cases. Had the company estimated and provided for the losses as mentioned in paragraphs 4(a) to 4(e) above, the profit stated in the Statement of Profit and Loss would have been lower by such amount; the liabilities in the Balance Sheet would have been higher by the amount of provisions with respect to item mentioned in paragraph 4(a) above; the carrying value of investments in the Balance Sheet would have been lower by the amount of provision with respect to item mentioned in paragraph 4(b) above; the amount of loans and advances in the Balance Sheet would have been higher by the amount of provision with respect to item mentioned in paragraph 4(c) above and the amount of other current assets in the Balance Sheet would have been lower by the amount of provisions with respect to items mentioned in paragraphs 4(d) and 4(e) above. f. Winding up petitions filed against the Company have been admitted by the Honourable High Court of Karnataka and are being heard [Ref. note no. 45]; the Honourable High Court of Karnataka has restrained the Company from disposing of any of its assets [Ref. note no. 52(e)]; the Company is a defendant in recovery suits instituted by certain creditors / lenders for recovery of their dues of ` 62,033 million [Ref. note no. 45]; some of the lenders have recovered their dues by disposing of the securities pledged by the company.[Ref. note no. 37]. Yet, the company has prepared its financial statements on going concern basis for the reasons stated in note no. 52. The appropriateness of preparation of financial statements on going concern basis is subject to the Company being able to successfully defend itself in the petitions / suits filed against it and obtaining substantial reliefs in the suits filed by it as mentioned in note no. 45. g. The Company has not recognised in its financial statements, disputed liabilities amounting to ` 77,309 million arising out of invocation of its corporate guarantees [Ref. note no. 31] and claims of ` 1,463 million made against it under agreements entered into with a banker [Ref. note no. 31]. Had the company recognised the above, current liabilities in the Balance Sheet would have been higher by that amounts and guarantees under contingent liabilities and claims not acknowledged as debt would have been lower by ` 77,309 million and ` 1,463 million, respectively. 5. Qualified Opinion In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the “Basis for Qualified Opinion” paragraphs above, the aforesaid stand-alone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March 2015, and its profit and its cash flows for the year ended on that date 6. Emphasis of Matter

Attention is invited to the following: a. A term deposit for ` 609 million with a banker, representing part of the sale proceeds of shares in United Spirits Limited in favour of Diageo group which had been kept deposited to comply with the direction of the Honourable High Court of Karnataka to the effect that the sale proceeds shall be kept invested in term deposits with banks, has been pre-closed by the bank by exercising its general lien and it has adjusted an amount of ` 453 million and encumbered an amount of ` 156 million against the borrowings from one of the group companies which had been guaranteed by the Company [Ref note no. 43]; b. The ‘status quo’ with respect to the transaction of sale of 10,141,437 no. of shares in United Spirits Limited in favour of Diageo group, as ordered by the Honourable , continues; c. The Company has provided for an amount of ` 579 million towards the probable loss that may arise in respect of dues from an associate. [Ref. note no. 39]; d. The Company has written off an amount of ` 13,883 million dues from Kingfisher Airlines Limited; e. The Company has provided for an amount of ` 2,779 million towards decline, other than temporary, in the carrying value of its investments in Kingfisher Airlines Limited; f. A lender of Kingfisher Airlines Limited has initiated action to attach and dispose of the Company’s property in Goa to recover its dues [Ref. note no. 32(d)]; 42 g. The Company has considered the write-off of amounts due from its subsidiaries as tax deductible having regard to an opinion obtained by it [Ref. note no. 35]; Annexure to the Independent Auditors' Report

h. Note no. 53 regarding efforts being made to recover a sum of ` 200 million advanced to a vendor which is presently being shown as an advance which is good and recoverable; i. Note no. 51 regarding non-accrual of interest payable to the extent of ` 634 million on account of the lender company's shareholders not approving the agreement granting the loan.

7. Report on Other Legal and Regulatory Requirements

i. As required by the Companies (Auditor’s Report) Order, 2015 (“the Order”), issued by the Central in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

ii. As required by section 143(3) of the Act, we report that:

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

b. In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c. The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. Except for the effects of the matters described in the Basis for Qualified Opinion paragraphs above, in our opinion, the aforesaid stand-alone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

e. The matters described in the Basis for Qualified opinion paragraphs above, in our opinion, may have an adverse effect on the functioning of the company;

f. On the basis of the written representations received from the directors as on 31st March 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2015, from being appointed as a director in terms of Section 164(2) of the Act;

g. With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The company has disclosed the impact of pending litigations on its financial position in its financial statements – Refer Note 45 to the financial statements; ii. The company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses except for the matters specified in the Basis for Qualified Opinion paragraphs; iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

For Vishnu Ram & Co., Chartered Accountants

S.Vishnumurthy Proprietor Place : Mumbai Membership No. 22715 Date : 29-05-2015 Firm Registration No.004742S

43 Annexure to the Independent Auditors' Report

Re: United Breweries (Holdings) Limited

Referred to in paragraph 7(i) of our report of even date;

(i) (a) The company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets. (b) Most of the assets have been physically verified by the management during the year. Some of the assets have not been verified. However, there is a regular programme of physical verification whereunder, every asset gets verified atleast once every three years. In our opinion, such verification is reasonable having regard to the size of the company and the nature of its assets. Discrepancies noticed on verification during the year have been properly dealt with in the books of account.

(ii) (a) As explained to us, the inventory has been physically verified during the year by the management. In our opinion, the frequency of such verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

(c) In our opinion and according to the information and explanations given to us, the company is maintaining proper records of its inventory. The discrepancies noticed on physical verification of inventory have been properly dealt with in the books of account.

(iii) As explained to us, the company has not granted any loans, secured or unsecured during the year to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. However, in respect of Kingfisher Airlines Limited (KFA), which is a company listed in the register maintained under section 189 of the Companies Act, 2013, there has been a transaction wherein a lender of KFA has sold the shares pledged by the company to secure KFA’s borrowings. Out of such sale proceeds the lender has appropriated an amount of ` 1,286.195 million towards dues from KFA. This has been written off by the company.

(iv) In our opinion and according to the information and explanations given to us, there exists in the company an adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system of the company.

(v) In our opinion and according to the information and explanations given to us, the company has complied with the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 and other relevant provisions of the Companies Act and the rules framed there under. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in relation to the deposits accepted by the company.

(vi) In our opinion and according to the information and explanations given to us the provisions with regard to maintenance of cost records under section 148(1) of the Companies Act, 2013 are not applicable to the company.

(vii) (a) In our opinion and according to the information and explanations given to us, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including dues in respect of provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax and other material statutory dues. However, there have been delays in depositing dues of service tax and tax deducted at source with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, service tax, sales tax, excise duty etc., were in arrears as at 31-3-2015 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, following is the list of dues on account of taxes, which have not been deposited on account of disputes.

44 Annexure to the Independent Auditors' Report (contd.)

Disputed amount Forum where dispute is Name of the Statute Nature of dues ( ` in million) pending Income Tax Act, 1961 Income tax for the A.Y. 1997-98 31.998 Supreme Court Income Tax Act, 1961 Income tax for the A.Y. 2001-02 0.482 High Court of Karnataka Income Tax Act, 1961 Income tax for the A.Y. 2007-08 69.535 CIT (Appeals) Income Tax Act, 1961 Income tax for the A.Y. 2008-09 171.040 CIT (Appeals) Income Tax Act, 1961 Income tax for the A.Y. 2009-10 68.987 CIT (Appeals) Income Tax Act, 1961 Income tax for the A.Y. 2010-11 200.661 CIT (Appeals) Foreign Trade Penalty 5.000 High Court of Judicature, Madras (Development & Regulation) Act, 1992

(d) According to the information and explanations given to us the amounts which were required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under have been transferred to such funds within time.

(viii) Accumulated losses of the company are more than fifty percent of its net worth. The company has not incurred cash losses during the financial year covered by our audit. The company has incurred cash losses during the immediately preceding financial year.

(ix) As per the information and explanations given to us, the company has defaulted in repayment of dues to a bank. The unpaid dues to the bank as at March 31, 2015 were ` 2,363 million. Out of this ` 27 million has been repaid in April 2015. The company is in negotiation with the banker. The company has not issued any debentures.

(x) According to the information and explanations given to us, during the year, the company has not given any guarantees in favour of banks or financial institutions for loans taken by others. Therefore, the provisions of clause 3(x) of the Companies (Auditor’s Report) Order, 2015 are not applicable to the company.

(xi) The company has not raised any term loans during the year. Therefore, the provisions of clause 3(xi) of the Companies (Auditor’s Report) Order, 2015 are not applicable to the company.

(xii) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

For Vishnu Ram & Co., Chartered Accountants

S.Vishnumurthy Proprietor Place : Mumbai Membership No. 22715 Date : 29-05-2015 Firm Registration No.004742S

45 Balance Sheet as at March 31, 2015 UNITED BREWERIES (HOLDINGS) ` in million LIMITED As at As at Note No. March 31, 2015 March 31, 2014

Equity and Liabilities Shareholders’ funds Share capital 2 668.185 668.185 Reserves and surplus 3 5,136.217 618.281

Non-current liabilities Long term borrowings 4 14,617.353 19,281.924 Other long term liabilities 5 4,820.485 6,034.976 Long term provisions 6 76.905 72.569

Current liabilities Short term borrowings 7 5,378.816 3,989.559 Trade payables 8 569.416 801.067 Other current liabilities 9 6,660.784 7,107.616 Short term provisions 10 1,006.435 1,006.435 38,934.596 39,580.612 Assets Non-current assets Fixed assets Tangible assets 11 9,173.248 9,383.341 Capital work in progress 11 1,362.051 1,248.355

Non-current investments 12 6,742.852 13,091.320 Long term loans and advances 13 756.932 3,691.577 Other non-current assets 14 58.666 68.576

Current assets Current investments 15 27.125 27.089 Inventories 16 114.690 345.792 Trade receivables 17 637.339 609.795 Cash and cash equivalents 18 1,218.645 1,375.930 Short term loans and advances 19 4,060.798 3,223.085 Other current assets 20 14,782.250 6,515.752 38,934.596 39,580.612 Significant Accounting Policies and other notes 1

The accompanying notes are an integral part of the accounts.

This is the Balance Sheet referred to in our report of even date. For Vishnu Ram & Co., Chartered Accountants Firm Regn. No. 004742S

Dr. Vijay Mallya N. Srinivasan M.S. Kapur S.Vishnumurthy Chairman Director Director Proprietor DIN 00122890 DIN 00004195 DIN 00703815 Membership No. 22715

Mumbai Kaushik Majumder May 29, 2015 Company Secretary 46 FCS 3368 Statement of Profit and Loss for the year ended March 31, 2015 UNITED BREWERIES ` in million (HOLDINGS) LIMITED Note No. For the year ended March 31, 2015 March 31, 2014

Revenues Revenue from operations 21 3,814.435 4,917.648 Other incomes 22 448.135 627.628 4,262.570 5,545.276

Expenses Purchase of traded goods 1,108.910 2,337.967 Cost of packing materials consumed 23 320.388 226.306 Change in inventories 24 223.494 (92.312) Employee benefit expenses 25 297.740 294.512 Finance costs 26 1,853.276 4,496.226 Depreciation 11 215.047 81.639 Provision for bad and doubtful advances 578.955 12,717.054

Bad advances/debts written off 1,286.236 24,505.944 Provision for diminition in value of investments 2,809.619 - Other expenses 27 879.175 1,089.866 9,572.840 45,657.204

Loss before exceptional Items (5,310.270) (40,111.926) Exceptional Items 28 9,650.009 19,878.906 Profit / (Loss) for the year 4,339.739 (20,233.020) Earnings Per Share (Face value of ` 10 each)

Basic / Diluted Earnings Per Share (before exceptional items) (79.47) (600.30) Basic / Diluted Earnings Per Share (after exceptional items) 64.95 (302.80)

Significant Accounting Policies and other notes 1

The accompanying notes are an integral part of the accounts. This is the Statement of Profit and Loss referred to in our report of even date. For Vishnu Ram & Co., Chartered Accountants Firm Regn. No. 004742S

Dr. Vijay Mallya N. Srinivasan M.S. Kapur S.Vishnumurthy Chairman Director Director Proprietor DIN 00122890 DIN 00004195 DIN 00703815 Membership No. 22715

Mumbai Kaushik Majumder May 29, 2015 Company Secretary 47 FCS 3368 UNITED Cash Flow Statement for the year ended March 31, 2015 BREWERIES (HOLDINGS) ` in million LIMITED For the year ended For the year ended March 31, 2015 March 31, 2014 A. Cash Flow from Operating Activities Net profit/ (loss) before taxes 4,339.739 (20,233.020) Adjustments for : Depreciation 215.047 81.639 Dividend income (48.706) (68.450) Exceptional items (9,650.009) (19,878.906) Loss / (Profit) on sale of old assets 0.042 (0.073) Interest and finance charges 1,853.276 4,496.226 Interest income (370.563) (393.901) Liabilities no longer required written back (66.397) (207.198) Provision for bad and doubtful advances 578.955 12,717.054 Provision for bad and doubtful debts - 9.558 Bad debts/ advances written off 1,286.236 24,505.944 Provision for diminution in value of investments 2,809.619 Unrealised exchange fluctuation loss 196.323 135.253 (3,196.176) 21,397.146 Operating profit before working capital changes 1,143.563 1,164.126 Adjustments for : Increase in trade and other receivables (951.330) (844.302) Decrease /(increase) in inventories 231.102 (84.268) (Decrease)/ increase in trade payable / other liabilities (626.714) 1,348.330 (1,346.942) 419.760 Cash (used in)/generated from operations (203.379) 1,583.884 Direct taxes paid (138.276) (615.080) Net cash (used in) /generated from operating activities (341.655) 968.804

B. Cash Flow from Investing Activities Purchase of fixed assets (including changes in capital work in progress) (118.874) (119.489) Sale of fixed assets/ advance for residential units 160.109 250.599 Loans and advances (net) 1,087.416 (616.793) Purchase of investments (other than short term investments) - (463.318) Sale of investments 4,714.271 23,437.224 (other than short term investments) Dividend income (other than short term investments) 48.666 68.450 Decrease / (increase) in fixed deposits with bank 574.194 (4,200.922) Deposit with court - (2,535.000) Net cash generated from investing activities 6,465.782 15,820.751 48 Cash Flow Statement for the year ended March 31, 2015 (contd.) UNITED BREWERIES (HOLDINGS) ` in million LIMITED For the year ended For the year ended March 31, 2015 March 31, 2014 C. Cash Flow from Financing Activities Interest and finance charges (1,014.936) (4,193.282) Interest received 352.601 363.561 Increase / (decrease) in short term borrowings 1,388.966 (1,455.187) Increase/ (decrease) in bank borrowings (161.329) (3,728.775) Increase/ (decrease) in Long term borrowings (6,716.005) (8,078.591) Net cash used in financing activities (6,150.703) (17,092.275)

Net decrease in cash and cash equivalents (26.575) (302.721) Cash and cash equivalents at the beginning of the year 867.272 1,169.993 Closing balance of cash and cash equivalents 840.697 867.272

Cash and Cash equivalents comprises of: Cash in hand (including foreign currencies) 0.385 0.754 Balance with banks in current accounts 813.187 839.429 Current investments 27.125 27.089 840.697 867.272 Reconciliation of cash and cash equivalents as per Balance Sheet and Cash Flow Statement Cash and cash equivalents as per Balance Sheet 1,218.645 1,375.930 Less: Deposits maturing beyond 3 months 405.073 535.747 Add: Current investments 27.125 27.089 840.697 867.272

Notes to the Cash Flow Statement 1. Short term investments represents amounts invested in mutual funds which are readily convertible into cash. 2. Balances with banks include ` 2.261 million being balances in unpaid dividend account which cannot be used by the Company except for payment of unpaid dividend / transfer to Investor Education and Protection Fund and ` 67.164. million in escrow account which cannot be used by the Company except for repayment of secured loan by a lender. 3. Cash in hand includes foreign currencies ( Refer note 41)

This is the Cash Flow Statement referred to in our report of even date.

For Vishnu Ram & Co., Chartered Accountants Firm Regn. No. 004742S

Dr. Vijay Mallya N. Srinivasan M.S. Kapur S.Vishnumurthy Chairman Director Director Proprietor DIN 00122890 DIN 00004195 DIN 00703815 Membership No. 22715

Mumbai Kaushik Majumder May 29, 2015 Company Secretary FCS 3368 49 Notes to the Financial Statements UNITED BREWERIES (HOLDINGS) CORPORATE INFORMATION: LIMITED United Breweries (Holdings) Limited (UBHL), headquartered in UB City, Bangalore is the holding company of the UB Group of Companies. It holds investments in the Groups alcoholic beverages business through United Spirits Limited and United Breweries Limited. UBHL also holds investments in Mangalore Chemicals & Fertilizers Limited, Kingfisher Airlines Limited and UB Engineering Limited. In addition to financing Group Companies by way of capital, loans and provision of corporate guarantees, it also exports alcoholic beverages, leather goods, garments and processed foods.

1. ACCOUNTING POLICIES i. Basis of preparation of financial statements: The financial statements of the Company have been prepared, unless otherwise stated, under historical cost convention, having due regard to the fundamental accounting assumptions of going concern, consistency, accrual and in compliance with the mandatory Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2006.

ii. Use of estimates: The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting year end. Although these estimates are based upon Management’s best knowledge of current events and actions, actual results could differ from these estimates.

iii. Revenue recognition: Revenues are generally recognized on accrual basis except where there is an uncertainty of ultimate realization. a. Sales are recognized when the properties in goods are transferred for a price and their collection is expected within the agreed time. b. Lease incomes from non-cancellable operating leases are recognized in the Statement of Profit and Loss, on straight line basis, over the lease term. In respect of other operating leases, lease income is recognized in accordance with the terms of the lease deeds as modified based on negotiations from time to time. c. Interest is recognized on time proportion basis taking into account the amount outstanding and the rate applicable. d. Dividends and royalty income are accounted for, when the right to receive the payment is established.

iv. Valuation of Inventories: Inventories are valued at lower of weighted average cost and net realizable value. Cost of inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

v. Fixed Assets: Fixed assets are stated at cost less depreciation, wherever applicable. The land and building in Bangalore is stated at the revalued amount as adjusted in accordance with the revaluation done in March 2014 at the market value determined by approved valuers. All costs relating to the acquisition and installation of fixed assets are capitalised and such costs include borrowing cost relating to borrowed funds attributable to the acquisition of qualifying assets for the period upto the date of acquisition / installation.

vi. Borrowing Cost: Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of cost of such assets till such time as the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as an expense in the period in which they are incurred.

vii. Depreciation: 50 Depreciation is provided under written down value method at the rates prescribed under Schedule II to the Companies Act, 2013. Notes to the Financial Statements (contd.) UNITED BREWERIES viii. Effects of changes in Foreign Exchange rates : (HOLDINGS) LIMITED a. Transactions in foreign currencies are translated applying the following exchange rates: In respect of export transactions, at the average exchange rate prevailing in the month preceding month in which the transaction takes place. In respect of all other transactions at the rate of exchange prevailing on the date of transaction. b. Monetary assets and liabilities denominated in foreign currency are translated at the rates of exchange at the Balance Sheet date and the resultant gain or loss is recognized in the Statement of Profit & Loss except exchange differences arising on reporting of long term foreign currency monetary items which are accumulated in a Foreign Currency Monetary Item Translation Difference Account and amortised over the balance period of such long term asset/liability but not beyond March 31, 2020. c. Non monetary items are carried at historical cost denominated in foreign currency and these are translated using the exchange rate prevailing on the date of transaction. ix. Accounting for Export benefits : Export benefits available to the company are considered for inclusion in the accounts where there is reasonable assurance that the Company will comply with the conditions attached to them and where such benefits have been earned by the Company and it is reasonably certain that the ultimate collection will be made. Exports benefits of revenue nature are recognised in the Statement of Profit and Loss. x. Investments :

a. Current investments refer to the investments that are readily realizable and intended to be held for not more than a year. b. Trade investments refer to the investments made with the aim of enhancing the group’s business interest. c. Long term investments are stated at cost. All expenses relating to acquisition of investments are capitalized. Diminution in the value of investments, if considered permanent, is provided for. d. Current investments are stated at lower of cost and fair value on the Balance Sheet date. xi. Employee Benefits: a. Defined-contribution plans : These are plans in which the Company pays pre-defined amounts to separate funds and does not have any legal or informal obligation to pay additional sums. These comprise of contributions to the Employees’ Provident Fund, Superannuation Fund, Employees’ Pension Scheme and certain state plans like Employees’ State Insurance. The Company’s payments to the defined contribution plans are recognized as expenses during the period in which the employees perform the services that the payment covers.

b. Defined-benefit plans: Gratuity: The Company provides for gratuity, a defined benefit plan (Gratuity Plan), to certain categories of employees. Liability with regard to gratuity plan is accrued based on actuarial valuation, based on Projected Unit Credit Method, and carried out by an independent actuary, at the Balance Sheet date. Actuarial Gains and Losses comprise experience adjustments and the effect of changes in the actuarial assumptions and are recognized immediately in the Statement of Profit and Loss as income or expense.

c. Other long term employee benefits: Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability at the present value of the defined benefit obligation at the Balance Sheet date based on actuarial valuation carried out at each Balance Sheet date. 51 Notes to the Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) d. Short term employee benefits: LIMITED Undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by the employees is recognized during the period when the employee renders the services. These benefits include compensated absences such as paid annual leave and performance incentives.

xii. Segment reporting: The operations of the Company are divided into alcoholic beverages, leather products, readymade garments, investments, guarantee services, property development and other activities. Accordingly, the primary segment reporting comprises the performance under these segments and the secondary segment reporting is based on geographical locations of customers.

xiii. Related Party disclosures: Transactions between related parties are disclosed as per Accounting Standard 18- “Related Party Disclosures”. Accordingly, disclosures regarding the name of the transacting related party, description of the relationship between the parties, nature of transactions and the amount outstanding as at the end of the accounting year, are made.

xiv. Taxes on Income: Provision for income tax comprises current taxes and deferred taxes. Current tax is determined as the amount of tax payable in respect of taxable income for the period.

Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets are recognized and carried forward to the extent that there is reasonable / virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized.

xv. Impairment of assets: The Company evaluates all its assets for assessing any impairment and accordingly recognises the impairment, wherever applicable, as provided in Accounting Standard 28- “Impairment of Assets”.

xvi. Provisions and Contingencies: A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an out flow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on Management estimates required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current Management estimates.

xvii. Earnings per share: Earnings per equity shares (basic / diluted) is arrived at by dividing the Net Profit or Loss for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year.

52 Notes to the Financial Statements (contd.) UNITED BREWERIES ` in million (HOLDINGS) LIMITED As at As at March 31, 2015 March 31, 2014

2. Share capital

Authorised

100,000,000 (2014: 100,000,000 ) 1,000.000 1,000.000 Equity Shares of ` 10/- each

1,000.000 1,000.000

Issued, Subscribed and Paid-up

66,818,521 (2014: 66,818,521) Equity Shares of ` 10/- 668.185 668.185 each fully paid up.

668.185 668.185

a. Reconciliation of equity shares outstanding at the beginning and at the end of the reporting period

2014 - 2015 2013 - 2014

No. of Shares Amount No. of Shares Amount

As at the beginning of the year 66,818,521 668.185 66,818,521 668.185

Issued during the year - - - -

Outstanding at the end of the year 66,818,521 668.185 66,818,521 668.185

b. Terms and rights attached to equity shares

‘The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the Annual General Meeting. The rights of shareholder is governed by the Articles of Association of the Company and the Companies Act, 2013.

c. Details of shareholders holding more than 5% shares in the company

March 31, 2015 March 31, 2014

Number of % holding Number of % holding shares shares

Dr Vijay Mallya 5,284,978 7.91 5,284,978 7.91

McDowell Holdings Limited 5,260,002 7.87 5,260,002 7.87

Watson Limited 14,159,986 21.19 14,159,986 21.19

d. Aggregate number of shares issued for consideration other than cash during the period of five years immediately preceding the reporting date is nil.

53 Notes to the Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) ` in million LIMITED As at As at March 31, 2015 March 31, 2014

3. Reserves and surplus

Capital reserve 511.365 511.365

Securities premium account 8,331.975 8,331.975

Fixed assets revaluation reserve At the beginning of the year 8,550.705 1,042.113 Add: additions during the year (refer note 32(a) ) - 7,508.592 8,550.705 8,550.705

Foreign Currency Monetary Item Translation Difference (183.463) (361.660) Account (refer note no. 47) General reserve 75.000 75.000

Surplus / (deficit) as per Statement of Profit and Loss: At the beginning of the year (16,489.104) 3,743.916 Less : Profit/ (loss) for the year 4,339.739 (20,233.020) (12,149.365) (16,489.104) 5,136.217 618.281

4 Long term borrowings Secured From banks 2,249.319 2,410.938 From others 1,729.367 8,255.387

Unsecured Fixed deposits 105.156 211.720 From group companies 13,394.095 13,394.095 From others 1,074.452 1,085.652 18,552.389 25,357.792 Less: Current maturities Secured From banks 2,249.115 2,318.054 From others 1,365.528 3,423.117

Unsecured Fixed deposits 95.393 109.697 From group companies 20.000 20.000 From others 205.000 205.000 3,935.036 6,075.868

14,617.353 19,281.924

54 Notes to the Financial Statements (contd.) UNITED BREWERIES Nature of security Terms of repayment (HOLDINGS) LIMITED a. Nature of security and and terms of repayment for secured borrowings (1) Vehicle loan from HDFC Bank amounting to Repayable in 60 equated monthly instalments from the date ` 2.519 million (Pr. year ` 4.609 million) is secured by of loan (May 2011) along with interest of 10.25% p.a. Last hypothecation of vehicle. instalment due in April 2016.

(2) Loan from Lakshmi Vilas Bank Limited amounting Repayable in 84 equated monthly instalments from the date to ` Nil million (Pr. year ` 159.529 million) is secured of loan (February 2009) along with interest at the rate of by assignment of future receivables for use of BPLR + 0.75% (presently @ 18% p.a.). Last instalment due in Pegasus logo by group companies. December 2016. This loan has been adjusted by the lender against the Company’s deposits with them. The Company is legally chalenging this unilateral act of the lender.

(3) Loan from Yes Bank Limited amounting to Moratorium of 24 months followed by 12 equal quarterly ` 2,246.800 million (Pr. year ` 2,246.800 million) is instalments from the date of each respective disbursement secured by subservient charge on all current assets i.e. March 30, 2013. Interest @ 15.00%. Additional interest and movable fixed assets of the company, both rate of 2.00% for delay in interest payment. Further 7.00% present and future, deposit in debt service reserve of loan is payable as fees. Over due interest of ` 53.915 account equal to the total amount of scheduled million is since paid, Over due fees of ` 62.663 million is interest payment due for one month and pledge of pending for payment. Although, the Loan has been recalled 2,726 shares in United Spirits Limited, 8,794,000 in January 2014 and is overdue for payment as on balance shares in United Breweries Limited held by the sheet date. The company is negotiating for restoration of company, 6,050,000 shares in United Breweries the facility. Limited held by McDowell Holdings Limited besides corporate guarantee by McDowell Holdings Limited.

(4) Loan from ECL Finance Limited amounting to Rate of interest @ 17.75% p.a. Lender has retained interest ` 207.647 million (Pr year ` 390.247 million) is till maturity date ie. 31st March 2016 for ` 54.64 million in secured by the pledge of 1,048,991 shares in a reserve account. United Spirits Limited held by the company besides corporate guarantee by a subsidiary.

(5) Loan from HDFC Limited (including foreign Loan of ` 1,798.779 million repayable in 120 monthly currency denominated loan of USD) amounting to instalments from February 2012. Loan of ` 582.871 million ` 1521.720 million (Pr year ` 7,864.687 million) is repayable in 119 monthly instalments from February 2012, are secured by the pledge of 317,030 shares in loan of USD 75.940 million repayable in 9 instalments, last McDowell Holdings Limited held by the company, instalment due on 30th April 2016. Overdue principal of mortgage by deposit of title deed of the company’s ` 924.173 million is since paid. land in Bangalore, the superstructure thereon and assignment of the rent receivable from the property let out, securitization of future sale proceeds from the luxury residential building “Kingfisher Towers - Residences in UB City”, pledge of 1,500,000 shares in United Spirits Limited held by a subsidiary company.

55 Notes to the Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) Nature of security Terms of repayment LIMITED b. Terms of repayment for Unsecured borrowings (1) Public deposits Repayable within 1 to 3 years from the date of deposit and not on demand or notice except at the sole discretion of the company. Rate of interest is 11- 11.5%

(2) Loan from erstwhile associate Repayable in 3 equal instalments in March 2019,March Amounting to ` 13,374.095 million 2020 and March 2021. Interest rate is @ 9.50% p.a. Interest payment starts from January 2015. Following the non approval of the loan by the shareholder of USL at their EGM on 28th November 2014, The Company has stopped accruing interest on this loan w.e.f 1st October 2014. Loan from group company Overdue for repayment. Rate of interest @ 12% p.a. Amounting to ` 20 million Extension of loan term being negotiated with the lender.

(3) Loan from Others a) Amounting to ` 5 million Overdue for repayment. Rate of interest @ 12% p.a. Extension of loan term being negotiated with the lender.

b) Amounting to ` 200 million Overdue for repayment. Rate of interest @ 18% p.a. Extension of loan term being negotiated with the lender.

c) Amounting to ` 869.451 million Repayable as and when company sells its share of units in “Kingfisher Towers - Residences in UB City” and to the extent the sale proceeds are over and above ` 20,000/- per sft , however, that the entire loan is repayable before the company takes possession of its full share. Rate of interest @ 12%.

` in million As at March 31, 2015 March 31, 2014

5. Other long term liabilities Trademark licence security deposits 577.741 889.157 Lease security deposits 345.050 346.334 Interest accrued and not due - 846.683 Refundable security deposit 67.500 67.500 Instalments from allottees for residential units 1,545.184 1,385.302 Advance licence fees for Pegasus loan 2,285.010 2,500.000 4,820.485 6,034.976

6. Long term provisions For legal cases 37.428 37.428 Leave encashment 39.477 35.141 76.905 72.569

56 Notes to the Financial Statements (contd.) UNITED BREWERIES ` in million (HOLDINGS) LIMITED As at March 31, 2015 March 31, 2014 7. Short term borrowings Secured Working capital loan / cash credit from bank 157.970 157.680 From others - 707.822

Unsecured From group companies 4,612.796 2,516.008 From Others 608.050 608.049

5,378.816 3,989.559

` in million

Nature of security Terms of repayment a. Nature of security and terms of repayment for secured borrowings

(1) Working capital loan from HDFC Bank is secured by Repayable on demand. Average rate of interest @ 14.5% pledge of 662,103 shares of United Spirits Limited, p.a. 4,753,881 shares of Mangalore Chemicals and Fertilizers Limited held by the company, first charge on movable fixed assets i.e. plant and machinery, furniture and fixtures valued at ` 370 million.

b. Terms of repayment for unsecured borrowings

(1) Loan from Group Companies amounting to ` 508.800 million with interest @ 21.25% p.a. is repayable ` 4,612.796 million in June 2015. Balance loan is repayable on demand.

(2) Loan from others includes ` 250 million (Py Overdue for repayment. Rate of interest @ 18% p.a. ` 250 million) from LKP finance Ltd, secured through Extension of loan term being negotiated with the pledge of shares held by a third party. lender.

(3) Short term loan from LKP Finance Limited amounting Overdue for repayment. Rate of interest @ 18% p.a. to ` 358.049 million ` (Pr year ` 358.049 million) Extension of loan term being negotiated with the secured through pledge of shares held by a third lender. party.

57 Notes to the Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) As at LIMITED March 31, 2015 March 31, 2014 8. Trade payables Trade creditors 569.416 801.067 569.416 801.067

9. Other Current Liabilities Current maturities of long term borrowings 3,935.036 6,075.868 Interest accrued and not due 34.253 84.687 Interest accrued and due 1,923.400 242.036 Statutory dues 27.802 64.210 Employee dues 7.971 1.851 Advertisement and sales promotion expenses payable 428.053 338.514 Advances received from customers 28.550 67.784 Claims payable 13.283 7.921 Other liabilities 183.086 174.745 Provision for expenses 65.101 34.231 Creditor for capital goods 11.894 12.637 Investor Education and Protection Fund: Unclaimed public deposits/interest 0.132 0.132 Unclaimed dividends 2.223 3.000 6,660.784 7,107.616 10. Short-term provisions Income tax 1,005.988 1,005.988 Wealth tax 0.447 0.447 1,006.435 1,006.435

58 Notes to the Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) LIMITED 5.862 8.826 4.561 7.589 17.386 92.167 15.196 76.530 516.533 215.862 as at as at 191.003 in million in million 1,140.341 1,945.359 1,088.723 31.03.13 31.03.14 of Assets of Assets ` ` 1,248.355 6,924.328 2,164.134 9,383.341 Net Value Net Value Net Value Net Value

4.561 7.589 1.213 1.665 4.380 15.196 76.530 46.097 191.004 149.510 as at as at Assets Assets 1,248.355 9,383.341 6,924.328 2,164.134 31.3.15 1,362.051 6,924.328 2,046.054 9,173.248 31.03.14 Net Value of Net Value Net Value of Net Value - - - 21.082 18.451 29.395 36.090 21.556 35.077 As at As at 634.551 196.686 224.688 144.249 31.3.15 315.266 265.749 174.754 849.492 31.03.14 - - - 3.351 2.234 2.593 3.695 5.682 81.639 28.115 29.402 15.944 year year 41.405 15.022 30.664 For the For the 118.580 215.047 ------0.987 0.159 0.013 0.096 0.158 0.054 0.666 0.344 0.014 0.590 1.107 DEPRECIATION DEPRECIATION tions tions Deduc Deduc during during the year the year the - - - 17.827 16.271 27.468 21.082 18.451 29.395 As at As at 553.899 168.571 195.299 128.463 196.686 224.688 144.249 634.551 01.04.14 01.04.13 36.278 23.012 36.984 37.303 23.221 39.457 415.692 220.779 As at As at 415.259 220.851 31.3.14 31.3.15 6,924.328 2,360.820 6,924.328 2,361.320 10,017.893 10,021.740 ------1.432 0.023 0.151 0.357 0.077 0.824 0.433 0.310 0.100 0.489 1.332 tions tions Dele Dele during during the year the year ------2.729 4.554 1.216 0.506 0.956 1.514 0.500 1.335 0.172 0.698 2.473 5.178 11.475 tions tions Addi Addi during during the year the year ------COST / VALUATION COST / VALUATION tion tion 7,508.592 Revalua Revalua 5,835.605 1,672.987 35.213 22.133 36.294 36.278 23.012 36.984 685.104 411.161 220.630 As at As at 415.692 220.779 2,499.258 1,088.723 01.04.13 01.04.14 6,924.328 2,360.820 10,017.893 32(a)) (refer note (refer (refer note 32 (a) ) (refer Description Description 59 11. FIXED ASSETS SCHEDULE in Progress Capital Work Capital work in progress Building Land Plant & Machinery Office Equipment Building Furniture and Fixture Furniture and Fixture Land Computers Plant & Machinery Vehicles Vehicles TOTAL TOTAL Office Equipment Furniture and Fixture Furniture and Fixture Computers Vehicles Vehicles TOTAL TOTAL Notes to the Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) LIMITED ` in million As at March 31, 2015 As at March 31, 2014 12. Non-current investments ( Refer note 33 )

Number Number Face Face Particulars of Cost of Cost Value Value Shares Shares

TRADE INVESTMENTS IN FULLY PAID EQUITY SHARES: QUOTED United Breweries Limited 30,295,911 ` 1 1,311.462 30,295,911 ` 1 1,311.462 Mangalore Chemicals & Fertilisers Limited 17,836,068 ` 10 205.456 17,836,068 ` 10 205.456 United Spirits Limited 4,208,556 ` 10 123.693 8,977,699 ` 10 263.862 McDowell Holdings Limited 489,482 ` 10 16.273 1,128,762 ` 10 37.527 UB Engineering Limited* 6,345,554 ` 10 424.928 6,345,554 ` 10 424.928 Kingfisher Airlines Limited* 59,550,000 ` 10 2,779.287 131,918,897 ` 10 6,156.712 4,861.098 8,399.947 Less : Provision for diminution in value of 2,779.287 - investments 2,081.812 8,399.947

* Trading has been suspended temporarily

UN-QUOTED In Equity Shares In Subsidiary Companies Kingfisher Training & Aviation Services Ltd 33,216 ` 10 0.332 33,216 ` 10 0.332 UB Infrastructure Projects Limited 50,000 ` 10 0.500 50,000 ` 10 0.500 UB Electronic Instruments Limited 280,976 ` 100 27.209 280,976 ` 100 27.209 UB International Trading Limited 25,050,002 ` 10 250.500 25,050,002 ` 10 250.500 Kingfisher Finvest India Limited 50,000 ` 10 0.500 50,000 ` 10 0.500 Kingfisher Aviation Training Limited 3,000,000 ` 10 30.000 3,000,000 ` 10 30.000 City Properties Maintenance Company 50,000 ` 10 0.500 50,000 ` 10 0.500 Bangalore Limited UB Overseas Limited 50 USD 1 0.002 50 USD 1 0.002 UBHL (BVI) Limited 238,370 USD 1 10.040 238,370 USD 1 10.040 Rigby International Corp. 15,115,488 USD 1 660.238 15,115,488 USD 1 660.238 Rubic Technologies Inc. 5,500,000 USD 0.01 26.558 5,500,000 USD 0.01 26.558 1,006.379 1,006.379 Less : Provision for diminution in value of 56.890 26.558 investments 949.489 979.821

60 Notes to the Financial Statements (contd.) UNITED BREWERIES ` in million (HOLDINGS) LIMITED As at March 31, 2015 As at March 31, 2014 NUMBER NUMBER FACE FACE PARTICULARS OF COST OF COST VALUE VALUE SHARES SHARES In Other Companies United Racing & Bloodstock Breeders Limited 40,045 ` 10 0.400 40,045 ` 10 0.400 WIE Engineering Limited 306,860 ` 10 1.419 306,860 ` 10 1.419 UB Pharma (Kenya) Limited 120,000 KS 100 7.616 120,000 KS 100 7.616 9.435 9.435 Less : Provision for diminution in value of 9.435 9.435 investments - - In Preference Shares In Subsidiary Companies UB Overseas Limited - 0.001% Unsecured Optionally - Convertible Redeemable Preference Shares 24,515,605 USD 1 1,211.553 23,515,605 USD 1 1,211.553

Kingfisher Finvest India Limited 10,000,000 ` 1 2,500.000 10,000,000 ` 1 2,500.000 3,711.553 3,711.553

Total Investments 6,742.852 13,091.320

Aggregate amount of quoted investments 2,081.812 8,399.947 Aggregate amount of un quoted investments 4,661.040 4,691.373 Market value of quoted investments 47,441.590 50,091.610

SHARE MOVEMENTS DURING THE YEAR - NON CURRENT INVESTMENTS ` in Million Particulars No. of Shares Cost A. ADDITION DURING THE YEAR Nil

B. SALES DURING THE YEAR

United Spirits Limited 4,769,143 140.169 McDowell Holdings Limited 639,280 21.254 Kingfisher Airlines Limited 72,368,897 3,377.425

Total 3,538.848

61 Notes to the Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) ` in million LIMITED As at As at March 31, 2015 March 31, 2014 13. Long term loans and advance Loans and advances to subsidiaries Considered good 754.282 2,886.774 Considered doubtful 139.982 139.982 894.264 3,026.756 Less: Provision 139.982 754.282 139.982 2,886.774

Loans and advances to associates Considered good - 802.153

Considered doubtful 578.955 12,597.072 578.955 13,399.225 Less: Provision 578.955 12,597.072 - 802.153 Loans and advances to others Considered good 2.650 2.650 Considered doubtful 4.746 7.988 7.396 10.638 Less: Provision 4.746 2.650 7.988 2.650

756.932 3,691.577

14. Other non-current assets Other deposits - considered good 58.666 68.576 58.666 68.576

15. Current investments Mutual funds* 27.125 27.089 27.125 27.089

* Market value as on 31.03.15 is ` 38.496 million.

62 Notes to the Financial Statements (contd.) UNITED BREWERIES ` in million (HOLDINGS) LIMITED As at As at March 31, 2015 March 31, 2014

16. Inventories Raw materials 0.684 0.981 Packing materials, stores and spares 36.315 43.627 Finished goods including goods in transit 77.691 301.184 114.690 345.792

17. Trade receivables Unsecured Exceeding six months: Considered good 297.175 301.541 Considered doubtful 10.919 12.096 308.094 313.637 Less: Provision 10.919 297.175 12.096 301.541 Others: considered good 340.164 308.254 637.339 609.795 18. Cash and cash equivalents Cash on hand 0.385 0.754 Balances with banks: in Current accounts 810.926 836.392 in Unpaid dividend account 2.261 3.037 in Deposit account 405.073 535.747 1,218.645 1,375.930

19. Short term loans and advances Advances to suppliers 1,448.703 898.971 Advance income tax 2,083.947 1,945.671 Other receivables 528.148 378.443 4,060.798 3,223.085 20. Other current assets Deposit with court 2,535.000 2,535.000 Bank deposits 3,353.986 3,797.506 Duty drawback receivable 101.557 183.246 Other recoverables 8,791.707 - 14,782.250 6,515.752

63 Notes to the Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) ` in million LIMITED Year ended March 31, 2015 March 31, 2014

21. Revenue from operations Sales 2,305.593 3,466.049 Dividends 48.706 68.450 Guarantee commission 8.916 18.833 Lease rent 524.625 511.738 Income from property maintenance 113.769 101.188 Licence fees 665.304 552.506 Management service fees 32.400 30.000 Duty drawback 115.122 168.884 3,814.435 4,917.648

22. Other income Interest income 370.563 393.901 Profit on sale of old assets - 0.073 Provisions / liabilities no longer required/payable written back 66.397 207.198 Miscellaneous income 11.175 26.456 448.135 627.628

23. Cost of packing material consumed Packing materials consumed 320.388 226.306 320.388 226.306

24. Changes in inventories of finished goods Opening stock: Finished goods 301.184 208.872 301.184 208.872

Closing stock: Finished goods 77.691 301.184 77.691 301.184

(Increase)/ decrease in stocks 223.494 (92.312)

25. Employee benefits expenses Salaries, wages and bonus 242.001 209.069 Contribution to provident and other funds 28.396 57.740 Workmen and staff welfare 27.343 27.703 297.740 294.512 26. Finance costs Interest expense 1,853.218 4,418.008 Processing charges and bank charges 0.058 78.218 1,853.276 4,496.226

64 Notes to the Financial Statements (contd.) UNITED BREWERIES ` in million (HOLDINGS) LIMITED Year ended March 31, 2015 March 31, 2014 27. Other expenses Rent including lease rent 32.092 31.014 Rates and taxes 24.458 42.362 Insurance premium 13.744 5.597 Communication expenses 7.857 8.514 Travel and conveyance 31.966 30.639 Electricity charges 2.025 1.634 Printing and stationery 3.186 3.145 Repairs & maintenance i) Buildings 15.006 12.904 ii) Machinery 3.345 3.109 iii) Others 0.447 2.503 Vehicle repairs and maintenance 6.937 7.108 Property maintenance expenses 86.310 78.163 Advertisement and sales promotion 177.839 288.481 Brokerage 0.113 2.431 Rebate and discount 0.497 1.324 Commission paid to selling agents 26.365 47.134 Freight charges 104.503 109.845 Exchange loss 91.023 161.283 Miscellaneous expenses 65.397 26.904 Claims paid 5.362 0.376 Legal and Professional charges 155.777 193.105 Directors' sitting fees 1.280 0.920 Auditor's remuneration 3.151 3.565 Provision for debts - 9.558 Loss on sale of old assets 0.042 - Other expenses 20.452 18.250 879.175 1,089.868 28. Exceptional items Profit on sale of shares to Diageo Plc (net of expenses) - 14,128.830 Profit on sale of pledged securities by KFA lenders (net) 6,257.344 2,136.259 Profit on sale of pledged securities by the company’s lenders 3,392.665 3,613.817 9,650.009 19,878.906

65 Notes to the Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) 29. The Company has executed a Joint Development Agreement with a Developer on 26th April, 2010 for development of a luxury LIMITED residential building to be named as “Kingfisher Towers – Residences at UB City”. The development of the above project (in which the Company is entitled to 55% share of super built up area) is under progress.

The Company has issued allotment letters in respect of seven residential units in Kingfisher Towers by collecting booking amounts of ` 1,545.184 million (Pr year ` 1,385.302 million).

30. Estimated amount of contracts remaining to be executed on capital account as at 31st March 2015 and not provided for is ` Nil million (net of advances) (Pr year ` 6.600 million).

31. Contingent liabilities: ` in million As at As at March 31, 2015 March 31, 2014 a) Guarantees given by the Company on behalf of subsidiaries to banks and financial Nil Nil institutions and others b) Guarantees given by the Company on behalf of associates / KFA to banks and 88,280.760 88,280.760 financial institutions and others (The enforceability of the Guarantees issued for Kingfisher Airlines Ltd beneficiaries are being contested in appropriate Courts of law) c) Claim against the company not acknowledged as debt 1,462.900 1,462.900 d) Demand raised by Income Tax authorities against which the Company has preferred 776.774 776.774 appeals

Certain aircraft lessors and vendors of Kingfisher Airlines Limited (KFA) have invoked the corporate guarantees given by the company on behalf of KFA. The total amount invoked and outstanding as on March 31, 2015 is ` 15,275.400 million (Pr year ` 15,275.400 million) and Kingfisher Airlines Limited is under negotiation with the beneficiaries. Also, Consortium of KFA bankers have invoked Company’s corporate guarantee and demanded payment of ` 62,033.500 million due from KFA along with interest, if any, decided by the Court. This matter is being contested by the Company in various Courts. Accordingly, the Company continues to recognize these obligations as only ‘contingent liabilities’. Based on management’s opinion no provision is presently considered necessary. In any event, the amount is not quantifiable.

A claim has been made for ` 1,462.900 million by a Bank towards share recompense amount. The company has obtained legal advice that this claim is not enforceable and accordingly the amount is presently shown above as “claims against the Company not acknowledged as debt.”

32. Fixed Assets a) The Company has revalued its land & buildings in Bangalore, as on March 31, 2014 at their Fair Market Value based on Valuation Report of an independent approved valuer and the carrying values of the respective assets have been adjusted accordingly. The incremental appreciation in the value of land arising out of the aforesaid revaluation is ` 5,835.605 million and that of building is ` 1,672.987 million. The incremental appreciation of ` 7,508.592 million, has been credited to the Fixed Assets revaluation reserve. b) The Company owns a valuable trademark which is in the form of the Company logo carried at NIL value. This logo has been licensed to Group companies. c) The Company’s UB City property and the land, in which residential properties are being developed, are under charge in favour of HDFC Limited, for facilities granted to the Company. d) KFA lenders have sent a notice purportedly under the SARFAESI Act in respect of the Company’s property in Goa. The Company has responded to the notice issued to it purportedly under the SARFAESI Act challenging the same. Pending adjudication of the suit, the Goa property continues to remain as an asset of the Company.

66 Notes to the Financial Statements (contd.) UNITED BREWERIES 33. Investments: (HOLDINGS) LIMITED a) The Company has pledged 1,713,820 shares of United Spirits Limited, 4,753,881 shares of Mangalore Chemicals & Fertilisers Limited, 317,030 shares of McDowell Holding Limited, 8,794,000 shares of United Breweries Limited to secure the borrowings of the company along with the borrowings of subsidiary companies and an associate company. The Company has also given undertaking in favour of it’s lender and that of an associate company, for non-disposal of 2,014,000 shares held in United Breweries Limited. b) Investments as on 31st March, 2015 include 59,150,000 shares of Kingfisher Airlines Limited, held in custody of a lender after they have invoked the pledge of the shares. c) The Company’s investment of ` 26.512 million with IDFC Mutual Fund is under a lien, to secure the borrowings of a third party. d) The Preference Shares held in an overseas subsidiary, UB Overseas Limited are to be redeemed anytime at the option of the Company or at the end of 10 years from the date of allotment of shares. The Company also has the option for partial / full conversion of Preference shares into equity shares of UB Overseas Limited, in the ratio of 1 equity share for one preference share held, at face value of USD 1 each to be determined and issued by the Issuer. e) Based on a critical review during the year of the carrying value of long term strategic investments, the management has provided an aggregate amount of ` 2,809.619 million, as disclosed in the accounts, as a matter of commercial prudence. While in respect of other strategic investments the matter will be reviewed during the following year based on business plans, investor funding and potential opportunities. f) SREI Infrastructure Finance Limited, one of the Company’s lenders, has invoked the Company’s pledge and sold 500,000 shares of United Spirits Limited. They have used a portion of the sale proceeds to retire the loan outstanding and holding a balance of ` 99.09 crores against their purported dues from KFA, which is being contested.

34. Sale of shares in United Spirits Limited The Division Bench of the Hon’ble High Court of Karnataka, vide its Order dated 20th December 2013 has set aside the permission granted by the Hon’ble Company Judge under Section 536(2) of the Companies Act 1956 to dispose of the shares of USL in favour of Diageo Plc / Relay BV. The Company and Diageo Plc have approached the Hon’ble Supreme Court by way of SLPs challenging the Order of the Division Bench. Pending disposal of the Company’s SLP’s, the Hon’ble Supreme Court has by its Order dated 10th February, 2014 directed that status quo be maintained in respect of the transaction of sale of shares to Diageo.

35. Tax provision There is no income tax liability on the profits of the year, taking into account the exempted profit on sale of securities. Futher, having regard to the adjustments required to be made to the book profit in respect of write off of certain advances against the provision made for such advances, there would also not be any liability on account of Minimum Alternate Tax.

36. Exceptional Items Exceptional items comprised of : a) Profit (net) of ` 6,257.344 million on sale of 3,497,985 equity shares in United Spirits Limited, 639,280 equity shares in McDowell Holdings Limited and 72,368,897 equity shares in Kingfisher Airlines Limited by lenders of Kingfisher Airlines Limited. b) Profit of ` 3,392.665 million on sale of 1,271,158 equity share in United Spirits Limited by the Company’s lenders.

67 Notes to the Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) 37. a) The Consortium of KFA lenders, have sold certain investments belonging to the Company pursuant to the purported LIMITED pledge. b) KFA lenders have invoked Company’s Corporate Guarantee and demanded payment of dues from KFA amounting to ` 62,033.500 million. c) The Consortium of KFA Bankers, have sold in periodical lots certain investments belonging to the Company pursuant to the purported pledge. The Company and others have filed a suit in the Hon’ble Bombay High Court, being Suit No. 311 of 2013 (Bombay Suit) against the consortium of lenders, who have advanced loans to KFA, inter alia, seeking the following reliefs:- (a) “For a declaration that the Corporate Guarantee dated 21st December, 2010 given by the Company and the Pledge Agreement dated 21st December, 2010, are void ab-initio and non-est; (b) For a permanent order and injunction restraining the consortium of bankers, their servants, agents or assigns, or any other person claiming by, through or under them or any of them, from acting upon, in furtherance or in any manner giving effect to the impugned Notice dated 16th March, 2013, or from taking any other or further steps to act upon or in furtherance of the Pledge Agreement dated 21st December, 2010, save and except in accordance with the procedure set out in clause 8.1 of the MDRA, including issuing a notice there under.

(c) For a permanent order and injunction restraining the consortium of bankers, their servants, agents or assigns, or any other person claiming by, through or under them or any of them, from acting upon or in furtherance of the Corporate Guarantee dated 21st December, 2010 given by the Company and the Pledge Agreement dated 21st December, 2010; (d) That an order and decree of damages of the sum of ` 3,199.68 crores as set out in the Particulars of Claim be awarded to the Plaintiffs.”

The Company has also filed a Notice of Motion in the said Suit, being Notice of Motion 306 of 2014 inter alia, for a decree on admission that the extent of the liability under the Corporate Guarantee is restricted to ` 1601.43 crores based on admissions by the consortium of lenders. The said Suit and Notice of Motion are pending adjudication in the Hon’ble Bombay High Court.

38. Confirmation of balances from certain Sundry Debtors and Sundry Creditors are awaited. Adjustment for differences, if any, arising out of confirmation and reconciliation thereof would be made in the current year. The Management is of the opinion that the effect of adjustments, if any, is not likely to be significant.

39. The Company has advanced ` 1,333.240 million (Pr year ` 1,306.049 million) to overseas subsidiaries and a domestic associate, which have not yet been repaid. In case of the associate, the Company has made a further assessment of its financial condition, considering its operations for the current year, and has decided, as a matter of prudence, to provide for ` 578.960 million (Pr year ` Nil) due from it. In respect of overseas subsidiaries, no provision has been considered at this stage.

40. The Company has accrued interest of ` 17.962 million (Pr year ` 88.020 million) on loans to associate / overseas subsidiary, as per Loan Agreements signed with them. Considering the income stream of those companies, realisability of this interest could possibly take protracted period of time beyond those stipulated in the Loan Agreement. 41. Cash in hand includes foreign currency notes.

42. As required under Section 205C of the Companies Act, 1956, the Company has transferred ` 0.777 million (Pr year ` 0.330 million) to the Investor Education and Protection Fund (IEPF) during the year. As on March 31, 2015, no amount was due to be transferred to the IEPF.

43. Claim against a banker for restitution of deposits of ` 609.60 million, which were unilaterally encashed and thereafter appropriated towards their claims against a Group Company is being pursued before the Hon’ble High Court of Karnataka. Appropriate amounts are being shown as recoverable from the said bank.

68 Notes to the Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) 44. The Company and Kingfisher Finvest India Limited (KFIL) have filed a suit, inter alia, against IDBI Trusteeship Services Limited LIMITED (IDBI Trusteeship), Indian Global Competitive Fund (IGCF) and SREI Venture Capital Limited (SREI), in the City Civil Court at Calcutta, being T.S. No. 966 of 2013, inter alia, for a declaration that the Security Trustee Agreement dated 30th June, 2008 and the Consolidated Deed of Pledge dated 21st December, 2010 (in respect of pledged shares of United Spirits Limited and KFA held by the Company and KFIL) are void, unenforceable and of no effect. The said suit is pending.

SBICAP Trustee and the Consortium of Banks, which have advanced loans to KFA have filed a suit, inter alia, against IDBI Trusteeship Services Limited, SREI Venture Capital Limited, UBHL and KFIL in the Court of City Civil Judge in Bangalore, being O.S. No. 25877 of 2013 to enforce their alleged rights under the Release of Residual Interest Agreement dated 21st December, 2010 in respect of sale proceeds remaining after appropriation of USL and KFA shares. On 10th June 2014, IDBI Trusteeship Services Limited transferred the pledged shares to IGCF who in turn sold 4,937,395 shares of United Spirits Limited (“Sold Shares”) held by UBHL and KFIL. By an Order dated 20th June, 2014 in Writ Petition No. 28577 of 2014, filed by the Consortium of Banks and which has now been disposed off, IGCF deposited the surplus/balance sales proceeds from the Sold Shares with the Hon’ble High Court of Karnataka and has been restrained from disposing off ` 690 crores retained by it. The Company is defending the aforesaid O.S. No. 25877 of 2013 and the ex-parte ad-interim orders passed therein.

During the pendency of the Writ Petition No. 28577 of 2014, the Consortium of Banks filed an application seeking to amend the plaint. The amendment application was heard and allowed vide Order dated 15.10.2014. The Company and KFIL have filed separate Writ Petitions against the said Order allowing the amendment application. The Company and KFIL have also filed applications for rejection of the suit on account of suit being barred by law and insufficient court fee. The company, after taking into account, various issues involved, has, as a matter of prudence and without prejudice to the rights and contentions of the Company in the legal proceedings as well as the stand adopted by KFA against the purported recall of its loans by the lenders, pursuant to which shares pledged by the company were sold by the lenders, has debited a portion of the sale proceeds of the IGCF sale of investments of ` 106.30 crores to KFA and written off the same as unrealizable, along with other dues from KFA. The balance sale proceeds of ` 847.46 crores continues to be disclosed as due from IGCF.

45. Litigation

a) The lenders of Kingfisher Airlines Limited (KFA) have, pursuant to certain Corporate Guarantees given by the Company (the validity of which is disputed as set out hereinafter), demanded from the Company, their alleged dues from KFA amounting to ` 6,203.35 crores with further interest and other dues from 01/06/2013 and have moved the Debt Recovery Tribunal (“DRT”), Bangalore for recovery of these alleged dues by way of an Original Application (OA). The Interim Application filed by the Company before the DRT seeking to reject the said OA on the ground of jurisdiction has been dismissed by the Tribunal vide its Order dated 12th November, 2013. The Company’s appeal before the DRAT, Chennai challenging the DRT Order is pending.

b) Further, three lenders who have extended pre-delivery payment (PDP) loans to KFA for purchase of aircrafts from M/s. Airbus S.A.S. and who claim to be beneficiaries of Corporate Guarantees of the Company, have filed proceedings before the DRT for recovery of total dues amounting to ` 192.51 crores. By an ex-parte order dated February 4, 2014, in I.A. No. 543/2014, the Hon. DRT has passed an ad-interim order attaching pre-delivery payments made by KFA to M/s. Airbus S.A.S. up to ` 192.51 crores. This ad-interim order is still in force. The Company is defending the said proceedings.

c) In a suit filed by United Spirits Limited (“USL”), the Goa Senior Division Court, by an Order dated 26th April, 2013 has granted an ad-interim injunction against any coercive action by lenders of KFA in respect of the Company’s property in Goa, tenanted to USL. USL has also deposited ` 35 crores in the Hon’ble Court pursuant to the said order.

Aggrieved by the Interim Order, the lenders filed an appeal in the High Court of Bombay at Goa, being Appeal from Order No. 76 of 2013 praying inter alia, that the Interim Order granting ad-interim injunction be quashed and set aside. On 18th July, 2014, the Hon’ble High Court of Bombay at Goa disposed off the appeal. The impugned order does not preclude the Banks from initiating proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002 (SARFAESI Act). It has been clarified by the High Court that the Interim Orders of 26th April and 4th May, 2013 shall continue to operate until disposal of the application for temporary injunction before the Learned 69 Judge, Mapusa, subject to the right of the Banks to proceed under the SARFAESI Act in accordance with law. Notes to the Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) Pursuant to the Order dated 18th July, 2014, passed by the Hon’ble Bombay High Court at Goa, the banks have filed an LIMITED application under Sec. 14 of the SARFAESI Act before the District Magistrate. The Interim Order dated 26th April, 2013 passed by the Goa Senior Division Court is still in force and pending adjudication of the suit, the Goa property continues to remain with the Company (and continues to be in the possession of USL) with a purported charge in favour of Consortium of KFA Bankers.

d) In addition to two winding up petitions instituted by purported beneficiaries of Corporate Guarantees issued by the Company, which are being challenged before the Hon’ble Supreme Court and the Karnataka High Court respectively, six more winding up petitions filed by certain creditors of KFA, who are purported beneficiaries of Corporate Guarantees for winding of the Company, have been admitted by the Hon’ble High Court of Karnataka vide combined Order dated 02nd January, 2015. The Company has filed appeals before the Division Bench of the Karnataka High Court to challenge three of the aforesaid six admission Orders of the single judge and such appeals are pending admission. No Order for appointment of a provisional Liquidator or Order of winding up of the Company, has been passed till date.

e) The Company has filed a suit for damages claiming an amount of ` 1,319.30 crores against one of the above Petitioners who have filed a winding up Petition against the Company in the City Civil Court, Bangalore and the same is pending adjudication.

f) The Company filed a Suit (L) No. 290 of 2015 in the High Court of Judicature at Bombay against ICICI Bank Ltd (hereinafter referred to as “ICICI”) and 3i Infotech Trusteeship Services Ltd (hereinafter referred to as “3i Infotech”) challenging ICICI’s alleged right to sell the 20,14,000 shares (the “NDU shares”) of United Breweries Limited by their notice dated 9th February, 2015 on the ground that the Loan Purchase Agreement dated 21st December, 2010 entered into with ICICI has ceased to operate consequent upon ICICI transferring, assigning and/or novating all its rights and obligations under the MDRA to a third party and that the claim of ` 146.29 crores by ICICI cannot be proceeded against the 20,14,000 shares as the LPA has worked itself out. Accordingly, the following ad-interim reliefs were sought in the Suit: (i) That pending the hearing and final disposal of the Suit, for a temporary order and injunction restraining the Defendants (3i Infotech and ICICI), their servants, agents or assigns, or any other person claiming by, through or under them or any of them, from acting on the basis or in any manner giving effect to the Power of Attorney dated 12th November 2011, or from taking any other or further steps to act upon or in furtherance of the Non Disposal Arrangement, dated 12th November 2011.

(ii) That pending the hearing and final disposal of the Suit, for an Order appointing a court receiver to take custody of 20,14,000 shares of United Breweries Limited, held by the Company and which are the subject matter of the Non Disposal Arrangement dated 12th November 2011.

By an Order dated 16th April, 2015, the Hon’ble Judge restrained both 3i Infotech and ICICI from selling the NDU shares and directed ICICI to deposit the NDU shares with the Prothonotary & Senior Master of Hon’ble High Court of Bombay within a period of 2 weeks from the date of pronouncement of the judgement. This Order has been challenged in an appeal filed by ICICI before the Division Bench of the Hon’ble Bombay High Court which had only stayed the portion of the Order which directs ICICI to deposit the NDU shares with the Prothonotary & Senior Master of Hon’ble Bombay High Court. However, the restraint Order on ICICI for sale of NDU shares continues. Pending adjudication of the Suit and without prejudice to the Company’s rights and contentions therein ICICI purported claim of ` 146.29 crores is disclosed as a contingent liability.

46. Events occurring after the date of the Balance Sheet The Company has appealed to Securities Appellate Tribunal (SAT) challenging the communication dated 27th April 2015 by SEBI to restate the Company’s accounts for Financial Years 2012-13 and 2013-14. By its Order dated 29th May, 2013, the SAT has stayed the operation, implementation and effect of the communication dated 27th April, 2015 till the next date of hearing.

47. The Company’s Rupee loan from HDFC Limited was converted into a “Dollar Denominated Loan’ at concessional rate of interest in Financial Year 2011-12. A portion of the foreign currency translation difference has been recognized as interest in terms of AS16 – ‘Borrowing costs’, and the balance is kept in Foreign Currency Monetary Item Translation Difference Account which is amortised over the life of the loan but not beyond March 2020, as provided in Government of India Notification No. G.S.R.913 (E) (F.No. 17/133/208-CL. Vj, Dated 29.12.2011). Accordingly an amount of ` 178.197 million is charged to the 70 Statement of Profit and Loss and the Balance of ` 183.463 Million is carried in Foreign Currency Monetary Item Translation Difference Account. Notes to the Financial Statements (contd.) UNITED BREWERIES 48. The position of Managing Director fell vacant on 17th April 2014 and efforts are being made to identify a successor. The (HOLDINGS) Company presently does not have any Managerial Personnel namely Managing Director and Chief Financial Officer. The day LIMITED to day operations of the Company are managed by Senior Executives of the Company under directions of the Group Chief Financial Officer and Chairman of the Board.

49. Zuari Fertilizers and Chemicals Limited (“Acquirer”) together with Zuari Agro Chemicals Limited as the person acting in concert (“PAC”) with the Acquirer, by way of an Open Offer in terms of the SEBI guidelines, acquired 43,329,000 fully paid-up equity shares of face value of INR 10 (Rupees ten) each, comprising 36.56% of the equity share capital, from the public shareholders of Mangalore Chemicals & Fertilizers Limited (“MCF”). Post this open offer, the shareholding of Acquirer in MCF increased from 16.47% to 53.03%. However, in terms of the an Agreement entered into between the UB Group with the Acquirer, the UB Group have an option to purchase such number of shares from the Acquirer so as to equalize the respective shareholdings of both UB Group and Zuari Group. The Board has resolved to exercise this option in due course.

50. Due to certain non-compliances under Listing Agreement with Stock Exchanges, the trading in the equity shares of KFA and UB Engineering Ltd. has been “suspended from trading” w.e.f 1st December 2014 and the suspension is still continuing.

51. The Company had entered into a loan agreement with United Spirits Limited on July 3, 2013 under which, an amount of ` 1,337.41 crores is outstanding as on March 31, 2015. The loan is for a period of 9 years. At an EGM of United Spirits Limited on November 28, 2014, the said loan agreement between the Company and United Spirits Limited, was not approved. The Company is examining the impact and consequences of such non-approval and has not accounted for any interest on the loan in Quarter 3 and 4 of the current financial year.

52. Going Concern a) The Company is defending recovery proceedings by the consortium of banks of KFA based on corporate guarantees, the validity of which is being contested. As stated herein above, the company has filed in Bombay High Court, a suit seeking to declare the corporate guarantee null, void ab initio and non-est. The suit is still pending adjudication.

b) Connected with the Corporate Guarantees, the winding up petitions filed in Hon’ble Karnataka High Court referred to in the Directors report, in the opinion of Counsel, can be successfully resisted.

c) The company has filed a suit for damages against the aircraft engine manufacturers for supply of inherently defective engines, both in design and manufacture, to KFA. The suit is pending. The company is pursuing without prejudice, negotiations with two of the creditors who have filed winding up petitions against the Company, to try and settle the disputes amicably. Two members of the Consortium of Bankers of KFA have assigned their debt to an Asset Reconstruction Company (ARC).

d) Under direction of Court pending resolution of various disputes, amounts totaling ` 794.38 crores are held as cash deposits.

e) Due to restraint orders passed by the High Court of Karnataka, rentable commercial office space could not be leased out resulting in continued loss of significant rental revenue. The Company has filed an Application vide CA No. 1428 of 2014 in COP 185/12 with a prayer to permit the Company to lease/rent out the vacant premises at UB City and grant such other further orders as are just. Also, high value residential units in Kingfisher Towers, could not be sold which has impacted the cash flow. The said application is pending.

Having regard to the totality of all the above facts and also the substantial assets of the Company which can be monetized in case of necessity, the financial statements for the year ended 31st March 2015 have been presented on principles applicable to Going Concern.

53. The Company has had advanced ` 20 crores to a vendor. Due to the demise of the owner of the vendor company, the supply arrangement could not be consummated. Discussions are on with the legal heirs for recovery of the advance.

54. Remuneration to Chairman, Managing Director and Managerial Personnel (i) The Chairman of the Company has received remuneration from two subsidiaries, amounting to USD 120,000 (Pr year USD 120,000) and GBP 89,600 (Pr year GBP 89,600) during the year 2014-15. (ii) Mr. V Shashikanth who held office as a Managing Director till 17th April 2014 received remuneration of ` 1.376 million. 71 Notes to the Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) LIMITED ` in million 2014-15 2013-14 55. Remuneration to Auditors: Statutory Audit 2.000 2.000 Tax Audit 0.200 0.200 Limited Reviews 0.300 0.300 Certification fees 0.651 1.065 3.151 3.565 56. Employee benefit Gratuity computations as on 31-03-2015 Disclosure as per AS 15 Defined benefit plans Reconciliation of opening and closing balances of the present value of the defined 2014-15 2013-14 benefit obligation: Obligations at period beginning 101.601 70.68 Service cost 9.704 32.073 Interest cost 7.494 6.132 Benefits settled (15.859) (6.900) Actuarial (gain)/loss (9.504) (0.384) Obligations at period end 93.436 101.601 Defined benefit obligation liability as at the Balance Sheet Is wholly funded by the Company Change in plan assets Plan assets at period beginning, at fair value 104.153 57.153 Expected return on plan assets 7.698 5.402 Actuarial gain/(loss) 0.771 0.113 Contributions 0.001 48.385 Benefits settled (15.859) (6.900) Plans assets at period end, at fair value 96.763 104.153 Reconciliation of present value of the obligation and the fair value of the plan assets: Fair value of plan assets at the end of the year 96.763 104.153 Present value of the defined benefit obligations at the end of the period 93.436 101.601 Net asset recognized in the Balance Sheet 3.327 2.552 Details of Gratuity cost Service cost 9.704 32.073 Interest cost 7.494 6.131 Expected return on plan assets (7.698) (5.402) Actuarial (gain) / loss (10.275) (0.496) Net gratuity cost (0.775) 32.306 Description of the basis used to determine the overall expected rate of return on assets including major categories of plan assets. The expected return is calculated on the average fund balance based on the mix of investments and the expected yield on them. Assumptions Interest rate 8.00% 9.12% Discount factor 8.00% 9.12% Estimated rate of return on plan assets 8.00% 8.00% Salary Increase 5.00% 5.00% Attrition rate 5.00% 5.00% Retirement age 58 58

72 The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. Notes to the Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) 57. Details of dues to Micro, Small and Medium Enterprises and Small Scale Industries. LIMITED Based on the response received by the Company, there are no outstanding as at March 31, 2015 to suppliers, as defined under the Micro, Small & Medium Enterprises Development Act, 2006. Amount due to Micro and Small Enterprises is Nil to the extent of information disclosed by creditors.

58. The Company has recognized the rent from cancellable operating leases in accordance with the terms of the lease deed. In respect of the non-cancellable operating leases, the Company recognizes the rent on a straight line basis over the non- cancellable lease term. Future minimum lease payments receivable under non-cancellable operating lease ` Nil (Pr year Nil).

59. The gross carrying amount, accumulated depreciation and net carrying value of leased building are as follows:

Description 2014-15 2013-14 Gross Block at the beginning of the year 1,607.639 455.095 Add: Increase due to revaluation - 1,292.856 1747.951 Accumulated depreciation 226.803 140.312 Less : Deletion - - 140.312 Net Block at the end of the year 1,380.836 1,607.639

60. Deferred tax Particulars 2014-15 2013-14 Deferred Tax Asset in respect of i) Depreciation on fixed assets 10.200 0.079 ii) Allowance for carried forward losses 5,816.418 942.769 iii) Others 13.524 12.020 Total 5,840.142* 954.868* Note : *Deferred tax asset is not recognized as a matter of prudence.

61. Quantitative Particulars Particulars of Purchases and Sales of Goods traded by the Company Opening Stock Purchases Sales Closing Stock Products Units Quantity Value Quantity Value Quantity Value Quantity Value 1. Alcoholic Cases 337,154 162.346 2,038,563 601.08 2,171,099 1,426.88 204,618 50.536 beverages (396,554) (144.601) (2,687,014) (1,187.84) (2,746,414) (2,121.11) (337,154) (162.346)

2. Leather Pairs 22,356 22.178 265,542 605.77 283,320 364.17 4,578 4.913 products (3,498) (3.461) (320,863) (294.407) (302,005) (371.98) (22,356) (22.178)

3. Processed Food Tons 46 4.733 2,408 122.457 2,391 193.13 63 3.059

(202) (10.57) (1,326) (109.004) (1,482) (160.99) (45) (4.733)

4. Readymade Pieces 217,632 111.93 592,507 292.681 787,580 284.24 22,559 8.459 garments (135,386) (50.24) (1,923,034) (709.407) (1,840,788) (783.17) (217,632) (111.93)

Figures in brackets relates to previous year

73 Notes to the Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) 62. Segment reporting: LIMITED Segment-wise business performance for the year ended March 31, 2015 Segment Revenue Segment Result Primary Segment Information 2014-15 2013-14 2014-15 2013-14 a) Alcoholic beverages 1,490.228 2,200.384 289.345 392.470 b) Leather products 404.432 415.359 67.739 73.672 c) Readymade garments 307.685 849.483 10.297 66.917 d) Investments 48.706 68.450 (141.205) (81.053) e) Logo fees 665.304 552.506 474.393 403.003 f) Property development 524.625 511.738 312.446 321.175 g) Guarantee services 8.916 18.833 (181.996) (130.670) h) Others 364.540 300.897 (60.336) (65.844) Total 3,814.435 4,917.648 769.681 979.669 Other income 448.135 627.628 Provision for doubtful advances (578.955) (12,717.054) Bad debts /advances written off (1,286.236) (24,505.944) Provision for diminution in value of investments (2,809.619) - Finance costs (1,853.276) (4,496.226) Exceptional items 9,650.009 19,878.906 Loss before tax 4,339.739 (20,233.020)

2014-15 2013-14 2014-15 2013-14 Other Segment Segment Segment Segment Capital Depreci- Capital Depreci- Information: Assets Liabilities Assets Liabilities Expenditure ation Expenditure ation a) Alcoholic beverages 1,175.620 994.372 922.877 1,020.100 0.080 0.311 0.433 0.090 b) Leather products 444.936 27.998 325.958 27.118 0.514 9.522 2.933 9.227 c) Readymade garments 1,183.370 10.689 1,249.780 23.737 - 9.136 3.950 6.987 d) Investments 24,954.710 31,055.381 26,007.620 36,187.740 - - - - e) Property development 404.805 - 419.385 - - - - 19.591 f) Others 136.503 35.317 158.617 29.012 0.239 4.575 4.159 45.744 Total 28,299.942 32,123.759 29,084.234 37,287.710 0.832 23.543 11.475 81.639

Notes : 1 Income under the segment “investments” represents dividends received, profit on sale of investments. 2 Income under the segment “property development” represents lease rent and profit on sale of immovable property. 3 Segment results represents profit/(loss) before interest expenses, other income, tax and exceptional items. 4 Capital expenditure represents the gross additions made to fixed assets during the year. 5 Segment assets include Non-Current Assets and Current Assets except income tax assets and increase in value of land and building due to revaluation. 6 Segment Liabilities include Non-Current Liabilities and Current Liabilities except provision for tax.

Secondary segments, based on geographical locations

Particulars Segment Revenue Segment Assets Segment 2014-15 2013-14 2014-15 2013-14 Within India 1,546.050 1,480.395 25,494.621 26,170.761 Outside India 2,268.385 3,437.253 2,805.321 2,913.474 74 Total 3,814.435 4,917.648 28,299.942 29,084.235 Notes to the Financial Statements (contd.) UNITED BREWERIES 63. Related Party Transactions: (HOLDINGS) LIMITED Persons having significant influence over the affairs of the Comapny :- Dr. Vijay Mallya - Chairman of the Board Mr. Ravi Nedungadi - Group Chief Financial Officer Key Management Personnel: Mr. V. Shashikanth* (*Managing Director up to 17th April 2014, President / KMP thereafter) Mr. Kaushik Majumder – Senior Vice President Legal and Company Secretary i) Name of the Related Parties and description of relationship Subsidiaries Bangalore Beverages Limited, Bestride Consultancy Pvt Limited, City Properties Maintenance Company Bangalore Limited, Kingfisher Finvest India Limited, Kingfisher Training and Aviation Services Limited, Kingfisher Aviation Training Limited, Kingfisher Goodtimes Private Limited, UB Electronic Instruments Limited, UB Infrastructure Projects Limited, UB International Trading Limited, UB Sports Limited, Rigby International Corp., United Breweries of America Inc, Delaware, Inversiones Mirabel, S.A, Mendocino Brewing Co. Inc, USA, United Breweries International [UK] Limited, Kingfisher Beer Europe Limited (formerly known as UBSN Limited), Rubic Technologies, Inc, Releta Brewing Company LLC, UB Overseas Limited, UBHL (BVI) Limited. Associates UB Engineering Limited, WIE Engineering Limited (Under Liquidation), Pixray India Limited, UB Pharma (Kenya) Limited.

75 Notes to the Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) ii) Transactions with Related Parties during the year. LIMITED City Prperties Kingfisher Finvest UB Electronic Kingfisher Training and UB Infrastructure Kingfisher Aviation UB International Bangalore Beverages Kingfisher Beer Europe Bestride Consultancy Maintenance Company UB Overseas Ltd UBHL-BVI Ltd. UB Sports Limited Total India Ltd Instruments Limited Aviation Services Ltd Projects Ltd Training Ltd Trading Ltd Limited Ltd Pvt Ltd Subsidiary Companies B’Lore Ltd 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 Purchase of goods ------293.454 313.327 ------11.255 13.711 - 304.709 327.038 (finished or unfinished) Sale of goods ------(finished or unfinished) Purchase of fixed assets ------Receiving of services ------22.086 22.224 ------22.086 22.224 Leasing arrangement ------0.561 0.630 ------0.561 0.630 Investments Redeemed ------Licence Agreement ------0.007 0.006 ------0.007 0.006 Finance (including loans in cash or 1,642.257 818.179 0.060 0.240 - - - 50.048 0.168 0.079 36.495 34.009 415.644 316.000 - - - - 22.050 155.074 0.057 0.011 12.080 13.631 15.491 226.812 2,144.302 1,614.083 in kind) paid Finance (including loans in cash or 5,870.975 7,664.398 ------12.849 0.404 0.030 0.121 - - - - - 316.705 - - - 3.000 125.565 5,886.853 8,107.194 in kind) received Investments made ------250.000 - 59.659 ------309.659 Dividend received ------Guarantee Commission received ------Deposit Received ------Interest Received ------36.597 ------36.597 Interest Paid - - 0.600 2.400 ------0.600 2.400 Bad advances written off ------2,171.115 - 383.577 - - - - - 18,121.757 - 6.364 - - 3,823.130 - 24,505.944 General Expenses 0.168 - 0.057 0.806 1.031 - Professional Charges 11.685 11.685 - Guarantees and collaterals ------Management contracts including ------deputation of employees Amount due from as on 31st March 2015 (2,096.878) 2,131.840 - - 119.982 119.982 - - - - 21.734 19.486 186.547 64.387 453.292 453.292 300.990 300.983 22.050 - - - 0.222 1.046 - - (992.060) 3,091.017 Amount due to as on 31st March 2015 - - 25.948 25.408 ------0.870 0.743 ------26.818 26.151

Key Management Associate Companies UB Engineering Limited Total Personnel Purchase of goods - - Current Year Previous Year (finished or unfinished) Sale of goods - - - - (finished or unfinished) Purchase of fixed assets - - - - Receiving of services - - - - Rendering of Services - - - - Sale of Assets - - - - Licence Agreement-Pegasus 2.809 12.500 2.809 12.500 - - Pegasus Advance Received - - - - Finance (including loans in cash or 7.959 162.000 7.959 162.000 - - in kind paid) Finance (including loans in cash or 4.964 5.744 4.964 5.744 - - in kind received) Investments made - - - - Dividend received - - - - Guarantee Commission received 3.416 13.330 3.416 13.330 - - Guarantee Commission Paid - - - - Deposit Received ------Interest Received 17.962 51.423 17.962 51.423 - - Interest Paid ------Bad advances written off - - Guarantees and collaterals 650.000 650.000 650.000 650.000 - - Payment of remuneration for 38.599 34.379 employment Management contracts including ------deputation of employees 76 Amount due from as on 31st March 2015 578.955 551.774 578.955 551.774 - - Amount due to as on 31st March 2015 ------Notes to the Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) LIMITED City Prperties Kingfisher Finvest UB Electronic Kingfisher Training and UB Infrastructure Kingfisher Aviation UB International Bangalore Beverages Kingfisher Beer Europe Bestride Consultancy Maintenance Company UB Overseas Ltd UBHL-BVI Ltd. UB Sports Limited Total India Ltd Instruments Limited Aviation Services Ltd Projects Ltd Training Ltd Trading Ltd Limited Ltd Pvt Ltd Subsidiary Companies B’Lore Ltd 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 Purchase of goods ------293.454 313.327 ------11.255 13.711 - 304.709 327.038 (finished or unfinished) Sale of goods ------(finished or unfinished) Purchase of fixed assets ------Receiving of services ------22.086 22.224 ------22.086 22.224 Leasing arrangement ------0.561 0.630 ------0.561 0.630 Investments Redeemed ------Licence Agreement ------0.007 0.006 ------0.007 0.006 Finance (including loans in cash or 1,642.257 818.179 0.060 0.240 - - - 50.048 0.168 0.079 36.495 34.009 415.644 316.000 - - - - 22.050 155.074 0.057 0.011 12.080 13.631 15.491 226.812 2,144.302 1,614.083 in kind) paid Finance (including loans in cash or 5,870.975 7,664.398 ------12.849 0.404 0.030 0.121 - - - - - 316.705 - - - 3.000 125.565 5,886.853 8,107.194 in kind) received Investments made ------250.000 - 59.659 ------309.659 Dividend received ------Guarantee Commission received ------Deposit Received ------Interest Received ------36.597 ------36.597 Interest Paid - - 0.600 2.400 ------0.600 2.400 Bad advances written off ------2,171.115 - 383.577 - - - - - 18,121.757 - 6.364 - - 3,823.130 - 24,505.944 General Expenses 0.168 - 0.057 0.806 1.031 - Professional Charges 11.685 11.685 - Guarantees and collaterals ------Management contracts including ------deputation of employees Amount due from as on 31st March 2015 (2,096.878) 2,131.840 - - 119.982 119.982 - - - - 21.734 19.486 186.547 64.387 453.292 453.292 300.990 300.983 22.050 - - - 0.222 1.046 - - (992.060) 3,091.017 Amount due to as on 31st March 2015 - - 25.948 25.408 ------0.870 0.743 ------26.818 26.151

Key Management Associate Companies UB Engineering Limited Total Personnel Purchase of goods - - Current Year Previous Year (finished or unfinished) Sale of goods - - - - (finished or unfinished) Purchase of fixed assets - - - - Receiving of services - - - - Rendering of Services - - - - Sale of Assets - - - - Licence Agreement-Pegasus 2.809 12.500 2.809 12.500 - - Pegasus Advance Received - - - - Finance (including loans in cash or 7.959 162.000 7.959 162.000 - - in kind paid) Finance (including loans in cash or 4.964 5.744 4.964 5.744 - - in kind received) Investments made - - - - Dividend received - - - - Guarantee Commission received 3.416 13.330 3.416 13.330 - - Guarantee Commission Paid - - - - Deposit Received ------Interest Received 17.962 51.423 17.962 51.423 - - Interest Paid ------Bad advances written off - - Guarantees and collaterals 650.000 650.000 650.000 650.000 - - Payment of remuneration for 38.599 34.379 employment Management contracts including ------deputation of employees Amount due from as on 31st March 2015 578.955 551.774 578.955 551.774 - - 77 Amount due to as on 31st March 2015 ------Notes to the Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) 64. Disclosures required by Accounting Standard (AS) 29-“Provisions, Contingent Liabilities and Contingent Assets LIMITED Provisions:

Particulars of disclosure Provision for legal cases Provision for leave encashment 1 Balance as on 1.04.14 37.428 35.141 2 Provision made during year - 6.676 3 Provision used during the year. - 2.340 4 Balance as on 31.03.15 37.428 39.477*

Year and quantum of outflow of cash in respect of the above contingent claims is not presently ascertainable. Time of outflow of cash on account of leave encashment is contingent upon the time of employee’s separation from the Company. *Based on actuarial valuation from an approved valuer.

65. Earnings per share (before exceptional items) 2014-15 2013-14 Loss before exceptional items (5,310.270) (40,111.926) Number of equity shares 66,818,521 66,818,521 Earnings per share (Basic)/ (Diluted) - in ` (79.47) (600.30)

Earnings per share (after exceptional items) 2014-15 2013-14 Profit / (Loss) after exceptional items and tax 4,339.739 (20,233.020) Number of equity shares 66,818,521 66,818,521 Earnings per share (Basic)/ (Diluted) - in ` 64.95 (302.80)

66. Value of imports calculated on CIF basis 2014-15 2013-14 Raw materials 40.560 18.618 Capital Goods - 4.116 Finished Goods 17,700 21.800 Total 58.260 44.534

67. Expenditure in Foreign Currency: 2014-15 2013-14 Foreign Travel expenses 5.600 9.111 Commission to Agents 0.828 8.933 Professional and Legal fees 0.864 43.901 Imports of material and capital goods 58.260 44.534 Others 50.877 166.663 Investments - 59.600 Total 116.429 332.742

68. Earnings in Foreign Exchange 2014-15 2013-14 Export of goods calculated on FOB basis 2,238.481 3,406.748 Total 2,238.481 3,406.748

78 Notes to the Financial Statements (contd.) UNITED BREWERIES 69. The Company has not entered into any speculative derivative transactions. Hedging is restricted to the business needs of the (HOLDINGS) LIMITED Company. As at the Balance Sheet date, foreign currency receivable / payable that is not hedged by any derivative instrument or otherwise are as under:

Particulars Net Receivable / (Payable) Net Receivable / (Payable) Foreign Currency Amount Amount in local currency Currency 2014-15 2013-14 2014-15 2013-14 USD - 3.922 - 235.730 GBP - 0.034 - 3.349 Euro - 0.561 - 46.329 Euro (0.004) (0.004) (0.275) (0.330) USD (21.063) (76.053) (1,378.366) (4,570.755) GBP - (0.011) - (1.046)

70. All amounts are in Rupees million, unless otherwise stated.

71. Previous year’s figures have been regrouped wherever necessary. For Vishnu Ram & Co., Chartered Accountants Firm Regn. No. 004742S

Dr. Vijay Mallya N. Srinivasan M.S. Kapur S.Vishnumurthy Chairman Director Director Proprietor DIN 00122890 DIN 00004195 DIN 00703815 Membership No. 22715

Mumbai Kaushik Majumder May 29, 2015 Company Secretary FCS 3368

79 UNITED COMPANY’S GENERAL BUSINESS PROFILE BREWERIES (HOLDINGS) LIMITED I Registration Details Registration / CIN : 740 /85110KA1915PLC000740 State Code : 08 Balance Sheet Date : 31.3.2015

II Capital Raised during the year Public Issue : Nil Rights Issue : Nil Private Placement : Nil Bonus Issue : Nil Private Placement : Nil

III Position of Mobilisation and Deployment of Funds (` in thousands) Total Liabilities 38,934,596 Total Assets 38,934,596

Sources of funds Application of Funds Paid up Capital 668,185 Net Fixed Assets 10,535,297 Reserves & surplus 5,136,217 Investments 6,769,979 Secured Loans 4,136,656 Other Assets 21,629,320 Unsecured Loans 19,794,548 Other Liabilities 9,198,989

IV Performance of the Company Turnover 3,650,608 Total Expenditure 45,710,643 Profit for the year 4,339,739 Profit after Tax 4,339,739 Earning per Share 64.95 Dividend Rate Nil

V Generic Name of three Principal Products / Services of the Company 1. Trading in following goods ITC Code Beer : 220300 Liquor : 220830 Leather Shoes : 640320

2. Real Estate Development and Investment Holding

80 Independent Auditor’s Report on Consolidated Financial Statements UNITED BREWERIES (HOLDINGS) To LIMITED The members of UNITED BREWERIES (HOLDINGS) LIMITED

1. Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of UNITED BREWERIES (HOLDINGS) LIMITED (hereinafter referred to as “the Holding Company”) and its subsidiaries (the Holding Company and its subsidiaries together referred to as “the Group”) and its associates, comprising of the Consolidated Balance Sheet as at 31st March 2015, the Consolidated Statement of Profit and Loss, the Consolidated Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information (hereinafter referred to as “the consolidated financial statements”).

2. Management’s Responsibility for the Consolidated Financial Statements The Holding Company’s Board of Directors is responsible for the preparation of these consolidated financial statements in terms of the requirements of the Companies Act, 2013 (hereinafter referred to as “the Act”) that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group including its Associates in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. The respective Board of Directors of the companies included in the Group, are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the Directors of the Holding Company, as aforesaid.

3. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. While conducting the audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Holding Company’s preparation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on whether the Holding Company has an adequate internal financial controls system over financial reporting in place and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Holding Company’s Board of Directors, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditors in terms of their reports referred to in Other Matters paragraph below, is sufficient and appropriate to provide a basis for our qualified audit opinion on the consolidated financial statements.

4. Basis for qualified opinion a. The holding company has extended corporate guarantees of ` 87,072 million in favour of lenders/lessors/creditors of Kingfisher Airlines Limited (KFA) (Refer note no. 44 to financial statements). The beneficiaries of such guarantees have invoked the guarantees and are pursuing recovery actions against the holding company. This may result in loss to the holding company (Refer note no. 44 to financial statements). No provision has been made in the accounts for such possible 81 loss. Independent Auditor’s Report on Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) LIMITED b. The holding company carries investments in certain subsidiaries and an associate company which have been accounted for in the Consolidated Financial Statements under AS-13 “Accounting for Investments”. The carrying value of such investments is ` 425 million. There are significant declines in the carrying value of these investments. The holding company has not provided for such declines (refer note 31 to financial statements).

c. The holding company has shown ` 317 million as due from a banker who has unilaterally encashed holding company’s deposits lying with it and appropriated the amount towards its claims against a group company. The possible loss on account of this development has not been recognised in the financial statements (refer note 47 to financial statements).

d. An amount of ` 8,475 million is shown as dues from a financial company, which has sold the holding company’s investments that were pledged with it and appropriated part of the sale proceeds against dues from KFA. Further, the said finance company still holds custody of 59,150,000 shares in KFA, belonging to the holding company. The holding company has petitioned the High Court of Calcutta and High Court of Karnataka challenging the validity of the pledge and for rendering full accounts. Pending outcome of the petitions, the Holding company has shown the above amounts as good and recoverable. Should the Holding company fail to get the reliefs as sought, there would be losses. The Holding company has not provided for any possible losses in this regard (refer note 48 to financial statements).

According to the management, it is not possible to estimate the losses and consequently quantify the amount of provisions required in the above cases.

Had the holding company estimated and provided for the losses as mentioned in paragraphs 4(a) to 4(d) above, the profit stated in the Consolidated Statement of Profit and Loss would have been lower by such amount; the liabilities in the Consolidated Balance Sheet would have been higher by the amount of provision with respect to item mentioned in paragraph 4(a) above; the carrying value of investments in the Consolidated Balance Sheet would have been lower by the amount of provision with respect to item mentioned in paragraph 4(b) above and the amount of other current assets in the Consolidated Balance Sheet would have been lower by the amount of provisions with respect to items mentioned in paragraphs 4(c) and 4(d) above.

e. Winding up petitions filed against the Holding Company have been admitted by the Honourable High Court of Karnataka and are being heard [Ref. note no. 37]; the Honourable High Court of Karnataka has restrained the Holding Company from disposing of any of its assets [Ref. note no. 38(e)]; the Holding Company is a defendant in recovery suits instituted by certain creditors/lenders for recovery of their dues of ` 62,033 million [Ref. note no. 37]; some of the lenders have recovered their dues by disposing of the securities pledged by the Holding Company. [Ref. note no. 34]. Yet, the Holding Company has prepared its financial statements on going concern basis for the reasons stated in note no. 38. The appropriateness of preparation of financial statements on going concern basis is subject to the Holding Company being able to successfully defend itself in the petitions/suits filed against it and obtaining substantial reliefs in the suits filed by it as mentioned in note no 37.

f. The Holding Company has not recognised in its consolidated financial statements, disputed liabilities amounting to ` 77,309 million arising out of invocation of its corporate guarantees [Ref. note no. 44] and claims of ` 1,463 million made against it under an agreement entered into with a banker [Ref. note no. 44]. Had the holding company recognised the above, current liabilities in the Consolidated Balance Sheet would have been higher by that amounts and guarantee under contingent liabilities and claims not acknowledged as debt would have been lower by ` 77,309 million and ` 1,463 million, respectively.

5. Qualified Opinion In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the Basis for Qualified Opinion paragraphs above, the aforesaid consolidated financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group, and its associates as at 31st March, 2015, 82 and their consolidated profit and their consolidated cash flows for the year ended on that date. Independent Auditor’s Report on Consolidated Financial Statements (contd.) Independent Auditor’s Report on Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) 6. Emphasis of Matter LIMITED Attention is invited to the following: a. A term deposit for ` 609 million with a banker, representing part of the sale proceeds of shares in United Spirits Limited in favour of Diageo group which had been kept deposited to comply with the direction of the Honourable High Court of Karnataka to the effect that the sale proceeds shall be kept invested in term deposits with banks, has been pre-closed by the bank by exercising its general lien and it has adjusted an amount of ` 453 million and encumbered an amount of ` 156 million against the borrowings from one of the group companies which had been guaranteed by the Holding Company [Ref. note no. 47];

b. The ‘status quo’ with respect to the transaction of sale of 10,141,437 no. of shares in United Spirits Limited in favour of Diageo group, as ordered by the Honourable Supreme Court of India, continues;

c. The Group has provided for an amount of ` 589 million towards the probable loss that may arise in respect of dues from an associate [Ref. note no. 35];

d. The Group has written off an amount of ` 18,742 million dues from Kingfisher Airlines Limited;

e. The Group has provided for an amount of ` 11,160 million towards decline, other than temporary, in the carrying value of its investments in Kingfisher Airlines Limited;

f. A lender of Kingfisher Airlines Limited has initiated action to attach and dispose of the Holding Company’s property in Goa to recover its dues [Ref. note no. 30(iii)];

g. The Group has considered the write-off of the amount due from subsidiaries as tax deductible having regard to an opinion obtained by it [Ref. note no. 33];

h. Note no. 45 regarding efforts being made to recover a sum of ` 200 million advanced to a vendor which is presently being shown as an advance which is good and recoverable;

i. Note no. 46 regarding non-accrual of interest payable to the extent of ` 634 million on account of the lender company’s shareholders not approving the agreement granting the loan;

j. For the reasons stated in note 39 to the financial statements, the holding company has followed “AS-13 – Accounting for investments” in respect of its investments in certain associates, instead of “AS 23- Accounting for investments in Associates in Consolidated Financial Statements”;

k. For the reasons stated in note 39 to the financial statements, the holding company has followed “AS-13 – Accounting for investments” in respect of its investments in certain subsidiaries, instead of “AS 21- Consolidated Financial Statements”.

7. Other Matters We did not audit the financial statements of certain subsidiaries, whose financial statements reflect total assets of ` 8,643.089 million as at March 31, 2015, total revenues of ` 2,855.188 million and net cash inflows amounting to ` 173.353 million for the year ended on that date. These financial statements have been audited by other auditors whose reports have been furnished to us by the Management, and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries and our report in terms of sub-sections (3) and (11) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiaries, is based solely on the reports of such auditors.

Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors and the financial statements certified by the Management.

8. Report on Other Legal and Regulatory Requirements i. As required by the Companies (Auditor’s Report) Order, 2015 (“the Order”), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, based on the comments in the auditors’ reports of the Holding company and subsidiary companies incorporated in India, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable. 83 Independent Auditor’s Report on Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) LIMITED ii. As required by Section 143(3) of the Act, we report, to the extent applicable, that: a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements; b. In our opinion proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books and the reports of the other auditors; c. The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss, and the Consolidated Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated financial statements; d. In our opinion, except for the effect of the matters described in the Basis for Qualified Opinion paragraphs above, the aforesaid consolidated financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014; e. The matters described in the Basis for Qualified Opinion paragraphs above, in our opinion, may have an adverse effect on the functioning of the Group; f. On the basis of the written representations received from the directors of the Holding Company as on 31st March, 2015 and taken on record by the Board of Directors of the Holding Company and the reports of the other statutory auditors of its subsidiary companies incorporated in India, none of the directors of the Group’s companies is disqualified as on 31st March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act; g. With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditor’s) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: a. The consolidated financial statements disclose the impact of pending litigations on the consolidated financial position of the Group – Refer Note 37 to the consolidated financial statements; b. The Group has made provision, as required under the applicable law or accounting standards, for material foreseeable losses except for the matters specified in the Basis for Qualified Opinion paragraphs; c. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Holding Company.

For Vishnu Ram & Co., Chartered Accountants

S. Vishnumurthy Proprietor Place: Mumbai Membership No. 22715 Date : 29-05-2015 Firm Registration No. 004742S

84 Independent Auditor’s Report on Consolidated Financial Statements (contd.) Annexure to the Independent Auditor’s Report UNITED BREWERIES Re: United Breweries (Holdings) Limited (HOLDINGS) LIMITED Referred to in paragraph 8(i) of our report of even date This report includes matters relating to subsidiary companies incorporated in India and which are considered for Consolidation. Our report in respect of these subsidiaries is based solely on the reports of the auditors of such subsidiary companies. (i) In respect of the fixed assets of the Holding Company and its aforesaid subsidiaries: (a) The respective entities have maintained proper records showing full particulars including quantitative details and situation of its fixed assets. (b) Most of the assets have been physically verified by the management of the respective entities during the year. Some of the assets have not been verified. However, there is a regular programme of physical verification whereunder, every asset gets verified atleast once every three years. In our opinion and based on the other auditors’ reports, such verification is reasonable having regard to the size of the respective entities and the nature of its assets. Discrepancies noticed on verification during the year have been properly dealt with in the books of account.

(ii) In respect of the inventories of the Holding Company and its aforesaid subsidiaries: (a) As explained to us and based on the other auditors’ reports issued in accordance with the Order on the aforesaid subsidiaries, the inventory have been physically verified during the year by the management of the respective entities. In our opinion, the frequency of such verification is reasonable and adequate in relation to the size of the respective entities and the nature of their businesses. (b) In our opinion and according to the information and explanations given to us and based on the other auditors’ reports issued in accordance with the Order on the aforesaid subsidiaries, the procedures of physical verification of inventories followed by the respective management were reasonable and adequate in relation to the size of the respective entities and the nature of their businesses. (c) In our opinion and according to the information and explanations given to us and based on the other auditors’ reports issued in accordance with the Order on the aforesaid subsidiaries, the respective entities were maintaining proper records of their inventory. The discrepancies noticed on physical verification of inventory have been properly dealt with in the books of account of the respective entities. (iii) According to the information and explanations given to us and based on the other auditors’ reports issued in accordance with the Order on the aforesaid subsidiaries, the Group has not granted any loans, secured or unsecured during the year to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. However, in respect of Kingfisher Airlines Limited (KFA), which is a company listed in the register maintained under section 189 of the Companies Act, 2013, there has been a transaction wherein a lender of KFA has sold the shares pledged by the company to secure KFA’s borrowings. Out of such sale proceeds the lender has appropriated an amount of ` 1,286.195 million towards dues from KFA. This has been written off by the holding company. (iv) In our opinion and according to the information and explanations given to us and based on the other auditors’ reports issued in accordance with the Order on the aforesaid subsidiaries, there exists in the respective entities an adequate internal control system commensurate with the size of the respective entities and the nature of their businesses with regard to purchases of inventory, fixed assets and with regard to sale of goods and services. During the course of our audit and based on the other auditors’ reports issued in accordance with the Order on the aforesaid subsidiaries, we have not observed any continuing failure to correct major weaknesses in the internal control system. (v) In our opinion and according to the information and explanations given to us, the holding company has complied with the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 and other relevant provisions of the Companies Act and the rules framed thereunder. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in relation to the deposits accepted by the Holding company. Based on the other auditors’ reports issued in accordance with the Order on the aforesaid subsidiaries, we report that the aforesaid subsidiaries have not accepted any deposits during the year and do not have any unclaimed deposits. (vi) In our opinion and according to the information and explanations given to us and based on the other auditors’ reports issued in accordance with the Order on the aforesaid subsidiaries, the provisions with regard to maintenance of cost records under section 148(1) of the Companies Act, 2013 are not applicable to the holding company and its aforesaid subsidiaries except one subsidiary. Based on the other auditor’s report issued in accordance with the Order on the aforesaid subsidiary, we report that Central Government has prescribed the maintenance of cost records under section 148(1) of the Companies Act, 2013 and the aforesaid subsidiary is maintaining the prescribed accounts and records.

(vii) According to the information and explanations given to us and based on other auditors’ reports issued in accordance with the Order on the aforesaid subsidiaries, in respect of statutory dues of the holding company and its aforesaid subsidiaries: (a) The respective entities have generally been regular in depositing with appropriate authorities undisputed statutory dues including dues in respect of provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax and other material statutory dues. However, there have been delays in depositing dues of service tax and tax deducted at source with the appropriate authorities by the holding company and delays in depositing labour welfare 85 fund dues by one of the subsidiaries. Annexure to the Independent Auditor’s Report (contd.) UNITED BREWERIES (HOLDINGS) LIMITED (b) According to the information and explanations given to us and based on other auditors’ reports issued in accordance with the Order on the aforesaid subsidiaries, no undisputed amounts payable in respect of income tax, wealth tax, service tax, sales tax, excise duty etc., were in arrears as at 31-3-2015 for a period of more than six months from the date they became payable except a sum of ` 0.615 million towards labour welfare fund dues by one of the subsidiaries. (c) According to the information and explanations given to us and based on other auditors’ reports issued in accordance with the Order on the aforesaid subsidiaries, following is the list of dues on account of taxes, which have not been deposited on account of disputes; Disputed amount Name of the Statute Nature of dues Forum where dispute is pending ( ` in million) Income Tax Act, 1961 Income tax for the A.Y. 1997-98 31.998 Supreme Court Income Tax Act, 1961 Income tax for the A.Y. 2001-02 0.482 High Court of Karnataka Income Tax Act, 1961 Income tax for the A.Y. 2007-08 69.535 CIT (Appeals) Income Tax Act, 1961 Income tax for the A.Y. 2008-09 171.040 CIT (Appeals) Income Tax Act, 1961 Income tax for the A.Y. 2009-10 68.987 CIT (Appeals) Income Tax Act, 1961 Income tax for the A.Y. 2010-11 200.661 CIT (Appeals) Foreign Trade Penalty 5.000 High Court of Judicature, Madras (Development & Regulation) Act, 1992 Income Tax Act, 1961 Income tax for the A.Y. 2010-11 2.960 CIT (Appeals) (in respect of subsidiary) Income Tax Act, 1961 Income tax for the A.Y. 2008-09 16.083 CIT (Appeals) (in respect of subsidiary) Finance Act, 1994 Service tax for the year 2007-08 & 10.752 Appellate Tribunal of Service Tax 2008-09 (in respect of subsidiary) (d) According to the information and explanations given to us the amounts which were required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder have been transferred to such funds within time by the holding company. Based on other auditors’ reports issued in accordance with the Order on the aforesaid subsidiaries, we report that there were no amounts required to be transferred to Investor Education and Protection Fund. (viii) Accumulated losses of the group is more than fifty percent of its net worth. The Group has not incurred cash losses during the financial year covered by our audit. The Group has incurred cash losses during the immediately preceding financial year (ix) As per the information and explanations given to us, the holding company has defaulted in repayment of dues to a bank. The unpaid dues to the bank as at March 31, 2015 were ` 2,363 million. Out of this ` 27 million has been repaid in April 2015. The holding company is in negotiation with the banker. The company has not issued any debentures. Based on other auditors’ reports issued in accordance with the Order on the aforesaid subsidiaries, we report that the aforesaid subsidiaries have not defaulted in repayment of dues to bank or financial institutions. (x) According to the information and explanations given to us and based on other auditors’ reports issued in accordance with the Order on the aforesaid subsidiaries during the year, the holding company and its aforesaid subsidiaries have not given any guarantees in favour of banks or financial institutions for loans taken by others. Therefore, the provisions of clause 3(x) of the Companies (Auditor’s Report) Order, 2015 are not applicable to the group. (xi) According to the information and explanations given to us and based on the other auditors’ reports issued in accordance with the Order on the aforesaid subsidiaries, the respective entities have not raised any term loans during the year. Therefore, the provisions of clause 3(xi) of the Companies (Auditor’s Report) Order, 2015 are not applicable to the group. (xii) According to the information and explanations given to us and based on the other auditors’ reports issued in accordance with the Order on the aforesaid subsidiaries, no fraud on or by the company and its aforesaid subsidiaries have been noticed or reported during the year.

For Vishnu Ram & Co., Chartered Accountants

S. Vishnumurthy Proprietor Place: Mumbai Membership No. 22715 86 Date : 29-05-2015 Firm Registration No. 004742S Consolidated Balance Sheet as at March 31, 2015 UNITED BREWERIES (HOLDINGS) ` in million LIMITED Note As at As at No. March 31, 2015 March 31, 2014 Equity and Liabilities Shareholders’ funds Share capital 2 668.185 668.185 Reserves and surplus 3 1,170.246 807.339 Minority interest 83.309 96.454 Non current liabilities Long term borrowings 4 14,641.269 19,341.368 Deferred tax liabilities (net) 1.838 3.647 Other long-term liabilities 5 4,820.486 6034.976 Long term provisions 6 118.815 96.102 Current liabilities Short-term borrowings 7 6,604.424 7,171.659 Trade payables 8 1,126.011 1,226.243 Other current liabilities 9 7,224.017 7,984.413 Short-term provisions 10 1,184.000 1,176.666 37,642.600 44,607.052 Assets Non current assets Fixed assets Tangible assets 11 9,709.909 9,954.658 Capital work in progress 11 1,362.051 1,248.355 Goodwilll on consolidation 434.464 434.464 Non current investments 12 3,157.181 18,017.156 Long term loans and advances 13 3.246 1,097.207 Other non current assets 14 98.606 101.425 Current assets Current investments 15 34.396 33.949 Inventories 16 267.455 537.893 Trade receivables 17 982.980 689.505 Cash and cash equivalents 18 2,286.640 2,271.213 Short term loans and advances 19 4,270.692 3,705.475 Other current assets 20 15,034.979 6,515.752

37,642.600 44,607.052 Significant Accounting Policies and other notes 1

The accompanying notes are an integral part of the accounts.

This is the Consolidated Balance Sheet referred to in our report of even date. For Vishnu Ram & Co., Chartered Accountants Firm Regn. No. 004742S

Dr. Vijay Mallya N. Srinivasan M.S. Kapur S.Vishnumurthy Chairman Director Director Proprietor DIN 00122890 DIN 00004195 DIN 00703815 Membership No. 22715

Mumbai Kaushik Majumder May 29, 2015 Company Secretary 87 FCS 3368 Consolidated Statement of Profit and Loss for the year ended March 31, 2015 UNITED BREWERIES (HOLDINGS) LIMITED ` in million Note For the year ended No. March 31, 2015 March 31, 2014 Revenue Revenue from operations 21 6,241.263 7,363.785 Other income 22 591.590 750.735 6,832.853 8,114.520 Expenses Purchase of traded goods 804.521 2,024.661 Cost of materials consumed 23 1,924.663 1,928.660 Change in inventories 222.723 (96.236) Employee benefit expenses 24 603.552 502.690 Finance costs 25 1,986.343 4,844.596 Depreciation 11 303.106 150.453 Provision for bad and doubtful advances 589.337 12,759.598 Bad advances/debts written off 6,125.065 24,564.935 Provision for diminution in value of investments 11,190.261 - Other expenses 26 1,758.013 1,967.935 25,507.584 48,647.292

Loss before exceptional item, tax and share in profits/(losses) (18,674.731) (40,532.772) of associates Exceptional items 27 20,223.534 26,748.506 Profit / (Loss) before tax and share in profits/(losses) of associates 1,548.803 (13,784.266) Tax expense: Current tax 1,248.476 167.230 Deferred tax (1.809) 0.732 Profit / (Loss) after tax and before share in profits/(losses) of associates 302.136 (13,952.228) Share in profits/(losses) of associates - - Profit / (Loss) before minority interest 302.136 (13,952.228) Share of minority interest 17.825 15.675 Net Profit / (Loss) for the year 319.961 (13,936.553) Earnings per share (face value of ` 10 each) Basic / Diluted Earnings Per Share (before exceptional items ) (297.87) (608.88) Basic / Diluted Earnings Per Share (after exceptional items ) 4.79 (208.57)

Significant Accounting Policies and other notes. 1

The accompanying notes are an integral part of the accounts.

This is the Consolidated Statement of Profit and Loss referred to in our report of even date. For Vishnu Ram & Co., Chartered Accountants Firm Regn. No. 004742S

Dr. Vijay Mallya N. Srinivasan M.S. Kapur S.Vishnumurthy Chairman Director Director Proprietor DIN 00122890 DIN 00004195 DIN 00703815 Membership No. 22715

Mumbai Kaushik Majumder May 29, 2015 Company Secretary 88 FCS 3368 Consolidated Cash Flow Statement fo r the year ended March 31, 2015 UNITED BREWERIES (HOLDINGS) ` in million LIMITED For the year ended For the year ended March 31, 2015 March 31, 2014 A. Cash flow from operating activities Net Profit / (Loss) before taxation 1,548.803 (13,784.266) Adjustments for : Depreciation 303.106 150.453 Dividend income (58.754) (86.780) Interest income (499.165) (509.366) Loss on sale of assets 0.081 3.586 Exceptional items (20,223.534) (26,748.506) Interest and finance charges 1,986.343 4,844.596 Liabilities no longer required (66.397) (207.198) Unrealised exchange fluctuation loss 196.323 188.693 Effect of exchange differences on translation of subsidiaries (130.571) (419.126) Effect of exchange differences on translation of foreign (0.112) (0.637) currency cash and cash equivalents Bad debts / advances written off 6,125.065 24,564.935 Provision for bad and doubtful advances 589.337 12,759.598 Provision for Diminution in value of investments 11,190.261 Provision for bad and doubtful debts - 9.558 (588.017) 14,549.806 Operating profit before working capital changes 960.786 765.540

Adjustment for changes in working capital: (Increase) /decrease in inventories 270.438 (116.137) (Increase)/ decrease in trade and other receivables (1,186.432) (862.990) Increase in current liabilities / other liabilities (487.444) (1,403.438) 1,317.504 338.377 Cash generated from/ ( used in) operations (442.652) 1,103.917 Less : taxes paid (1,404.437) (743.697) Net cash generated from / (used in) operating activities (1,847.089) 360.220

B. Cash flow from investing activities Purchase of Fixed Assets (including changes in capital work (177.234) (222.486) in progress) Sale of fixed assets/ advance for residential units 165.026 305.110 Purchase of investments (other than current investments) - (238.402) Sale of investments (other than current investments) 10,579.833 34,178.406 Loans given (net) (763.652) (7,800.635) Dividend income (other than current investments) 58.710 86.780 Interest received 481.207 458.028 Increase in fixed deposits with bank 473.281 (4,996.975) Deposit with court - (2,535.000) Net cash generated from investing activities 10,817.170 19,234.825 89 Consolidated Cash Flow Statement for the year ended March 31, 2015 (contd.) UNITED BREWERIES (HOLDINGS) LIMITED ` in million For the year ended For the year ended March 31, 2015 March 31, 2014 C. Cash flow from financing activities Interest and Finance Charges (1,111.003) (4,582.536) Proceeds from loans from banks and others (net) (7,813.555) (15,344.865)

Net cash used in financing activities (8,924.558) (19,927.401)

Net increase / (decrease) in cash and cash equivalents 45.523 (332.356) Cash and cash equivalents at the beginning of the year 963.030 1,317.954

Elimination on cessation of subsidiaries - (23.205)

Effect of exchange differences on translation of foreign 0.112 0.637 currency cash and cash equivalents

Cash and cash equivalents at the end of the year 1,008.665 963.030

Cash and cash equivalents comprise of : Cash in hand 3.121 3.835 Balance with banks in current accounts 971.148 925.246 Short term investments 34.396 33.949 1,008.665 963.030 Reconciliation of cash and cash equivalents as per Balance sheet and Cash Flow Statement Cash and cash equivalents as per Balance Sheet 2,286.640 2,271.213 Less: Deposits maturing beyond 3 months 1,312.371 1,342.132 Add: Current investments 34.396 33.949 1,008.665 963.030

Notes to the Consolidated Cash Flow Statement 1. Short term investments represents amounts invested in mutual funds which are readily convertible into cash. 2. Balances with banks include ` 2.261 million being balances in unpaid dividend account which cannot be used by the Company except for payment of unpaid dividend / transfer to Investor Education and Protection Fund and ` 67.164 million in escrow account which cannot be used by the Company except for repayment of secured loan by a lender. 3. Cash in hand includes foreign currencies. This is the Consolidated Cash Flow Statement referred to in our report of even date.

For Vishnu Ram & Co., Chartered Accountants Firm Regn. No. 004742S

Dr. Vijay Mallya N. Srinivasan M.S. Kapur S.Vishnumurthy Chairman Director Director Proprietor DIN 00122890 DIN 00004195 DIN 00703815 Membership No. 22715

Mumbai Kaushik Majumder May 29, 2015 Company Secretary 90 FCS 3368 Notes to the Consolidated Financial Statements UNITED BREWERIES (HOLDINGS) 1. SIGNIFICANT ACCOUNTING POLICIES ADOPTED IN THE PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS LIMITED i. Basis of Preparation of Consolidated Financial Statements: The consolidated financial statements relate to UNITED BREWERIES (HOLDINGS) LIMITED (the Company), its subsidiaries and associates (the Group). The consolidated financial statements are prepared in accordance with Accounting Standard 21- “Consolidated Financial Statements” and Accounting Standard 23-“Accounting for Investments in Associates in Consolidated Financial Statements”. The consolidated financial statements are prepared by adopting uniform accounting policies for like transactions and other events in similar circumstances and are presented to the extent possible, in the same manner as the Company’s separate financial statement, except as otherwise stated.

ii. The subsidiary companies required to be considered in the consolidated financial statements are: Ownership Name of the Subsidiary Country of Incorporation Percentage 1 Kingfisher Training and Aviation Services Limited 71.92 India 2 UB International Trading Limited 100.00 India 3 UB Electronic Instruments Limited 98.44 India 4 Kingfisher Finvest India Limited 100.00 India 5 UB Infrastructure Projects Limited 100.00 India 6 Kingfisher Aviation Training Limited 100.00 India 7 City Properties Maintenance Company Bangalore Limited 55.00 India 8 Bangalore Beverages Limited 100.00 India 9 UB Sports Limited 100.00 India 10 Kingfisher Goodtimes Private Limited 71.92 India 11 Bestride Consultancy Private Limited 100.00 India 12 Rigby International Corp. 100.00 British Virgin Islands 13 Rubic Technologies Inc. 100.00 British Virgin Islands 14 United Breweries of America Inc., 92.49 United States of America 15 Inversiones Mirabel, S.A. 100.00 Republic of Panama 16 Mendocino Brewing Company, Inc. 68.10 United States of America 17 United Breweries International [UK] Limited 68.10 United Kingdom 18 Kingfisher Beer Europe Limited (formerly known as UBSN Limited) 68.10 United Kingdom 19 Releta Brewing Company, LLC 68.10 United States of America 20 UB Overseas Limited 100.00 British Virgin Islands 21 UBHL [BVI] Limited 100.00 British Virgin Islands

The following subsidiary companies are excluded from the consolidation for the year under review for reasons mentioned there against. Name of the Subsidiary Company Reason for exclusion 1 Kingfisher Training and Aviation Services Limited 2 UB Infrastructure Projects Limited 3 Kingfisher Aviation Training Limited These are operating under severe long term restrictions 4 Bangalore Beverages Limited that has significantly impaired their ability to transfer 5 UB Sports Limited funds to the company. 6 Kingfisher Goodtimes Private Limited 7 Bestride Consultancy Private Limited

The associate companies required to be considered in the consolidated financial statements are: Ownership Country of Name of the Associate Company Percentage Incorporation 1 UB Engineering Limited 37.18 India 2 Pixray India Limited 30.36 India 3 WIE Engineering Limited (under liquidation) 25.88 India 4 UB Pharma (Kenya) Limited 50.00 Kenya 91 Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) LIMITED All the above companies are excluded from the consolidation for the year under review for reasons mentioned there against. Name of the Associate Company Reason for exclusion 1 WIE Engineering Limited Under liquidation proceedings 2 UB Pharma (Kenya) Limited Closed operations 3 Pixray India Limited These are operating under severe long term restrictions 4 UB Engineering Limited that has significantly impaired their ability to transfer funds to the company.

iii. Basis of Presentation of Financial Statements: The financial statements of the parent Company and that of its subsidiaries, UB Electronic Instruments Limited, Kingfisher Finvest India Limited, UB International Trading Limited, City Properties Maintenance Company Bangalore Limited have been prepared in accordance with the Generally Accepted Accounting Principles (GAAP) applicable in India and the financial statements of Rigby International Corp, Rubic Technologies Inc, Inversiones Mirabel, S.A., Mendocino Brewing Company, Inc., United Breweries of America, Inc., Delaware, United Breweries International (UK) Limited, Kingfisher Beer Europe Limited (formerly known as UBSN Limited) , Releta Brewing Company LLC, UB Overseas Limited and UBHL [BVI] Limited have been prepared in accordance with the accounting / financial reporting standards applicable in their respective countries of incorporation and as realigned to GAAP applicable in India. The consolidated financial statements have been prepared based on such financial statements.

iv. Principles of Consolidation: i) The financial statements of the parent Company and its subsidiaries have been consolidated on a line by line basis by adding together the book values of like items of assets, liabilities, income and expenses after eliminating intra-group balances and intra-group transactions. ii) Unless otherwise stated, the financial statements of the parent Company and its subsidiaries have been consolidated using uniform accounting polices for like transactions and other events in similar circumstances. iii) Goodwill represents the difference between the group’s share in the networth of a subsidiary and the cost of acquisition at each point of time of making the investment in the subsidiary. Goodwill arising on consolidation is not amortised. For this purpose the group’s share of networth is determined on the basis of the latest financial statement prior to the acquisition after making necessary adjustments for material events between the date of such audited financial statement and the date of respective acquisition. Negative goodwill is recognised as capital reserve on consolidation. However for the purposes of consolidation, capital reserve arising on consolidation of subsidiaries is set off against the goodwill arising on consolidation.

v. Valuation of Inventories: Inventories are valued at lower of costs and net realizable value. Cost of inventories comprise of cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. In respect of the parent Company and its Indian subsidiary, UB International Trading Limited, and its overseas subsidiaries, cost is determined under the weighted average cost method.

vi. Revenue recognition: All revenues are generally recognized on accrual basis except where there is an uncertainty of ultimate realization. i) Sales are recognized when the property in goods are transferred for a price and it is reasonable to expect the ultimate collection. ii) Interest is recognized on time proportion basis taking into account the amount outstanding and the rate applicable. iii) Dividends and royalty income are accounted for, when the right to receive the payment is established.

vii. Fixed Assets: i) Fixed Assets are stated at cost less depreciation, wherever applicable. The land and building in Bangalore is stated at the revalued amount as adjusted in accordance with the revaluation done in March 2014 at the market value determined by approved valuers. All costs relating to the acquisition and installation of fixed assets are capitalized and include borrowing cost relating to borrowed funds attributable to the acquisition of qualifying assets for the period upto the date of acquisition. ii) Capital work-in-progress comprise advances paid towards acquisition of fixed assets and cost of fixed assets that are not ready for intended use at the year-end. iii) Assets acquired under leases where the company has substantially all the risks and rewards of ownership are classified 92 as assets acquired under finance leases. Such assets are capitalised at the inception of the lease at lower of the fair value or the present value of minimum lease payments. Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) viii. Borrowing costs: LIMITED Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of cost of such assets till such time as the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as an expense in the period in which they are incurred. ix. Depreciation: i) Depreciation has been provided at the rates prescribed under Schedule II of the Companies Act, 2013, under written down value method with regard to the parent Company and its Indian subsidiaries. ii) In respect of foreign subsidiaries, depreciation is provided on straight line basis. x. Effect of changes in foreign exchange rates: i) Transactions in foreign currencies are translated applying the following exchange rates: a) In respect of export transactions of the parent Company, at the average exchange rate prevailing in the month preceding the month in which the transaction took place. b) In respect of all other transactions at the rate of exchange prevailing on the date of transaction. ii) Monetary assets and liabilities denominated in foreign currency are translated at the rates of exchange at the Balance Sheet date and the resultant gain or loss is recognized in the Statement of Profit and Loss except exchange difference arising on reporting of long term foreign currency monetary items which are accumulated in a Foreign Currency Monetary Translation Difference Account and amortised over the balance period of such long term asset / liability but not beyond March 31, 2020. iii) Financial statements of non-integral foreign operations are translated using the average rate of exchange for the year, in so far as their Statement of Profit and Loss is concerned and the closing rate in so far as their Balance Sheet is concerned. iv) Exchange difference arising on translation of financial statements of non-integral foreign operations is accumulated in foreign currency translation reserve. xi. Accounting for Export benefits: Government grants available to the Company are considered for inclusion in the accounts, where there is reasonable assurance that the Company will comply with the conditions attached to them and where such benefits have been earned by the Company and it is reasonably certain that the ultimate collection will be made. Revenue grants are recognized in the Statement of Profit and Loss. xii. Investments: i) Current investments refer to the investments that are readily realizable and intended to be held for not more than a year. ii) Trade investments refer to the investments made with the aim of enhancing the group’s business interest. iii) Long term investments are stated at cost. All expenses relating to acquisition of shares are capitalized. Diminution in the value of investment, if considered permanent, is provided for. iv) Current investments are stated at the lower of cost and fair value. v) Investments in associates and subsidiary companies that have not been considered for consolidation are dealt with as Investments in accordance with AS-13 “Accounting for Investments”. xiii. Retirement Benefits: a) Defined-contribution plans These are plans in which the group pays pre-defined amounts to separate funds and does not have any legal or informal obligation to pay additional sums. These comprise of contributions to the Employees’ Provident Fund, Superannuation Fund and Employees’ Pension Scheme and certain state plans like Employees’ State Insurance. The group’s payments to the defined contribution plans are recognized as expenses during the period in which the employees perform the services that the payment covers. 93 Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) LIMITED b) Defined-benefit plans Gratuity: The group provides for gratuity, a defined benefit plan (Gratuity Plan), to certain categories of employees. Liability with regard to gratuity plan is accrued based on actuarial valuation, based on Projected Unit Credit Method, carried out by an independent actuary, at the Balance Sheet date. Actuarial gains and losses comprise experience adjustments and the effect of changes in the actuarial assumptions are recognized immediately in the Statement of Profit and Loss as income or expense. c) Other long term employee benefits Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability at the present value of the defined benefit obligation at the Balance Sheet date based on actuarial valuation carried out at each Balance Sheet date.

d) Short term employee benefits Undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by employees is recognized during the period when the employee renders the services. These benefits include compensated absences such as paid annual leave and performance incentives.

xiv. Segment reporting: The operations of the Group are divided into alcoholic beverages, leather products, readymade garments, investment, property development, maintenance, training and other activities. Accordingly, the primary segment reporting comprises the performance under these segments and the secondary segment reporting is based on geographical locations of customers.

xv. Related Party disclosures: Transactions between related parties is disclosed as per Accounting Standard 18, “Related Party Disclosure” and disclosure regarding the name of the transacting related party, description of the relationship between the parties, nature of transactions and amount outstanding as at the end of the accounting year, are made.

xvi. Taxes on Income: i) Tax expenses comprises of current and deferred tax. ii) Current income tax is measured at the amount expected to be paid to the tax authorities by the components (holding and subsidiary companies) and in accordance with the Income tax laws of the respective countries in which they are incorporated. iii) Deferred tax is recognized, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

xvii. Accounting for Leases: Lease income from non cancellable operating leases are recognized in the Statement of Profit and Loss, on straight line basis, over the non-cancellable lease term. In respect of other operating leases, lease income is recognized in accordance with the terms of the lease deeds as modified based on negotiations from time to time.

xviii. Impairment of assets: The group evaluates all the assets for assessing any impairment and accordingly recognizes the impairment wherever applicable as provided in Accounting Standards 28 “Impairment of Assets”.

xix. Provisions and Contingencies: A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an out flow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on Management estimates required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.

xx. Earnings per share: Earnings per equity share (basic/diluted) is arrived at by dividing the net profit or loss for the period attributable to the equity share holders by the weighted average number of equity shares outstanding during the year.

94 Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) ` in million LIMITED As at As at March 31, 2015 March 31, 2014 2. Share Capital Authorised 100,000,000 (2014: 100,000,000) Equity Shares of `10/- each 1,000.000 1,000.000 1,000.000 1,000.000 Issued, Subscribed and Paid-up 66,818,521 (2014: 66,818,521) Equity Shares of ` 10/- each fully paid up 668.185 668.185 668.185 668.185

a. Reconciliation of equity shares outstanding at the beginning and at the end of the reporting year No. of No. of Amount Amount Shares Shares As at the beginning of the year 66,818,521 668.185 66,818,521 668.185 Issued during the year - - - - Outstanding at the end of the year 66,818,521 668.185 66,818,521 668.185

b. Terms and rights attached to equity shares The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the Annual General Meeting. The rights of shareholder is governed by the Articles of Association of the company and the Companies Act, 2013.

c. Details of shareholders holding more than 5% shares in the company March 31, 2015 March 31, 2014 No. of No. of % holding % holding Shares Shares Dr Vijay Mallya 5,284,978 7.91 5,284,978 7.91 McDowell Holdings Limited 5,260,002 7.87 5,260,002 7.87 Watson Limited 14,159,986 21.19 14,159,986 21.19

d. Aggregate number of shares issued for consideration other than cash during the period of five years immediately preceding the reporting date is nil. ` in million As at As at March 31, 2015 March 31, 2014

3. Reserves and Surplus Capital reserve 511.365 511.365 Securities premium account 8,331.975 8,331.975 Fixed assets revaluation reserve At the beginning of the year 8,550.705 1,042.113 Add: Addition during the year - 7,508.592 8,550.705 8,550.705 Foreign currency monetary item translation difference account (183.463) (361.660) Foreign currency translation reserve (1,456.072) (1,320.821)

Surplus / (deficit) as per Statement of Profit and Loss: At the beginning of the year (14,904.224) 3,845.657 add: Elimination of the brought forward loss of subsidiaries - 583.328 Less: Elimination of share of associate profits - (5,396.655) Profit / (Loss) for the year 319.959 (13,936.554) (14,584.264) (14,904.224) 1,170.246 807.339 95 Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) LIMITED ` in million As at As at March 31, 2015 March 31, 2014

4 Long term borrowings Secured Term Loans From banks 2,249.319 2,410.938 From others 1,730.394 8,631.691 Unsecured Fixed deposits 105.156 211.720 From group companies 13,374.095 13,374.095 From others 1,462.503 1,467.123 18,921.467 26,095.567 Less: Current maturities Secured From banks 2,249.115 2,318.054 From others 1,365.878 3,798.436 Unsecured Fixed deposits 95.393 109.697 From others 569.812 528.012 4,280.198 6,754.199

14,641.269 19,341.368

(Borrowings are secured by pledge of shares held by the parent company and its subsidiary, deposit of title deed of the parent company’s land and structures in Bangalore, charge on fixed assets, charge on current assets, securitisation of rent receivables from the property let out and securitisation of sale proceeds from the luxury residential buildings)

5. Other long term liabilities Trademark licence security deposits 577.741 889.157 Pegasus advance received 2,285.011 2,500.000 Lease security deposits 345.050 346.334 Interest accrued and not due - 846.683 Refundable deposit 67.500 67.500 Instalments from allottees for residential units 1,545.184 1,385.302 4,820.486 6,034.976 6. Long term provisions For legal cases 37.428 37.428 Employee benefits 81.387 58.674 118.815 96.102 96 Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) ` in million LIMITED As at As at March 31, 2015 March 31, 2014 7. Short term borrowings Secured From banks 3,480.456 3,339.780 From others 608.049 707.822

Unsecured From group company 2,515.919 2,516.008 From others - 608.049 6,604.424 7,171.659

(Borrowings are secured by pledge of shares held by the parent company and charge on fixed assets of the company.)

8. Trade payables Trade creditors 1,126.011 1,226.243 1,126.011 1,226.243

9. Other current liabilities Current maturities of long term borrowings 4,280.198 6,754.199 Interest accrued and not due 34.253 81.725 Interest accrued and due 1,957.437 242.036 Statutory dues 33.136 71.563 Employee dues 61.344 10.826 Advertisement and sales promotion expenses payable 428.053 338.514 Advances received from customers 36.645 75.470 Claims payable 13.283 7.921 Other liabilities 365.419 386.390 Creditor for capital goods 11.894 12.637 Investor Education and Protection Fund: - Unclaimed public deposits/interest 0.132 0.132 Unclaimed Dividends 2.223 3.000 7,224.017 7,984.413 10. Short term provisions Income tax 1,174.331 1,173.865 Employee benefits 9.669 2.801 1,184.000 1,176.666

97 Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) LIMITED 6.128 15.401 99.828 11.639 18.467 in million 485.853

31.03.14 1,248.355 6,960.512 2,356.830 9,954.658 ` As at 1.273 2.565 7.312 68.832 13.860 427.805 Net value of Asset 31.03.15

6,960.511 2,227.752 9,709.909 1,362.051 ------0.500 0.500 31.03.14 - - - - - As at Impairment 0.500 0.500 31.03.15 -

37.066 25.427 57.151 48.981 As at 456.075 669.635 184.238 31.03.15 1,478.573 - 4.616 6.800 4.608 33.123 15.167 year 129.578 109.214 303.106 For the - - - 0.014 0.159 0.590 1.897 Depreciation Depreciation 45.415 48.075 during the year Deductions - 21.912 21.401 52.248 44.373 As at 326.497 605.837 151.273 01.04.14 1,223.540

38.338 27.992 64.463 62.841 253.069 As at 31.03.15 6,960.511 2,683.827 1,097.941 11,188.981 - - - 0.310 0.100 0.489 1.897 50.460 53.256 during the year Deletion ------

Revaluation Cost / Valuation Cost / Valuation - 0.500 1.335 2.068 0.951 2.473 56.211 63.538 year Additions during the 37.313 27.529 63.887 62.841 As at 251.102 01.04.14 6,960.511 2,683.327 1,092.190 (Refer Note No. 30) 11,178.698 Description of Assets 98 11 Fixed Assets Asset Tangible Land Buildings Plant & machinery Office Equipments Furniture & Fixtures Computers Vehicles assets ( others) Tangible to lease-hold Improvement Plants Assets Tangible Total Capital work-in-progress Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS)

- - LIMITED 7.406 2.035 19.063 14.774 22.513 19.895 719.586 518.341 118.571 in million 31.03.14 1,124.906 2,567.087 1,140.341 ` - - - - As at 6.128 15.401 99.828 11.639 18.467 485.853 Net value of Asset

2,356.830 9,954.658 1,248.355 31.03.15 6,960.512 ------0.500 0.500 31.03.14 ------As at Impairment 0.500 0.500 31.03.15 - - - - -

21.912 21.401 52.248 44.373 326.497 605.837 151.273 As at 31.03.15 1,223.540 - - - - - 3.388 2.768 4.491 4.354 38.468 78.277 18.707 year 150.453 For the - 0.161 0.161 0.143 0.775 3.985 6.432 2.968 18.477 10.566 11.289 12.964 67.598 Depreciation Depreciation during the year Deductions - 0.161 0.161 19.299 29.199 54.188 11.289 42.987 12.964 As at 288.172 546.037 136.551 01.04.14 1,140.686 - -

0.161 0.161 37.313 27.529 63.887 62.841 251.102 As at 6,960.511 2,683.327 1,092.190 31.03.15 11,178.698 - - - 0.147 2.274 6.805 2.968 6.589 77.207 10.466 13.324 32.859 152.639 during the year Deletion

- -

5,835.605 1,672.987 7,508.592 Revaluation Cost / Valuation Cost / Valuation - - - - - 2.729 1.225 2.785 1.390 1.514 0.309 year 104.519 114.471 Additions during the 0.161 0.161 38.362 36.605 68.962 13.324 65.500 32.859 255.122 As at 1,124.906 1,007.758 1,064.878 3,708.276 01.04.14

(refer note no. 30(i)) (refer Description (refer note no. 30(i)) (refer 99 Buildings Intangible Assets Computer Software Intangible assets Total assets Tangible Land Capital work-in-progress Plant & machinery Office Equipments Furniture & Fixtures Computers Vehicles assets (others) Tangible to lease-hold Improvement Buildings to lease-hold Improvement Plants support & other Ground equipment Assets Tangible Total Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) LIMITED ` in million As at As at March 31, 2015 March 31, 2014

12. Non current investments Long term investments In fully paid equity shares In associate companies 11,585.010 14,962.435 In other companies 2,771.869 3,064.157 14,356.879 18,026.592 Less: Provision for diminution in value of investments 11,199.698 9.436 3,157.181 18,017.156 13. Long term loans and advances Considered good 3.246 1,097.207 Considered doubtful 714.065 12,737.054 717.311 13,834.261 Less: Provision 714.065 3.246 12,737.054 1,097.207

3.246 1,097.207

14. Other non current assets Other deposits - considered good 98.606 101.425 98.606 101.425

15. Current investments In Mutual funds * 34.396 33.949 34.396 33.949 * Market value as on 31.03.2015 is ` 45.767 million.

100 Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) ` in million LIMITED As at As at March 31, 2015 March 31, 2014 16. Inventories Raw materials 13.030 27.087 Packing materials, stores and spares 37.691 44.834 Work in progress 17.323 13.627 Finished goods including goods in transit 199.411 452.345 267.455 537.893 17. Trade receivables Unsecured Exceeding six months: Considered good 301.044 13.501 Considered doubtful 10.919 12.096 311.963 25.597 Less: Provision 10.919 301.044 12.096 13.501 Others: considered good 681.936 676.004 982.980 689.505

18. Cash and cash equivalents Cash on hand 3.121 3.835 Balances with Banks: in current accounts 968.887 922.209 in unpaid dividend account 2.261 3.037 in deposit account 1,312.371 1,342.132 2,286.640 2,271.213

19. Short term loans and advances Advances to suppliers 1,282.545 854.884 Advance income tax 2,283.034 2,126.607 Prepaid expenses 53.996 34.888 Other receivables - considered good 651.117 689.096 4,270.692 3,705.475

20. Other current assets Deposit with court 2,535.000 2,535.000 Bank deposit 3,353.986 3,797.506 Duty drawback receivable 101.557 183.246 Other receivables 9,044.436 - 15,034.979 6,515.752

101 Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) LIMITED ` in million Year ended Year ended March 31, 2015 March 31, 2014 21. Revenue from operations Sales 4,355.873 5,537.267 Dividends 58.754 86.780 Guarantee commission 8.916 18.833 Lease rent 524.625 511.738 Income from property maintenance 464.995 443.478 Licence fees 680.578 566.805 Management service fees 32.400 30.000 Duty drawback 115.122 168.884 6,241.263 7,363.785

22. Other Income Interest income 499.165 509.366 Provisions/ liabilities no longer required/ payable written back 66.397 207.198 Miscellaneous income 26.028 34.171 591.590 750.735

23. Cost of material consumed Raw material consumed 1,604.275 1,702.354 Packing materials consumed 320.388 226.306 1,924.663 1,928.660

102 Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) ` in million LIMITED

Year ended Year ended March 31, 2015 March 31, 2014 24. Employee benefits expenses Salaries, wages and bonus 490.778 374.105 Contribution to provident and other funds 75.267 89.921 Workmen and staff welfare 37.507 38.664 603.552 502.690 25. Finance costs Interest expenses 1,986.235 4,766.328 Processing charges and bank charges 0.108 78.268 1,986.343 4,844.596

26. Other expenses Rent including lease rent 38.478 36.600 Rates and taxes 26.141 50.997 Insurance premium 14.129 5.935 Communication expenses 9.314 9.714 Travel and conveyance 41.542 37.647 General administrative expenses 284.173 209.529 Repairs & maintenance 107.465 99.115 Vehicle repairs and maintenance 6.937 7.108 Property maintenance expenses 168.764 191.496 Selling and promotion expenses 530.714 617.397 Brokerage 0.113 2.431 Commission paid to selling agents 26.365 47.134 Freight charges/job charges 167.172 160.234 Miscellaneous expenses 68.710 48.154 Claims paid 5.362 0.376 Legal & professional charges 166.723 218.729 Directors' sitting fees 1.626 1.305 Auditor's remuneration 3.181 4.186 Loss on asset sold/discarded / written off 0.081 3.586 Exchange loss (net) 91.023 206.704 1,758.013 1,967.935

27. Exceptional items Profit on sale of shares to Diageo Plc (net of expenses) - 23,302.456 Profit on sale of pledged securities by KFA lenders (net) 11,056.405 1,023.894 Profit on sale of pledged securities by the lenders of the company 9,167.129 4,812.480 Loss on sale of other securities - (2,390.324) 20,223.534 26,748.506

103 Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) LIMITED 28. The parent company has executed a Joint Development Agreement with a Developer on 26th April, 2010 for development of a luxury residential building to be named as “Kingfisher Towers – Residences at UB City”. The development of the above project (in which the Company is entitled to 55% share of super built up area) is under progress. The parent company has issued allotment letters in respect of seven residential units in Kingfisher Towers by collecting booking amounts of ` 1,545.184 million (Pr year 1,385.302 million) 29. Estimated amount of contracts remaining to be executed, on capital account as on 31.03.15 and not provided for, in the case of parent company is ` Nil (net of advances) (Pr year ` 6.600 million). 30. Fixed Assets : i) The parent company has revalued its land & buildings in Bangalore, as on March 31, 2014 at their Fair Market Value based on Valuation Report of an independent approved valuer and the carrying values of the respective assets have been adjusted accordingly. The incremental appreciation in the value of land arising out of the aforesaid revaluation is ` 5,835.605 million and that of building is ` 1,672.987 million. The total incremental appreciation of ` 7,508.592 million has been credited to the Fixed Assets revaluation reserve. ii) Depreciation on fixed assets is provided on reducing balance method based on useful life of the assets as prescribed in Schedule II to the Companies Act 2013, in respect of the parent Company and domestic subsidiaries. In respect of the overseas subsidiaries, depreciation is charged under the straight-line method at the rates prescribed under the statute governing those subsidiaries. The net book value of fixed assets of overseas subsidiaries on which straight-line method of depreciation is used, is ` 508.727 million (Pr year ` 548.690 million). iii) KFA lenders have sent a notice purportedly under the SARFAESI Act in respect of the Parent Company’s property in Goa. The Parent Company has responded to the notice issued to it, challenging the same. Pending adjudication of the suit, the Goa property continues to remain as an asset of the Parent Company. 31. Based on a critical review during the year of the carrying value of long term strategic investments, the management has provided an aggregate amount of ` 11,190.216 million, as disclosed in the accounts, as a matter of commercial prudence. While in respect of other strategic investments the matter will be reviewed during the following year based on business plans, investor funding and potential opportunities. 32. The Division Bench of the Hon’ble High Court of Karnataka, vide its Order dated 20th December 2013 has set aside the permission granted by the Hon’ble Company Judge under Section 536(2) of the Companies Act 1956 to dispose of the shares of USL in favour of Diageo Plc / Relay BV. The Company and Diageo Plc have approached the Hon’ble Supreme Court by way of SLPs challenging the Order of the Division Bench. Pending disposal of the Company’s SLP’s, the Hon’ble Supreme Court has by its Order dated 10th February, 2014 directed that status quo be maintained in respect of the transaction of sale of shares to Diageo. 33. There is no income tax liability on the profits for the years, on the parent company, taking into account the exempted profit on sale of securities. Further, having regard to the adjustments required to be made to the book profit in respect of write off of certain advances against the provision made for such advances, there would also not be any liability on account of Minimum Alternate Tax. 34. i) The Consortium of KFA lenders, have sold certain investments belonging to the parent company and a subsidiary pursuant to the purported pledge. ii) The Consortium of KFA Bankers, have sold in periodical lots certain investments belonging to the Parent Company pursuant to the purported pledge. KFA lenders have invoked parent company’s Corporate Guarantee and demanded payment of dues from KFA amounting to ` 62,033.550 million. iii) The Consortium of KFA Bankers, have sold in periodical lots certain investments belonging to the Company pursuant to the purported pledge. The parent company and others have filed a suit in the Hon’ble Bombay High Court, being Suit No. 311 of 2013 (Bombay Suit) against the consortium of lenders, who have advanced loans to Kingfisher Airlines Limited (“KFA”), inter alia, seeking the following reliefs:- (a) “For a declaration that the Corporate Guarantee dated 21st December, 2010 given by the Parent Company and the Pledge Agreement dated 21st December, 2010, are void ab-initio and non-est; (b) For a permanent order and injunction restraining the consortium of bankers, their servants, agents or assigns, or any other person claiming by, through or under them or any of them, from acting upon, in furtherance or in any manner giving effect to the impugned Notice dated 16th March, 2013, or from taking any other or further steps to act upon or in furtherance of the Pledge Agreement dated 21st December, 2010, save and except in accordance with the 104 procedure set out in clause 8.1 of the MDRA, including issuing a notice thereunder. Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) (c) For a permanent order and injunction restraining the consortium of bankers, their servants, agents or assigns, or LIMITED any other person claiming by, through or under them or any of them, from acting upon or in furtherance of the Corporate Guarantee dated 21st December, 2010 given by the Parent Company and the Pledge Agreement dated 21st December, 2010; (d) That an order and decree of damages of the sum of ` 3,199.68 Crores as set out in the Particulars of Claim be awarded to the Plaintiffs.”

The Parent Company has also filed a Notice of Motion in the said Suit, being Notice of Motion 306 of 2014 inter alia, for a decree on admission that the extent of the liability under the Corporate Guarantee is restricted to ` 1,601.43 crores based on admissions by the consortium of lenders. The said Suit and Notice of Motion are pending adjudication in the Hon’ble Bombay High Court.

35. The Parent Company has advanced ` 578.960 million (Pr year ` 551.774 million) to an associate, which have not yet been repaid. The Parent Company has made a further assessment of its financial condition. Considering its operations for the current year, and has decided, as a matter of prudence, to provide for ` 578.960 million. (Pr year ` Nil) due from it.

36. Events occurring after the date of the Balance Sheet The parent Company has appealed to SAT challenging the communication dated 27th April 2015 by SEBI to restate the parent Company’s accounts for Financial Years 2012-13 and 2013-14. By its Order dated 29th May, 2013, the SAT has stayed the operation, implementation and effect of the communication dated 27th April, 2015 till the next date of hearing. 37. Litigation a) The lenders of Kingfisher Airlines Limited (KFA) have, pursuant to certain Corporate Guarantees given by the Parent Company (the validity of which is disputed as set out hereinafter), demanded from the Parent Company, their alleged dues from KFA amounting to ` 6,203.35 crores with further interest and other dues from 01/06/2013 and have moved the Debt Recovery Tribunal (“DRT”), Bangalore for recovery of these alleged dues by way of an Original Application (OA). The Interim Application filed by the Parent Company before the DRT seeking to reject the said OA on the ground of jurisdiction has been dismissed by the Tribunal vide its Order dated 12th November, 2013. The Parent Company’s appeal before the DRAT, Chennai challenging the DRT Order is pending. b) Further, three lenders who have extended pre-delivery payment (PDP) loans to KFA for purchase of aircrafts from M/s. Airbus S.A.S. and who claim to be beneficiaries of Corporate Guarantees of the Parent Company, have filed proceedings before the DRT for recovery of total dues amounting to ` 192.51 crores. By an ex-parte order dated February 4, 2014, in I.A. No. 543/2014, the Hon. DRT has passed an ad-interim order attaching pre-delivery payments made by KFA to M/s. Airbus S.A.S. up to ` 192.51 crores. This ad-interim order is still in force. The Parent Company is defending the said proceedings. c) In a suit filed by United Sprits Limited (“USL”), the Goa Senior Division Court, by an Order dated 26th April, 2013 has granted an ad-interim injunction against any coercive action by lenders of KFA in respect of the Parent Company’s property in Goa, tenanted to USL. USL has also deposited ` 35 crores in the Hon’ble Court pursuant to the said order. Aggrieved by the Interim Order, the lenders filed an appeal in the High Court of Bombay at Goa, being Appeal from Order No. 76 of 2013 praying inter alia, that the Interim Order granting ad-interim injunction be quashed and set aside. On 18th July, 2014, the Hon’ble High Court of Bombay at Goa disposed off the appeal. The impugned order does not preclude the Banks from initiating proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002 (SARFAESI Act). It has been clarified by the High Court that the Interim Orders of 26th April and 4th May, 2013 shall continue to operate until disposal of the application for temporary injunction before the Learned Judge, Mapusa, subject to the right of the Banks to proceed under the SARFAESI Act in accordance with law. Pursuant to the Order dated 18th July, 2014, passed by the Hon’ble Bombay High Court at Goa, the banks have filed an application under Sec. 14 of the SARFAESI Act before the District Magistrate. The Interim Order dated 26th April, 2013 passed by the Goa Senior Division Court is still in force and pending adjudication of the suit, the Goa property continues to remain with the Parent Company (and continues to be in the possession of USL) with a purported charge in favour of Consortium of KFA Bankers. d) In addition to two winding up petitions instituted by purported beneficiaries of Corporate Guarantees issued by the Parent Company, which are being challenged before the Hon’ble Supreme Court and the Karnataka High Court respectively, six more winding up petitions filed by certain creditors of KFA, who are purported beneficiaries of Corporate Guarantees for winding of the Parent Company, have been admitted by the Hon’ble High Court of Karnataka vide combined Order dated 02nd January, 2015. The Parent Company has filed appeals before the Division Bench of the Karnataka High Court to challenge three of the aforesaid six admission Orders of the single judge and such appeals are pending admission. No 105 Order for appointment of a provisional Liquidator or Order of winding up of the Parent Company, has been passed till date. Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) LIMITED e) The Parent Company has filed a suit for damages claiming an amount of ` 1,319.30 crores against one of the above Petitioners who have filed a winding up Petition against the Parent Company in the City Civil Court, Bangalore and the same is pending adjudication. f) The Parent Company filed a Suit (L) No. 290 of 2015 in the High Court of Judicature at Bombay against ICICI Bank Ltd (hereinafter referred to as “ICICI”) and 3i Infotech Trusteeship Services Ltd (hereinafter referred to as “3i Infotech”) challenging ICICI’s alleged right to sell the 20,14,000 shares (the “NDU shares”) of United Breweries Limited by their notice dated 9th February, 2015 on the ground that the Loan Purchase Agreement dated 21st December, 2010 entered into with ICICI has ceased to operate consequent upon ICICI transferring, assigning and/or novating all its rights and obligations under the MDRA to a third party and that the claim of ` 146.29 crores by ICICI cannot be proceeded against the 20,14,000 shares as the LPA has worked itself out. Accordingly, the following ad-interim reliefs were sought in the Suit: (i) That pending the hearing and final disposal of the Suit, for a temporary order and injunction restraining the Defendants (3i Infotech and ICICI), their servants, agents or assigns, or any other person claiming by, through or under them or any of them, from acting on the basis or in any manner giving effect to the Power of Attorney dated 12th November 2011, or from taking any other or further steps to act upon or in furtherance of the Non Disposal Arrangement, dated 12th November 2011. (ii) That pending the hearing and final disposal of the Suit, for an Order appointing a court receiver to take custody of 20,14,000 shares of United Breweries Limited, held by the Company and which are the subject matter of the Non Disposal Arrangement dated 12th November 2011. By an Order dated 16th April, 2015, the Hon’ble Judge restrained both 3i Infotech and ICICI from selling the NDU shares and directed ICICI to deposit the NDU shares with the Prothonotary & Senior Master of Hon’ble High Court of Bombay within a period of 2 weeks from the date of pronouncement of the judgement. This Order has been challenged in an appeal filed by ICICI before the Division Bench of the Hon’ble Bombay High Court which had only stayed the portion of the Order which directs ICICI to deposit the NDU shares with the Prothonotary & Senior Master of Hon’ble Bombay High Court. However, the restraint Order on ICICI for sale of NDU shares continues. Pending adjudication of the Suit and without prejudice to the Company’s rights and contentions therein ICICI purported claim of ` 146.29 crores is disclosed as a contingent liability.

38. Going concern a) The Parent Company is defending recovery proceedings by the consortium of banks of KFA based on corporate guarantees, the validity of which is being contested. As stated herein above, the Parent Company has filed in Bombay High Court, a suit seeking to declare the corporate guarantee null, void ab initio and non-est. The suit is still pending adjudication.

b) Connected with the Corporate Guarantees, the winding up petitions filed in Hon’ble Karnataka High Court referred to in the Directors report, in the opinion of Counsel, can be successfully resisted.

c) The Parent Company has filed a suit for damages against the aircraft engine manufacturers for supply of inherently defective engines, both in design and manufacture, to KFA. The suit is pending. The Parent Company is pursuing without prejudice, negotiations with two of the creditors who have filed winding up petitions against the Parent Company, to try and settle the disputes amicably. Two members of the Consortium of Bankers of KFA have assigned their debt to an Asset Reconstruction Company (ARC).

d) Under direction of Court pending resolution of various disputes, amounts totaling ` 794.38 crores are held as cash deposits.

e) Due to restraint orders passed by the High Court of Karnataka, rentable commercial office space could not be leased out resulting in continued loss of significant rental revenue. The Company has filed an Application vide CA No. 1428 of 2014 in COP 185/12 with a prayer to permit the Company to lease/rent out the vacant premises at UB City and grant such other further orders as are just. Also, high value residential units in Kingfisher Towers, could not be sold which has impacted the cash flow. The said application is pending.

Having regard to the totality of all the above facts and also the substantial assets of the Company which can be monetized in case of necessity, the financial statements for the year ended 31st March 2015 have been presented on principles 106 applicable to Going Concern. Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) 39. The following associates, namely, UB Engineering Limited and Pixray (India) Limited, have been facing liquidity crunch resulting LIMITED in their ability to transfer funds to parent company being significantly impaired. In view of this they have not been considered for the consolidation and investments in them have been dealt in accordance with AS 13 - Accounting for Investments.

The following subsidiaries, namely, Kingfisher Training and Aviation Services Limited, UB Infrastructure Projects Limited, Kingfisher Aviation Training Limited, Bangalore Beverages Limited, UB Sports Limited, Kingfisher Goodtimes Private Limited and Bestride Consultancy Private Limited have been facing liquidity crunch, resulting in their ability to transfer funds to parent company being significantly impaired. In view of this they have not been considered for the consolidation and investments in them have been dealt in accordance with AS 13 - Accounting for Investments. ` in million 40. Employee benefit Disclosure as per AS 15 Defined benefit plans 2014-15 2013-14 Reconciliation of opening and closing balances of the present value of the defined benefit obligation: Obligations at period beginning 108.311 75.300 Service cost 75.084 34.102 Interest cost 7.967 6.534 Benefits settled (16.363) (7.321) Actuarial (gain)/loss (10.826) (0.304) Obligations at period end 164.173 108.312 Defined benefit obligation liability as at the Balance Sheet Is wholly funded by the Company Change in plan assets Plan assets at period beginning, at fair value 107.945 60.619 Expected return on plan assets 10.038 6.149 Actuarial gain/(loss) 0.820 0.113 Contributions 51.414 48.385 Benefits settled (16.363) (7.321) Plans assets at period end, at fair value 153.854 107.946 Reconciliation of present value of the obligation and the fair value of the plan assets: Fair value of plan assets at the end of the year 164.173 108.312 Present value of the defined benefit obligations at the end of the period 153.854 107.946 Net assets/(liability) recognized in the Balance Sheet 10.319 0.366 Details of Gratuity Cost Service Cost 75.084 34.102 Interest Cost 7.967 6.533 Expected return on plan assets (10.038) (5.402) Acturial (gain)/loss (11.646) (0.724) Net Gratuity Cost 61.367 34.509 Description of the basis used to determine the overall expected rate of return on assets including major categories of plan assets. The expected return is calculated on the average fund balance based on the mix of investments and the expected yield on them. Assumptions Interest rate 8.00% 9.12% Discount factor 8.00% 9.12% Estimated rate of return on plan assets 8.00% 8.00% Salary Increase 5.00% 5.00% Attrition rate 5.00% 5.00% Retirement age 58 58

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.

107 Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) LIMITED 41. Deferred Tax: The following deferred tax assets / liabilities are recognized for the year. ` in million Name of the Company Deferred tax Deferred Liability Tax Asset City Properties Maintenance Company Bangalore Limited - 0.951 UB Electronic Instruments Limited - 0.017 UB International Limited - 0.841 Total deferred tax asset (recognized in the Profit and Loss Account) - 1.809

42. Segment Reporting: Segment-wise business performance for the year ended March 31, 2015 ` in million Primary Segment Information 2014-15 2013-14 Segment Revenue: a) Alcoholic Beverages 3,520.169 4,260.63 b) Leather products 416.735 418.654 c) Readymade Garments 307.685 849.483 d) Investments 58.754 86.780 e) Logo Fee 680.578 566.805 f) Property development 524.625 639.238 g) Maintenance 464.995 315.978 h) Others 267.720 226.217 Total Revenue 6,241.263 7,363.785 Segment Results: a) Alcoholic Beverages 229.202 369.173 b) Leather products 57.602 (243.603) c) Readymade Garments 10.297 66.900 d) Investments (314.882) (182.810) e) Logo Fee 441.939 392.300 f) Property development 264.718 354.183 g) Maintenance 81.681 114.116 h) Others (145.871) 15.364 Total Result 624.686 885.623 Other income 591.590 750.735 Provision for bad and doubtful debts/ advances (589.337) (12,759.598) Bad advances/debts written off (6,125.065) (24,564.935) Diminution in value of investments (11,190.261) - Finance cost (1,986.343) (4,844.596) Exceptional items 20,223.534 26,748.506 Profit / (Loss) before tax 1,548.803 (13,784.266)

2014-15 2013-14 2014-15 2013-14 Other Information Segment Segment Segment Segment Capital Depreci- Capital Depreci- Assets Liabilities Assets Liabilities Expenditure ation Expenditure ation a) Alcoholic Beverages 2,681.558 2,510.817 2,428.381 2,426.387 55.528 79.192 98.394 62.759 b) Leather Products 1,072.403 376.652 675.335 81.834 0.514 13.160 4.312 9.473 c) Readymade Garments 1,183.372 10.689 1,249.781 23.737 0.177 9.136 3.950 6.987 d) Investments 34,249.170 45,002.835 28,803.356 39,058.116 - - - - e) Property Development 404.805 - 419.385 - - 110.668 - 19.591 f) Maintenance 158.043 150.285 149.538 74.091 2.619 4.870 3.655 2.830 g) Others 185.274 55.480 203.968 197.045 4.700 86.080 4.160 48.813 Total 39,934.625 48,106.758 33,929.744 41,861.210 63.538 303.106 114.471 150.453 108 Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) Notes : LIMITED 1 Income under the segment “investments” represents dividends received, profit on sale of investments. 2. Income under the segment “property development” represents lease rent and profit on sale of immovable property 3. Segment results represents profit/(loss) before finance expenses, interest income, tax and exceptional items. 4. Capital expenditure represents the gross additions made to fixed assets during the year. 5. Segment assets include Non-Current Assets and Current Assets except goodwill and income tax assets. 6. Segment Liabilities include Non-Current Liabilities and Current Liabilities provision for tax and dividend.

Secondary segments, based on geographical locations

Particulars Segment Revenue Segment Assets Segment 2014-15 2013-14 2014-15 2013-14 Within India 1,922.577 1,866.286 35,433.540 32,072.595 Outside India 4,318.686 5,497.499 4,501.085 1,857.149 Total 6,241.263 7,363.785 39,934.625 33,929.744

43. Related Party Transactions: Persons having significant influence over the affairs of the Company :- Dr. Vijay Mallya - Chairman of the Board Mr. Ravi Nedungadi - Group Chief Financial Officer Key Management Personnel: Mr. V. Shashikanth* - President (*Managing Director up to 17th April 2014) Mr. Kaushik Majumder – Senior Vice President Legal and Company Secretary

Associates UB Engineering Limited, WIE Engineering Limited (Under Liquidation), Pixray India Limited, UB Pharma (Kenya) Limited. ii. Transactions with Related Parties during the year :

Key Management Personnel/ Associates Persons having significant influence Sl. No. Nature of Transactions over the affairs of the Company Current Year Previous Year Current Year Previous Year 1. Purchase of goods/services 2. Rendering of services 3. Receiving of services 4. Guarantee commission paid 5. Licence Fees received 2.809 12.500 6. Dividend received 7. Guarantee commission received 3.416 13.330 8. Interest received 17.962 51.423 9. Interest paid 10. Investment made 11. Guarantees given 650.000 650.000 12. Finance (including loans in cash or 7.959 162.000 in kind paid) 13. Finance (including loans in cash or in kind received) 4.964 5.744 14. Payment of remuneration for 103.784 81.779 employment 15. Management contracts 16. Pegasus advance received Amount Due from as on March 31, 2015 602.752 551.774 109 Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) LIMITED 44. Contingent liabilities: Particulars 2014-15 2013-14 i) Guarantees given (the enforceability of the guarantee issued for Kingfisher Airlines Limited 88,280.760 88,280.760 beneficiaries are being contested in appropriate Courts of Law) ii) Claims against the parent Company and its subsidiaries, not acknowledged 0.961 0.961 as debts iii) Demands raised by Income Tax Authorities against which the subsidiaries 5.454 5.454 have preferred appeals iv) Demand raised by Income Tax authorities against which the parent 776.774 776.774 Company has preferred appeals v) Demands raised against subsidiary by Service Tax Authorities against 10.752 10.752 which the subsidiary has preferred appeals vi) Claim against the company not acknowledged as debt 1,462.900 1,462.900

Certain aircraft lessors and vendors of Kingfisher Airlines Limited (KFA) have invoked the corporate guarantees given by the company on behalf of KFA. The total amount invoked and outstanding as on March 31, 2015 is ` 15,275.400 million (Pr year ` 15,275.400 million) and Kingfisher Airlines Limited is under negotiation with the beneficiaries. Also, Consortium of KFA bankers have invoked Company’s corporate guarantee and demanded payment of ` 62,033.500 million due from KFA along with interest, if any, decided by the Court This matter is being contested by the Company in various Courts. Accordingly, the Company continues to recognize these obligations as only ‘contingent liabilities’. Based on management’s opinion no provision is presently considered necessary. In any event, the amount is not quantifiable.

A claim has been made for ` 1,462.900 million by a Bank towards share recompense amount. The company has obtained legal

advice that this claim is not enforceable and accordingly the amount is presently shown above as “claims against the Company not acknowledged as debt.”

45. The Parent Company has advanced ` 20 crores to a vendor. Due to the demise of the owner of the vendor company, the supply arrangement could not be consummated. Discussions are on with the legal heirs for recovery of the advance.

46. The Parent Company had entered into a loan agreement with United Spirits Limited on July 3, 2013 under which, an amount of ` 1,337.41 crores is outstanding as on March 31, 2015. The loan is for a period of 9 years. At an EGM of United Spirits Limited on November 28, 2014, the said loan agreement between the Parent Company and United Spirits Limited, was not approved. The Parent Company is examining the impact and consequences of such non-approval and has not accounted for any interest on the loan in Quarter 3 and 4 of the current financial year.

47. The Parent Company is pursuing a claim before the Hon’ble High Court of Karnataka against a banker for restitution of deposits of Rs. 609.60 million, which were unilaterally encashed and thereafter appropriated towards their claims against a Group Company. The parent company is showing the appropriate amounts as recoverable from the said bank.

48. The Parent Company and a subsidiary company have filed a suit, inter alia, against IDBI Trusteeship Services Limited (IDBI Trusteeship), Indian Global Competitive Fund (IGCF) and SREI Venture Capital Limited (SREI), in the City Civil Court at Calcutta, being T.S. No. 966 of 2013, inter alia, for a declaration that the Security Trustee Agreement dated 30th June, 2008 and the Consolidated Deed of Pledge dated 21st December, 2010 (in respect of pledged shares of United Spirits Limited and KFA held by the Parent Company and the subsidiary company ) are void, unenforceable and of no effect. The said suit is pending.

SBICAP Trustee and the Consortium of Banks, which have advanced loans to KFA have filed a suit, inter alia, against IDBI Trusteeship Services Limited, SREI Venture Capital Limited, the Parent Company and the subsidiary company in the Court of City Civil Judge in Bangalore, being O.S. No. 25877 of 2013 to enforce their alleged rights under the Release of Residual Interest Agreement dated 21st December, 2010 in respect of sale proceeds remaining after appropriation of USL and KFA shares. On 10th June 2014, IDBI Trusteeship Services Limited transferred the pledged shares to IGCF who in turn sold 4,937,395 shares of United Spirits Limited (“Sold Shares”) held by the Parent Company and the subsidiary company. By an Order dated 20th June, 2014 in Writ Petition No. 28577 of 2014, filed by the Consortium of Banks and which has now been disposed off, IGCF deposited the surplus/balance sales proceeds from the Sold Shares with the Hon’ble High Court of Karnataka and has been restrained from disposing off ` 690 crores retained by it. The Parent Company is defending the aforesaid O.S. No. 25877 of 2013 110 and the ex-parte ad-interim orders passed therein. Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES (HOLDINGS) During the pendency of the Writ Petition No. 28577 of 2014, the Consortium of Banks filed an application seeking to amend LIMITED the plaint. The amendment application was heard and allowed vide Order dated 15.10.2014. The Parent Company and the subsidiary company have filed separate Writ Petitions against the said Order allowing the amendment application. The Parent Company and the subsidiary company have also filed applications for rejection of the suit on account of suit being barred by law and insufficient court fee.

The Parent company, after taking into account, various issues involved, has, as a matter of prudence and without prejudice to the rights and contentions of the Parent Company in the legal proceedings as well as the stand adopted by KFA against the purported recall of its loans by the lenders, pursuant to which shares pledged by the Parent company were sold by the lenders, has debited a portion of the sale proceeds of the IGCF sale of investments of ` 106.30 crores to KFA and written off the same as unrealizable, along with other dues from KFA. The balance sale proceeds of ` 847.46 crores continues to be disclosed as due from IGCF by the Parent Company.

49. Earnings per Share:

Earnings per Share (before exceptional items) 2014-15 2013-14

Loss before exceptional items (18,674.731) (40,532.772)

Weighted average number of equity shares 66,818,521 66,818,521

Earnings per share (Basic / Diluted) - in ` (297.87) (608.88)

Earnings per Share (after exceptional items) 2014-15 2013-14 Profit / (Loss) after exceptional items and tax 319.961 (13,936.553)

Weighted average number of equity shares 66,818,521 66,818,521

Earnings per share (Basic / Diluted) - in ` 4.79 (208.57)

50. There are no speculative derivative transactions. Hedging is restricted to the business needs of the companies. As at the Balance Sheet date, foreign currency exposures that have not been hedged by any derivative instrument or otherwise are as follows:

` in million 2014-15 2013-14 Amount receivable - 46.329 Amount payable 1,378.641 4,572.131

51. All amounts are in Rupees millions, unless otherwise stated.

52. Previous year’s figures have been regrouped wherever necessary.

For Vishnu Ram & Co., Chartered Accountants Firm Regn. No. 004742S

Dr. Vijay Mallya N. Srinivasan M.S. Kapur S.Vishnumurthy Chairman Director Director Proprietor DIN 00122890 DIN 00004195 DIN 00703815 Membership No. 22715

Mumbai Kaushik Majumder May 29, 2015 Company Secretary FCS 3368 111

Notes to the Consolidated Financial Statements (contd.) UNITED BREWERIES

(HOLDINGS) LIMITED 0.00 55.00 68.10 96.25 351.25 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 % of Share holding

------61.12 for USD, Dividend Proposed Proposed ` -

2.254 (0.068) 45.633 (2.809) 11.461 (0.188) (0.125) 15.073 (39.446) (114.900) Profit Profit (232.553) 4,280.738 4,499.576 (3,210.052) After Tax

5.262 0.134 0.098 0.856 (0.841) ------1,246.387 1,241.110 Taxation Provision for Provision -

3.110 (0.068) 45.633 (2.809) 16.723 (0.188) (0.125) 15.073 - (39.312) tion (114.802) Profit Profit (233.394) 5,527.125 5,740.686 (3,210.052) Before Taxa Before - - 5.561 0.426 11.188 15.280 - 810.164 146.516 249.062 244.205 242.470 515.529 307.444 1,273.466 Turnover

7.271 0.056 ------361.122 633.595 353.851 347.687 389.623 946.078 1,011.179 Details of Investments

1.415 0.313 93.118 15.458 12.841 37.088 546.282 296.705 153.901 367.535 222.907 824.123 217.416 316.230 Total Total 3,799.421 Liabilities

67.605 72.663 63.288 - 92.46 as on 31.03.2015 (for Balance sheet items) and average rate at 218.115 879.017 155.421 291.375 347.687 215.342 946.078 Total Total Assets ` 4,297.285 3,858.917 1,253.327 1,016.914 61.394 25.557 (1.415) 16.215 (88.575) 332.228 (34.737) (258.923) (389.110) (530.169) (252.574) (258.486) 3,436.901 3,625.510 Surplus (4,398.368) Reserves & 9.985 0.909 0.001 9.985 10.500 29.193 34.425 14.920 62.59 and GBP at 291.102 984.040 312.950 959.373 250.500 946.078 ` 1,615.861 Share Capital Share

- INR INR INR INR GBP GBP USD USD USD USD USD USD USD USD Currency Reporting Name of the subsidiary Indian Subsidiaries City Properties Maintenance Company Bangalore Limited Bangalore Company Maintenance Properties City Kingfisher Beer Europe Limited # Kingfisher Beer Europe of America Inc., Delaware# United Breweries Relata Brewing Company LLC # Relata Brewing Kingfisher Finvest India Limited Inversiones Mirabel, S.A.# UB Electronic Instruments Limited UB Electronic Mendocino Brewering Company Inc. USA# Mendocino Brewering UB International Trading Limited UB International Trading Overseas Subsidiaries Rigby International Corp# UB Overseas Limited Rubic Technologies Inc.# Rubic Technologies UBHL (BVI) Limited United Breweries International United Breweries ( UK) Limited# 95.84 for GBP (for P&L account items). The following associates, namely, UB Engineering Limited and Pixray (India) Limited, have In company view being of significantly this impaired. they for been have the not consolidation been and considered investments in them have with been AS dealt 13 in accordance facing liquidity crunch resulting in their ability to transfer funds to - Accounting for Investments. parent WIE Engineering Limited is under liquidation and UB Pharma (Kenya) has since closed operations. The exchange rate prevelant on the last day of the financial year has been taken for conversion for the balance sheet items while the conversion rate for the revenues revenues the for rate conversion the while items sheet balance the for conversion for taken been has year financial the of day last the on prevelant rate exchange The has been the average rate for period. any dividend. None of the above Companies has proposed Report the seeking subsidiaries its and Company the of investors for available made be shall companies above the of information related with along Report Anuual The /information at any point of time. Office of the Company and its Subsidiaries. The Annual Report is also available for inspection of investors at the Registered In respect of overseas subsidiaries, USD is valued at ` period. # Company having 31st December as a reporting 1 6 7 8 2 9 3 4 1 2 3 4 5 Sl. 10 No

112 Part (A) SUBSIDIARIES Note: 1 2 3 4 5 6 Name of Subsidiaries which are yet to commence operations - Nil Name of Subsidiaries which are Name of Subsidiaries which have been liquidated or sold during the year - Nil SALIENT FEATURES OF FINANCIALS STATEMENT OF SUBSIDIARIES / ASSOCIATES AS PER COMPANIES ACT, 2013 ACT, AS PER COMPANIES OF SUBSIDIARIES / ASSOCIATES OF FINANCIALS STATEMENT SALIENT FEATURES Part (B) ASSOCIATES 1. 2. yet to commence operations - Nil Name of Associates which are Name of Associates which have been liquidated or sold during the year - Nil