Getting Future-Ready
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BIGGER. BETTER Getting future-ready ASSOCIATED ALCOHOLS & BREWERIES LIMITED 29TH ANNUAL REPORT FY2017-18 FORWARD-LOOKING STATEMENT In this Annual Report we have disclosed forward-looking information to enable investors to comprehend our prospects and take informed investment decisions. This report and other BIGGER. statements - written and oral - that we periodically make contain forward-looking statements that set out anticipated results based on the management’s plans and assumptions. We have tried wherever possible to identify such statements by using words such as ‘anticipates’, ‘estimates’, ‘expects’, BETTER ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words of similar substance in connection with any discussion of future performance. We cannot guarantee that these forward looking statements will be realized, although we believe we have been The Indian alco-beverages prudent in assumptions. The achievement of results is subject to risks, uncertainties and even inaccurate assumptions. Should market is at the cusp of an known or unknown risks or uncertainties materialise, or should underlying assumptions prove inaccurate, actual results could attractive opportunity. vary materially from those anticipated, estimated or projected. Readers should bear this in mind. We undertake no obligation to publicly update any forward-looking statements, whether as A strategic shift by the some of a result of new information, future events or otherwise. the largest organised players in India’s alco-beverage sector is creating an unprecedented long-term opportunity for mid-sized players with strong Vision: To become an industry leader in liquor managements and credible CONTENTS manufacturing, distillation Balance Sheets. and bottling in India and About Associated Alcohols & Breweries Limited 02 to establish a foothold in At Associated Alcohols & AABL and Trust 04 the liquor industry as one Breweries Limited, we are of the most reputed liquor How we have enhanced value across the years 06 company responding to this reality with Letter to Shareholders 09 speed and sensitivity. What we achieved in 2017-18 and where we expect to go 12 4 Ways by which we expect to transform AABL 13 By enlarging our core What makes our business model different 22 manufacturing capacity. Our performance ambition 24 By extending into value-added 6 Things that enhanced aabl’s competitiveness 26 products. Enhancing value for stakeholders 28 Management Discussion and Analysis 30 By strengthening our value Notice 43 chain. Directors’ report 50 By widening our geographic Corporate Governance 68 footprint. Financial statements 78 By entering into complementary alliances. With the objective to emerge bigger and better prepared for www.associatedalcohols.com the future. 2 3 Associated Alcohols & Breweries Limited // Annual Report 2017-18 Promoters’ background Expansion Contract manufacturing brands Installed capacity Mr. Anand Kumar Kedia and Mr. The Company embarked on a large • Black Dog Scotch Whisky across two THINGS Prasann Kumar Kedia are the key sections greenfield expansion to address the • VAT 69 Scotch Whisky promoters of the Company. growing domestic and international • Smirnoff Vodka Mr. Anand Kumar Kedia, Chairman – demand. This initiative comprises the • Black & White Scotch Whisky YOU NEED Business Promotion & Development, commissioning of modern alcohol possesses a rich sectoral experience plants, increasing the production Ethical pedigree across almost three decades. He capacity from 31 million liters to 90 Vision: To become an industry leader TO KNOW spearheads the strategic initiatives of million litres per annum by 2021 – in liquor manufacturing, distillation the Company. around higher operating efficiency. and bottling in India and to establish a foothold in the liquor industry as one 25 Mr. Prasann Kumar Kedia, Vice Clientele Chairman – Operation & Business of the most reputed manufacturing and Bottling lines facility ABOUT • Diageo/ United Spirits Limited Development, has been involved marketing company • Allied Blender & Distillers with the Company for more than two Mission: Associated Alcohols & • Government-regulated retail decades and oversees day-to-day Breweries Limited undertakes to ASSOCIATED contractors/agencies (for IMFL & IMIL) operations. dedicate itself and all its resources to achieving global excellence in the Presence Proprietary products present sectors of operations and ALCOHOLS & Associated Alcohols & Breweries • Titanium Triple Distilled Vodka with seeking growth. Limited is one of the largest distilleries Orange and Green Apple Flavour • Central Province Whisky in India enjoying a wide presence across Values the country and a growing presence • James McGill Whisky • To cultivate the highest standards BREWERIES • Jamaican Magic Rum 31 across the sectoral value chain. of professionalism, fairness and • Bombay Special Series Alcohol production • Premium extra neutral alcohol / total customer satisfaction in all our • Super Man Series capacity (million grain spirit LIMITED transactions and dealings. litres per annum) Licensed brands / • Rectified spirit • To create a profound and everlasting franchised brands • Indian made foreign liquor (IMFL) impact on our customers through • Bagpiper Deluxe Whisky • Indian made Indian liquor (IMIL) commitment and sincerity. • Contract manufacturing partner • Directors Special Whisky Corporate background • To continue the ongoing journey (Diageo-USL) • White Mischief Flavoured Associated Alcohols & Breweries Limited is the flagship towards honesty, sincerity and integrity • Director’s Special Gold Whisky company of the Associated Kedia Group – a H10,000 million with all our stakeholders. business conglomerate with interests in liquor manufacturing Facilities • DSP Black Special Whisky • To spread our wings all across the and bottling. The Company was incorporated in 1989 by Late The Company’s corporate office is • McDowell’s No.1 XXX Rum country and play a dominant role in the Shri Bhagwati Prasad Kedia. Associated Alcohols & Breweries situated in Indore; its state-of-the-art liquor industry in India. Limited took over the existing distillery of the promoter group plant is at Khodigram (Barwaha, district 6.5 in 1990 and extended into the manufacture of premium Khargone, Madhya Pradesh). This plant Packaging capacity liquor products. accounts for bottling facilities, alcohol production and packaging capacity. (million cases per annum) 4 5 Associated Alcohols & Breweries Limited // Annual Report 2017-18 MILESTONES Trust makes it possible for vendors to provide our company with a sustainable 1989 Incorporated as public resource supply across market cycles. limited company 1990 Started manufacturing and marketing potable alcohol Trust makes it possible for 1995 THIS ANNUAL customers to invest in their growth on Modernised and expanded the assurance that a trusted vendor like the distillery REPORT IS AABL will engage in corresponding and timely capacity expansion. 2003 ESSENTIALLY Captive power plant with 60% self-sufficiency in power ABOUT ONE OVER- 2012 Revamped manufacturing facili- ties and processes as per sectoral ARCHING AABL requirements Trust makes it possible for our trade ATTRIBUTE. partners and intermediaries to work 2015 with us across the long-term. Implemented SAP-ERP across TRUST. all functional areas 2016 Issued bonus shares in the ratio of 1:1 Trust in AABL makes it possible for arguably the Trust makes proximate communities 2018 world’s largest alco-beverage brand to outsource believe that the Company’s manufacturing Embarked on an ENA capacity expansion from 31.4 million the production of its most critical and quality-de- practices will be completely responsible. litres per annum to 45 million manding brands to our company. litres per annum 6 7 Associated Alcohols & Breweries Limited // Annual Report 2017-18 HOW WE HAVE ENHANCED VALUE ACROSS THE YEARS Revenues (H lac) EBIDTA (H lac) Net profit H( lac) EBIDTA margin (%) ROCE (%) Debt-equity ratio (x) Debt cost (H lac) Interest cover (x) 7.45 0.16 5.36 11.75 0.49 0.30 0.09 17.67 14.41 17.68 14.25 18.22 16.78 13.44 10.58 20.86 518.96 404.01 653.63 382.88 1,429.15 1,691.24 2,518.92 1,233.64 4,272.43 5,456.99 3,506.65 3,865.40 28,811.09 29,106.74 30,014.28 32,523.99 FY17 FY17 FY17 FY17 FY17 FY17 FY17 FY17 FY15 FY15 FY15 FY15 FY15 FY15 FY15 FY15 FY16 FY16 FY16 FY16 FY16 FY16 FY16 FY16 FY18 FY18 FY18 FY18 FY18 FY18 FY18 FY18 Definition Definition Definition Definition Definition Definition Definition Definition Growth in sales net of taxes Earnings before the deduction Profit earned during the year EBIDTA margin is a profita- This financial ratio measures This is derived through the This is derived by calculating This is derived through the and excise duties of fixed expenses (interest, after deducting all expenses bility ratio used to measure a a company’s profitability and ratio of debt to net worth (less the average cost of division of EBIDTA by interest depreciation, extraordinary and provisions company’s pricing strategy and efficiency with which capital is revaluation reserves) consolidated debt outflow Why this is measured items and tax) operating efficiency. Higher the employed in the business It highlights the service Why this is measured operating margin, the better for Why this is measured Why this is measured Why this is measured acceptance and reach of the Why this is measured It highlights the strength the Company. Why this is measured This is one of the defining This indicates the extent of Interest cover indicates