UBHL Annual Report final file - moneycontrol.com

UNITED BREWERIES (HOLDINGS)

LIMITED

1

Directors

Dr. Vijay Mallya, Chairman

Mr. Sidhartha V. Mallya, Non Executive Non Independent Director (up to March 31, 2016)

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

Executive Vice Chairman UB Group

Mr. S. R. Gupte

President & Chief Financial Officer UB Group (upto April 30, 2016)

Mr. Ravi Nedungadi

President Mr. V. Shashikanth

Chief Financial Officer Mr. Ajay Kumar Vijay ( w.e.f. April 20, 2016)

Company Secretary and Compliance Officer Mr. Kaushik Majumder

Statutory Auditors M/s Vishnu Ram & Co.,Chartered AccountantsNo.12, Margosa Road, Malleswaram,Bangalore – 560 003

Internal Auditors M/s B.K. Ramadhyani & Co,Chartered Accountants68, 4th Floor, Chitrapur Bhavan,15th Cross, 8th Main Road, Malleswaram,Bangalore – 460 055

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

Registrars and Transfer Agents Integrated Enterprises (India) LimitedNo. 30, Ramana Residency, 4th Cross, Malleswaram,Bangalore – 560 003

UNITED BREWERIES (HOLDINGS) LIMITED


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Report of the Directors

Report of the Directors

Your Directors present the Annual Report of your Company together with the Audited Accounts for the year ended March 31, 2016.

Financial Performance of the CompanyThe summary of financial results of the Company for the financial year ended March 31, 2016 is as under:

(` in crores)

2015-2016 2014-2015

The working for the year resulted in Profit/(Loss) from Operations

52.989 (42.041)

Less:Provision for doubtful advances 55.000 57.896

Bad advances / debts written off 12.513 128.624

Provision for diminution in value of investment

21.246 280.962

Depreciation 16.615 21.505

Loss before exceptional item and tax

(52.385) (531.03)

Add:Exceptional item ( profit on

sale of pledged shares)7.254 965.001

Profit / (Loss) before tax (45.130) 433.974

Less: Tax - -

Profit / (Loss) for the year carried to the Balance Sheet

(45.130) 433.974

Dividend

With a view to conserve resources for operational requirements, your Directors do not recommend any dividend for the year ended March 31, 2016.

Operations of the Company

The operations of the Company comprise primarily of holding of strategic investments and other securities, international trade, development of real estate, sale and rental of constructed premises including residential property of Kingfisher Towers, licensing of trademarks, advancing of loans and provision of guarantees.

Despite the return of significant number of Indian consumers from the Gulf and the Far East due to rationalisation of jobs because of continued low oil prices, UB Global - the export division of your Company, has managed to remain India’s largest exporter of beer in the year under review. A judicious mix of

domestic and export orders also ensured an exponential growth in your Company’s apparel business. The FEDERATION OF KARNATAKA CHAMBER OF COMMERCE & INDUSTRY has, once again, awarded the Export Excellence award to your Company.

The Company is constrained by various restraint orders of the Hon’ble High Court of Karnataka as a result of which revenue yielding business proposals like franchising out the Kingfisher brand owned by the Company and renting out vacant space at UB City, Bangalore could not be implemented.

The operations of the Company was further affected due to the provisional attachment of properties and shares by the Directorate of Enforcement consequent upon their investigation in a purported money laundering case of Kingfisher Airlines Limited. Continuing efforts are being taken to have the temporary embargo lifted which would augment increasing revenue streams.

Subsidiaries and Associate Companies

In accordance with Section 139(3) of the Companies Act 2013, the Company has prepared consolidated financial statements with four Indian Subsidiary Companies, excluding the seven Indian Subsidiary Companies (refer to Note no. 50 of the Consolidated Financial Statement appearing in page no. 113), which forms part of the Annual Report. The report on the performance and financial position on each of the subsidiary companies in the prescribed Form AOC-1 is annexed to this report as Annexure A.

Kingfisher Finvest India Limited is a “material non-listed Indian subsidiary”. A “Policy for determining Material Subsidiaries” has been uploaded in the website of the Company under link:“http://theubgroup.com/PDF/UNITED-BREWERIES-(HOLDINGS)-LIMITED-POLICY-FOR-DETERMINING-MATERIAL- SUBSIDIARIES.pdf”

The affairs of the Subsidiaries and Associate Companies are conducted by their respective Board of Directors and audited by their Statutory Auditors. The Consolidated Financial Statement of the Company and its subsidiaries and associates should therefore be read in conjunction with respective financial statements, accounting policies, financial notes, cash flow statements and Statutory Auditors Reports thereon.

Directors and Key Managerial Personnel

Mr. Sidhartha V Mallya, vacated the office of Director w.e.f. March 31, 2016 by operation of Section 167(1)(b) of the Companies Act, 2013.

Ms. Daljit Mahal, a Non-Independent Non-Executive Director, retires by rotation and, being eligible, offers herself for re-appointment, as a Director liable to retire by rotation. A brief resume of Ms. Daljit Mahal proposed to be re-appointed is given in the Annexure to the Notice.


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Report of the Directors (contd.)

The position of Managing Director fell vacant on April 17, 2014 and since then efforts were on to identify a successor. In the interregnum, the Chairman of the Board, Dr. Vijay Mallya is acting as the Principal Officer of the Company and reviewed the performance of the Company at the Board Meetings held during the year. Even after his relocating to London, he has full control over the affairs of the Company through appropriate delegation of duties to various operating executives who report to him on a regular basis.

Mr. Ajay Kumar Vijay was appointed as Chief Financial Officer of the Company w.e.f. April 20, 2016.

Mr. Kaushik Majumder, Company Secretary and Mr. Ajay Kumar Vijay, the Chief Financial Officer are presently the 2 Key Managerial Personnel of the Company.

Directors’ Responsibility Statement

Despite the absence of the Managing Director and Chief Financial Officer throughout the year, the Chairman of the Board of Directors, the Group Chief Financial Officer and the President of the Company have collectively conducted the affairs of the Company for the year under review and in view of this, the Directors in compliance with Section 134 (5) of the Companies Act, 2013, state that:

(a) in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) accounting policies have been selected and applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the loss of the Company for that period;

(c) proper and sufficient care have been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for prevention and detection of fraud and other irregularities;

(d) the annual accounts have been prepared on a going concern basis;

(e) internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and operating effectively;

(f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that, such systems are adequate and operating effectively.

Statutory Auditor

(a) Reappointment

At the Annual General Meeting (AGM) held on September 30, 2014, Messrs. Vishnu Ram & Co., Chartered Accountants, were appointed as Statutory Auditors of the Company for a period of three years. As per the provisions of Section 139 of the Companies Act, 2013, ratification of appointment of the Statutory Auditors is being sought from the Members of the Company at this AGM. Further, the Statutory Auditors have, under Section 139(1) of the Act and the Rules framed thereunder, furnished a certificate of their eligibility and consent for appointment.

(b) Auditors’ qualification & Board responses

The Statutory Auditor of the Company, Messrs. Vishnu Ram & Co., Chartered Accountants, issued separate reports on the Standalone and Consolidated Financial Statements of the Company and the same are appended hereto the Report. The qualifications in the Auditors’ Reports relating to impairment of certain investments, enforcement of certain corporate guarantees, doubtful recovery of advances, various legal disputes including winding-up petitions, sustainability of the Company as a going concern - all these have been explained in the relevant Financial Notes to Accounts.

Corporate Governance & Management Discussion and Analysis Report

Pursuant to erstwhile Clause 49 of the Listing Agreement with the Stock Exchanges and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, (‘Listing Regulations’) a report on Corporate Governance and Management Discussion and Analysis Report is attached to this Annual Report.

Disclosures

Board and its Committees

The details of the Meetings of the Board and its Committees held during the financial year, the composition of the Committee and the details of Committee Meetings are given in the Report on Corporate Governance.


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Independent Directors Declaration

All the Independent Directors of the Company have given declaration in terms of Section 149(6) of the Companies Act, 2013.

Internal Financial Controls

The Company has Internal Financial Controls commensurate with its size and nature of the business. The business procedures ensure optimum use and protection of the resources and compliance with the policies, procedures and statutes. The internal control systems provide for well defined policies, guidelines and authorizations and approval procedures. The board is satisfied that such internal financial controls are adequate and are operating effectively. The report of the Statutory Auditors in this regard forms part of their Audit Report.

Risk Management

The Company manages, monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives through the Audit Committee and Internal Auditors comprising of external firm of Chartered Accountants. The Company is exposed to various legal disputes as stated elsewhere in this Report which are handled by expert legal advisors in consultation with the Chairman of the Board.

Particulars of Conservation of Energy, Technology Absorption

The provisions of Section 134 (3) (m) of the Companies Act, 2013 relating to conservation of energy and technology absorption do not apply to this Company since it is not engaged in manufacturing activities.

Foreign Exchange Earnings and outgo

The particulars are given in the Notes to the Audited Accounts.

Policy on Appointment and Remuneration of Directors, Key Managerial Personnel and Senior Employees

The Board on the recommendation of the Nomination and Remuneration Committee has laid down a policy for appointment of Directors and remuneration for the Directors, Key Managerial Personnel and Senior Employees. The same is enclosed as Annexure B to this Report. Mr. Ajay Kumar Vijay was appointed as Chief Financial Officer and Key Managerial Personnel of the Company w.e.f. April 20, 2016.

Performance Evaluation of the Board and Committees

The details of annual evaluation made by the Board of its own performance and that of its Committees and

Individual Directors and performance criteria for Independent Directors laid down by the Nomination and Remuneration Committeeare enclosed as Annexure C to this Report.

Vigil Mechanism

The Company has implemented a vigil mechanism to provide a framework for the Company’s employees and Directors to promote responsible and secure whistle blowing. It protects the employees who raise concern about serious irregularities within the Company. A brief summary of the vigil mechanism implemented by the Company is annexed under Annexure D to this Report. This policy is available through the weblink: http://theubgroup.com/PDF/UBHL/2014-2015/UBHLWHISTLE- BLOWER-AND-VIGIL-MECHANISM-POLICY.pdf.

Particulars of Employees and related disclosures

Disclosures with respect to the remuneration of Directors and Employees as required under Section 197 of Companies Act, 2013 and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been appended as Annexure E to this Report.

Details of employee remuneration as required under provisions of Section 197 of Companies Act, 2013 and Rule 5(2) and Rule 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are available at the Registered Office of the Company during working hours before 21 days of the Annual General Meeting and shall be made available to any shareholder on request.

Familiarisation programme for Independent Directors

The details of programmes for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company at the link: http:// theubgroup.com/PDF/UBHL-FAMILIARISATION-PROGRAMMEFOR- INDEPENDENT-DIRECTORS.pdf.

Particulars of Loans, Guarantees and Investments

Particulars of loans and guarantees given and investments made are given in the Notes to the Standalone Financial Statement.

Corporate Social Responsibility

The Company, being an apex holding company of the UB

Group, takes its role as a responsible corporate citizen

seriously and encourages all its constituents of investee

companies to pursue their business in a responsive manner.



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The Company has in place a Corporate Social Responsibility

Committee (CSR) for overseeing CSR activities. Since the

average net profit of the Company for the preceding three

years was negative, there was no necessity for the Company

to carry out any CSR spending for the period under review.

Secretarial Audit

(a) Report

Pursuant to the provisions of Section 204 of the

Companies Act, 2013 and The Companies (Appointment

and Remuneration of Managerial Personnel) Rules,

2014, the Company has appointed Mr. Sudhir Hulyalkar,

Company Secretary in Practice to undertake the Secretarial

Audit of the Company. The Report furnished by Auditor in

the format prescribed under The Companies (Appointment

and Remuneration of Managerial Personnel) Rules, 2014 is

enclosed as Annexure F to this Report.

(b) Qualifications & Board responses

The Board responses to the qualifications of the Secretarial

Audit are as under:

(a) While efforts are still on for appointment of a

suitable candidate for the position of the Managing

Director, the Chief Financial Officer was appointed

w.e.f April 20, 2016.

(b) The Board is seized of the matter regarding

appointment of minimum number of Directors in

terms of the Articles of Association of the Company

and efforts are on in this regard despite the difficulty

in getting suitable persons under the prevailing

circumstances.

(c) The Company has applied for condonation of delay

to the Central Government for filing the required

Form.

Extract of Annual Return

The details forming part of the extract of the Annual Return in

form MGT -9 is annexed herewith as Annexure G.

Major litigations involving the Company

Major litigations of the Company are as follows:

(i) The appeal before the Hon’ble Supreme Court against the Order of the Division Bench of the Hon’ble High Court of Karnataka which has set aside the permission granted by the Hon’ble Company Judge under Section 536(2) of the Companies Act 1956 vide its Order dated

December 20, 2013 to dispose of the shares of USL in favour of Diageo Plc / Relay BV is continuing and is yet to be adjudicated. Meanwhile, the Hon’ble Supreme Court has, by its Order dated February 10, 2014, directed that status quo be maintained in respect of the transaction of sale of shares to Diageo. By another Order dated November 17, 2015, the Hon’ble Supreme Court, have amongst others, admitted the SLP filed by Diageo and posted for final hearing and disposal. The SLPs are still continuing.

(ii) The Company and others have filed a suit in the Hon’ble Bombay High Court against the Consortium of Lenders of KFA (“Lenders”) challenging the purported issue of Guarantee to the Lenders, even before the SARFAESI action has been initiated by the Lenders, and the Suit is still pending adjudication.

(iii) 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 purportedly executed by 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. Thereafter, vide final order dated March 28, 2016 the Hon’ble DRT had issued a Demand Notice directing the Company to pay an amount of ` 192,51,08,484.67.

Aggrieved by the final order of the Hon’ble DRT, the Company preferred a Writ Petition before the Hon’ble High Court of Karnataka and by way of an interim Order dated June 16, 2016, the Hon’ble High Court of Karnataka was pleased to stay the order of the DRT. This stay is still continuing.

(iv) After protracted litigation, SBICAP Trustee Limited, acting as Trustees of the Consortium of Banks of KFA, was permitted to take possession of Kingfisher Villa on May

13, 2016 pursuant to an order of the Hon’ble District

Magistrate dated May 11, 2016 passed under Section

14 of the SARFAESI Act. The Company has since filed an

Appeal against the aforesaid order dated May 11, 2016

before DRT, Mumbai on August 18, 2016. The matter is

yet to be listed for hearing and is pending. Although the

possession of the KF Villa property has been taken over

by the Consortium of Banks, the legal ownership of the

property continues to remain with the Company.



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(v) In the SREI suit in Bangalore, SBI claimed that the deposit

of ` 651 crores kept with the Hon’ble High Court of

Karnataka, being surplus sale proceeds received from

sale of pledged shares, be made available to them. The

Company opposed the said relief claim and the Hon’ble

Court of XXVIII Addl. City Civil Judge, Bangalore while

upholding the objections of the Company was pleased

to dismiss the application filed by SBI vide its order dated

July 16, 2016. The Suit is still in progress.

(vi) The Company has filed a suit claiming an amount of

USD 210,400,000 along with ` 162,10,00,000/- by way

of Damages against one of the above Petitioners who

has filed a winding up Petition against the Company, in

the City Civil Court, Bangalore and the same is pending

adjudication. In the said suit the Defendants therein

filed applications challenging the jurisdiction of the

Hon’ble City Civil Court, Bangalore. However, the said

applications have since been dismissed by the Hon’ble

City Civil Court by its order dated April 30, 2016.

(vii) BIAL had filed a summary suit being O.S.No.8306 of 2012 in the Hon’ble City Civil Court, Bangalore, seeking recovery of ` 15,47,00,000/- allegedly payable to it by the Company under a purported Corporate Guarantee dated December 5, 2011 executed by the Company in favour of BIAL. The Company filed an application in the said suit seeking the leave of the Court to defend the said summary suit. By an order dated March 30, 2013, the Hon’ble City Civil Court, Bangalore granted the Company the leave to defend the suit upon deposit of ` 7,00,00,000/- in the Court. Thereafter, BIAL filed CRP No.193 of 2013 in the Hon’ble Karnataka High Court challenging the order aforesaid dated March 30, 2013. By an order dated October 10, 2014 the Hon’ble Karnataka High Court allowed CRP No.193 of 2013 and set aside the order dated March 30, 2013, granting the Company the leave to defend the said summary suit. In the circumstances, the Company was constrained to file SLP No. 11379 of 2015 in the Hon’ble Supreme Court of India challenging the aforesaid order dated March 30, 2013 of the Hon’ble Karnataka High Court. Pursuant to an order dated April 10, 2015 of the Hon’ble Supreme Court in the said SLP granting conditional stay of all proceedings before the Hon’ble City Civil Court, Bangalore the Company deposited 50% of the Guarantee amount totalling to ` 83.533 million with the Hon’ble City Civil Court, Bangalore. The said SLP is pending before the Hon’ble Supreme Court of India for

final hearing and disposal.

(viii) After litigation which continued for some time and pursuant to dismissal of our appeal before the Hon’ble Supreme Court, ICICI Bank have sold 19,58,000 shares of United Breweries Limited (“UBL”) to recover their claim of the equity recompense amount in full. In response to an Application filed by the Consortium of Banks, the DRT vide its order dated 11th January 2016 restrained ICICI from transferring and utilizing the sale proceeds without permission of the DRT.

(ix) Post the open offer by Zuari Fertilizers and Chemicals Limited (“Acquirer”) together with Zuari Agro Chemicals Limited as the person acting in concert (“PAC”) with the Acquirer, the shareholding of Acquirer in Mangalore Chemicals & Fertilizers Limited (“MCF”) increased from 16.47% to 53.03%. Since certain disputes have arisen out of the Share Holders Agreement (“SHA”) dated March 12, 2014 executed between the Acquirer and PAC (collectively referred to as the “Zuari Group”) on one hand and the Company KFIL and McDowell Holdings Limited (“MHL”) (collectively referred to as the “UB Group”) on the other hand, the UB Group invoked the arbitration clause in the SHA and have referred the dispute to an Arbitrator. The arbitration proceedings are pending. In terms of the SHA, the UB Group has an option to purchase such number of shares from the Acquirer so as to equalize the respective shareholdings of both the UB Group and the Zuari Group. The Board has resolved to exercise this option as and when desirable.

(x) In terms of Master Circular of RBI, State Bank of India and Punjab National Bank have amongst others declared the Company and Dr. Mallya as willful defaulters. While the declaration of SBI is under challenge in a writ petition before the Bombay High Court, the declaration of PNB is under challenge in a Writ Petition before the Hon’ble Delhi High Court. However, the declaration of Wilful Default by United Bank of India is currently under stay by the Hon’ble Calcutta High Court. No other Bank, other than the above have declared the Company as Wilful Defaulter.

(xi) On the matter of investigation into the affairs of Kingfisher Airlines Limited by the Investigating Agencies, the Company and its Directors and Employees have been co-operating with the investigation process by way of personal appearance and submission of documents and records whenever called for. Except the order passed by the Enforcement Directorate, as mentioned hereunder, no other order has been passed by any of the Investigating Agencies.



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Significant and material orders passed by the Regulators/ Courts

The material orders passed by the Regulators / Courts which may impact the going concern status of the Company and its future operations are as under:

(i) Order passed by the Hon’ble High Court of the Karnataka

Out of the 9 winding up petitions filed against the Company, 8 petitions have been admitted. While the Company Petitions filed by BNP Paribas and ATR have been admitted by the Hon’ble High Court of Karnataka vide its order dated November 19, 2013 and December 13, 2013 respectively, the other six company petitions have been admitted vide its combined order dated January 2, 2015. The appeal filed by the Company before the Division Bench of the Karnataka High Court to challenge the admission order of BNP Paribas and ATR were dismissed vide its order dated December 16, 2013. The Company filed an appeal before the Hon’ble Supreme Court to challenge the admission order of BNP Paribas which was admitted by the Hon’ble Supreme Court vide its order dated November 17, 2015. The Suits are still in progress.

(ii) Suit before the Hon’ble Debt Recovery Tribunal

KFA lenders have invoked Company’s Corporate Guarantee and demanded payment of dues from KFA amounting to ` 62,033.500 million. The hearings in the matter are still under progress.

(iii) Order passed by Securities Appellate Tribunal (SAT)

SEBI in its communication dated April 27, 2015 had advised the Company to restate the Accounts for the

Financial Years 2012-13 and 2013-14 to address the

qualifications made in the Report by the Statutory

Auditors, despite a representation that most of the

required adjustments have already been made in the

accounts for the subsequent Financial Year 2013-14. The

Hon’ble Securities Appellate Tribunal by its Order dated

March 29, 2016 quashed and set aside the orders passed

by SEBI dated April 27, 2015 with the liberty to the SEBI

to pass fresh order on the merits and in accordance with

law.

Post the Hon’ble Securities Appellate Tribunal Order

dated March 29, 2016, SEBI has again vide its letter

dated July 25, 2016 advised the Company to comply

with its new circular dated May 27, 2016 regarding

disclosure of the “Impact of Audit Qualifications”

beginning from the financial year 2012-13. Although this

circular is applicable for the period ending on or after

March 31, 2016 which is being complied, the Company

has sought legal view regarding compliance for the

previous years beginning from financial year 2012-13.

(iv) Attachment of assets by Enforcement Directorate

The Directorate of Enforcement (ED), Ministry of

Finance-Dept. of Revenue, Government of India, vide its

Provisional Attachment Order No. 11/2016 dated June

11, 2016, received by the Company, has provisionally

attached the immovable properties of the Company

based in Bangalore and Mumbai under Section 5(1) of

Prevention of Money Laundering Act, 2002 for a period

of 180 days from the date of the Order in connection with

investigation against Dr. Vijay Mallya, Kingfisher Airlines

Limited & Others. Pursuant to a Show Cause Notice

dated July 11, 2016 received from the Adjudicating

Office in this regard, the Company is in consultation with

its Legal Counsels for taking appropriate steps that may

be required including but not limited to defending the

case before the Adjudicating Authority in Delhi.

As part of the investigations of the affairs of the

Kingfisher Airlines Limited (“KFA”), the Company has co-

operated with all the Investigating Agencies by providing

all relevant information, records, data and facts as and

when required by the said Agencies.

Listing requirements

Your Company’s Equity shares are listed on the BSE Limited

(formerly Bombay Stock Exchange Limited) and National

Stock Exchange of India Limited. The listing fees have been

paid to all these Stock Exchanges for the year 2016-2017.

Fixed Deposits

The Company has discontinued the acceptance/ renewal of deposits. The existing deposits will run till the date of maturity and will be repaid on the due dates.

There have been no defaults in the repayment of fixed deposits during the year.

The Fixed Deposits accepted from the Public and Shareholders stood at ` 1.94 crores as on March 31, 2016. A sum of ` 0.99 crores from Public and Shareholders remained unclaimed as at March 31, 2016.



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Transfer to Investor Education and Protection Fund

Pursuant to the provisions of Section 125 of the Companies Act, 2013, an amount of ` 0.06 crores (Previous Year ` 0.07 crores) being the aggregate of the Unclaimed Dividend and Deposits, remaining unclaimed and unpaid for more than 7 years, have been transferred to the Investor Education and Protection Fund.

Contracts and Arrangements with related parties

All Related Party Transactions that were entered during the financial year were at arm’s length basis and were in the ordinary course of business and were in compliance with the applicable provisions of the Companies Act 2013 and the Listing Agreement. There are no materially significant Related Party Transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on an annual basis for those transactions which could not be determined at the beginning of the year. The transactions entered into pursuant to the omnibus approval so granted are placed before the Audit Committee for ratification on a quarterly basis.

Similarly, all material Related Party Transactions, as defined under erstwhile Clause 49 of the Listing Agreement, which require approval of the Shareholders through Special Resolution, have been obtained by the Company in the Annual General Meeting held on September 28, 2015.

General

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report.

Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of

Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Acknowledgement

Your Directors place on record the support received from Group Companies, shareholders, depositors, customers, vendors and particularly the employees who has shown courage and withstood tremendous pressure during the very difficult circumstances.

By Order of the Board

Place: London Dr. Vijay MallyaDate: August 31, 2016 Chairman



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LIMITED

10

Annexure to Report of the Directors (contd.)

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:

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

and 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.

The Independent Directors are also governed by the Code to be followed by them as stipulated in Schedule IV of the Companies Act, 2013.

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

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


LIMITED

11


policy of the Company is aimed at rewarding performance, based on review of achievements on a regular basis and is in consonance with the existing industry practices.

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 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 the Company comprises of two categories of Directors viz., Non –Executive Directors and Non - Executive Independent Directors.

The Remuneration to 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.


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12


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

Audit Committee.

of the Protected Disclosure.

on a regular basis about all Protected Disclosures referred to him/her since the last report together with the results of investigations, if any.

of the 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.

exceptional cases.


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13


Annexure E

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 2015-16, the percentage increase in remuneration of Chief Executive Officer, Chief Financial Officer and other Executive Director and Company Secretary during the financial year 2015-16.

Sl.No.

Name of Director/KMP DesignationRatio of remuneration of each Director to median

remuneration of Employees

Percentage increase in

Remuneration1. Kaushik Majumder Company Secretary Not applicable 14%

Note :(a) 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.

(b) 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 financial year 2015- 16.

ii. The percentage increase in the median remuneration of Employees for the financial year was 9%.

iii. The Company has 87 permanent Employees on the rolls of Company as on March 31, 2016.

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. The loss for the year is ` 13.89 crores. The operational profit for the year 2015-16 is ` 52.99 crores.

vii. The Market Capitalisation of the Company as on March 31, 2016 was ` 133.30 crores as compared to ` 150.68 crores as on March 31, 2015. The price earnings ratio (excluding Exceptional Item) of the Company was (0.63) as at March 31, 2016 and was (0.28) as at March 31, 2015. The closing share price of the Company at BSE Limited on March 31, 2016 being ` 19.95 per equity share of face value of ` 10/- each.

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.


Place: London Dr. Vijay MallyaDate: August 31, 2016 Chairman


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14


Annexure F

Form No. MR-3 SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2016[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) LimitedRegd. Office: Level 12, UB Tower, UB City24, Vittal Mallya Road, Bangalore - 560001

I have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by United Breweries (Holdings) Limited (CIN:L85110KA1915PLC000740) (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, 2016, 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, 2016 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;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, 2015;(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 (Share Based Employee Benefits) Regulations, 2014 (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); (h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998, (No instances for compliance

requirements during the year); and (i) The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

vi. All other Labour, Employee and Industrial Laws, Trade Laws to the extent applicable to the Company.

vii. The Foreign Trade (Development & Regulations) Act, 1992 to the extent applicable to the Company.


LIMITED

15


I have also examined compliance with the applicable clauses of the following:

(i) Secretarial Standards issued by the Institute of Company Secretaries of India.

(ii) 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, Guidelines, etc as mentioned above wherever applicable subject to the following observations:

1. As mentioned in my report for the financial year ended on March 31, 2015, the Company has no Managing Director or Chief Executive Officer or Manager or whole-time director as required under Section 203 (1) (i) of the Act. However the Company has appointed Chief Financial officer with effect from April 20, 2016 as required under Section 203 (1) (iii) of the Act.

2. The Company does not have minimum 9 directors on its Board as required under Article 112 of the Articles of Association of the Company.

3. As prescribed under Section 403 of the Act, there were instances of delay beyond 270 days from due dates for filing of certain resolutions with the Registrar of Companies, under Section 117 of the Act in Form MGT -14. The Company has now filed applications with the Central Government under Section 460 of the Act for condoning the delay and enabling the Company to file these resolutions.

4. The Company has obtained the certificate under Clause 49 (IX) and declaration under Clause 49 (II) (E) of the erstwhile listing agreement for the financial year ended on March 31, 2015 by the Chairman to the Board instead of and in absence of Chief Executive Officer or Managing Director or Manager or whole-time director and Chief Financial Officer.

5. Major Notices received during the year:

(i) SEBI had sent a Show Cause Notice dated August 6, 2015 under Rule 4(1) of the SEBI (Procedure and Imposition of Penalties by Adjudicating Officer) Rules, 1995, for alleged violations of Regulation 31(1), 31(2) read with 31(3) of the SEBI Substantial Acquisition of Shares and Takeovers) Regulations, 2011 for failure in disclosure to the Stock Exchanges regarding creation and invocation/release of certain pledges made in 2012. Upon inquiry SEBI vide its Order dated November 27, 2015, imposed a penalty of Rupees 15 lakhs. The Company has filed an appeal at Hon’ble Securities Appellate Tribunal against this Order and the matter is pending.

(ii) As mentioned in my report for the financial year ended on March 31, 2015, on the communication by SEBI dated April 27, 2015 for restatement of the financial statements for the year 2012-13 and 2013-14 by giving effect to the qualifications of the Statutory Auditors, the Company had made an appeal before Hon’ble Securities Appellate Tribunal. The Hon’ble Securities Appellate Tribunal by its Order dated March 29, 2016 quashed and set aside the orders passed by SEBI dated 27th April 2015 with the liberty to the SEBI to pass fresh order on the merits and in accordance with law. SEBI by vide its letter dated July 25, 2016 has now advised the Company to comply with the newly laid down requirements as detailed in its Circular No. CIR/CFD/CMD/56/2016 dated May 27, 2016 regarding disclosure of the Impact of Audit Qualifications beginning from the Financial Year 2012-13.

(iii) The Company has received notice from Serious Fraud Investigation Office on February 4, 2016 to produce certain documents in relation to investigation by it into the affairs of Kingfisher Airlines Limited and the same have been submitted by the Company.

(iv) On the basis of an application made by the Export division of the Company in 2014 for renewal of the status holder certificate, certain clarifications were sought by the Joint Director General of Foreign Trade. The Export division has re-applied to the Director General of Foreign Trade for the renewal of the certificate which is under consideration.

6. Winding Up and other legal matters:

As mentioned in my previous year report, there are various winding up petitions filed at the Honorable High Court of Karnataka and other legal cases at different courts and tribunals. The Company and the Chairman of the Board Dr. Vijay Mallya have been declared as wilful defaulter by certain banks. The details on these matters are provided by the Company in Notes to Accounts.


LIMITED

16


I further report that

Subject to my observation in (1) 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 notices were given to all Directors to schedule the Board meetings, agenda and detailed note on agenda were sent at least seven days in advance and wherever sent at shorter period and also in the cases wherever the matters other than agenda items were considered, the requisite compliance of Section 173 of the Act and Para 1.3 of Secretarial Standard 1 were carried out 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.

All the decisions carried through without dissent by any members are recorded in the minutes.

I further report that there are adequate systems and processes in the company commensurate size and operations of the company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

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, standards referred to above:

1. The Shareholders of the Company have passed a Special Resolution on July 10, 2015 through postal ballot under Section 186 of the Act, to give loans to any person or other body corporate and to make investments or to acquire by way of subscription, purchase or otherwise of the securities of any other body corporate whether Indian or Overseas up-to a maximum amount of ` 50 Crores exceeding the limits prescribed under the said section.

2. The Shareholders of the Company have passed a Special Resolution on September 28, 2015 at the Company’s Annual General Meeting under Section 188 of the Act and Clause 49 of the erstwhile Listing Agreement approving the contract / arrangement with United Breweries Limited in respect of purchase of goods or materials from them (including purchase of Beer) for an estimated amount of up to ` 150 crores for the financial year 2015- 16.

Sudhir Vishnupant Hulyalkar Company Secretary in PracticePlace: Bangalore FCS No. 6040

Date: August 29, 2016 C P No. : 6137


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17


Annexure G

Form No. MGT - 9

EXTRACT OF ANNUAL RETURNas on the financial year ended on March 31, 2016

[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 contact details

UB Tower, Level 12, UB City, 24, Vittal Mallya Road, Bangalore 560001; Contact No. : 080-22272808; 080-22275809; 080-398560000;

vi) Whether listed company Yes / No Yes

vii) Name, Address and Contact details of Reg-istrar and Transfer Agent, if any

Integrated Enterprises (India) Limited30, Ramana Residency, 4th Cross,Sampige Road, Malleswaram,Bangalore – 560 003Tel.No. : 080 – 23460815 – 18Fax 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.No.

Name and Description of main products / services Business Code of the Product/ service

% to total turnover of the Company

i) Trading of Beer G1 39.40%

ii) Trading of Leather Shoes G1 10.00%

iii) Real Estate Development L1 13.90%

iv) Logo Fee - 17.40%

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES -

Sl. No.

Name and Address of the Company CIN/GLN Holding/ Subsidiary/ associate

% of shares held

Applicable Section

1. Bangalore Beverages LimitedUB Tower, Level 12, UB City,24, Vittal Mallya RoadBangalore, Karnataka

U15500KA2008PLC045719 Subsidiary 100.00 2(87)

2. Bestride Consultancy Private LimitedUB Tower, Level 12, UB City, 24, Vittal Mallya Road,Bangalore - 560 001, Karnataka

U74140KA2010PTC053806 Subsidiary 100.00 2(87)

3. City Properties Maintenance Company Bangalore LimitedUB Tower, Level -1, Basement Floor, UB City,24, Vittal Mallya RoadBangalore - 560 001, Karnataka


4. Kingfisher Finvest India Limited [Formerly Kingfisher Radio Limited]UB Tower, Level 12, UB City, 24, Vittal Mallya Road,Bangalore - 560 001, Karnataka


5. Kingfisher Training and Aviation Services Limited[Formerly Kingfisher Airlines Limited]UB Tower, Level 12, UB City, 24, Vittal Mallya Road,Bangalore - 560 001, Karnataka



LIMITED

18


Sl. No.

Name and Address of the Company CIN/GLN Holding/Subsidiary/Associate

% of shares held

Applicable Section

6. Kingfisher Aviation Training Limited[Formerly Kingfisher Training Academy Limited]UB Tower, Level 12, UB City,24, Vittal Mallya RoadBangalore, Karnataka


7. Kingfisher Goodtimes Private LimitedKingfisher House, Western Express Highway, Vile Parle (East),Mumbai 400057, Maharashtra

U92400MH2007PTC174565 Subsidiary 71.92 2(87)

8. Hyderabad Electronic Instruments Limited (formerly UB Electronic Instruments Ltd) Plot No 1, Sanjeev Housing Colony, Mahendra Hills, East Marredpally, Secunderabad- 500026, Telangana

U29309TG1975PLC001936 Subsidiary 98.44 2(87)

9. UB Infrastructure Projects LimitedUB Tower, Level 12, UB City,24, Vittal Mallya RoadBangalore, Karnataka


10. UB International Trading LimitedUB Tower, Level 12, UB City,24, Vittal Mallya RoadBangalore, Karnataka


11. UB Sports LimitedUB Tower, Level 12, UB City,24, Vittal Mallya RoadBangalore, Karnataka


12. Inversiones Mirabel, S.A.Hong Kong Building, 6th Floor, Samuel Lewis Avenue,P.O. Box 6, 4298, El Dorado

Foreign Company Overseas Subsidiary 100.00 2(87)

13. Mendocino Brewing Co. Inc, USA 1601, Airport Road, Ukiah, CA, 95482


14. Rubic Technologies Inc1050, Bridgeway, Sausalito, CA 94965, USA


15. Rigby International Corp.Vanterpool Plaza, Wickam’s Cay, 1, P.O. Box 873, Road Town,Tortola, British Virgin Islands


16. Releta Brewing Company LLC131, Excelsior Ave, Saratoga Springs, NY 12866, USA


17. UB Overseas Limited2nd Floor, Geneva Place, 333, Waterfront Drive,Road Town, Tortola, B.V.I.


18. UBHL [BVI] Limited2nd Floor, Geneva Place, 333, Waterfront Drive,Road Town, Tortola, B.V.I.


19. United Breweries of America Inc., DelawareThree Harbor Drive, Suite 115, Sausalito, CA 94965, USA


20. United Breweries International [UK] LimitedSpringfield House, Sandling Road, Maidstone,Kent, ME14,2LP


21. Kingfisher Beer Europe Limited (Formerly UBSN Limited)Springfield House, Sandling Road, Maidstone, Kent, ME14,2LP


22. UB Engineering LimitedSahyadri Sadan Tilak Road,Pune- 411030,Maharashtra

L32109MH1970PLC014509 Associate 37.18 2(6)

23. Pixray India Limited 15/11 Stephen House, Kolkata- 700001West Bengal

U51507WB1967PLC027211 Associate 30.36 2(6)

24. WIE Engineering Limited (Under Liquidation) Associate 25.88 2(6)

25. UB Pharma, (Kenya) LimitedEnterprise Road, Nairobi,Kenya

Foreign Company Associate 50.00 2(6)


LIMITED

19


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 (As on April 1, 2015)

No. of Shares held at the end of the year(As on March 31, 2016)

% Change during

the yearDemat Physical Total % of Total

SharesDemat Physical Total % of Total

SharesA. Promoters(1) Indiana) Individual/HUF 5,284,978 - 5,284,978 7.91 5,284,978 - 5,284,978 7.91 NILb) Central Government/ State Government(s)

- - - - - - - - -

c) Bodies Corp. 12,706,798 - 12,706,798 19.02 12,706,798 - 12,706,798 19.02 NILd) 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) Foreigna) 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 NILc) Institutions - - - - - - - -d) Qualified Foreign Investor - - - - - - - - -e) Any Other (specify) - - - - - - - - -Sub-total (A) (2) 16,981,504 - 16,981,504 25.41 16,981,504 - 16,981,504 25.41 NILTotal shareholding of Promoter (A) = (A)(1)+(A)(2)

34,973,280 - 34,973,280 52.34 34,973,280 - 34,973,280 52.34 NIL

B. Public Shareholding1. Institutionsa) Mutual Funds/ UTI 1,969,411 2,576 1,971,987 2.95 1,869,411 2,576 1,871,987 2.80 -0.15b) Financial Institutions/ Banks 235461 10898 246359 0.08 437378 10898 448276 0.67 0.59c) Central Government/ State Government(s)

- 198 198 0.00 - 198 198 0.00 NIL

d) Venture Capital Funds - - - - - - - - -e) Insurance Companies 132424 - 132424 0.20 132424 - 132424 0.20 -f) Foreign Institutional Investors 1127500 1524 1129024 1.69 1072000 1524 1073524 1.61 -0.08g) Foreign Venture Capital Investors

- - - - - - - -

h) Qualified Foreign Investor - - - - - - - - -i) Any Other (specify) - - - - - - - - -Sub-total (B)(1):- 3464796 15196 3479992 5.21 3511213 15196 3526409 5.28 0.072. Non-Institutionsa) Bodies Corporate 5769722 25070 5794792 8.67 4507287 24962 4532249 6.78 -1.89b) Individualsi) Individual shareholders holding nominal share capital upto ` 1 lakh

14605178 1322910 15928088 23.84 11891184 1284487 13175671 19.72 -4.12

ii) Individual shareholders holding nominal share capital in excess of ` 1 lakh

5156052 14400 5170452 7.74 9474168 14400 9488568 14.20 6.46

c) Qualified Foreign Investor - - - - - - - - -d) Others (specify)NRI 506721 84666 591387 1.00 348592 80994 429586 0.64 -0.36Clearing Member 804913 - 804913 1.20 616441 - 616441 0.92 -0.28Trust 75617 - 75617 0.11 76317 - 76317 0.11 -Sub-total (B)(2) 26918203 1447046 28365249 42.45 26913989 1404843 2366851 42.38 -

Total Public Shareholding (B)=(B)(1)+ (B)(2)

30382999 1462242 31845241 47.66 30425202 1420039 31845241 47.66 -

C. Shares held by Custodians and against which Depository Receipts have been issued

- - - - - - - - -

Grand Total (A+B+C) 65356279 1462242 66818521 100.00 65398482 1420039 66818521 100.00 -


LIMITED

20


(ii) Shareholding of Promoters

Sl. No.

Shareholder’s Name

Shareholding at the beginning of the year( As on April 1, 2015)

Shareholding at the end of the year( As on March 31, 2016)

% change in share holding during

the year

No. of shares

% of total shares of the

company

%of Shares Pledged /

encumbered to total shares

No. of shares% of total

shares of the company

%of Shares Pledged /

encumbered to total shares

1. Dr. Vijay Mallya 40,320 0.06 - 40,320 0.06 - NIL

2. Dr. Vijay Mallya &Sidhartha V Mallya

2,825,358 4.23 - 2,825,358 4.23 - NIL

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 Company Private Limited

1,066,184 1.60 - 1,066,184 1.60 - NIL

7. Pharma Trading Company Private Limited

519,818 0.78 0.58 519,818 0.78 0.58 NIL

8. Mallya Private Limited 2,418,100 3.62 3.59 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 7.76 3,4973,280 52.34 7.76 NIL

(iii) Change in Promoters’ Shareholding

Sl. No.

Change in Promoters’ Shareholding Shareholding at thebeginning of the year( As on April 1, 2015)

Cumulative Shareholdingduring the year

April 1, 2015 to March 31, 2016)

No. of shares % of total 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 / decrease (e.g. allotment / transfer / bonus/ sweat equity etc):

No Change *

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, 2015 and March 31, 2016


LIMITED

21


(iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):

Sl.No.

Name Shareholding Date Increase / Decrease in

shareholding

Reason Cumulative Shareholding during the year (April 1, 2015 to March 31, 2016)

No. of shares at the beginning of the year ( As on April 1, 2015)/

end of the year March 31, 2016)


company


company

1. Birla Sun Life Trustee Company Private Limited A/c

1968671 2.95 1.4.2015 1968671 2.95

26.02.2016 -50000 Sale 1918671 2.87

04.03.2016 -50000 Sale 1868671 2.80

1868671 2.80 31.03.2016 1868671 2.802. Derive Trading P LTD 1071000 1.60 1.4.2015 0 Nil

movementduring the year

1071000 1.60

1071000 1.60 31.3.2016

3. H Parson Pvt. LTD 657268 0.98 1.4.2015 0 Nilmovement

during the year

657268 0.98

657268 0.98 31.3.2016

4. ACACIA Partners, LP 605000 0.91 1.4.2015 0 Nilmovement

during the year

605000 0.91

605000 0.91 31.3.2016

5. Karvy Stock Broking Ltd 408319 0.61 1.4.2015 408319 0.61

10.04.2015 -329 Sale 407990 0.61

17.04.2015 58567 Sale 466557 0.70

24.04.2015 -87276 Sale 379281 0.57

01.05.2015 -7665 Sale 371616 0.56

08.05.2015 -8461 Sale 363155 0.54

15.05.2015 -12274 Sale 350881 0.53

22.05.2015 9806 Sale 360687 0.54

29.05.2015 10263 Sale 370950 0.56

05.06.2015 7000 Sale 377950 0.57

12.06.2015 -234 Sale 377716 0.57

19.06.2015 -14982 Sale 362734 0.54

26.06.2015 1824 Sale 364558 0.55

30.06.2015 -1420 Sale 363138 0.54

03.07.2015 1252 Sale 364390 0.55

10.07.2015 -29727 Sale 334663 0.50

17.07.2015 -12343 Sale 322320 0.48

24.07.2015 2811 Sale 325131 0.49

31.07.2015 -6260 Sale 318871 0.48

07.08.2015 -744 Sale 318127 0.48

14.08.2015 -16622 Sale 301505 0.45

21.08.2015 -4837 Sale 296668 0.44

28.08.2015 26608 Sale 323276 0.48

04.09.2015 -18169 Sale 305107 0.46

11.09.2015 -4907 Sale 300200 0.45

18.09.2015 -1204 Sale 298996 0.45

25.09.2015 -4294 Sale 294702 0.44

30.09.2015 -8363 Sale 286339 0.43

01.10.2015 2593 Sale 288932 0.43

09.10.2015 -6833 Sale 282099 0.42

16.10.2015 -2328 Sale 279771 0.42

23.10.2015 8636 Sale 288407 0.43

30.10.2015 -6496 Sale 281911 0.42

06.11.2015 9110 Sale 291021 0.44


LIMITED

22


Sl.No.


shareholding





company


company

13.11.2015 -9840 Sale 281181 0.42

20.11.2015 3321 Sale 284502 0.43

27.11.2015 -3949 Sale 280553 0.42

04.12.2015 -4997 Sale 275556 0.41

11.12.2015 -20574 Sale 254982 0.38

18.12.2015 -10608 Sale 244374 0.37

25.12.2015 -4067 Sale 240307 0.36

31.12.2015 12927 Sale 253234 0.38

01.01.2016 -1380 Sale 251854 0.38

08.01.2016 -13140 Sale 238714 0.36

15.01.2016 13031 Sale 251745 0.38

22.01.2016 1802 Sale 253547 0.38

29.01.2016 7323 Sale 260870 0.39

05.02.2016 -5598 Sale 255272 0.38

12.02.2016 6849 Sale 262121 0.39

19.02.2016 -4577 Sale 257544 0.39

26.02.2016 -462 Sale 257082 0.38

04.03.2016 -2323 Sale 254759 0.38

11.03.2016 2237 Sale 256996 0.38

18.03.2016 -1307 Sale 255689 0.38

25.03.2016 3448 Sale 259137 0.39

263664 0.39 31.3.2016 4527 263664 0.396. Ambitious Computech (Mumbai)

Pvt Ltd327201 0.49 1.4.2015 0 Nil

movementduring the year

327201 0.49

31.3.2016

7. ACACIA Institutional Partners, LP 270000 0.40 1.4.2015 0 Nilmovement

during the year

270000 0.40

31.3.2016

8. VJM Media Private Limited 255000 0.38 1.4.2015 0 Nilmovement

during the year

255000 0.38

31.3.2016

9. SWEW Benefit Company 245083 0.37 1.4.2015 0 Nilmovement

during the year

245083 0.37

31.3.2016

10. Master Capital Services Ltd 224074 0.34 01.04.2015 224074 0.34

10.04.2015 -5763 Sale 218311 0.33

17.04.2015 -2985 Sale 215326 0.32

24.04.2015 -48429 Sale 166897 0.25

01.05.2015 4746 Sale 171643 0.26

08.05.2015 -10 Sale 171633 0.26

15.05.2015 -18216 Sale 153417 0.23

22.05.2015 -4144 Sale 149273 0.22

29.05.2015 8255 Sale 157528 0.24

05.06.2015 -2533 Sale 154995 0.23

12.06.2015 -3353 Sale 151642 0.23

19.06.2015 -2361 Sale 149281 0.22

26.06.2015 1489 Sale 150770 0.23

30.06.2015 -926 Sale 149844 0.22

03.07.2015 1199 Sale 151043 0.23


LIMITED

23


Sl.No.


shareholding





company


company

10.07.2015 -10277 Sale 140766 0.21

17.07.2015 352 Sale 141118 0.21

24.07.2015 -192 Sale 140926 0.21

31.07.2015 -2196 Sale 138730 0.21

07.08.2015 -1552 Sale 137178 0.21

14.08.2015 -3450 Sale 133728 0.20

21.08.2015 1946 Sale 135674 0.20

28.08.2015 -547 Sale 135127 0.20

04.09.2015 11959 Sale 147086 0.22

11.09.2015 -648 Sale 146438 0.22

18.09.2015 -1105 Sale 145333 0.22

25.09.2015 29691 Sale 175024 0.26

30.09.2015 2349 Sale 177373 0.27

01.10.2015 -303 Sale 177070 0.27

09.10.2015 -1071 Sale 175999 0.26

16.10.2015 1042 Sale 177041 0.26

23.10.2015 22485 Sale 199526 0.30

30.10.2015 -6393 Sale 193133 0.29

06.11.2015 -2765 Sale 190368 0.28

13.11.2015 27738 Sale 218106 0.33

20.11.2015 -6465 Sale 142816 0.21

27.11.2015 -12080 Sale 138690 0.21

04.12.2015 -13953 Sale 135891 0.20

11.12.2015 -15659 Sale 135384 0.20

18.12.2015 -14802 Sale 125964 0.19

25.12.2015 -14729 Sale 126389 0.19

31.12.2015 -14416 Sale 126510 0.19

01.01.2016 -13172 Sale 125558 0.19

08.01.2016 -11393 Sale 125785 0.19

15.01.2016 -7596 Sale 126132 0.19

22.01.2016 -9518 Sale 126156 0.19

29.01.2016 -8493 Sale 126634 0.19

05.02.2016 -15392 Sale 131694 0.20

12.02.2016 -13934 Sale 132504 0.20

19.02.2016 -29939 Sale 115394 0.17

26.02.2016 -71779 Sale 103245 0.15

04.03.2016 -68255 Sale 109118 0.16

11.03.2016 -86579 Sale 90491 0.14

18.03.2016 -120234 Sale 55765 0.08

25.03.2016 -110608 Sale 66433 0.10

7274 0.01 31.03.2016 -192252 Sale 7274 0.01


LIMITED

24


(v) Shareholding of Directors and Key Managerial Personnel:

Sl. No.


shareholding





Company


Company

No. of shares


Company

A. Directors:1. Dr. Vijay Mallya

Non-Executive Chairman5,284,978 7.91 1.4.2015 0 Nil movement

during the year 5,284,978 7.915,284,978 7.91 31.3.20162. Mr. Sidhartha V Mallya

Non-Executive Director (upto March 31, 2016)

0 0.00 1.4.2015 0 Nil movementduring the year 0 0.000 0.00 31.3.2016

3. Mr. N SrinivasanIndependent Director

120 0.00 1.4.2015 0 Nil movementduring the year 120 0.00 120 0.00 31.3.2016

4. Mr. M S KapurIndependent Director


5. Dr. Lalit BhasinIndependent Director


6. Ms. Daljit MahalNon-Executive Director

0 0.00 1.4.2015 0 Nil movementduring the year

0 0.000 0.00 31.3.2016

B. Key Managerial Personnel:7. Mr. Kaushik Majumder

Company Secretary0 0.00 1.4.2015 0 Nil movement

during the year 0 0.000 0.00 31.3.2016

V. INDEBTEDNESS

Indebtedness of the Company including interest outstanding/accrued but not due for payment (` In crores)

Secured Loansexcluding deposits

Unsecured Loans Deposits Total Indebtedness

Indebtedness at the beginning of the financial yeari) Principal Amount 413.67 1,968.94 10.52 2,393.12.ii) Interest due but not paid - 190.56 1.78 192.34iii) Interest accrued but not due 0.71 - 2.71 3.43Total (i+ii+iii) 414.38 2,159.49 15.01 2,588.89Change in Indebtedness during the financial yearAdditioni) Principal Amount - 234.03 - 234.03ii) Interest due but not paid - - - -iii) Interest accrued but not due - 1.71 - 1.71Reductioni) Principal Amount 255.92 - 8.58 264.49ii) Interest due but not paid - 5.07 - 5.07iii) Interest accrued but not due 0.71 - 3.73 4.45Net Changei) Principal Amount (255.92) 234.03 (8.58) (30.47)ii) Interest due but not paid - (5.07) - (5.07)iii) Interest accrued but not due (0.71) 1.71 (3.73) (2.74)Indebtedness at the end of the financial yeari) Principal Amount 157.75 2,202.97 1.94 2,362.65ii) Interest due but not paid - 185.48 1.78 187.27iii) Interest accrued but not due - 1.71 (1.02) 0.69Total (i+ii+iii) 157.75 2,390.16 2.70 2,550.61


LIMITED

25


VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. Remuneration to Managing Director, Whole-Time Directors and/or Manager:

Sl. No.

Particulars of Remuneration Managing Director, Whole-time Directors and/or Manager

Total Amount (` )

1. Gross salary(a) Salary as per provisions contained in section 17(1) of

the Income-tax Act, 1961

Nill

(b) Value of perquisites u/s 17(2) Income-tax Act, 1961(c ) Profits in lieu of salary under section 17(3) Income-tax

Act, 19612. Stock Option3. Sweat Equity4. Commission

- as % of profit- others, specify…

5. Others, please specifyTotal (A)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 Act Where 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.

* The Company presently does not have a Managing Director, Whole-time Director and/or Manager

B. Remuneration to other Directors: **

Sl. No.

Particulars of Remuneration Name of Directors Total Amount (` )Vijay Mallya N.

SrinivasanM S Kapur Lalit Bhasin Daljit Mahal

1. Independent DirectorsFee for attending board / committee meetings

- 8,60,000 8,40,000 7,40,000 - 24,40,000

Commission - - - - - -Others, please specify - - - - - -

Total (1) - 8,60,000 8,40,000 7,40,000 - 24,40,0002. Other Non-Executive Directors

Fee for attending board / committee meetings

3,20,000 - - - 2,40,000 5,60,000

Commission - - - - - -Others, please specify - - - - - -

Total (2) 3,20,000 - - - 2,40,000 5,60,000Total Managerial Remuneration = (1+2)

3,20,000 8,60,000 8,40,000 7,40,000 2,40,000 3,000,000

Overall Ceiling as per the Act Sitting Fees not exceeding Rupees One Lakh per meeting of the Board or Committee thereof in terms of Rule 4 of the Companies (Appointment and Remuneration of Managerial Personnel ) Rules, 2014

** None of the Directors are paid any remuneration except sitting fees for attending meetings of the Board and Committee meetings.

* Out of the total sitting fees of ̀ 3,20,000 , payment of siting fees of ̀ 1,60,000 has been restrained by Order of the Tax Recovery Officer dated November 24, 2015.


LIMITED

26

C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD ***

Sl.No.

Particulars of Remuneration Key Managerial Personnel

Total(` )

Kaushik Majumder (Company Secretary)

1. Gross salary

(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961 54,14,705 54,14,705

(b) Value of perquisites u/s 17(2) Income-tax Act, 1961 36,14,625 36,14,625

(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 90,29,330 90,29,330

VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:

Type Section of the Companies

Act

Brief Description

Details of Penalty / Punishment/

Compounding fees imposed

Authority [RD / NCLT/ COURT]

Appeal made, if any (give Details)

A. COMPANY

PenaltyNILPunishment

Compounding

B. DIRECTORS

PenaltyNILPunishment

Compounding

C. OTHER OFFICERS IN DEFAULT

Penalty NIL

Punishment

Compounding



LIMITED

27

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 theCompanies (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 transac-tions 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, 2016, 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, 2016 are as follows:

Sl.No.

Name of theRelated Party and

RelationshipTransaction Duration Salient Terms

Amount (` in

crores)

1. United Breweries Limited (UBL) Purchase of goods or materials ( Beer)

Ongoing At arm’s length basis and in ordinary course of business

2.95

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


Place: London Dr. Vijay Mallya

Date: August 31, 2016 Chairman



LIMITED

28

MANAGEMENT DISCUSSION AND ANALYSIS

1. OVERVIEW

United Breweries (Holdings) Limited (“UBHL”) is the Investment Holding Company of the UB Group which has over many

decades promoted a number of businesses.

In order to realize value from your Company’s strength in building mega consumer brands, your 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

(“USL”) at its apex in 1999. A third vertical, namely Kingfisher Airlines Limited (“KFA”) was promoted in year 2004. Apart

from this, your Company is also a Promoter of Mangalore Chemicals and Fertilizers Limited (“MCF”), UB Engineering Limited

(“UBEL”) and McDowell Holdings Limited (“MHL”) the other three listed entities.

In each of these identified core business areas, your Company provided substantial financial support to the principal operating

entity to facilitate investments and growth.

As Investment Holding Company and the principal Promoter, your Company has always supported its investee Companies

both financially as well as through managerial support. While very significant value was created in some business, other

ventures were not so successful. However, as the principal Holding Company, your Company tried to ensure that fair

business practice is maintained.

2. RISKS, CONCERNS AND MITIGATIONS

(a) (i) Risks & Concerns

Your 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

Your Company is exposed to the following risks and concerns:

i) Your 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.

Your Company assisted by Senior Counsels are taking all necessary steps to protect its interests.

ii) Restrictions imposed by Courts on payment of dividend by certain promotee companies to your Company has affected and will continue to affect the revenue stream till such time the restraints are not withdrawn.

iii) The profitability of the Export Division of your Company UB Global is subject to world economic scenario, volatility of various currencies including Indian Rupee and business decisions of the promotee companies. Property values could reflect overall consumer sentiment. All these factors would have some bearing on your Company’s future profitability.

iv) Some of the 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) Your Company has significant exposure on account of guarantees given to lenders and creditors of an erstwhile Associate Company which could expose your Company to potential pecuniary loss.

vi) One of the principal income streams of your Company is earning rentals from lease of its property in UB City.

The Company is constrained from leasing its vacant property as long as the restraint order passed by the Hon’ble High Court of Karnataka continues.



LIMITED

29

(b) Risk Identification process

Your Company has put in place a risk identification and mitigation process as part of internal financial control

mechanism.

(c) Risk Mitigation

The Audit Committee periodically reviews the efficacy of Internal Financial Control Systems and risk mitigation process.

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 your 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.



LIMITED

30

Report on Corporate Governance

1. COMPANY’S POLICY ON CORPORATE GOVERNANCE

The Company continues to practice good Corporate Governance in their true letter and spirit. The Board of the Company, which is charged with the responsibility of ensuring good Corporate Governance, is 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 Regulation 17 of Securities (Listing Obligation and Disclosure Requirements) Regulations, 2015 ("SEBI (LODR) Regulations 2015"), the Board consists of 3 Independent Directors and 2 Non-Independent Directors (including a Non -Executive Chairman and a Woman Director).

The Company held 9 Board Meetings during 2015-16 and the gap between two meetings did not exceed one hundred and twenty days. The Board Meetings were held on April 8, 2015, May 29, 2015, July 23, 2015, September 28, 2015, November 6, 2015, February 3, 2016, February 5, 2016, March 23, 2016 and March 31, 2016.

The details of attendance of Directors at the Board Meetings during the financial year 2015-16 and at the last Annual General Meeting (AGM) held on September 28, 2015, and also the number of other Directorships and Committee positions held by each of the Directors as on date are given below:

Name DIN Category

No. of Board

Meetings Attended

Attendance at the

last AGM held on

28.9.2015

Directorship in Other

Public Limited

Companies

No. of Committees(other than the

Company) in which Member/Chairman

Dr. Vijay Mallya 00122890 Promoter Non-Executive Chairman

8 Yes 3 0

Mr. Sidhartha V Mallya1 00991076 Promoter jointly with Dr. Vijay Mallya

Non-Executive Director 0 No 1 Nil

Mr. N Srinivasan 00004195 Independent Non-Executive Director8 Yes 8

7(Chairman of 3)

Mr. M S Kapur 00703815 Independent Non-Executive Director9 Yes 7

7(Chairman of 5)

Dr. Lalit Bhasin 00001607 Independent Non-Executive Director9 Yes 9

8(Chairman of 4)

Ms. Daljit Mahal 07140099 Non-Executive Director 6 Yes Nil Nil

1 vacated office Director w.e.f. March 31, 2016

Notes:

1. Except Dr. Vijay Mallya and Mr. Sidhartha V Mallya none of the other Directors are inter-related.2. Mr. Sidhartha V Mallya vacated office w.e.f. March 31, 2016 by operation of Section 167(1)(b) of the Companies Act, 2013.3. 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 Regulation 17 of SEBI (LODR) Regulations 2015, 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.

6. Dr. Vijay Mallya, Chairman, Promoter and Non- Executive Director holds together with his relatives, 5,284,978 equity shares in the Company. Ms. Daljit Mahal, Non-Executive Director does not hold any shares in the Company.

7. The details of programmes for familiarisation of Independent Directors are put up on the website of the Company at the link: http:// theubgroup.com/PDF/UBHL-FAMILIARISATION-PROGRAMMEFOR- INDEPENDENT-DIRECTORS.pdf.


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Report on Corporate Governance (contd.)

3. COMMITTEES OF THE BOARD

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, erstwhile Clause 49 (III) (D) of the Listing Agreement with Stock Exchanges and Regulation 18 of SEBI (LODR) Regulations 2015. 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 Group Chief Financial Officer-UB Group 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 28, 2015.

Meeting and Attendance details

Seven Meetings of the Audit Committee were held during 2015-16 i.e., on April 8, 2015, May 29, 2015, July 23, 2015, November 5, 2015, February 5, 2016, February 18, 2016, March 31, 2016 and the gap between two meetings did not exceed one hundred and twenty days. The composition and attendance of Members at the Meetings of the Audit Committee held during 2015-16 are as follows:

Name Designation CategoryMeetings held during

2015- 16Meetings attended

Mr. N Srinivasan Chairman Independent Director 7 7

Mr. M S Kapur Member Independent Director 7 7

Dr. Lalit Bhasin Member Independent Director 7 4

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, erstwhile Clause 49 of the Listing Agreement with Stock Exchanges and Regulation 19 of SEBI (LODR) Regulations 2015.

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.


Three Meetings of the Nomination and Remuneration Committee was held during 2015-16 i.e. on May 29, 2015, July 23, 2015 and March 31, 2016. The composition and attendance of Members at the Meetings of the Nomination and Remuneration Committee held during 2015-16 are as follows:

Name Designation CategoryMeetings held during

2015- 16Meetings attended

Mr. M S Kapur Chairman Independent Director 3 3Mr. N Srinivasan Member Independent Director 3 3Dr. Lalit Bhasin Member Independent Director 3 3


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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, erstwhile Clause 49 (VIII) (E) (4) of the Listing Agreement with the Stock Exchanges and Regulation 20 of SEBI (LODR) Regulations 2015.

The Stakeholders Relationship Committee reviews all matters connected with transfer of shares lodged for transfer, transmission, dematerialization, rematerialization, split and 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.


Six Meetings of the Committee were held during 2015-16 i.e., on April 8, 2015, May 29, 2015, July 23, 2015, November 5, 2015, December 24, 2015 and February 5, 2016.The composition and attendance of Members at the Meetings of the Stakeholders Relationship Committee held during 2015-16 are as follows:

Name Designation CategoryMeetings held during 2015- 16

Meetings attended

Mr. N Srinivasan Chairman Independent Director 6 6

Mr. M S Kapur Member Independent Director 6 5

Dr. Lalit Bhasin Member Independent Director 6 4

Investor Grievance Redressal

A summary of the complaints received and resolved during the financial year 2015-16 are as follows:

No. of Complaints Received during 2015-16 Resolved during 2015-16 Closing

As per SEBI Category 6 6 Nil

Other Correspondences 343 343 Nil

As on March 31, 2016, no complaints were outstanding.

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 and the Rules made thereunder.

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 2015-16. 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

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].


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4. REMUNERATION OF DIRECTORS

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 Independent

Directors, Board, Committees and other individual Directors.

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 2015-16

The Company did not have a Managing Director during the year.

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 criteria for making payments to non-executive directors is available on the website through the weblink:http://theubgroup.com/PDF/UBHL-CRITERIA-OF-MAKING-PAYMENTS-TO-NON-EXECUTIVE-DIRECTORS.pdf

The details of sitting fees paid to the Directors of the Company for attending the Board and Committee Meetings for the year 2015-16 are as follows:

Name Fees Paid (` )

Dr. Vijay Mallya * 1,60,000

Mr. N Srinivasan 8,60,000

Mr. M S Kapur 8,40,000

Dr. Lalit Bhasin 7,40,000

Ms. Daljit Mahal 2,40,000

Total 28,40,000

*Payment of sitting fees for the meetings held on February 3, 2016, February 5, 2016, March 23, 2016 and March 31, 2016 have been restrained by Order of the Tax Recovery Officer dated November 24, 2015.

None of the Directors has any business relationships with the Company.

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

NameNumber of Shares held

As on March 31, 2016 As on March 31, 2015

Dr. Vijay Mallya 5,284,978 5,284,978

Mr. N Srinivasan 120 120

Mr. M S Kapur Nil Nil

Dr. Lalit Bhasin Nil Nil

Ms. Daljit Mahal Nil Nil


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5. GENERAL BODY MEETINGS

Annual General Meetings

The details of the last three Annual General Meetings (AGMs) of the Company held are furnished as under:

Postal Ballot

Your Company had not conducted any Postal Ballot during the year and there is no resolution proposed to be passed by postal ballot at the ensuing Annual General Meeting. None of the businesses proposed to be transacted in the ensuing Annual General Meeting require passing of resolution through postal ballot.

Financial Year Date Time Venue Special Resolutions passed

97th Annual General Meeting April 2012 – March 2013

Thursday, September 12, 2013

3.15.p.m. Good Shepherd Auditorium, Opp. St. Joseph’s Pre-University College, Residency Road, Bangalore 560 025

1. Appointment of Mr. V Shashikanth as Managing Director


Tuesday, September 30, 2014

12.00. noon

Conference Hall, 1st Floor, UB Tower, UB City, No. 24, Vittal Mallya Road, Bangalore – 560 001

1

2

3

4

5

6

To borrow monies from banks and / or financial institutions and create mortgage/charge in connection with such borrowings.

Contract/Arrangement with United Spirits Limited in respect of licensing of the Pegasus logo of the Company under Section 188 of the Companies Act, 2013.

Contract/Arrangement with United Spirits Limited in respect of purchase of goods or materials from them under Section 188 of the Companies Act, 2013.

Contract/Arrangement with United Breweries Limited in respect of purchase of goods or materials from them under Section 188 of the Companies Act, 2013.

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.

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.


Monday, September 28, 2015

11.30 a.m Conference Hall, 1st Floor, UB Tower, UB City, No. 24, Vittal Mallya Road, Bangalore – 560 001

1 Contract/Arrangement with United Breweries Limited in respect of purchase of goods or materials from them under Section 188 of the Companies Act, 2013.


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6. 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, same are not sent to the residence of Shareholders.

Newspapers in which Results are normally published in i) The Financial Expressii) 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 presentations made to Institutional Investors or to the analysts:

Yes

Designated e-mail Address for Investor Services

In terms of Regulation 46(j) of SEBI (LODR) Regulations 2015, the designated e-mail address for investor complaints is “[email protected]”.

7. GENERAL SHAREHOLDER INFORMATION

The particulars of the Annual General Meeting for the year ended March 31, 2016 is as under:

Date of 100th AnnualGeneral Meeting

Venue Time

Thursday , September 29, 2016

Conference Hall, 1st Floor, UB Tower, UB City , 24 Vittal Mallya Road, Bangalore – 560 001

11.30 a.m.

Book Closure

From September 24, 2016 To September 29, 2016

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


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Unclaimed Dividend

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 ` 0.06 crores towards unclaimed dividend declared for the financial

year 2007-08 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 28, 2015 (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

Year

Type of

dividend

Dividend per

Share (` )

Date of declaration Due date for

transfer

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





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.No.

Name of the StockExchanges

Address Scrip Name, ScripCode & Scrip ID

1. BSE Limited Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai 400 001

UBHOLDINGS /507458

2. National Stock Exchange ofIndia Limited

Exchange Plaza, C-1, Block-G, Bandra Kurla Complex, Bandra East, Mumbai 400 051

UBHOLDINGS

The Annual listing fee for the year 2016 - 2017 has been paid to the above Stock Exchanges.


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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, 2015 to March 31, 2016 are provided in the table hereunder.

MonthsBSE NSE

High LowVolume

High LowVolume

` ` ` `April, 2015 26.35 19.15 25059 26.40 19.10 42167May, 2015 22.75 19.20 6025 22.70 19.10 18662June, 2015 21.35 17.30 5790 20.90 17.25 17927July, 2015 24.70 18.55 11286 24.70 18.40 35195

August, 2015 23.35 17.00 5014 23.50 17.70 14641September, 2015 25.40 20.95 5892 25.45 20.50 20733

October, 2015 33.80 21.45 21548 33.70 21.50 53775November, 2015 35.80 28.00 18688 35.80 28.10 43424December, 2015 32.10 27.20 10257 32.15 25.60 22117January, 2016 31.20 21.60 8936 31.30 21.60 20961February, 2016 29.75 18.20 11862 29.85 17.70 31405March, 2016 23.00 18.15 9624 22.85 18.00 23131

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


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Registrars and Transfer Agents

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 the erstwhile Clause 47(c) of the Listing Agreement and Regulation 40(9) of SEBI (LODR) Regulations 2015 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. The Company has established connectivity with both the depositories i.e., NSDL and CDSL through Integrated Enterprises (India) Limited, Registrars and Share Transfer Agents of the Company to facilitate the investors in having easy access to the demat system. 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, 2016

Sl. No. Particulars No. of Share Holders No. of Shares %1 Demat Mode

NSDL 24383 49098206 73.48

CDSL 11564 16300276 24.39

Total 35947 65398482 97.872 Physical Mode 14923 1420039 2.13

Grand Total 50870 66818521 100.00

Distribution of Shareholding as on March 31, 2016

Category Number of Shareholders % Number of Shares %

Up to 5,000 50248 98.78 12178102 18.23

5,001 - 10,000 321 0.63 2373788 3.55

10,001 - 20,000 135 0.26 1911781 2.86

20,001 - 30,000 50 0.10 1212548 1.81

30,001 - 40,000 18 0.04 638400 0.96

40,001 - 50,000 10 0.02 461453 0.69

50,001 - 1,00,000 37 0.07 2518568 3.77

1,00,001 and above 51 0.10 45523881 68.13

Total 50870 100.00 66818521 100.00


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Outstanding Global Depository Receipts (GDRs) / American Depository Receipts (ADRs) / Warrants or Con-vertible Instruments

- 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 requested to register either ECS mandate or Bank details for payment of dividend.

Shareholding Pattern as on March 31, 2016

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 -Rossi & Associates Private Limited 0.69

VJM Investments Private Limited -

Foreign Promoters

Watson Limited 21.19

Firstart Inc 4.22

Total Promoters’ Holdings 52.34

Foreign Institutional Investors 1.61

Mutual Funds /UTI 2.80

Financial Institutions / Banks 0.67

Insurance Companies 0.20

Other Bodies Corporate 6.78

Individuals holding up to ` 1 lakh in nominal capital 19.72

Individuals holding more than ` 1 lakh in nominal capital 14.20

Others 1.04

NRIs 0.64

Total Non-Promoter’s Holdings 47.66

Grand Total 100.00


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Plant Locations

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 and Share Transfer Agents

Integrated Enterprises (India) Limited30, Ramana Residency, 4th Cross,Sampige Road, Malleswaram,Bangalore – 560 003Tel.No. : 080 – 23460815 – 18Fax 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 SecretaryUnited Breweries (Holdings) Limited“UB Tower”, Level 12, UB CityNo.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 hold-ingshares in dematerialised form

Shareholders holding shares in dematerialized form should ad-dress all 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.

8. OTHER 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.

Code of Conduct

The Company had 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, 2016.


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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.

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.

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.

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 under erstwhile Clause 49 of the Listing Agreement with Stock Exchanges and the provisions of the Listing Regulations, as amended from time to time except to the extent of CEO/CFO certification. 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.

Policy for determining ‘material’ subsidiaries

The Policy for determining ‘material’ subsidiaries is available through the weblink: http://theubgroup.com/PDF/UNITED-BREWERIES-(HOLDINGS)-LIMITED-POLICY-FOR-DETERMINING-MATERIAL-SUBSIDIARIES.pdf.

Policy for related party transactions

The Policy for related party transactions is available through the weblink: http://theubgroup.com/PDF/UBHL/2014- 2015/UNITED%20BREWERIES(HOLDINGS)%20LIMITED-%20RELATED%20PARTY% 20TRANSACTIONS%20POLICY.pdf.

Commodity price risks and commodity hedging activities

Your Company is not exposed to the risk of price fluctuation of finished goods. Your Company has a governance mechanism in place to ensure that your Company is adequately protected from market volatility. Your Company proactively manages these risks through foreign exchange forward booking, inventory management and proactive vendor development practices.

Your Company manages the foreign exchange risk through hedging on the basis of advice regularly received from a foreign exchange consultant. Foreign exchange transactions are fully covered with strict limits placed on the amount of uncovered exposure, if any, at any point in time. The Company does not enter into any derivative instruments for trading or speculative purposes. The details of foreign exchange exposures as at March 31, 2016 have been disclosed in Note No. 68 in the Notes to Standalone Financial Statements.

9. NON –COMPLIANCE OF ANY REQUIREMENT OF CORPORATE GOVERNANCE REPORT

The Company has complied with all the requirements of sub para (2) to (10) Corporate Governance Report.


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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.` CEO/CFO Certificate

The certificate from CEO/CFO to the Board pursuant to Regulation 17(8) of SEBI (LODR) Regulations 2015 during the year under review has been obtained from the Chairman of the Board, since the Company did not have a Managing Director or a Manager nor a Chief Financial Officer.

As per Clause 13 of Part C of Schedule V to the Listing Regulations, the Company has made disclosures of the compliance with corporate governance requirements specified in Regulation 17 to 27 and Clauses (b) to (i) of Sub-regulation (2) of Regulation 46 on the website of the Company: www.theubgroup.com.

AnnexureReport on Corporate Governance of United Breweries (Holdings) Limited

Compliance with Code of Business Conduct and Ethics

In accordance with Regulation 26 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, 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, 2016.

Date: August 31, 2016 Dr. Vijay MallyaPlace: London Chairman


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CERTIFICATE To the Members ofUnited 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, 2016, as stipulated in clause 49 of the Listing Agreement of the said Company with Stock Exchanges (“Listing Agreement”) for the period from April 1, 2015 to November 30, 2015 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”) for the period from December 1, 2015 to March 31, 2016 .

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 above mentioned Listing Agreement and Listing Regulations except the following condition;

(i) It has not obtained a certificate required to be obtained from CEO/CFO. However, 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, 2016 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 & CoChartered Accountants

Place : Bangalore (S Vishnumurthy)Date : August 31, 2016 Proprietor

Membership No. : 22715Firm Registration No.004742S


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Independent Auditor's 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 2016, 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 and presentation 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 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 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 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. 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 had extended corporate guarantees of Rs. 87,072 million in favour of lenders/lessors/creditors of Kingfisher Airlines Limited (KFA) an erstwhile subsidiary of the company (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. The carrying value of such investments is Rs. 1,472 million. There are significant declines in the carrying value of these investments. The company has not provided for such declines. (Refer note 33(h) to financial statements).

c. Certain subsidiaries owe to the company Rs. 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).


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Independent Auditor's Report (contd.)

d. The company has shown Rs. 358 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 42 to financial statements).

e. An amount of Rs. 8,074 million is shown as dues from a contributory trust (“Trust”) managed by a financial company which had sold the company’s investments that were pledged with it and had appropriated part of the sale proceeds against dues from KFA (Ref note no. 43 & 33(e)). Further, the said Trust still holds custody of 59,150,000 shares in KFA, belonging to the company (Ref note no. 33(c)). The company has petitioned the City Civil 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 if any and consequently quantify the amount of provisions 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 loss stated in the Statement of Profit and Loss would have been higher by such amount; the liabilities in the 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 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 lower 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. 44]; the Honourable High Court of Karnataka has restrained the Company from disposing of any of its assets [Ref. note no. 50.]; the Company is a defendant in recovery suits instituted by certain creditors/lenders for recovery of their dues of Rs. 62,033 million [Ref. note no. 37] (which is part of the amount mentioned at Sl No. 4(a) above); some of the lenders have recovered their dues by disposing of the securities pledged by the company.[Ref. note no. 37]. On the consideration that it shall defend legal cases successfully, the company has prepared its financial statements on going concern basis for the reasons stated in note no. 50. 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. 44.

g. The Company has not recognised in its financial statements, disputed liabilities amounting to Rs. 77,309 million (which is part of the amount mentioned at Sl No. 4(a) above) arising out of invocation of its corporate guarantees [Ref. note no. 31]. Had the company recognised the above, current liabilities in the Balance Sheet would have been higher, guarantees under contingent liabilities would have been lower and amounts recoverable under other current assets would have been higher, by Rs. 77,309 million.

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 2016, and its loss 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 Rs. 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 Rs. 494 million (a part of which is referred in paragraph 4(d)) and encumbered an amount of Rs. 115 million against the borrowings from one of the group companies which had been guaranteed by the Company [Ref note no. 42];


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Independent Auditor's Report (contd.)

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 Company has written off an amount of Rs. 579 million due from an associate. [Ref. note no. 39];

d. The lenders of Kingfisher Airlines Limited have taken possession of the Company’s property in Goa to recover its dues [Ref. note no. 32(d)];

e. Note no. 48 regarding non-accrual of interest payable to the extent of Rs. 1904 million (out of that Rs. 634 million pertaining to earlier year) 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, 2016 (“the Order”), issued by the Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure A, 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 2016, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2016, from being appointed as a director in terms of Section 164(2) of the Act;

g. We have issued a separate report on the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls. The said report can be found in “Annexure B” to this report.

h. 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 44 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 : Bangalore Membership No. 22715Date : 31-08-2016 Firm Registration No.004742S


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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.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.

(ii) The physical verification of inventory has been conducted at reasonable intervals by the management. The discrepancies noticed on verification between the physical stocks and the book records 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. Therefore, the provisions of clause 3(iii)(a) to 3(iii)(c) of the Companies (Auditor’s Report) Order, 2016 are not applicable to the company.

(iv) According to the information and explanation given to us and based on our examination of the records of the company, the company has not given any loans, made any investments, provided any guarantee/security to any persons during the year. Therefore, the provisions of clause 3(iv) of the Companies (Auditor’s Report) Order, 2016 are not applicable to 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,

employees state insurance, income tax, sales tax, duty of customs, duty of excise, value added 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.

According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees state insurance, income tax, sales tax, duty of customs, duty of excise, service tax, value added tax and other material statutory dues etc., were in arrears as at 31-3-2016 for a period of more than six months from the date they became payable.

Annexure to the Independent Auditor's Report


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48

(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.

Name of the Statute Nature of duesDisputed amount

( ` in million)Forum where dispute is

pending

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. 2011-12. 1,144.949 Income Tax Appellate Tribunal

Foreign Trade (Development & Regulation) Act, 1992

Penalty 5.000 High Court of Judicature, Madras

(viii) As per the information and explanations given to us, the company has defaulted in repayment of dues to a bank and a Non Banking Financial Company. The unpaid dues to the bank as at March 31, 2016 were Rs. 1,519 million and unpaid dues to the Non Banking Financial Company were Rs. 695.686 million. Out of this Rs. 17 million has been repaid to bank in April 2016. The company is in negotiation with the banker. The company has not issued any debentures.

(ix) The company has not raised any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year. Therefore, the provisions of clause 3(ix) of the Companies (Auditor’s Report) Order, 2016 are not applicable to the company.

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

(xi) The company has not paid/provided any managerial remuneration during the year. Therefore, the provisions of clause 3(xi) of the Companies (Auditor’s Report) Order, 2016 are not applicable to the company.

(xii) In our opinion and according to the information and explanations given to us, the company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the Companies (Auditor’s Report) Order, 2016 are not applicable to the company.

(xiii) According to the information and explanations given to us and based on our examination of the records of the company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanation given to us and based on our examination of the records of the company, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

(xv) According to the information and explanation given to us and based on our examination of the records of the company, the company has not entered into non-cash transactions with directors or persons connected with him. Therefore, the provisions of clause 3(xv) of the Companies (Auditor’s Report) Order, 2016 are not applicable to the company.

(xvi) According to the information and explanation given to us and based on our examination of the records of the company, the company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.



Annexure to the Independent Auditor's Report (contd.)


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Annexure to the Independent Auditor's Report (contd.)

Annexure – B to the Auditor’s report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)We have audited the internal financial controls over financial reporting of UNITED BREWERIES (HOLDINGS) LIMITED (“the Company”) as of 31st March, 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial ControlsThe Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Char-tered Accountants of India (‘ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, includ-ing adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ ResponsibilityOur responsibility is to express an opinion on the Company's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was estab-lished and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls sys-tem over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstate-ment of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial ReportingA company's internal financial control over financial reporting is a process designed to provide reasonable assurance regard-ing the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those poli-cies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised ac-quisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial report-ing and such internal financial controls over financial reporting were operating effectively as at 31st March 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.




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50

` in million

Note No. As at

March 31, 2016 As at

March 31, 2015

Equity and LiabilitiesShareholders’ funds

Share capital 2 668.185 668.185 Reserves and surplus 3 4,868.376 5,136.217

Non-current liabilitiesLong term borrowings 4 869.451 14,617.353 Other long term liabilities 5 4,606.872 4,820.485 Long term provisions 6 63.338 76.905

Current liabilitiesShort term borrowings 7 6,416.235 5,378.816 Trade payables 8 530.044 569.416 Other current liabilities 9 19,211.869 6,660.784 Short term provisions 10 1,006.435 1,006.435

38,240.805 38,934.596

Assets

Non-current assetsFixed assets

Tangible assets 11 8,939.652 9,173.248 Capital work in progress 11 1,468.996 1,362.051

Non-current investments 12 6,442.920 6,742.852 Long term loans and advances 13 757.811 756.932 Other non-current assets 14 59.613 58.666

Current assetsCurrent investments 15 0.646 27.125 Inventories 16 232.168 114.690 Trade receivables 17 1,032.675 637.339 Cash and cash equivalents 18 1,958.858 1,218.645 Short term loans and advances 19 2,955.252 4,060.798 Other current assets 20 14,392.214 14,782.250

38,240.805 38,934.596

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.

Balance Sheet as at March 31, 2016


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 London Ajay Kumar Vijay Kaushik Majumder BangaloreAugust 31, 2016 Chief Financial Officer Company Secretary August 31, 2016


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51




` in million

Note No. For the year ended

March 31, 2016 March 31, 2015

Revenues

Revenue from operations 21 3,718.076 3,814.435

Other incomes 22 476.242 448.135

4,194.318 4,262.570

Expenses

Purchase of traded goods 1,185.104 1,108.910

Cost of packing materials consumed 23 362.660 320.388

Change in inventories 24 (49.699) 223.494

Employee benefit expenses 25 334.535 297.740

Finance costs 26 915.862 1,853.276

Depreciation 11 166.145 215.047

Provision for doubtful advances 550.000 578.955

Advance no longer recoverable 125.134 1,286.236

Provision for diminution in value of investments 212.464 2,809.619

Other expenses 27 915.962 879.175

4,718.167 9,572.840

(Loss) before exceptional items (523.849) (5,310.270)

Exceptional Items (net) 28 72.545 9,650.009

Profit / (Loss) for the year (451.304) 4,339.739

Earnings Per Share (Face value of `10 each)

Basic / Diluted Earnings Per Share (before exceptional items) (7.84) (79.47)

Basic / Diluted Earnings Per Share (after exceptional items) (6.75) 64.95

Significant Accounting Policies and other notes 1


This is the Statement of Profit and Loss referred to in our report of even date.

Statement of Profit and Loss for the year ended March 31, 2016


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52

` in million

For the year ended March 31, 2016


A. Cash Flow from Operating Activities

Profit/ (loss) before taxes (451.304) 4,339.739

Adjustments for :


Dividend income (41.031) (48.706)

Exceptional items (72.545) (9,650.009)

Loss / (Profit) on sale of old assets (0.014) 0.042

Interest and finance charges 915.862 1,853.276

Interest income (307.738) (370.563)

Liabilities no longer required written back (152.459) (66.397)


Provision for bad debts 87.627 -

Advances no longer recoverable 125.134 1,286.236

Provision for diminution in value of investments 212.464 2,809.619

Unrealised exchange fluctuation loss 183.463 196.323

1,666.908 (3,196.177)

Operating profit before working capital changes 1,215.604 1,143.562

Adjustments for :

Decrease/(increase) in trade and other receivables 327.412 (951.328)

Decrease /(increase) in inventories (117.478) 231.102

(Decrease)/increase in trade payable / other liabilities 65.476 (626.716)

275.410 (1,346.942)

Cash generated from / (used in) operations 1,491.014 (203.380)

Direct taxes paid (127.098) (138.276)

Net cash generated from / (used in) operating activities 1,363.916 (341.656)

B. Cash Flow from Investing Activities

Purchase of fixed assets (including changes in capital work in progress) (109.814) (118.874)

Sale of fixed assets/ advance for residential units 37.892 160.109

Loans and advances (net) (250.879) 1,087.416

Sale of investments (other than short term investments) 630.170 4,714.271

Dividend income (other than short term investments) 41.031 48.666

Decrease / (increase) in fixed deposits with bank (155.096) 574.194

Deposit with court (48.533) -

Net cash generated from / (used in) investing activities 144.771 6,465.782

Cash Flow Statement for the year ended March 31, 2016


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` in million



C. Cash Flow from Financing ActivitiesInterest and finance charges (993.936) (1,014.935)

Interest received 307.738 352.601 Increase in short term borrowings 2,313.641 1,388.967 Decrease in bank borrowings (905.052) (161.329)Decrease in Long term borrowings (1,713.265) (6,716.004)Net cash used in financing activities (990.874) (6,150.700)

Net Increase / (decrease) in cash and cash equivalents 517.813 (26.574)Cash and cash equivalents at the beginning of the year 840.697 867.272 Closing balance of cash and cash equivalents 1,358.510 840.697

Cash and Cash equivalents comprises of:Cash in hand (including foreign currencies) 0.388 0.385

Balance with banks in current accounts 1,357.476 813.187 Current investments 0.646 27.125

1,358.510 840.697 Reconciliation of cash and cash equivalents as per Balance Sheet and Cash Flow Statement

Cash and cash equivalents as per Balance Sheet 1,958.858 1,218.645

Less: Deposits maturing beyond 3 months 600.994 405.073

Add: Current investments 0.646 27.125 1,358.510 840.697

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 `1.624 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 `2.443 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 Cash Flow Statement referred to in our report of even date.

Cash Flow Statement for the year ended March 31, 2016 (contd.)





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CORPORATE INFORMATION:

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 Group's alcoholic beverages business through United Breweries Limited. UBHL also holds investments in Mangalore Chemicals & Fertilizers Limited, United Spirits 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 prescribed under section 133 of the Companies Act, 2013 (‘Act’) read with rule 7 of the Companies (Accounts) Rules, 2014.

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.

Notes to the Financial Statements


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vii. Depreciation:

Depreciation is under written down value method at the rates prescribed under Schedule II to the Companies Act, 2013.

viii. Effects of changes in Foreign Exchange rates :

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:

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 investments are capitalized. Diminution in the value of investments, if considered permanent, is provided for.

iv) 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.

Notes to the Financial Statements (contd.)


LIMITED

56

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 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” prescribed under section 133 of the Companies Act, 2013 (‘Act’) read with rule 7 of the Companies (Accounts) Rules, 2014. 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.



LIMITED

57


` in million

As at March 31, 2016


2. Share capital

Authorised

100,000,000 (2015: 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 (2015: 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 period

2015 - 2016 2014 - 2015

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, 2016 March 31, 2015

Number of shares

% holding Number of shares

% holding

Dr Vijay Mallya 52,84,978 7.91 52,84,978 7.91

McDowell Holdings Limited 52.60,002 7.87 52.60,002 7.87

Watson Limited 1,41,59,986 21.19 1,41,59,986 21.19

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


LIMITED

58

` in million



3. Reserves and surplus

Capital reserve 511.365 511.365

Securities premium account 8,331.975 8,331.975

Fixed assets revaluation reserve 8,550.705 8,550.705

Foreign Currency Monetary Item Translation Difference Account

- (183.463)

General reserve 75.000 75.000

Deficit as per Statement of Profit and Loss: At the beginning of the year (12,149.365) (16,489.104)Less : Profit/ (loss) for the year (451.304) 4,339.739

(12,600.669) (12,149.365)

4,868.376 5,136.217

4 Long term borrowingsSecuredFrom banks 1,502.237 2,249.319 From others 101.863 1,729.367

UnsecuredFixed deposits 19.396 105.156 From group companies 20.000 20.000 From others 14,448.546 14,448.546

16,092.042 18,552.389Less: Current maturitiesSecuredFrom banks 1,502.237 2,249.115 From others 101.863 1,365.528

UnsecuredFixed deposits 19.396 95.393 From group companies 20.000 20.000 From others 13,579.095 205.000

15,222.591 3,935.036

869.451 14,617.353



LIMITED

59

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

Nature of security Terms of repayment

(1) Vehicle loan from HDFC Bank amounting to ` 0.204 million (Pr. year `2.519 million) is secured by hypothecation of vehicle.

Repayable in 60 equated monthly instalments from the date of loan (May 2011) along with interest of 10.25% p.a. Last instalment due in April 2016. Loan is since repaid in full and closed.

(2) Loan from Yes Bank Limited amounting to `. 1,502.033million (Pr. year ` 2,246.800 million) is sucured by subservient charge on all current assets and movable fixed assets of the company, both present and future, deposit in debt service reserve account equal to the total amount of scheduled interest payment due for one month and pledge of 2,726 shares in United Spirits Limited, 8,794,000 shares in United Breweries Limited held by the company, 46,45,000 shares in United Breweries Limited held by McDowell Holdings Limited.

Moratorium of 24 months followed by 12 equal quarterly instalments from the date of each respective disbursement i.e. March 30, 2013. Interest @ 15.00 %. Additional interest rate of 2% for delay in interest payment. Further, 7% p.a on loan is payable as fees. Overdue interest of Rs. 17.114 million is since paid. Although, the loan has been recalled in January 2014 and is overdue for payment as on Balance Sheet date. The Company is negotiating for restoration of the facility.

(3) Loan from HDFC Limited (including foreign currency denominated loan of USD) amounting to `101.863 million (Pr year `1,521.720 million) are secured by the pledge of 317,030 shares in McDowell Holdings Limited held by the company, mortgage by deposit of title deed of the company’s 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 10,50,000 shares in United Spirits Limited held by a subsidiary company.

Loan of `101.863 million is repayable in 119 monthly installments from February 2012. Loan has been fully repaid in April 2016.

b. Terms of repayment for Unsecured borrowings

(1) Public deposits amounting to `19.396 million 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 group company

Amounting to `20 million Overdue for repayment. Rate of interest @ 12% p.a. 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.



LIMITED

60

c) Amounting to `13,374.095 million Repayable in 3 equal instalments in March 2019,March 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 shareholders of USL at their EGM on 28th November 2014, the company has stopped accruing interest on this loan w.e.f 1st October 2014.

d) 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, 2016 March 31, 2015

5. Other long term liabilities

Trademark licence security deposits 520.000 577.741 Lease security deposits 434.779 345.050 Refundable security deposit 67.500 67.500 Instalments from allottees for residential units 1,582.900 1,545.184 Advance licence fees for pegasus logo 2,001.693 2,285.010

4,606.872 4,820.485

6. Long term provisions

For legal cases 37.428 37.428 Leave encashment 25.910 39.477

63.338 76.905

7. Short term borrowingsSecuredWorking capital loan / cash credit from bank - 157.970

UnsecuredFrom group companies 5,834.815 4,612.796

From Others 581.420 608.050

6,416.235 5,378.816

a. Terms of repayment for unsecured borrowings1. Loan from group companies amounting to

` 5,834.815 million` 508.800 million with interest @ 21.25% p.a is overdue for payment. Balance loan is repayable on demand.

2. Loan from others includes ̀ 250 million (Pr ̀ 250 million) from LKP Finance Ltd, secured through pledge of shares held by a third party.

Overdue for repayment. Rate of interest @ 18% p.a. Ex-tension of loan term being negotiated with the lender.

3. Short term loan from LKP Finance Limited amounting to `331.420 million (Pr year ` 358.049 million) secured through pledge of shares held by a third party.

Overdue for repayment. Rate of interest @ 18% p.a. Ex-tension of loan term being negotiated with the lender.



LIMITED

61

8. Trade payables

Trade creditors 530.044 569.416

530.044 569.416

9. Other Current Liabilities

Current maturities of long term borrowings 15,222.591 3,935.036

Interest accrued and not due 29.782 34.253

Interest accrued and due 1,849.797 1,923.400

Statutory dues 46.426 27.802

Employee dues 4.677 7.971

Advertisement and sales promotion expenses payable 458.200 428.053

Advances received from customers 162.699 28.550

Claims payable 9.935 13.283

Other liabilities 1,314.242 183.086

Provision for expenses 102.381 65.101

Creditor for capital goods 9.421 11.894

Investor Education and Protection Fund:

Unclaimed public deposits/interest 0.132 0.132

Unclaimed dividends 1.586 2.223

19,211.869 6,660.784

10. Short-term provisions

Income tax 1,005.988 1,005.988

Wealth tax 0.447 0.447

1,006.435 1,006.435

` in million As at

March 31, 2016 March 31, 2015

`



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LIMITED

63

` in million

As at March 31, 2016 As at March 31, 2015

12. Non-current investments ( Refer note 33 )

ParticularsNumber

ofShares

FaceValue

CostNumber

ofShares

FaceValue

Cost

TRADE INVESTMENTS IN FULLY PAID EQUITY SHARES:

QUOTED

United Breweries Limited 28,337,911 ` 1 1,226.703 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 4,116,306 ` 10 120.982 4,208,556 ` 10 123.693

McDowell Holdings Limited 489,482 ` 10 16.273 489,482 ` 10 16.273

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 59,550,000 ` 10 2,779.287

4,773.628 4,861.098

Less : Provision for diminution in value of investments

2,991.750 2,779.287

1,781.878 2,081.812

* 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

Hyderabad Electronic Instruments Limited(Formerly 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 Bangalore Limited

50,000 ` 10 0.500 50,000 ` 10 0.500

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


56.890 56.890

949.489 949.489



LIMITED

64

` in million

As at March 31, 2016 As at March 31, 2015

PARTICULARSNUMBER

OFSHARES

FACEVALUE

COSTNUMBER

OFSHARES

FACEVALUE

COST

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


9.435 9.435

- -

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 24,515,605 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 6,442.920 6,742.852

Aggregate amount of quoted investments 1,781.878 2,081.812

Aggregate amount of unquoted investments 4,661.042 4,661.042

Market value of quoted investments 34,368.770 47,480.996

SHARE MOVEMENTS DURING THE YEAR - NON CURRENT INVESTMENTS

` in Million

Particulars No. of Shares

Cost

A. ADDITION DURING THE YEAR Nil Nil

B. SALES DURING THE YEAR

United Breweries Limited 1,958,000 84.759

United Spirits Limited 92,250 2.711

Total 87.470



LIMITED

65

` in million As at As at

March 31, 2016 March 31, 201513. Long term loans and advance

Loans and advances to subsidiariesConsidered good 755.161 754.282 Considered doubtful 139.982 139.982

895.143 894.264 Less: Provision 139.982 755.161 139.982 754.282

Loans and advances to associatesConsidered good - -

Considered doubtful - 578.955 - 578.955

Less: Provision - 578.955 - -

Loans and advances to others Considered good 2.650 2.650 Considered doubtful 254.733 4.746

257.383 7.396 Less: Provision 254.733 2.650 4.746 2.650

757.811 756.932

14. Other non-current assetsOther deposits - considered good 59.613 58.666

59.613 58.666

15. Current investmentsMutual funds* 0.646 27.125

0.646 27.125

* market value as on 31.03.16 is ` 0.646 million

16. Inventories

Raw materials 16.322 0.684

Packing materials, stores and spares 88.456 36.315

Finished goods including goods in transit 127.390 77.691

232.168 114.690



LIMITED

66

` in million As at As at

March 31, 2016 March 31, 2015

17. Trade receivables

Unsecured

Exceeding six months:

Considered good 588.444 297.175

Considered doubtful 92.479 10.919

680.923 308.094

Less: Provision 92.479 588.444 10.919 297.175

Others: considered good 444.231 340.164

1,032.675 637.339

18. Cash and cash equivalents

Cash on hand 0.388 0.385

Balances with banks:

in Current accounts 1,355.852 810.926

in Unpaid dividend account 1.624 2.261

in Deposit account 600.995 405.073

1,958.858 1,218.645

19. Short term loans and advances

Advances to suppliers 895.817 1,448.703

Advance income tax 2,085.911 2,083.947

Other receivables 273.524 528.148

3,255.252 4,060.798

Less: Provision for doubtful advance (300.000) -

2,955.252 4,060.798

20. Other current assets

Deposit with court 2,583.533 2,535.000

Bank deposits 3,313.160 3,353.986

Duty drawback receivable 62.935 101.557

Other recoverables 8,432.586 8,791.707

14,392.214 14,782.250



LIMITED

67

` in million

Year ended

March 31, 2016 March 31, 2015

21. Revenue from operations Sales 2,239.447 2,305.593

Dividends 41.031 48.706

Guarantee commission 5.515 8.916

Lease rent 517.875 524.625 Income from property maintenance 113.388 113.769 Licence fees 648.319 665.304 Management service fees 54.408 32.400 Duty drawback 98.093 115.122

3,718.076 3,814.435

22. Other income Interest income 307.738 370.563 Profit on sale of old assets 0.014 - Provisions / liabilities no longer required/payable written back 152.459 66.397 Miscellaneous income 2.406 11.175 Profit on redemption of mutual fund 13.625 - 476.242 448.135

23. Cost of packing material consumed Packing materials consumed 362.660 320.388

362.660 320.388

24. Changes in inventories of finished goods Opening stock:

Finished goods 77.691 301.184

77.691 301.184

Closing stock:

Finished goods 127.390 77.691

127.390 77.691

(Increase)/ decrease in stocks (49.699) 223.494



LIMITED

68


27. Other expenses

Rent including lease rent 22.294 32.092Rates and taxes 40.570 24.458Insurance premium 6.682 13.744Communication expenses 9.753 7.857Travel and conveyance 27.904 31.966Printing and stationery 3.383 3.186Repairs & maintenance

i) Buildings 16.024 15.006ii) Machinery 2.947 3.345iii) Others 0.759 0.447Vehicle repairs and maintenance 6.878 6.937Property maintenance expenses 85.896 86.310Advertisement and sales promotion 202.920 177.839Brokerage - 0.113Rebate and discount - 0.497Commission paid to selling agents 18.680 26.365Freight charges 66.255 104.503Exchange loss 106.084 91.023Miscellaneous expenses 12.029 67.422Claims paid - 5.362Legal and Professional charges 152.541 155.777Directors' sitting fees 2.840 1.280Auditor's remuneration 2.920 3.151Provision for bad debts 87.627 - Loss on sale of old assets - 0.042Other expenses 40.975 20.452

915.962 879.175

28. Exceptional items

Profit on sale of pledged securities by KFA lenders (net) - 6,257.344

Profit on sale of pledged securities by the company lenders 2,000.763 3,392.665 Loss on Impairment of Fixed Assets (70.155) - Loss on Share Recompense (1,858.063) -

72.545 9,650.009

` in million

Year ended

March 31, 2016 March 31, 2015

25. Employee benefits expensesSalaries, wages and bonus 256.397 242.001Contribution to provident and other funds 50.457 28.396

Workmen and staff welfare 27.681 27.343

334.535 297.740 26. Finance costs

Interest expense 915.380 1,853.218 Processing charges and bank charges 0.482 0.058

915.862 1,853.276


LIMITED

69


29. UB City Luxury residential Project

The 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 Company has issued allotment letters in respect of seven residential units in Kingfisher Towers by collecting booking amounts of `1,582.900 million (Pr year `1,545.184 million).

30. Estimated amount of contracts remaining to be executed on capital account as at 31st March 2016 and not provided for is `27.150 million (net of advances) (Pr year Nil ).

31. Contingent liabilities: ` in million


As atMarch 31, 2015

a) Guarantees given by the Company (on behalf of Kingfisher Airlines Ltd to banks and financial institutions and on behalf of others / associates)(The enforceability of the Guarantees issued for Kingfisher Airlines Ltd beneficiaries are being contested in appropriate Courts of law)

88,280.760 88,280.760

b) Claim against the company not acknowledged as debt - 1,462.900

c) Demand raised by Income Tax authorities against which the Company has preferred appeals

1,892.534 776.774

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, 2016 is `15,275.400 million (Pr year `15,275.400 million) and KFA 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.

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 certain Group Company and an erstwhile Group Company, and the Company is earning Logo fee on the same.

c) The Company’s share in the constructed area and proportionate share of land in the UB City property had been charged to secure a loan from HDFC Limited. The said loan stands fully repaid, after the balance sheet date.

d) After protracted litigation, SBICAP Trustee Limited, acting as Trustees of the Consortium of Banks of KFA, was permitted to take possession of Kingfisher Villa on 13th May 2016 pursuant to an order of the Hon’ble District Magistrate dated 11thMay 2016 passed under Section 14 of the SARFAESI Act. The Company has since filed an Appeal against the aforesaid order dated 11th May, 2016 before DRT, Mumbai on 18th August 2016. The matter is yet to be listed for hearing and is pending. Although the possession of the KF Villa property has been taken over by the Consortium of Banks, the legal ownership of the property continues to remain with the Company.


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33. Investments:

a) The Company has pledged 16,41,570 shares of United Spirits Limited, 4,753,881 shares of Mangalore Chemicals & Fertilizers Limited, 3,17,030 shares of McDowell Holdings 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 erstwhile associate company.

b) The Company filed a Suit 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 (LPA) 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 `1,462.906 million by ICICI cannot be proceeded against the 20,14,000 shares as the LPA has worked itself out. Although, 3i Infotech and ICICI were restrained from selling the NDU shares initially, subsequently by orders of the Court there was no hindrance for ICICI to sell the said NDU shares. On 5th January 2016, ICICI transferred 19,58,000 NDU shares in their Demat Account. However, on an Application filed by the Consortium of Banks, the DRT vide its order dated 11th January 2016 restrained ICICI from transferring and utilizing the sale proceeds without permission of the DRT. This restraint order is still in force. Pending this, as a matter of prudence the Company has recognized the expense of `1,858.063 million in the books. Further, the balance 56,000 shares of United Breweries Limited are held as investments in the books of the company.

c) Investments as on 31st March, 2016 include 59,150,000 shares of Kingfisher Airlines Limited, held in custody of a lender after they have invoked the pledge of the shares.

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) SREI Infrastructure Finance Limited (SREI) one of the Company’s lenders in the previous year, had invoked the Company’s pledge and sold 500,000 shares of United Spirits Limited. They had used a portion of the sale proceeds to retire the loan outstanding. SREI was holding a balance of `99.09 crores against their purported dues from KFA. Out of this, `15 crores has been refunded to the Company. From the balance amount of `84.09 crores, SREI has informed that it has further appropriated an amount of `25 crores towards the purported settlement of their dues from KFA. While this appropriation is being contested by the company, efforts are on for recovery of the entire amount of ` 84.09 crores due from SREI. As a matter of accounting prudence, the amount of `25 crores has been provided by the company.

f) The Company had pledged 92,250 shares of United Spirits Limited, to lenders, to secure the borrowings of the Company. The lenders have invoked these shares and the realization thereof has been utilized for the purpose of liquidating the loans of the Company.

g) The Debt Recovery Tribunal has restrained Mangalore Chemicals and Fertilizers Limited (“MCF”) and United Breweries Limited vide its order dated 30th September 2015, from disbursement of dividend to the Company, declared at their respective AGM for FY 2014-15. Accordingly, the dividend of `107.016 million declared by MCF is shown as receivable.

h) Based on a critical review during the year of the carrying value of long term strategic investments, the management has provided an amount of `212.464 million, as disclosed in the accounts, as a matter of commercial prudence. While in respect of other investments the matter will be reviewed during the following year based on business plans, investor funding and potential opportunities.


LIMITED

71


34. Sale of shares in United Spirits Limited (USL)

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. While this status quo order is still continuing, the adjudication of the Suit is still in progress.

35. Tax provision

There is no income tax liability since the Company has incurred loss for the year. 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.

36. Exceptional items.

Exceptional items comprised of :

a) Profit of `227.458 million on account of sale of 92,250 pledged equity shares in United Spirits Limited by the Company’s lenders.

b) A lender to Kingfisher Airlines Limited has sold 19,58,000 pledged equity shares held by the Company in United Breweries Limited. Pursuant to this sale, a profit of `1,773.305 million, along with a loss /expense of Rs. 1,858.063 million and writing down the carrying value of the investments, have been recognized in the accounts.

c) Potential Loss of `70.155 million on account of KFA lender taking over possession of the Company’s fixed assets under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002 (SARFAESI Act), which has been provided. However, the legal ownership still vest with the Company.

37. (i) KFA lenders have invoked Company’s Corporate Guarantee and demanded payment of dues from KFA amounting to `62,033.500 million. The Original Application filed by the Lenders before the Hon’ble DRT is continuing. In one of the Applications preferred by the Consortium of KFA Bankers, the Hon’ble DRT has passed an order lifting the corporate veil of its wholly owned subsidiary. Although this order of the Hon’ble DRT has been stayed by the Hon’ble High Court of Karnataka, the process of adjudicating the Appeal in Hon’ble DRAT is in progress and a decision is awaited.

(ii) 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 (Bombay Suit) against the consortium of lenders, who have advanced loans to KFA, inter alia, challenging the validity of the Corporate Guarantee. The Company has also filed a Notice of Motion in the said Suit 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.

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 `754 million (Pr year `1,333,240 million to overseas subsidiaries and a domestic associate) to overseas subsidiaries, which have not yet been repaid. In resepct of the domestic associate, after a further assessment of its financial condition, the company has decided, as a matter of prudence to write off its dues of `578.960 million after withdrawing the provision made in the previous year. In respect of overseas subsidiaries, no provision has been considered at this stage.

40. Cash in hand includes foreign currency notes.


LIMITED

72


41. As required under Section 125 (2)(e) of the Companies Act, 2013, the Company has transferred `0.600 million (Pr year `0.777 million) to the Investor Education and Protection Fund (IEPF) during the year. As on March 31, 2016, no amount was due to be transferred to the IEPF.

42. 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.

43. The Company and Kingfisher Finvest India Limited (KFIL) 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 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 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 of the Hon’ble High Court of Karnataka 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 suit is still in progress.

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 in the previous year. The balance sale proceeds of `807.46 crores continues to be disclosed as due from IGCF.

Meanwhile, the Consortium of Banks have filed another Application before the Court of the XXVIII Addl. City Civil Judge, Bangalore to direct that a sum of `651.15 crores deposited in the account of Registrar General, Hon’ble High Court of Karnataka as per order dated 20-6-2014 in W.P. No. 25877 be transferred to the credit of SBICAP Trustee Company Limited for appropriation towards the dues payable to the Banks. After hearing the Suit on merits, the Applications preferred by the Consortium of Banks was dismissed.

44. Litigation:

a) The litigation regarding Consortium of Banks filing a suit before the Hon’ble DRT is mentioned in details in para 37(i).

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. Thereafter, vide final order dated 28th March 2016 issued a Demand Notice directing the Company to pay an amount of `192,51,08,484.67. Aggrieved by the final order of the Hon’ble DRT, the Company preferred a Writ Petition before the Hon’ble High Court of Karnataka and by way of an interim Order dated 16th June 2016, the Hon’ble High Court of Karnataka was pleased to stay the order of the DRT. This stay is still continuing.

c) The litigation regarding Kingfisher Villa property is mentioned in details in para 32(d).


LIMITED

73


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 2nd 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. The Suits are still in progress.

e) The Company has filed a suit claiming an amount of USD 210,400,000 along with `162,10,00,000/- by way of Damages 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. However, applications filed by the said Petitioner challenging the jurisdiction of the Suit has since been dismissed vide order of the Hon’ble City Civil Court dated 30th April 2016.

f) The litigation with ICICI Bank regarding 20,14,000 shares of UBL is mentioned in details in para 33(b).

(g) Pursuant to a Corporate Guarantee given by the Company to BIAL, the Company deposited 50% of the Guarantee amount of `83.533 million with the Hon’ble High Court of Karnataka pursuant to order passed by the Hon’ble Supreme Court consequent to filing of SLP by the Company. The Suit is still in progress.

(h) The Company has appealed to 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. In view of the resolution passed in the SEBI Board Meeting dated 12th March 2016 and the subsequent press release issued by SEBI, the counsel of SEBI has before the Hon’ble SAT stated that the order dated 27th April 2015 may be quashed with liberty to SEBI to pass appropriate orders in accordance with law. Accordingly, orders passed by SEBI dated 27th April 2015 have been set aside vide order of the Hon’ble SAT vide its order dated 29th March 2016.

(i) 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. This application is pending.

45. The Company does not have a Managing Director since 18th April 2014. The Company has appointed a Chief Financial Officer, subsequent to the Balance Sheet date, on 20th April 2016.

The operations of the Company for the year under review were carried out by the President of the Company under the guidance of the Chairman of the Board and financial matters were monitored by the Group Chief Financial Officer under the guidance of the Chairman of the Board. The Group Chief Financial Officer has since retired.

46. Zuari Fertilizers and Chemicals Limited (“Zuari”) through an open offer process has become the majority shareholder of Mangalore Chemicals & Fertilizers Limited (“MCF”) and currently it is holding 53.03% of the paid up equity share capital of MCF. Consequently, MCF ceased to be an Associate of the Company. Since certain disputes have arisen out of the Shareholders Agreement (“SHA”) with Zuari Group, the UB Group has invoked the arbitration clause in the SHA and have referred the dispute to an Arbitrator. The arbitration proceedings are pending.

47. 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.

48. Certain pre-existing loans from United Spirits Limited (“USL”) and its wholly owned subsidiaries extended to UBHL and which were in existence as on 31st March 2013 aggregating to `1337.41 crores were consolidated into and recorded as an unsecured loan by way of an Agreement entered into by the Company with USL on 3rd July 2013. This loan has been granted for a period of 8 years and is payable in 3 annual installments commencing from the 6th Anniversary of the effective date of the Loan Agreement. At an EGM of United Spirits Limited on 28th November 2014, the said loan agreement between the Company and United Spirits Limited, was not approved. The Company has not accounted for any interest on the loan since October 2014.Consequent to non-compliance of the terms of the Agreement, USL claimed payment of the entire principal amount of `1337.41 crores together with outstanding interest. Meanwhile vide its letter dated 14th July 2016, USL has invoked the arbitration clause in the agreement and have appointed one arbitrator. Similarly the Company has also appointed one arbitrator in terms of the agreement. The process of arbitration has commenced.


LIMITED

74


49. One of the Group Company has raised a claim of `175.42 crores upon the Company. This amount consists of loans given to the company and the proceeds of invocation and sale of their pledged shares by a bank, the realization of which was utilized by the bank for the purpose of liquidating the dues of the company. The loan has become overdue as on 31st March 2016.

50. Going Concern

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 before the Hon’ble Bombay High Court, a suit seeking to declare the corporate guarantee null, void ab initio and non-est. The suit is still pending adjudication. (Refer note no. 31 and 37). Certain winding up petitions in this regard are pending before the Karnataka High Court and which are contested by the company.

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 Application filed by the engine manufacturers challenging the jurisdiction has been dismissed by the Hon’ble City Civil Court, Bangalore vide its order dated 30th April 2016. 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).

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

The market value of the Company’s properties and investments is significantly higher than the carrying value. The operations of UBGC (a Division of the Company), are generating substantial revenues on a regular basis. Further, revenues are being generated from the Logo fee contracts with various other companies. The Company is also receiving dividends on its investments. Added to it is the fact that the rental revenue is also generating cash inflows, and this would substantially increase when the embargo to renew or take on fresh lease, is lifted by the High Court.

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 2016 have been presented on principles applicable to Going Concern.

51. The Company 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 the recovery of the advance. However, as a matter of prudence the Company has provided for the advance.

52. Events occurring after the date of the Balance Sheet(a) The Directorate of Enforcement (ED), Ministry of Finance-Dept. of Revenue, Government of India, vide its Provisional

Attachment Order No. 11/2016 dated 11th June 2016, received by the Company, has provisionally attached the immovable properties of the Company based in Bangalore and Mumbai under Section 5(1) of Prevention of Money Laundering Act, 2002 for a period of 180 days from the date of the Order in connection with investigation against Dr. Vijay Mallya, Kingfisher Airlines Limited & Others. The Company is in consultation with its Legal Counsels for taking appropriate steps that may be required including defending the case before the Adjudicating Authority in Delhi pursuant to a Show Cause Notice dated 11th July 2016 received from the Adjudicating Office in this regard.

(b) The Company executed a Joint Development Agreement (“JDA”) with Prestige Estates Projects Limited (“Prestige”), a reputed Developer based in Bangalore, on April 26, 2010 for development of a luxury residential building named as “Kingfisher Towers – Residences at UB City” in the available land in UB City. Due to certain delay in construction, the Company claimed an amount of `66 crores from Prestige upto 31st March 2016 and reserved its rights to claim further claims beyond 31st March 2016 till the receipt of the Occupancy Certificate.

53. 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 2015-16.

` in million2015-16 2014-15

54. Remuneration to Auditors:Statutory Audit 2.000 2.000Tax Audit 0.200 0.200Limited Reviews 0.300 0.300Certification fees 0.420 0.651

2.920 3.151


LIMITED

75


` in million55. Employee benefit

Gratuity computations as on 31-03-2016Disclosure as per AS 15Defined benefit plansReconciliation of opening and closing balances of the present value of the defined benefit obligation:

2015-16 2014-15

Obligations at period beginning 93.436 101.601Service cost 3.225 9.704Interest cost 7.475 7.494Benefits settled (55.672) (15.859)Actuarial (gain)/loss 30.263 (9.504)Obligations at period end 78.727 93.436Defined benefit obligation liability as at the Balance Sheet Is wholly funded by the Company

Change in plan assetsPlan assets at period beginning, at fair value 96.763 104.153

Expected return on plan assets 7.741 7.698Actuarial gain / (loss) (2.700) 0.771Contributions - 0.001Benefits settled (55.672) (15.859)Plans assets at period end, at fair value 46.132 96.763Reconciliation 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 46.132 96.763Present value of the defined benefit obligations at the end of the period 78.727 93.436Net asset recognized in the Balance Sheet 32.595 3.327

Details of Gratuity cost Service cost 3.225 9.704Interest cost 7.475 7.494Expected return on plan assets (7.741) (7.698)Actuarial (gain) / loss 29.636 (10.275)Net gratuity cost 32.595 (0.775)

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.AssumptionsInterest rate 7.80% 8.00%Discount factor 7.80% 8.00%Estimated rate of return on plan assets 7.80% 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.


LIMITED

76


56. Details of dues to Micro, Small and Medium Enterprises and Small Scale Industries.

Based on the response received by the Company, there are no outstanding as at March 31, 2016 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.

57. 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).

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

Description 2015-16 2014-15

Gross Block at the beginning of the year 1,607.639 1,607.639

Accumulated depreciation 269.333 226.803

Net Block at the end of the year 1,338.306 1,380.836

59. Deferred tax

Particulars 2015-16 2014-15

Deferred Tax Asset in respect of

i) Depreciation on fixed assets 7.340 10.200

ii) Allowance for carried forward losses 6,769.274 5,816.418

iii) Others 16.787 13.524

Total 6,793.401* 5,840.142*

Note : *Deferred tax asset is not recognized as a matter of prudence.

60. Quantitative Particulars

Particulars of Purchases and Sales of Goods traded by the Company

Products Units Opening Stock Purchases Sales Closing Stock

Quantity Value Quantity Value Quantity Value Quantity Value

1. Alcoholic Beverages

Cases 204,618 50.536 2,513,011 558.992 2,339,765 1,431.971 377,864 92.852

(337,154) 162.346 (2,038,563) (601.08) (2,171.099) (1,426.880) (204.618) (50.536)

2. Leather Products

Pairs 4,578 4.913 262,572 318.061 265,737 327.302 1,413 1.272

(22,356) (22.178) (265,542) (605.770) (283,320) (364.170) (4,578) (4.913)

3. Processed Food

Tons 62 3.059 1,582 52.110 1,349 140.856 295.25 21.473

(46) (4.733) (2,408) (122.457) (2,391) (193.130) (62) (3.059)

4. Readymade garments

Pieces 22,559 8.459 836,115 137.929 841,955 294.252 16,719 11.793

(217,632) (111.930) (592,507) (292.681) (787,580) (284.240) (22.559) (8.459)

Figures in brackets relates to previous year


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61. Segment reporting:

Segment-wise business performance for the year ended March 31, 2016

Primary Segment InformationSegment Revenue Segment Result 2015-16 2014-15 2015-16 2014-15

a) Alcoholic Beverages 1,463.632 1,490.228 334.545 289.345

b) Leather Products 371.287 404.432 38.253 67.739

c) Readymade garments 315.700 307.685 (46.739) 10.297

d) Investments 41.031 48.706 (133.097) (141.205)

e) Logo Fees 648.319 665.304 474.191 474.393

f) Property development 517.875 524.625 322.308 312.446

g) Guarantee services 5.515 8.916 (168.613) (181.996)

h) Others 354.717 364.540 (17.278) (60.336)

Total 3,718.076 3,814.435 803.370 769.681

Other income 476.242 448.135

Provision for doubtful advances (550.000) (578.955)

Advances no longer recoverable (125.134) (1,286.236)

Provision for diminution in value of investments 212.464 (2,809.619)

Finance costs (915.862) (1,853.276)

Exceptional items 72.544 9,650.009

Profit / (Loss) before tax (451.304) 4,339.739

OtherInformation:

2015-16 2014-15 2015-16 2014-15

Segment Assets

Segment Liabilities

Segment Assets

Segment Liabilities

Capital Expenditure

Depreci-ation

Capital Expenditure

Depreci-ation

a) Alcoholic Beverages 1,340.914 1,058.364 1,175.620 994.372 0.043 0.093 0.080 0.311

b) Leather Products 454.397 30.894 444.936 27.998 0163 8.161 0.514 9.522

c) Readymade garments 985.908 10.066 1,183.370 10.689 - 7.105 - 9.136

d) Investments 24,199.340 30,565.407 24,954.710 31,055.381 2.219 44.326 - -

e) Property development 435.114 - 404.805 - - 104.712 - -

f) Others 188.516 33.077 136.503 35.317 0.443 1.748 0.239 4.575

Total 27,604.189 31,697.808 28,299.942 32,123.759 2.868 166.145 0.832 23.543

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 2015-16 2014-15 2015-16 2014-15

Within India 1,576.027 1,546.050 24,793.290 25,494.621

Outside India 2,412.049 2,268.385 2,810.899 2,805.321

Total 3,718.076 3,814.435 27,604.189 28,299.942


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Subsidiary CompaniesKingfisher Finvest

India LtdUB Electronic

Instruments LimitedKingfisher Training and

Aviation Services LtdUB Infrastructure

Projects LtdKingfisher Aviation

Training Ltd

City Prperties Maintenance Company

B’Lore Ltd2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15

Purchase of goods (finished or unfinished)

- - - - - - - -

Receiving of services - - - - - - - - 22.698 22.086 Leasing arrangement - - - - - - - - 0.561 0.561 Licence Agreement - - - - - - - - - - Finance (including loans in cash or in kind) paid

0.941 1,642.257 - 0.060 0.028 - 0.270 - 0.101 0.168 35.270 36.495

Finance (including loans in cash or in kind) received

1,222.959 5,870.975 - - - - - - - - 24.167 12.849

Interest Paid - - - 0.600 - - - - - - General Expenses 0.028 - 0.270 0.101 0.168 Professional Charges Amount due from as on 31st March 2016 - - - - 119.982 119.982 - - - - 10.492 21.734 Amount due to as on 31st March 2016 3,318.896 2,096.878 25.948 25.948 - - - - - - 0.662 0.870


Associate Companies UB Engineering Limited Key Management Personnel

2015-16 2014-15 2015-16 2014-15

Licence Agreement-Pegasus - 2.809 - - Finance (including loans in cash or in kind paid)

- 7.959 - -

Finance (including loans in cash or in kind received)

- 4.964 - -

Guarantee Commission received - 3.416 - - Interest Received - 17.962 - - Bad advances written off 578.955 - - Guarantees and collaterals 650.000 650.000 - - Payment of remuneration for employment

48.710 38.599

Amount due from as on 31st March 2016 - 578.955 - - Amount due to as on 31st March 2016 - - - -

UB International Trading Ltd UB Overseas Ltd UBHL-BVI Ltd. Bangalore Beverages

Limited UB Sports Limited Kingfisher Beer Europe Ltd

Bestride Consultancy Pvt Ltd Total

2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 317.042 293.454 - - - - - - - - 9.809 11.255 326.852 304.709

- - - - - - - - - - 22.698 22.086 - - - - - - - - - - 0.561 0.561 - - - - - 0.007 - - - - - 0.007

224.649 415.644 - - - - 0.486 22.050 0.027 0.057 9.844 12.080 6.391 15.491 278.006 2,144.302 - 0.030 - - - - - - - - - 3.000 1,247.126 5,886.853

- - - - - - - - - - - 0.600 0.486 22.050 0.027 0.057 - 0.806 0.913 23.081

5.511 11.685 5.511 11.685 94.855 186.547 453.292 453.292 300.990 300.990 - - - - 0.228 0.222 0.879 - 4,299.615 3,179.645

- - - - - - - - - - - - 3,345.506 2,123.695

Subsidiary Companies (contd.)



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62. Related Party Transactions:

Persons having significant influence over the affairs of the Comapny :-

Dr. Vijay Mallya - Chairman of the Board Mr. Ravi Nedungadi - Group Chief Financial Officer (upto 30th April 2016)

Key Management Personnel:

Mr. V. Shashikanth - President

Mr. Kaushik Majumder – Senior Vice President Legal and Company Secretary

Mr. Ajay Kumar Vijay – Chief Financial Officer (w.e.f 20th April 2016)

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, Hyderabad Electronic Instruments Limited (formerly 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.

ii) Transactions with Related Parties during the year (Refer table in page 78).

63. Disclosures required by Accounting Standard (AS) 29-“Provisions, Contingent Liabilities and Contingent Assets

Provisions:

Particulars of disclosure Provision for legal cases Provision for leave encashment

1 Balance as on 1.04.15 37.428 39.477

2 Provision made during year - 0.388

3 Provision used during the year. - 13.955

4 Balance as on 31.03.16 37.428 25.910*

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.

64. Earnings per share (before exceptional items) 2015-16 2014-15

Profit / (Loss) before exceptional items (523.849) (5,310.270)

Number of equity shares 66,818,521 66,818,521

Earnings per share (Basic)/ (Diluted) - in ` (7.84) (79.47)

Earnings per share (after exceptional items) 2015-16 2014-15

Profit / (Loss) after exceptional items and tax (451.304) 4,339.739

Number of equity shares 66,818,521 66,818,521

Earnings per share (Basic)/ (Diluted) - in ` (6.75) 64.95



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65. Value of imports calculated on CIF basis 2015-16 2014-15Raw materials 56.810 40.560Finished Goods 2.943 17,700Total 59.753 58.260

66. Expenditure in Foreign Currency: 2015-16 2014-15Foreign Travel expenses 9.431 5.600Commission to Agents 0.240 0.828Professional and Legal fees 10.934 0.864Imports of material and capital goods 59.753 58.260Others 59.352 50.877Total 139.710 116.429

67. Earnings in Foreign Exchange 2015-16 2014-15

Export of goods calculated on FOB basis 2,122.043 2,238.481

Total 2,122.043 2,238.481

68. The Company has not entered into any speculative derivative transactions. Hedging is restricted to the business needs of the 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)Foreign Currency Amount

Net Receivable / (Payable)Amount in local currency

Currency 2015-16 2014-15 2015-16 2014-15GBP 0.157 - 14.955 -Euro (0.006) (0.004) (1.021) (0.275)USD (0.015) (21.063) (0.466) (1,378.366)GBP (0.002) (0.228)

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

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






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COMPANY’S GENERAL BUSINESS PROFILE

I Registration Details

Registration / CIN : 740 /85110KA1915PLC000740

State Code : 08

Balance Sheet Date : 31.3.2016

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 38,240,805 Total Assets 38,240,805

Sources of funds Application of Funds

Paid up Capital 668,185 Net Fixed Assets 10,408,648

Reserves & surplus 4,868,376 Investments 6,442,920

Secured Loans 1,604,100 Other Assets 21,389,237

Unsecured Loans 20,904,177

Other Liabilities 10,195,967

IV Performance of the Company

Turnover 3,718,075 Total Expenditure 3,664,424

Loss before tax for the year 451,304 Loss after Tax 451,304

Earning per Share (6.75) 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


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Independent Auditor’s Report on Consolidated Financial Statements

ToThe 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 2016, 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 and presentation 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. 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 had extended corporate guarantees of Rs. 87,072 million in favour of lenders/lessors/creditors of Kingfisher Airlines Limited (KFA) (Refer note no. 49 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. 49 to financial statements). No provision has been made in the accounts for such possible loss.


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Independent Auditor’s Report on Consolidated Financial Statements (contd.)

b. The holding company carries investment in a subsidiary which has been accounted for in the Consolidated Financial Statements under AS-13 “Accounting for Investments”. The carrying value of such investment is Rs. 0.500 million. There are significant declines in the carrying value of this investment. The holding company has not provided for such declines (refer note 31(d) to financial statements).

c. The holding company has shown Rs. 358 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 35 to financial statements).

d. An amount of Rs. 8,074 million is shown as dues from a contributory trust (“Trust”) managed by a financial company which had sold the holding company’s investments that were pledged with it and had appropriated part of the sale proceeds against dues from KFA. Further, the said Trust still holds custody of 59,150,000 shares in KFA, belonging to the holding company. The holding company has petitioned the City Civil 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 31(b) and note 36 to financial statements).

According to the management, it is not possible to estimate the losses if any 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 loss stated in the Consolidated Statement of Profit and Loss would have been higher 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. 37]; the Holding Company is a defendant in recovery suits instituted by certain creditors/lenders for recovery of their dues of Rs. 62,033 million [Ref. note no. 33] (which is part of the amount mentioned at Sl No. 4(a) above); some of the lenders have recovered their dues by disposing of the securities pledged by the Holding Company.[Ref. note no. 33]. On the consideration that it shall defend legal cases successfully, the Holding Company has prepared its financial statements on going concern basis for the reasons stated in note no. 40. 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 Rs. 77,309 million (which is part of the amount mentioned at Sl No. 4(a) above) arising out of invocation of its corporate guarantees [Ref. note no. 49.]. Had the holding company recognised the above, current liabilities in the Consolidated Balance Sheet would have been higher, guarantee under contingent liabilities would have been lower and amounts recoverable under other current assets would have been higher by Rs.77,309 million.

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, 2016, and their consolidated loss and their consolidated cash flows for the year ended on that date.


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6. Emphasis of Matter

Attention is invited to the following:

a. A term deposit for Rs. 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 Rs. 494 million (a part of which is referred in paragraph 4(c)) and encumbered an amount of Rs. 115 million against the borrowings from one of the group companies which had been guaranteed by the Holding Company [Ref, note no. 35];

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 written off an amount of Rs. 589 million due from an associate. [Ref. note no. 34];

d. The lenders of Kingfisher Airlines Limited have taken possession of the Holding Company’s property in Goa to recover its dues [Ref. note no. 30(iii)];

e. Note no. 39 regarding non-accrual of interest payable to the extent of Rs. 1904 million (out of that Rs. 634 million pertaining to earlier year) on account of the lender company’s shareholders not approving the agreement granting the loan;

f. For the reasons stated in note 50 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”;

g. For the reasons stated in note 50 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 Rs.

9,286.468 million as at March 31, 2016, total revenues of Rs. 2,870.773 million and net cash outflows amounting to Rs.34.228 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 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;



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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, 2016 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, 2016 from being appointed as a director in terms of Section 164 (2) of the Act;

g. We have issued a separate report on the adequacy of the internal financial controls over financial reporting of the Group and the operating effectiveness of such controls. The said report can be found in “Annexure A” to this report.

h. 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.


S. Vishnumurthy Proprietor.Place: Bangalore Membership No. 22715

Date : 31-08-2016 Firm Registration No. 004742S


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Annexure – A to the Auditor’s report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of UNITED BREWERIES (HOLDINGS) LIMITED (“the Holding Company”) and its subsidiary companies as of 31st March, 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Respective Board of Directors of the Holding Company and its subsidiary companies, which are companies incorporated in India are responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.



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Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Holding Company and its subsidiary companies, which are incorporated in India, have, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.


S. Vishnumurthy Proprietor.Place: Bangalore Membership No. 22715

Date : 31-08-2016 Firm Registration No. 004742S



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` in million

NoteNo.



Equity and Liabilities

Shareholders’ fundsShare capital 2 668.185 668.185 Reserves and surplus 3 1,474.078 1,170.246

Minority interest 91.994 83.309

Non current liabilitiesLong term borrowings 4 878.253 14,641.269 Deferred tax liabilities (net) 1.124 1.838 Other long-term liabilities 5 4,606.872 4,820.486 Long term provisions 6 134.538 118.815

Current liabilitiesShort-term borrowings 7 3,244.061 6,604.424 Trade payables 8 1,283.515 1,126.011 Other current liabilities 9 22,603.281 7,224.017 Short-term provisions 10 1,485.944 1,184.000

36,471.845 37,642.600 Assets

Non current assetsFixed assets

Tangible assets 11 9,443.463 9,709.909 Capital work in progress 11 1,468.996 1,362.051

Goodwilll on consolidation 434.465 434.464 Non current investments 12 2,358.872 3,157.181 Long term loans and advances 13 4.183 3.246 Other non current assets 14 102.996 98.606

Current assetsCurrent investments 15 8.274 34.396 Inventories 16 381.249 267.455 Trade receivables 17 1,401.351 982.980 Cash and cash equivalents 18 2,993.921 2,286.640 Short term loans and advances 19 3,227.394 4,270.692 Other current assets 20 14,646.681 15,034.979

36,471.845 37,642.600 Significant Accounting Policies and other notes 1


This is the Consolidated Balance Sheet referred to in our report of even date.

Consolidated Balance Sheet as at March 31, 2016





LIMITED

89

` in million

Note No.

For the year ended

March 31, 2016 March 31, 2015

RevenueRevenue from operations 21 6,053.135 6,241.263 Other income 22 619.482 591.590

6,672.617 6,832.853 ExpensesPurchase of traded goods 868.082 804.521 Cost of materials consumed 23 2,016.266 1,924.663 Change in inventories (52.289) 222.723 Employee benefit expenses 24 643.700 603.552 Finance costs 25 963.588 1,986.343 Depreciation 11 242.236 303.106 Provision for doubtful advances 550.000 589.337 Advances no longer recoverable 125.154 6,125.065 Provision for diminution in value of investments 695.883 11,190.261Other expenses 26 1,634.531 1,758.013

7,687.151 25,507.584

Loss before exceptional item, tax and share in profits/(losses)of associates

(1,014.534) (18,674.731)

Exceptional items (net) 27 1,279.843 20,223.534 Profit before tax 265.309 1,548.803 Tax expense:

Current tax 292.935 1,248.476 Deferred tax (0.455) (1.809)

Profit /(loss) before minority interest (27.171) 302.136 Share of minority interest (5.439) 17.825 Profit / (Loss) for the year (32.610) 319.961 Earnings per share (face value of ` 10 each)

Basic / Diluted Earnings Per Share (before exceptional items ) (15.18) (297.87)Basic / Diluted Earnings Per Share (after exceptional items ) (0.49) 4.79

Significant Accounting Policies and other notes. 1


This is the Consolidated Statement of Profit and Loss referred to in our report of even date.

Consolidated Statement of Profit and Loss for the year ended March 31, 2016





LIMITED

90

Consolidated Cash Flow Statement for the year ended March 31, 2016

` in million

For the year endedMarch 31, 2016


A. Cash flow from operating activities

Profit before taxes 265.309 1,548.803

Adjustments for :


Dividend income (58.229) (58.754)

Interest income (429.539) (499.165)

Loss on sale of assets 9.545 0.081

Exceptional items (1,279.843) (20,223.534)

Interest and finance charges 963.588 1,986.343

Liabilities no longer required (152.459) (66.397)

Unrealised exchange fluctuation loss 183.463 196.323

Effect of exchange differences on translation of subsidiaries 156.221 (130.571)

Effect of exchange differences on translation offoreign currency cash and cash equivalents

(0.153) (0.112)

Advances no longer recoverable 125.154 6,125.065


Provision for Diminution in value of investments 695.883 11,190.261

Provision for bad and doubtful debts 87.627 -

1,093.493 (588.017)

Operating profit before working capital changes 1,358.803 960.786

Adjustment for changes in working capital:

(Increase) /decrease in inventories (113.794) 270.438

(Increase)/ decrease in trade and other receivables 252.017 (1,186.432)

Increase in current liabilities / other liabilities 246.264 384.487 (487.444) (1,403.438)

Cash generated from/ ( used in) operations 1,743.289 (442.652)

Less : taxes paid (149.534) (1,404.437)

Net cash generated from / (used in) operating activities 1,593.756 (1,847.089)

B. Cash flow from investing activities

Purchase of Fixed Assets (including changes in capitalwork in progress)

(155.930) (177.234)

Sale of fixed assets/ advance for residential units 31.211 165.026

Sale of investments (other than current investments) 1,852.424 10,579.833

Loans given (net) (250.931) (763.652)

Dividend income (other than current investments) 58.229 58.710

Interest received 429.539 481.207

Increase /(decrease) in fixed deposits with bank (220.736) 473.281

Deposit with court (48.533) -

Net cash generated from investing activities 1,695.271 10,817.170


LIMITED

91

` in million



C. Cash flow from financing activities

Interest and Finance Charges (1,080.268) (1,111.003)

Repayment of loans to banks and others (net) (1,789.317) (7,813.555)

Net cash used in financing activities (2,869.584) (8,924.558)

Net increase in cash and cash equivalents 419.443 45.523

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

Effect of exchange differences ontranslation of foreign currency cash and cash equivalents

0.153 0.112

Cash and cash equivalents at the end of the year 1,428.262 1,008.665

Cash and cash equivalents comprise of :

Cash in hand 4.401 3.121

Balance with banks in current accounts 1,415.587 971.148

Short term investments 8.274 34.396

1,428.262 1,008.665

Reconciliation of cash and cash equivalents as perBalance sheet and Cash Flow Statement

Cash and cash equivalents as per Balance Sheet 2,993.921 2,286.640

Less: Deposits maturing beyond 3 months 1,573.933 1,312.371

Add: Current investments 8.274 34.396

1,428.262 1,008.665

Notes to the Consolidated Cash Flow Statement1. Short term investments represents amounts invested in mutual funds which are readily convertible into cash.2. Balances with banks include `1.624 million being balances in unpaid dividend account which can not be used by the

parent company except for payment of unpaid dividend / transfer to Investor Education and Protection Fund and ` 2.443 million in escrow account which cannot be used by the the parent 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.

Consolidated Cash Flow Statement for the year ended March 31, 2016 (contd.)





LIMITED

92

Notes to the Consolidated Financial Statements

1. SIGNIFICANT ACCOUNTING POLICIES ADOPTED IN THE PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS

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:

Name of the SubsidiaryOwnership Percentage

Country of Incorporation

1 Kingfisher Training and Aviation Services Limited 71.92 India

2 UB International Trading Limited 100.00 India

3 Hyderabad Electronic Instruments Limited (Formerly 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

These are operating under severe long term restrictions that has significantly impaired their ability to transfer funds to the company.

2 UB Infrastructure Projects Limited

3 Kingfisher Aviation Training Limited

4 Bangalore Beverages Limited

5 UB Sports Limited

6 Kingfisher Goodtimes Private Limited

7 Bestride Consultancy Private Limited


LIMITED

93

Notes to the Consolidated Financial Statements (contd.)

The associate companies required to be considered in the consolidated financial statements are:

Name of the Associate Company Ownership Percentage

Country of 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

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 that has significantly impaired their ability to transfer funds to the company.

4 UB Engineering Limited

iii. Basis of Presentation of Financial Statements:

The financial statements of the parent Company and that of its subsidiaries, Hyderabad Electronic Instruments Limited (formerly 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.


LIMITED

94


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 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.

viii. Borrowing costs:

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.


LIMITED

95

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.

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.



LIMITED

96

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.



LIMITED

97

` in millionAs at

March 31, 2016 As at

March 31, 20152. Share Capital

Authorised100,000,000 (2015: 100,000,000) Equity Shares of `10/- each 1,000.000 1,000.000

1,000.000 1,000.000 Issued, Subscribed and Paid-up66,818,521 (2015: 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 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 sharesThe 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 companyMarch 31, 2016 March 31, 2015

No. of Shares % holdingNo. of Shares

% holding

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 preceeding the reporting date is nil.

` in millionAs at

March 31, 2016As at

March 31, 2015

3. Reserves and SurplusCapital reserve 511.365 511.365 Securities premium account 8,331.975 8,331.975 Fixed assets revaluation reserve 8,550.706 8,550.706Foreign currency monetary item translation difference account

- (183.463)

Foreign currency translation reserve (1,303.097) (1,456.072)

Deficit as per Statement of Profit and Loss:At the beginning of the year (14,584.264) (14,904.223)Less : Profit / (loss) for the year (32.607) 319.959

(14,616.871) (14,584.264)

1,474.078 1,170.246



LIMITED

98

` in million

As at As at

March 31, 2016 March 31, 2015

4 Long term borrowings

Secured

From banks 1,502.237 2,249.319

From others 130.665 1,730.394

Unsecured

Fixed deposits 19.396 105.156

From others 14,857.962 14,836.598

16,510.260 18,921.467

Less: Current maturities

Secured

From banks 1,502.237 2,249.115

From others 101.863 1,365.878

Unsecured

Fixed deposits 19.396 95.393

From others 14,008.511 569.812

15,632.007 4,280.198

878.253 14,641.269

(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 520.000 577.741

Advance license fees for pegasus logo 2,001.692 2,285.011

Lease security deposits 434.780 345.050

Refundable deposit 67.500 67.500

Instalments from allottees for residential units 1,582.900 1,545.184

4,606.872 4,820.486

6. Long term provisions

For legal cases 37.428 37.428

Employee benefits 97.110 81.387

134.538 118.815



LIMITED

99

` in million

As at As at

March 31, 2016 March 31, 2015

7. Short term borrowingsSecuredFrom banks 146.722 3,480.456

From others 581.420 608.049

UnsecuredFrom group company 2,515.919 2,515.919

3,244.061 6,604.424

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

8. Trade payablesTrade creditors 1,283.515 1,126.011

1,283.515 1,126.011

9. Other current liabilities

Current maturities of long term borrowings 15,632.007 4,280.198

Interest accrued and not due 23.842 34.253

Interest accrued and due 1,851.168 1,957.437

Statutory dues 53.282 33.136

Employee dues 20.491 61.344

Advertisement and sales promotion expenses payable 458.200 428.053

Advances received from customers 170.514 36.645

Claims payable 9.935 13.283

Other liabilities 4,372.703 365.419

Creditor for capital goods 9.421 11.894

Investor Education and Protection Fund:

Unclaimed public deposits/interest 0.132 0.132

Unclaimed Dividends 1.586 2.223

22,603.281 7,224.017

10. Short term provisions

Income tax 1,460.180 1,174.331

Employee benefits 25.764 9.669

1,485.944 1,184.000



LIMITED

100


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app

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LIMITED

101

Notes to the Consolidated Financial Statements (contd.)`

in m

illion

Des

crip

tion

of A

sset

s

Cos

t / V

alua

tion

Dep

recia

tion

Impa

irmen

t N

et v

alue

of A

sset

As a

t 0

1.04

.14

Add

ition

s d

urin

g th

e ye

ar

Dele

tion

dur

ing

the

year

As a

t 3

1.03

.15

As a

t 0

1.04

.14

Ded

uctio

ns

durin

g th

e ye

ar

For t

he

year

As a

t 3

1.03

.15

As a

t A

s at

31.0

3.15

31.0

3.14

31.0

3.15

31.0

3.14

Tang

ible

Ass

et

Land

6

,960

.511

-

6,9

60.5

11

- -

- -

- 6

,960

.511

6

,960

.512

Build

ings

2

,683

.327

0

.500

-

2,6

83.8

27

326

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-

129

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4

56.0

75

- -

2,2

27.7

52

2,3

56.8

30

Plant

& m

achi

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1

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.190

5

6.21

1 5

0.46

0 1

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6

05.8

37

45.

415

109

.214

6

69.6

35

0.5

00

0.5

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427

.805

4

85.8

53

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313

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10

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338

21.

912

0.0

14

15.

167

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066

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15.

401

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& Fi

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es

251

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2

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0

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2

53.0

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151

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511,

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355


LIMITED

102

` in million



12. Non current investments

Long term investments

In fully paid equity shares

In associate companies 425.080 425.080

In other companies 13,829.372 13,931.798

14,254.452 14,356.878

Less: Provision for diminution in value ofinvestments 11,895.580 11,199.697

2,358.872 3,157.181

13. Long term loans and advances



378.898 717.311

Less: Provision 374.715 4.183 714.065 3.246

4.183 3.246

14. Other non current assets

Other deposits - considered good 102.996 98.606

102.996 98.606

15. Current investments

In Mutual funds * 8.274 34.396

8.274 34.396

* market value as on 31.03.16 is Rs. 8.274 million

16. Inventories

Raw materials 72.707 13.030

Packing materials, stores and spares 90.473 37.691

Work in progress 42.481 17.323

Finished goods including goods in transit 175.588 199.411

381.249 267.455



LIMITED

103

` in million



17. Trade receivables

Unsecured

Exceeding six months:



703.200 311.963

Less: Provision 92.479 610.721 10.919 301.044

Others: considered good 790.630 681.936

1,401.351 982.980

18. Cash and cash equivalents

Cash on hand 4.401 3.121

Balances with Banks:

in current accounts 1,413.963 968.887

in unpaid dividend account 1.624 2.261

in deposit account 1,573.933 1,312.371

2,993.921 2,286.640

19. Short term loans and advances

Advances to suppliers 821.688 1,282.545

Advance income tax 2,300.089 2,283.034

Prepaid expenses 43.075 53.996

Other receivables 362.542 651.117

Less: Provision for doubtful advance (300.000) -

3,227.394 4,270.692

20. Other current assets

Deposit with court 2,583.533 2,535.000

Bank deposit 3,313.160 3,353.986

Duty drawback receivable 62.936 101.557

Other receivables 8,687.052 9,044.436

14,646.681 15,034.979



LIMITED

104

` in million

Year ended March 31, 2016


21. Revenue from operations

Sales 4,307.629 4,355.873

Dividends 58.229 58.754

Guarantee commission 5.515 8.916

Lease rent 517.314 524.625

Income from property maintenance 363.628 464.995

Licence fees 648.319 680.578

Management service fees 54.408 32.400

Duty drawback 98.093 115.122

6,053.135 6,241.263

22. Other Income

Interest income 429.539 499.165

Provisions/ liabilities no longer required/ payable written back 152.459 66.397

Miscellaneous income 23.859 26.028

Profit on redemption of mutual fund 13.625 -

619.482 591.590

23. Cost of material consumed

Raw material consumed 1,653.606 1,604.275

Packing materials consumed 362.660 320.388

2,016.266 1,924.663



LIMITED

105

` in million



24. Employee benefits expensesSalaries, wages and bonus 512.910 490.778

Contribution to provident and other funds 91.124 75.267

Workmen and staff welfare 39.666 37.507

643.700 603.552

25. Finance costsInterest expenses 963.065 1,986.235

Processing charges and bank charges 0.523 0.108

963.588 1,986.343

26. Other expensesRent including lease rent 26.397 38.478

Rates and taxes 42.811 26.141

Insurance premium 6.987 14.129

Communication expenses 10.907 9.314

Travel and conveyance 34.429 41.542

General administrative expenses 232.742 284.173

Repairs & maintenance 107.991 107.465

Vehicle repairs and maintenance 6.878 6.937

Property maintenance expenses 121.076 168.764

Selling and promotion expenses 568.776 530.714

Brokerage - 0.113

Commission paid to selling agents 18.680 26.365

Freight charges/job charges 146.494 167.172

Miscellaneous expenses 13.905 68.710

Claims paid - 5.362

Legal & professional charges 166.310 166.723

Directors' sitting fees 3.200 1.626

Auditor's remuneration 3.281 3.181

Provision for bad and doubtful debts 87.627 -

Loss on asset sold/discarded / written off 9.545 0.081

Exchange loss (net) 26.495 91.023

1,634.531 1,758.013

27. Exceptional itemsProfit on sale of pledged securities by KFA lenders (net) - 11,056.405

Profit on sale of pledged securities by the lenders of the parent company 3,208.061 9,167.129

Loss on Impairment of Fixed Assets (70.155) -

Loss on Share Recompense (1,858.063) -

1,279.843 20,223.534



LIMITED

106

28. UB City Luxury residential Project

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 parent 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 `1,582.900 million (Pr year `1,545.184 million)

29. Estimated amount of contracts remaining to be executed, on capital account as on 31st March, 2016 and not provided for, in the case of parent company is `27.150 million (net of advances) (Pr year Nil).

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 `479.456 million (Pr year `508.727 million).

iii). After protracted litigation, SBICAP Trustee Limited, acting as Trustees of the Consortium of Banks of KFA, was permitted to take possession of Kingfisher Villa on 13thMay 2016 pursuant to an order of the Hon’ble District Magistrate dated 11thMay 2016 passed under Section 14 of the SARFAESI Act. The parent Company has since filed an Appeal against the aforesaid order dated 11th May, 2016 before DRT, Mumbai on 18th August 2016. The matter is yet to be listed for hearing and is pending. Although the possession of the KF Villa property has been taken over by the Consortium of Banks, the legal ownership of the property continues to remain with the parent Company.

31. Investment

a) The Parent Company filed a Suit 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. Although, 3i Infotech and ICICI were restrained from selling the NDU shares initially, subsequently by orders of the Court there was no hindrance for ICICI to sell the said NDU shares. On 5-1-2016, ICICI transferred 19,58,000 NDU shares in their Demat Account. However, on an Application filed by the Consortium of Banks, the DRT vide its order dated 11th January 2016 restrained ICICI from transferring and utilizing the sale proceeds without permission of the DRT. This restraint order is still in force. Pending this as a matter of prudence, the Parent Company has recognized the liability of `1,858.063 million in the books. Further, the balance 56,000 shares of United Breweries Limited are held as investments in the books of the Parent Company.

b) SREI Infrastructure Finance Limited (SREI) one of the Parent Company’s lenders in the previous year, had invoked the Parent Company’s pledge and sold 500,000 shares of United Spirits Limited. They had used a portion of the sale proceeds to retire the loan outstanding. SREI was holding a balance of `99.09 crores against their purported dues from KFA. Out of this, `15 crs has been refunded to the parent company and the balance amount of `84.09 crs is still retained by SREI and is being sought to be recovered by the Company. SREI has informed that it has further appropriated an amount of `25 crs towards the purported settlement of their dues from KFA. While this appropriation is being contested by the parent company, efforts are on for recovery of the entire amount of ̀ 84.09 crs due from SREI. As a matter of accounting prudence, the amount of `25 crs has been provided by the Parent Company.

c) The Debt Recovery Tribunal has restrained Mangalore Chemicals and Fertilizers Limited (“MCF”)and United Breweries Limited vide its order/ order sheet dated 30th September 2015, from paying the dividend to the Parent Company, declared at their respective AGM for FY 2014-15. Accordingly, the dividend of `107.016 million is still shown as receivable from MCF.



LIMITED

107

d) 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 `695.883 million (Pr year `11,190.261 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. Sale of shares in United Spirits Limited (USL)

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 parent 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 parent 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. While this status quo order is still continuing, the adjudication of the Suit is still in progress.

33. (i) KFA lenders have invoked Parent Company’s Corporate Guarantee and demanded payment of dues from KFA amounting to `62,033.500 million. The Original Application filed by the Lenders before the Hon’ble DRT is continuing. In one of the Applications preferred by the Consortium of KFA Bankers, the Hon’ble DRT has passed an order lifting the corporate veil of its wholly owned subsidiary. Although this order of the Hon’ble DRT has been stayed by the Hon’ble High Court of Karnataka, the process of adjudicating the Appeal in Hon’ble DRAT is in progress.

(ii) The Consortium of KFA Bankers, have sold in periodical lots certain investments belonging to the Parent Company pursuant to the purported pledge. The Parent Company and others have filed a suit in the Hon’ble Bombay High Court (Bombay Suit) against the consortium of lenders, who have advanced loans to KFA, inter alia, challenging the validity of the Corporate Guarantee. The Parent Company has also filed a Notice of Motion in the said Suit for a decree on admission that the extent of the liability under the Corporate Guarantee is restricted to Rs. 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.

34. The Parent Company has advanced `589 million (Pr year `589 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 write off `589 million due from it, which was provided for in the previous year.

35. The parent Company is pursuing a 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.

36. 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 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 a 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 a subsidiary company in the Court of City Civil Judge in Bangalore 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 a subsidiary company. By an Order of the Hon’ble High Court of Karnataka 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 suit is still in progress.

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 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 in the previous year. The balance sale proceeds of `807.46 crores continues to be disclosed as due from IGCF.



LIMITED

108

Meanwhile, the Consortium of Banks have filed another Application before the Court of the XXVIII Addl. City Civil Judge, Bangalore to direct that a sum of `651.15 crores deposited in the account of Registrar General, Hon’ble High Court of Karnataka as per order dated 20-6-2014 in W.P. No. 25877 be transferred to the credit of SBICAP Trustee Company Limited for appropriation towards the dues payable to the Banks. After hearing the Suit on merits, the Applications preferred by the Consortium of Banks was dismissed.

37. Litigation:

a) The litigation regarding Consortium of Banks filing a suit before the Hon’ble DRT is mentioned in details in para 33(i).

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. Thereafter, vide final order dated 28th March 2016 issued a Demand Notice directing the Company to pay an amount of `192,51,08,484.67. Aggrieved by the final order of the Hon’ble DRT, the Parent Company preferred a Writ Petition before the Hon’ble High Court of Karnataka and by way of an interim Order dated 16th June 2016, the Hon’ble High Court of Karnataka was pleased to stay the order of the DRT. This stay is still continuing.

c) The litigation regarding Kingfisher Villa property is mentioned in details in para 30(iii).

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 2nd 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 Order for appointment of a provisional Liquidator or Order of winding up of the parent Company, has been passed till date. The Suits are still in progress.

e) The Parent Company has filed a suit claiming an amount of USD 210,400,000 along with `162,10,00,000/- by way of Damages 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. However, applications filed by the said Petitioner challenging the jurisdiction of the Suit has since been dismissed vide order of the Hon’ble City Civil Court dated 30th April 2016.

f) The litigation with ICICI Bank regarding 20,14,000 shares of UBL is mentioned in details in para 31(a).

g) Pursuant to a Corporate Guarantee given by the Parent Company to BIAL, the Parent Company deposited 50% of the Guarantee amount of `83.533 million with the Hon’ble High Court of Karnataka pursuant to order passed by the Hon’ble Supreme Court consequent to filing of SLP by the Parent Company. The Suit is still in progress.

h) 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. In view of the resolution passed in the SEBI Board Meeting dated 12th March 2016 and the subsequent press release issued by SEBI, the counsel of SEBI has before the Hon’ble SAT stated that the order dated 27th April 2015 may be quashed with liberty to SEBI to pass appropriate orders in accordance with law. Accordingly, orders passed by SEBI dated 27th April 2015 have been set aside vide order of the Hon’ble SAT vide its order dated 29th March 2016.

i) 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 parent Company has filed an Application vide CA No. 1428 of 2014 in COP 185/12 with a prayer to permit the parent Company to lease/rent out the vacant premises at UB City and grant such other further orders as are just. This application is pending.

38. Zuari Fertilizers and Chemicals Limited (“Zuari”) through an open offer process has become the majority shareholder of Mangalore Chemicals & Fertilizers Limited (“MCF”) and currently it is holding 53.03% of the paid up equity share capital of MCF. Consequently, MCF ceased to be an Associate of the parent Company. Since certain disputes have arisen out of the Shareholders Agreement (“SHA”) with Zuari Group, the UB Group has invoked the arbitration clause in the SHA and have referred the dispute to an Arbitrator. The arbitration proceedings are pending.



LIMITED

109

39. Certain pre-existing loans from United Spirits Limited (“USL”) and its wholly ownedsubsidiaries extended to the parent Company and which were in existence as on 31st March 2013 aggregating to `1,337.41 crs were consolidated into and recorded as an unsecured loan by way of an Agreement entered into by the parent Company with USL on 3rd July 2013. This loan has been granted for a period of 8 years and is payable in 3 annual installments commencing from the 6th Anniversary of the effective date of the Loan Agreement. 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 has not accounted for any interest on the loan since October 2014.Consequent to non-compliance of the terms of the Agreement, USL claimed payment of the entire principal amount of `1,337.41 crs together with outstanding interest. Meanwhile vide its letter dated 14th July 2016, USL has invoked the arbitration clause in the agreement. The process of arbitration is yet to commence.

40. Going concern

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 before the Hon’ble Bombay High Court, a suit seeking to declare the corporate guarantee null, void ab initio and non-est. The suit is still pending adjudication. (Refer note no. 33 and 37). Certain winding up petitions in this regard are pending before the Karnataka High Court and which are contested by the parent company.

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 Application filed by the engine manufacturers challenging the jurisdiction has been dismissed by the Hon’ble City Civil Court, Bangalore vide its order dated 30th April 2016. 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).

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

The market value of the parent Company’s properties and investments is significantly higher than the carrying value. The operations of UBGC (a Division of the Company), are generating substantial revenues on a regular basis. Further, revenues are being generated from the Logo fee contracts with various other companies. The parent Company is also receiving dividends on its investments. Added to it is the fact that the rental revenue is also generating cash inflows, and this would substantially increase when the embargo to renew or take on fresh lease, is lifted by the High Court.

Having regard to the totality of all the above facts and also the substantial assets of the parent Company which can be monetized in case of necessity, the financial statements for the year ended 31st March 2016 have been presented on principles applicable to Going Concern.

41. The Parent Company had advanced ̀ 20 crs 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 the recovery of the advance. However, as a matter of prudence the Parent Company has provided for the advance.

42. There is no income tax liability on the parent company since it has incurred loss for the year. Further, having regard to the adjustments required to be made to the book profit in respect of write off ofcertain advances against the provision made for such advances, there would also not be any liability on account of MinimumAlternate Tax.

43. One of the Group Company has raised a claim of `175.42 crores upon the parent Company. This amount consists of loans given to the company and the proceeds of invocation and sale of their pledged shares by a bank, the realization of which was utilized by the bank for the purpose of liquidating the dues of the parent company. The loan has become overdue as on 31st March 2016.

44. Events occurring after the date of the Balance Sheet

(a) The Directorate of Enforcement (ED), Ministry of Finance-Dept. of Revenue, Government of India, vide its Provisional Attachment Order No. 11/2016 dated June 11, 2016, received by the parent Company, has provisionally attached the immovable properties of the parent Company based in Bangalore and Mumbai under Section 5(1) of Prevention of Money Laundering Act, 2002 for a period of 180 days from the date of the Order in connection with investigation against Dr. Vijay Mallya, Kingfisher Airlines Limited & Others. The parent Company is in consultation with its Legal Counsels for taking appropriate steps that may be required including defending the case before the Adjudicating Authority in Delhi pursuant to a Show Cause Notice dated 11th July 2016 received from the Adjudicating Office in this regard.



LIMITED

110

(b) The parent Company executed a Joint Development Agreement (“JDA”) with Prestige Estates Projects Limited (“Prestige”), a reputed Developer based in Bangalore, on April 26, 2010 for development of a luxury residential building named as “Kingfisher Towers – Residences at UB City” in the available land in UB City. Due to certain delay in construction, the parent Company claimed an amount of `66 crores from Prestige upto 31st March 2016 and reserved its rights to claim further claims beyond 31st March 2016 till the receipt of the Occupancy Certificate.

` in million 45. Employee benefit

Disclosure as per AS 15Defined benefit plans 2015-16 2014-15Reconciliation of opening and closing balances of the present value of the defined benefit obligation:Obligations at period beginning 164.173 108.311Service cost 5.309 75.084Interest cost 13.102 7.967Benefit settled (64.247) (16.363)Actuarial (gain)/loss 42.567 (10.826)Obligations at period end 160.904 164.173Defined benefit obligation liability as at the Balance Sheet Is wholly funded by the Company Is wholly funded by the CompanyChange in plan assets Plan assets at period beginning, at fair value 153.854 107.945Expected return on plan assets 14.095 10.038Actual gain / (loss) (1.659) 0.820Contributions 11.500 51.414Benefits settled (63,520) (16.363)Plans assessed at period end, at fair value 114.270 153.854Reconciliation 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 151.954 164.173Present value of the defined benefit obligations at the end of the period. 107.595 153.854Net asset / liability recognized in the Balance Sheet 44.359 10.319Details of Gratuity cost Service cost 5.309 75.084Interest cost 13.102 7.967Expected return on plan assets (11.946) (10.038)Actuarial (gain) / loss 40.400 (11.646)Net Gratuity Cost 46.865 61.367Description 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.

AssumptionsInterest rate 7.80% 8.00%Discount factor 7.80% 8.00%Estimate rate of return on plan asset 7.80% 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.



LIMITED

111

46. Deferred Tax

The following deferred tax assets / liabilities are recognized for the year.` in million

Name of the Company Deferred tax Liability

DeferredTax Asset

City Properties Maintenance Company Bangalore Limited - 0.319Hyderabad Electronic Instruments Limited (formerly known as UB Electronic Instruments Limited)

0.057 -

UB International Limited - 0.193Total 0.057 0.512Total deferred tax asset (net) (recognized in the Profit and Loss Account) - 0.455

47. Segment Reporting:

Segment-wise business performance for the year ended March 31, 2016

Primary Segment Information 2015-16 2014-15Segment Revenue:a) Alcoholic Beverages 3,506.499 3,520.169b) Leather products 371.287 416.735c) Readymade Garments 333.093 307.685d) Investments 58.229 58.754e) Logo Fee 648.319 680.578f) Property development 517.314 524.625g) Maintenance 363.628 464.995h) Others 254.765 267.720Total Revenue 6,053.135 6,241.263Segment Results:a) Alcoholic Beverages 374.337 229.202b) Leather Products 41.759 57.602c) Readymade Garments (46.739) 10.297d) Investments (170.887) (314.882)e) Logo Fee 430.458 441.939f) Property development 277.815 264.718g) Maintenance (101.083) 81.681h) Others (105.050) (145.871)Total Result 700.608 624.686Other income 619.482 591.590Provision for doubtful debts/ advances (550.000) (589.337)

Advances no longer recoverable (125.154) (6,125.065)

Diminution in value of investments (695.883) (11,190.261)

Finance cost (963.588 (1,986.343)Exceptional items 1,279.843 20,223.534Profit before tax 265.309 1,548.803

Other Information2015-16 2014-15 2015-16 2014-15

Segment Assets

Segment Liabilities

Segment Assets

Segment Liabilities

Capital Expenditure

Depreci-ation

Capital Expenditure

Depreci-ation

a) Alcoholic Beverages 3,321.984 2,664.151 2,681.558 2,510.817 42.326 68.892 55.528 79.192b) Leather Products 772.830 318.091 1,072.403 376.652 0.503 10.783 0.514 13.160c) Readymade Garments 985.908 10.066 1,183.372 10.689 - 7.105 0.177 9.136d) Investments 19,263.927 29,617.067 34,249.170 45,002.835 2.454 44.480 - -e) Property Development 435.114 - 404.805 - - 104.712 - 110.668

f) Maintenance 167.061 88.018 158.043 150.285 3.204 3.370 2.619 4.870g) Others 239.758 54.253 185.274 55.480 0.497 2.894 4.700 86.080

Total 25,186.583 32,751.647 39,934.625 48,106.758 48.985 242.236 63.538 303.106



LIMITED

112

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 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.


Particulars Segment Revenue Segment AssetsSegment 2015-16 2014-15 2015-16 2014-15Within India 1,868.218 1,922.577 20,686.489 35,433.540Outside India 4,184.916 4,318.686 4,500.094 4,501.085Total 6,053.135 6,241.263 25,186.583 39,934.625

48. Related Party Transactions:

Persons having significant influence over the affairs of the Company:-

1. Dr. Vijay Mallya, Chairman of the Board 2. Mr. A. K. Ravi Nedungadi - Group Chief Financial officer (upto 30th April 2016) 3. Mr. V. Shashikanth - President

i. Key Management Personnel:

1. Mr. Kaushik Majumder – Senior Vice President & Company Secretary

2. Mr. Ajay Kumar Vijay – Chief Financial Officer (w.e.f 20th April 2016)

Name of the Related Parties where control exists: Associates:

UB Engineering Limited, WIE Engineering Limited (Under Liquidation), Pixray India Limited, UB Pharma (Kenya) Limited.

ii. Transactions with Related Parties during the year :

Sl. No. Nature of TransactionsAssociates Key Management Personnel

2015-16 2014-15 2015-16 2014-151. Licence Fees received - 2.809 - -2. Guarantee commission received - 3.416 - -3. Interest received - 17.962 - -4. Guarantees given 650.000 650.000 - -5. Finance (including loans in cash or

in kind paid) - 7.959 - -

6. Finance (including loans in cash or in kind received) - 4.964 - -

7. Payment of remuneration for employment - - 112.120 103.784

8. Bad advances written off 589.337 - - -9. Amount Due from as on

March 31, 2016 - 589.337 - -



LIMITED

113

49. Contingent liabilities:

Particulars 2015-16 2014-15i) Guarantees given by the parent Company (on behalf of KFA to banks

and financial institutions and on behalf of others / associates)88,280.760 88,280.760

(The enforceability of the Guarantees issued for Kingfisher Airlines Ltd beneficiaries are being contested in appropriate Courts of law)

ii) Claims against the subsidiaries, not acknowledged as debts - 0.961

iii) Demands raised by Income Tax Authorities against which the subsidiaries have preferred appeals

5.546 5.454

iv) Demand raised by Income Tax authorities against which the parent Company has preferred appeals

1,892.534 776.774

v) Demands raised against subsidiary by Service Tax Authorities against which the subsidiary has preferred appeals

10.752 10.752

vi) Claim against the parent company not acknowledged as debt - 1,462.900

Certain aircraft lessors and vendors of Kingfisher Airlines Limited (KFA) have invoked the corporate guarantees given by the parent company on behalf of KFA. The total amount invoked and outstanding as on March 31, 2016 is `15,275.400 million (Pr year `15,275.400 million) and KFA is under negotiation with the beneficiaries. Also, Consortium of KFA bankers have invoked parent 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 parent Company in various Courts. Accordingly, the parent 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.

50. The following associates, namely, UB Engineering Limited and Pixray (India) Limited, have been facing liquidity crunch resulting in their ability to transafer 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 their ability to transfer funds to parent company being significantly impaired. In view of this they have not been considered for consolidation and investments in then have been dealt in accordance with AS 13 – Accounting for investment.

51. Earnings per Share:

Earnings per Share (before exceptional items) 2015-16 2014-15

Loss before exceptional items and tax (1,014.534) (18,674.731)

Weighted average number of equity shares 66,818.521 66,818,521

Earnings per share (Basic / Diluted) - in `. (15.18) (297.87)

Earnings per Share (after exceptional items) 2015-16 2014-15Profit / (Loss) after exceptional items and tax (32.610) 319.961

Weighted average number of equity shares 66,818.521 66,818,521

Earnings per share (Basic / Diluted) - in ` (0.49) 4.79



LIMITED

114

52. 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

2015-16 2014-15

Amount receivable 14.955 -

Amount payable 1.715 1,378.641

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

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






LIMITED

115

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LIMITED

116

NOTES


LIMITED

117

NOTES


LIMITED

118

NOTES


LIMITED

119

NOTES


LIMITED

120

NOTES


LIMITED

1

Notice of Annual General Meeting

UNITED BREWERIES (HOLDINGS) LIMITEDRegistered Office: “UB Tower”, Level 12, UB City, No.24, Vittal Mallya Road, Bangalore 560 001

Tel: 080-22272808, 22275809, 39856000; Fax: 080-22274890Corporate Identity Number:L85110KA1915PLC000740

Website: www.theubgroup.com; e-mail:[email protected]

NOTICE is hereby given that the One - Hundredth Annual General Meeting of the Members of UNITED BREWERIES (HOLDINGS) LIMITED will be held at Conference Hall, Level 1, UB Tower, UB City, No. 24, Vittal Mallya Road, Bangalore – 560 001 on Thursday, September 29, 2016 at 11.30.a.m. to transact the following business:

Ordinary Business

1. To receive, consider and adopt the Standalone Audited Balance Sheet of the Company as at March 31, 2016, the Statement of Profit and Loss and Cash Flow Statement for the financial year ended on that date and the Reports of the Auditors and Directors thereon.

2. To receive, consider and adopt the Consolidated Audited Balance Sheet of the Company as at March 31, 2016, the Statement of Profit and Loss and Cash Flow Statement for the financial year ended on that date and the Reports of the Auditors thereon.

3. To appoint a Director in the place of Ms. Daljit Mahal (DIN 07140099), who retires by rotation and, being eligible, offers herself for re-appointment.

4. Ratification of Auditors’ Re-Appointment :

RESOLVED THAT pursuant to the provisions of Section 139 of the Companies Act, 2013 (the “Act”), the Companies (Audit and Auditors) Rules, 2014, and such other applicable provisions, if any, of the Act and the rules framed there under and pursuant to the resolution passed by the Members at the Annual General Meeting on September 30, 2014, the Company hereby ratifies the appointment of Messrs. Vishnu Ram & Co, Chartered Accountants (Firm Registration No.004742S), as Statutory Auditors of the Company to hold office from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting and that their remuneration be fixed by the Board of Directors of the Company.

Special Business

5. To consider and if thought fit, to pass with or without modification, the following resolution as an Ordinary Resolution:

RESOLVED THAT pursuant to Section 188 and other applicable provisions of the Companies Act, 2013, (including any amendments thereto or re-enactment thereof, for the time being in force), Rule 15(3) of the Companies (Meetings of Board & its Powers) Rules 2014, and Regulation 23 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and subject to the approvals, permission of Hon’ble Court wherever necessary, the consent of the Members be and is hereby accorded to enter into a contract / arrangement with United Breweries Limited in respect of purchase of goods or materials from them (including purchase of Beer) for an estimated amount of up to ̀ 150,00,00,000/- (Rupees One Hundred and Fifty Crores only) for the financial year 2016 - 2017 on such terms and conditions as may be mutually agreed upon between the Company and United Breweries Limited.

RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorized to do all such acts, deeds,matters and things as may be required to give effect to the above resolution subject to the approval / condition which may be imposed by any Hon’ble Court.

By Order of the BoardRegistered Office: UB Tower, Level 12, UB City No.24, Vittal Mallya Road Kaushik Majumder Bangalore – 560 001 Senior Vice President – Legal & Company SecretaryLondon August 31, 2016


LIMITED

2

Notice (contd.)

Notes:

1. The Explanatory Statement pursuant to Section 102 of the Companies Act, 2013, forms part of this Notice.

2. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND SUCH PROXY NEED NOT BE A MEMBER OF THE COMPANY. The proxies, in order to be effective, must be received by the Company not less than 48 hours before the Meeting. A person can act as a proxy on behalf of Members not exceeding fifty and holding in the aggregate not more than ten percent of the total share capital of the Company carrying voting rights. A Member holding more than ten percent of the total share capital of the Company carrying voting rights may appoint a single person as proxy andsuch person shall not act as a proxy for any other person or Shareholder.

3. The trading in the Company’s Shares has been made compulsory in dematerialized form effective August 28, 2000 for all class of investors. To enable us to serve our investors better, we request Members whose shares are in physical mode to dematerialize shares and to update their bank accounts with the respective depository participants.

4. Members are requested to lodge / notify the transfer deeds, dividends, communication for change of address, bank details, ECS details, wherever applicable, mandates (if any), and matters related therewith may be addressed directly to the Company’s Registrars and Share Transfer Agents viz., Integrated Enterprises (India) Limited, 30, Ramana Residency, 4th Cross, Sampige Road, Malleswaram, Bangalore 560 003.

5. Members / Beneficial Owners holding shares in dematerialised form are requested to address all 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 and not to the Company or to the Registrar and Share Transfer Agents of the Company, as the Company is obliged to use only the data provided by the Depositories.

6. Non-Resident Indian Members are requested to inform Integrated Enterprises (India) Limited immediately of: (a) change in their residential status on return to India for permanent settlement (b) particulars of their bank account maintained in India with complete name, branch, account type, account number and address of the bank with pin code number, if not furnished earlier.

7. The Register of Members and the Share Transfer Books of the Company will remain closed from Saturday, September 24, 2016 to Thursday, September 29, 2016 (both days inclusive).

8. Voting rights shall be reckoned on the paid up value of shares registered in the name of the Member / beneficial owner (in case of electronic shareholding) as on the Cut-off date i.e. of Friday, September 23, 2016.

9. The Companies Act, 2013 authorises the Company to send all statutory communications via email to the Members who have registered their email ID. The Company, therefore, requests:

a. The Members who are holding shares in physical mode to submit their valid e-mail ID to Integrated Enterprises (India) Limited, the Registrar and Share Transfer Agents, by quoting their folio number and also any change therein from time to time; and

b. The Members / Beneficial Owners holding shares in dematerialized form are requested to inform / update their valid e-mail ID to their respective depository participants from time to time.

10. Members are requested to quote the Folio Number / Client ID / DP ID in all correspondence. The Company has designated an e-mail address of the Compliance Officer viz., [email protected] exclusively for the purpose of registering complaints,if any, by investors.

11. The Securities and Exchange Board of India (SEBI) has mandated the submission of Permanent Account Number (PAN) by every participant in securities market. Members holding shares in electronic form are, therefore, requested to submit the PAN to their Depository Participants with whom they are maintaining their demat accounts. Members holding shares in physical form can submit their PAN details to the Company / Registrar and Share Transfer Agents.

12. The Company has transferred unclaimed dividends declared up to financial years 2007-08 from time to time on due dates to the “Investor Education and Protection Fund” (IEPF) established by the Central Government.


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Notice (contd.)

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 28, 2015 (date of last Annual General Meeting) on the website of the Company www.theubgroup.com.

13. Members may note that the Notice of the One Hundredth Annual General Meeting (AGM) and the Annual Report for 2015-16 is also available on the Company’s website www.theubgroup.com.

14. Members who require communication in physical form in addition to e-communication or have any other queries, may write to the Company at [email protected].

15. Members who have opted for the emailing of the Annual Report and the Accounts are kindly requested to bring the print out there of when they attend the AGM.

16. Members / Proxies are requested to bring their copy of the Annual Report and Attendance / Proxy Slip sent herewith duly filled in for attending the meeting to avoid inconvenience and delay at the time of registration and avoid being accompanied by non-members and children. Copies of Annual Report and Attendance slip will NOT be available for distribution at the venue of the Meeting.

17. Documents referred to in the Notice and the Explanatory Statement shall be open for inspection at the Registered Office of the Company during normal business hours on all working days except on Saturdays, Sundays and Public Holidays up to and including the date of AGM of the Company.

18. The relevant information relating to the Directors seeking re-appointment viz., Ms. Daljit Mahal is given in the Annexure to the Notice as required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial Standards on General Meetings – SS-2.

19. The Statutory Auditors of the Company, Messrs. Vishnu Ram & Co, Chartered Accountants (Firm Registration No.004742S), at the AGM held on September 30, 2014 were appointed Statutory Auditors of the Company for a period of 3 years subject to ratification by the Members at every AGM. Ratification of appointment of Statutory Auditors is being sought from the Members of the Company at this AGM.The Auditors have confirmed that they continue to satisfy the conditions as prescribed under the Act and Rules framed thereunder for appointment as Auditors of the Company.

20. Electronic copies of the Annual Report and Notice are being sent to all the Members whose email IDs are registered with the Company / Depository Participants for communication purposes unless any Member has requested for a hard copy of the same.

For Members who have not registered their email address, physical copies of the Annual Report and Notice is being sent in the permitted mode.

21. Pursuant to Section 107 of the Act read with Rule 20 of the Companies (Management and Administration) Rules, 2014, there will not be voting by show of hands on any of the agenda items at the Meeting and the Company will conduct voting at the Meeting.

22. Voting options:-

(I) Voting through electronic means

In compliance with provisions of Section 108 of the Companies Act, 2013 and the Companies (Management and Administration) Rules, 2014, as amended,Regulation 44 of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 and Secretarial Standard on General Meetings (SS-2) issued by the Institute of Company Secretaries of India, the Company is pleased to provide the Members a facility to exercise their voting rights for the businesses to be transacted at the AGM by electronic means (remote e-voting) through remote e-voting services provided by Central Depository Services (India) Limited (CDSL).

The instructions for Members voting electronically are as under:

(i) The remote e-voting period begins on Monday, September 26, 2016 at 9.00 a.m. and ends on Wednesday, September 28, 2016 at 5.00 p.m. During this period, Shareholders of the Company holding shares either in


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physical form or in dematerialized form, as on the cut-off date of Friday September 23, 2016 may cast their vote electronically. The remote e-voting module shall be disabled by CDSL for voting thereafter.

(ii) Log on to the remote e-voting website www.evotingindia.com

(iii) Click on “Shareholders” tab.

(iv) Now Enter your User ID

a. For CDSL: 16 digits beneficiary ID

b. For NSDL: 8 Character DP ID followed by 8 Digits Client ID

c. Shareholders holding shares in Physical Form should enter Folio Number registered with the Company.

(v) Next enter the Image Verification as displayed and Click on Login.

(vi) If you are holding shares in demat form and had logged on to www.evotingindia.com and voted on an earlier voting of any Company, then your existing password is to be used.

(vii) If you are a first time user follow the steps given below:

For Shareholders holding shares in Demat Form and Physical Form

PAN Enter your 10 digit alpha-numeric PAN issued by Income Tax Department (Applicable for both Demat

Shareholders as well as Physical Shareholders)

• ShareholderswhohavenotupdatedtheirPANwiththeCompany/DepositoryParticipantarerequestedto

use the first two letters of their name and the last 8 digits of the sequence number in the PAN field.

• Incasethesequencenumberislessthan8digitsentertheapplicablenumberof0’sbeforethenumber

after the first two characters of the name in CAPITAL letters. eg. If your name is Ramesh Kumar with

sequence number 1 then enter RA00000001 in the PAN field.

DOB Enter the Date of Birth as recorded in your Demat Account or in the Company records for the said Demat

Account or Folio in dd/mm/yyyy format.

Dividend

Bank

Details

Enter the Dividend Bank Details as recorded in your Demat Account or in the Company records for the said

Demat Account or Folio.

Please enter the DOB or Dividend Bank Details in order to login. If the details are not recorded with the Deposi-

tory or Company please enter member id / folio number in the Dividend Bank details field as mentioned in

instruction (iv).

(viii) After entering these details appropriately, click on “SUBMIT” tab.

(ix) Shareholders holding shares in physical form will then reach directly the Company selection screen. However, Shareholders holding shares in demat form will now reach ‘Password Creation’ menu wherein they are required to mandatorily enter their login password in the new password field. Kindly note that this password is to be also used by the demat holders for voting for resolutions of any other Company on which they are eligible to vote, provided that Company opts for remote e-voting through CDSL platform. It is strongly recommended not to share your password with any other person and take utmost care to keep your password confidential.

(x) For Shareholders holding shares in physical form, the details can be used only for remote e-voting on the resolutions contained in this Notice.

(xi) Click on the EVSN of United Breweries (Holdings) Limited to vote.

(xii) On the voting page, you will see “RESOLUTION DESCRIPTION” and against the same the option “YES / NO” for voting. Select the option YES or NO as desired. The option YES implies that you assent to the Resolution and option NO implies that you dissent to the Resolution.

(xiii) Click on the “RESOLUTIONS FILE LINK” if you wish to view the entire Resolution details.

Notice (contd.)


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(xiv) After selecting the resolution you have decided to vote on, click on “SUBMIT”. A confirmation box will be displayed.

If you wish to confirm your vote, click on “OK”, else to change your vote, click on “CANCEL” and accordingly modify your vote.

(xv) Once you “CONFIRM” your vote on the resolution, you will not be allowed to modify your vote.

(xvi) You can also take out print of the voting done by you by clicking on “Click here to print” option on the Voting page.

(xvii) If Demat account holder has forgotten the changed password then enter the User ID and the image verification code and click on Forgot Password & enter the details as prompted by the system.

(xviii) Note for Non – Individual Shareholders and Custodians

• Non-Individualshareholders(i.e.otherthanIndividuals,HUF,NRIetc.)andCustodiansarerequiredtologon to www.evotingindia.com and register themselves as Corporates.

• TheyshouldsubmitascannedcopyoftheRegistrationFormbearingthestampandsignoftheentitytohelpdesk.evoting@cdslindia.com.

• Afterreceivingthelogindetailsacomplianceusershouldbecreatedusingtheadminloginandpassword.The Compliance user would be able to link the account(s) for which they wish to vote on.

• Thelistofaccountsshouldbemailedtohelpdesk.evoting@cdslindia.comandonapprovaloftheaccountsthey would be able to cast their vote.

• TheyshoulduploadascannedcopyoftheBoardResolutionandPowerofAttorney(POA)whichtheyhaveissued in favour of the Custodian, if any, in PDF format in the system for the Scrutinizer to verify the same.

• Incaseyouhaveanyqueriesor issues regardingremotee-voting,youmayrefer theFrequentlyAsked Questions (“FAQs”) and remote e-voting manual available at www.evotingindia.com under help section or write an email to [email protected].

(II) Voting at AGM

Members who have not cast their votes through remote e-voting, can exercise their voting rights at the AGM.

23. Members holding shares under multiple folios / demat accounts shall choose the voting process separately for each of the folios / demat accounts.

24. In case of joint holders attending the Meeting, only such joint holder who is higher in the order of names will be entitled to vote.

25. Voting has to be done for each item of the Notice separately. In case you do not desire to cast your vote on any specific item it will be treated as abstained.

26. A Member can opt for only one mode of voting i.e. either in person or through proxy at the Meeting or through remote e-voting. Members attending the AGM who have not already cast their vote by remote e-voting shall be able to exercise their right to vote at the AGM. Members who have already cast their vote by remote e-voting shall not be allowed to vote again at the AGM. If a member casts votes by all the modes, then voting done through remote e-voting shall prevail and voting through other means shall be treated as invalid.

27. Any person, who acquires shares of the Company and becomes a Member of the Company after dispatch of the Notice and holding shares as of the cut-off date i.e. Friday, September 23, 2016, may obtain a copy of the Notice by sending a request at help [email protected] / [email protected]. Such persons may follow the instructions given in the Notice forecasting their votes through remote e-voting provided by CDSL. In case of any assistance on remote e-voting, please contact the Registrar at [email protected] / Phone No. 080-23560815-818 / Fax: 080-23460819.

28. A person, whose name is recorded in the Register of Members or in the Register of Beneficial Owners maintained by the Depositories as on the cut-off date only shall be entitled to avail the facility of remote e-voting as well as voting at the AGM.

Notice (contd.)


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6

29. The Board has appointed Mr. Sudhir Hulyalkar, Company Secretary in Practice (Membership No. FCS 6040, CP 6137) as the Scrutinizer to scrutinize the remote e-voting process as well as voting through Ballot Paper at the AGM in a fair and transparent manner.

30. The Scrutinizer shall immediately after the conclusion of the General Meeting, first count the votes cast at the meeting and there after unblock the votes cast through remote e-voting in the presence of at least two (2) witnesses not in the employment of the Company and shall make a consolidated Scrutinizer’s Report of the votes cast in favour or against, if any, forthwith to the Chairman or any person authorized by him in writing who shall counter sign the same within a period not exceeding three (3) days from the date of the AGM.

31. The Results shall be declared at or after the Annual General Meeting of the Company by the Chairman or the person authorized by him. The results declared along with the Scrutinizer’s Report shall be placed on the website of the Company - www.theubgroup.com and on the website of CDSL – www.cdslindia.com. The results shall simultaneously be communicated to the Stock Exchanges.

32. Route map giving directions to the venue of the meeting is annexed to the Notice.

EXPLANATORY STATEMENT as required under Section 102 of the Companies Act, 2013

Item No. 5

The Members of the Company at the Annual General Meeting held on September 28, 2015 by way of Special Resolution in terms of the provisions of Section 188(1) of the Companies Act, 2013 read with Rule 15(3) of the Companies (Meetings of Board and its Powers) Rules 2014 (as amended from time to time) and Clause 49-VII of the Listing Agreement had approved the following monetary limits for related party transactions for financial year 2014-15 which have not been fully utilized:

Name of the Related Party

Name of the Director/Key Managerial

Personnel who is related

Natureof

Relationship

Nature of theproposed

contract or arrangement

Monetary limit of the transaction(` In crores)

United BreweriesLimited (UBL)

Dr. Vijay Mallya, Director Group Company Purchase of goods or materials (Beer)

150.00

The Board of Directors of your Company have approved the proposed transaction along with annual limit (as mentioned below) that your Company may enter into with its related parties (as defined under the Companies Act, 2013) and Regulation 23 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 for the financial year 2016-17.

The proposed transaction under consideration qualifies as a “material related party transaction” and in terms of Regulation 23 (4) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 all material related party transactions have to be approved by Ordinary Resolution of the Shareholders and the related parties shall abstain from voting on such resolution whether the entity is a related party to the transaction or not.

The particulars of the transaction are as under:

Name of the Related Party

Name of the Director/Key Managerial Personnel who

is related

Natureof

Relationship

Nature of the proposed contract or arrangement

Monetary limit of the transaction(` In crores)

United BreweriesLimited (UBL)

Dr. Vijay Mallya, Director Group Company Purchase of goods or materials ( Beer)

150.00

Except Dr. Vijay Mallya and his relatives, none of the other Directors are concerned or interested in the above resolutions.

The Board, therefore, recommends the Resolution set out at Item No. 5 of the Notice for the approval of the Members in terms of Regulation 23 (4) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

By Order of the BoardRegistered Office:

UB Tower, Level 12, UB City Kaushik Majumder No.24, Vittal Mallya Road Senior Vice President – Legal Bangalore – 560 001 & Company Secretary

London August 31, 2016

Notice (contd.)


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7

Details of Directors seeking re-appointment at the One Hundredth Annual General Meeting of the Company and this information forms part of the notice for the Annual General Meeting :

Name Ms. Daljit Mahal (DIN 07140099)

Date of Birth May 22, 1959

Nationality British

Qualification Graduate, Malaspina College, Nanaimo, British Columbia, Canada

Expertise Secretarial and Office Administration

Experience Ms. Daljit Mahal has been working with the UB Group for over 22 years

Date of appointment March 28, 2015

Shares held in the Company Nil

Directorship in other Companies Nil

Chairman / Member of the Committees ofother Companies in which he is a Director

Nil

Notice (contd.)


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8

VENUE: CONFERENCE HALL, LEVEL 1, UB TOWER, UB CITY, # 24 VITTAL MALLYA ROAD, BENGALURU - 560 001.

ROUTE MAP

UNITED BREWERIES (HOLDINGS) LIMITEDRegistered Office: “UB Tower”, Level 12, UB City, No.24, Vittal Mallya Road, Bangalore 560001

Tel: 080-22272808, 22275809, 39856000; Fax: 080-22274890; Corporate Identity Number: L85110KA1915PLC000740; Website: www.theubgroup.com

e-mail:[email protected]

Name of the Member(s) : _______________________________________________________________________

Registered Address : _______________________________________________________________________

_______________________________________________________________________

E-mail Id : _______________________________________________________________________

Folio No. / Client ID. : ______________________________________ DP ID. : __________________________

I/We, being the holder(s) of _________________Equity Shares of United Breweries (Holdings) Limited, hereby appoint:

(1) Name : _____________________________________ Address : ___________________________________

E-mail Id : _____________________________________ Signature : ________________________, or failing him

(2) Name : _____________________________________ Address : ___________________________________

E-mail Id : _____________________________________ Signature : ________________________, or failing him

(3) Name : _____________________________________ Address : ___________________________________

E-mail Id : _____________________________________ Signature: __________________________________

as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at the One- Hundredth Annual General Meeting of the Company to be held on Thursday, September 29, 2016 at Conference Hall, Level 1, UB Tower, UB City, No 24, Vittal Mallya Road, Bangalore -560001 at 11.30 a.m. and at any adjournment(s) thereof in respect of such resolutions as are indicated below:

Signed this ............................................day of ............................2016.

.......................................................Signature of the Proxy holder(s)

Notes :

1. This form of proxy in order to be effective should be duly completed and deposited at the Registered Office of the Company, not less than 48 hours before the commencement of the Meeting.

2. A person can act as proxy on behalf of Members not exceeding Fifty Members and holding in the aggregate not more than ten percent of the total share capital of the Company. Further, a Member holding more than ten percent of the total share capital of the Company carrying voting rights may appoint a single person as proxy and such person shall not act as proxy for any other person or member.

3. A Member entitled to attend and vote at the Meeting is entitled to appoint a Proxy to attend and vote instead of himself and the Proxy need not be a Member.

1. Adoption of Standalone Audited Balance Sheet of the Company as at March 31, 2016, the Statement of Profit and Loss and Cash Flow Statement for the financial year ended on that date and the Reports of the Auditors and Directors thereon.

2. Adoption of Consolidated Audited Balance Sheet as at March 31, 2016, the Statement of Profit and Loss and Cash Flow Statement for the financial year ended on that date and the Reports of the Auditors thereon.

3. Re-appointment of Ms. Daljit Mahal (DIN 07140099), who retires by rotation and, being eligible, offers herself for re-appointment.

4. Ratification of Auditors’ Re-Appointment.

5. Contract/Arrangement with United Breweries Limited in respect of purchase of goods or materials from them (including purchase of Beer) under Section 188 and other applicable provisions of the Companies Act, 2013 of the Companies Act, 2013 and the Rules made thereunder.

............................................................Signature of the Shareholder(s)

PROXY FORM[Pursuant to Section 105(6) of the Companies Act, 2013 and Rule 19(3) of the Companies (Management and Administration) Rules, 2014]

AffixRe.1/-

RevenueStamp

UNITED BREWERIES (HOLDINGS) LIMITEDRegistered Office: “UB Tower”, Level 12, UB City, No.24, Vittal Mallya Road, Bangalore 560001

Tel: 080-22272808, 22275809, 39856000; Fax: 080-22274890; Corporate Identity Number: L85110KA1915PLC000740; Website: www.theubgroup.com

e-mail:[email protected]

ATTENDANCE SLIPTH100 ANNUAL GENERAL MEETING

Date: Thursday, September 29, 2016 at 11.30 a.m.Place: Conference Hall, Level 1, UB Tower, UB City, No.24, Vittal Mallya Road, Bangalore - 560001

I/We hereby record my/our presence at the One- Hundredth Annual General Meeting of the Company being held on Thursday , September 29, 2016 at 11.30 a.m. at Conference Hall, Level 1, UB Tower, UB City, No.24, Vittal Mallya Road, Bangalore 560001.

Signature of the Member(s) / Proxy / Authorised Representative* ……………...........………………………

* Strike off whichever is not applicable.

NOTE:

1. The Company will accept only the Attendance Slip of a person personally attending the Meeting as a Member or a valid Proxy duly registered in time with the Company. The Company will not accept Attendance Slip from any other person even if signed by a Member. Members are requested not to bring non-Members or children.

2. Persons representing bodies corporate are required to submit with the Company original Resolution of the Board of Directors or other governing body of such Member, authorizing such person to act as its representative under Section 113 of the Companies Act, 2013.

3. Member/Proxy - holder attending the Meeting should bring his/her copy of the Annual Report for reference at the Meeting.

4. To facilitate Members, registration of attendance will commence at 11.00.a.m. on September 29, 2016.

5. Remote e-voting particulars are set out below:

Remote e-voting period begins on

Remote e-voting period ends on

Name of the Scrutinizer

Monday, September 26, 2016 at 9.00 a.m.

Wednesday, September 28, 2016 at 5.00 p.m.

Mr. Sudhir Hulyalkar, Practising Company Secretary

You may refer the Frequently Asked Questions (“FAQs”) and e-voting manual available at www.evotingindia.com under help section or write an email to [email protected]

Help

EVSN USER ID PASSWORD

160903028