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Directors Report of Radico Khaitan Ltd.

Mar 31, 2015

Dear Members,

THE Directors take great pleasure in presenting their 31st Annual Report on the business and operations together with the audited financial statement of the Company for the year ended March 31,2015.

Summary of Financial Performance:

(Rs. in Crore)

2014-15 2013-14

Net Sales (including sales from 1,846.46 1,857.22 arrangements with other Distilleries / Bottling units)

Gross Profit (before depreciation and tax) 125.44 145.16

Profit before tax 87.13 106.41

Profit after tax 67.64 71.25

Prior period adjustments 0.00 0.00

Surplus brought forward from last year 98.61 89.81

Profit available for appropriation 166.25 161.07

Transfer to General Reserve 50.00 50.00

Proposed Dividend and tax thereon 12.81 12.45

Balance carried forward 88.49 98.61

Operations Review:

FY2015 was a very challenging year for the spirits industry in India. The immediate past current dynamics of the spirit industry and the operating environment have largely been unfavourable for the business growth. During the year, input costs, in particular ENA prices, which have already been on an upward trend over the last couple of years, are believed to have peaked. We believe that these were shortterm challenges and Radico Khaitan is very well positioned for the anticipated upturn in the industry. Despite these industry challenges, the Company was able to report sustained performance during the year. Sales remained relatively flat at Rs.1,846,5 Crore compared to the same period last year. Prestige & Above category brands registered a volume growth of 8.8% y-o-y in FY2015 to reach 40.43 million cases. Prestige & Above category brands as a percentage of total IMFL sales increased from 18,3% in FY2014 to 20.7% in FY2015. However, overall IMFL volume was 194.88 million cases in FY2015, representing a y-o-y decline of 4.3%. Net EBITDA margin was under pressure, standing at 9.8% in FY2015 as compared to 11.2% in FY2014, mainly on account of higher input costs during the year (6% ENA cost increase and 6% glass bottle cost increase). The Company's leverage profile has witnessed improvement with a 6% reduction in total debt on y-o-y basis, FY2015 total debt standi ng at Rs.849.3 Crore.

Radico Khaitan's Magic Moments vodka continued to be the market leader in the fast growing premium vodka segment. The Company launched Verve super premium vodka in FY 2012 and its different flavours in FY 2014. Radico Khaitan's latest offering is triple distilled and triple filtered 8% Vodka infused ready to drink (RTD) product Electra in three fierce yet sublime premium flavour (Agent Orange, Appletini & Cosmopolitan).

Capital Structure and Liquidity:

Share Capital

During the year under review, the Company has not issued any new shares on the exercise of stock options granted under the Employees Stock Option Scheme 2006. The outstanding, issued and paid-up equity shares stood at 133,038,765 shares, same as of March 31,2014.

General Reserve

An amount of Rs. 50 Crore has been transferred to the General Reserve out of Radico Khaitan's profit of Rs. 67.6 Crore for the financial year ended March 31,2015.

Term Loan and Working Capital

As of March 31, 2015, the Company had total debt of Rs, 849.3 Crore, Cash and Cash Equivalents were Rs. 10.3 Crore resulting in Net Debt of Rs. 838.9 Crore. Total Debt consists of Rs. 412,4 Crore of Working Capital loans and Rs, 436.9 Crore of Long Term loans, including Long Term loans maturing within 12 months of the balance sheet date. As of March 31,2015, Radico had a conservative leverage with Debt/Equity ratio of 1,0x.

Capital Market Ratings:

The Company continued to enjoy investment grade credit rating from Credit Analysis & Research Ltd (CARE) which has re-affirmed the rating of "CARE A " assigned for the long term facilities. CARE A or A1 rating is considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk,

CARE has also re-affirmed the rating of "CARE A1 " assigned for the short term facilities, which is considered to have very strong degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk.

Directors:

During the year the company appointed Mr. Sarvesh Srivastava as Independent Director and Mrs. Shailja Saraf as a Non Executive Non Independent Director (Women Director) of the Company with effect from 30th May 2014. During the year Mr. Mahendra Kumar Doogar resigned as Director of the Company with the effect from 30th May 2014,

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Company's Articles of Association, Mr. Abhishek Khaitan, Managing Director retires by rotation at the forthcoming Annual General meeting and being eligible offers himself for re-appointment.

Board Meetings:

During FY2014-15, the Board of Directors met 4 (four) times on 30thMay 2014, .12th August, 2014,11th November 2014 and 10th February 2015. The period between any two consecutive meetings of the Board of Directors of the Company was not more than 120 days. The details regarding composition, number of Board Meetings held and attendance of the directors during FY 2014-15 are set out in the Corporate Governance Report.

Meeting of Independent Directors

A meeting of Independent Directors was held on 10.02.2015 to:

1) Review the performance of Non-independent Directors and the Board as a whole;

2) Review the performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non-executive Directors;

3) Assess the quality, quantity and timelines of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties

Training of Independent Directors

Every new Independent director of the Board attends an orientation prog ram conducted by senior executives of the Company. This program is intended to familiarise the new Board members about the Company's strategy, products and offerings, operations and facilities, economic environment organisation structure, human resource, finance, technology, quality and risk management.

A majority of the independent directors of Radico Khaitan have been associated with the Company for over 3 years and have in depth understanding of the Company's business model, strategy and business environment. Radico Khaitan firmly believes that a Board, which is well informed /familiarised with the Company, can contribute significantly to effectively discharge its role of trusteeship in a manner that fulfils stakeholders' expectations.

In pursuit of this, the Directors are updated on a continuing basis on developments in the corporate and industry scenario including those pertaining to regulatory and economic environment, to enable them to take well informed and timely decisions. The Independent directors attended interactive session from time to time to understand the dynamics of industry.

Statement on declaration given by independent directors under sub-section (6) of section 149;

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

The Company keeps a policy of transparency and arm's length while dealing with its Independent Directors. No transaction was entered with Independent directors in the year which could have any material pecuniary relationship with them. Apart from sitting fee no other remuneration was given to any of the Independent Directors.

Board Evaluation:

Clause 49 of the Listing Agreement requires that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be performed by the Board of its own performance, various committees of the Board and that of the individual directors. Pursuant to these requirements, a comprehensive and structured questionnaire was prepared after taking into consideration the various aspects of the Board's functioning, composition of the Board and its Committees, culture, execution and performance of specific duties, obligations and governance.

The performance evaluation of the Independent directors was done by the entire Board excluding the director being evaluated. The performance evaluation of the Chairman and the Non-Independent directors was carried out by the Independent directors. The Board of Directors expressed their satisfaction with the evaluation process.

Policy on Nomination, Remuneration and Board Diversity u/s 178 sub Section 1:

The Board of Directors (the "Board") on the recommendation of the Nomination and Remuneration Committee (the "Committee") has approved and adopted the Nomination, Remuneration and Board Diversity Policy (the "Policy") in compliance with the provisions of Section 178 of the Companies Act, 2013 and rules made thereunder, and Clause 49 of the Listing Agreements with the stock exchanges. The policy and its objectives are available on the Company s website www.radicokhaitan.com

Risk Management Policy:

Risk management is embedded in the operating framework of Radico Khaitan Ltd. The Company believes that managing risks goes hand in hand with maximising returns. To this effect, there is a robust process in place to identify key risks across the Company and prioritise relevant action plans to mitigate these risks. Risk Management Framework is reviewed periodically by the Board and the Audit Committee which includes discussing the management submissions on risks, prioritising key risks and approving action plans to mitigate such risks.

During the year, a Risk Management Policy has been approved by Audit Committee. The objective of this policy is to have a well defined approach to risk. The Policy lays broad guidelines for the appropriate authority so as to be able to do timely identification, assessment, and prioritisation of risks affecting the Company in the short and foreseeable future. The Company has appointed Independent Consultant to make a report on key risks and its addressal system so as to make sure that risks are adequately compensated or mitigated. The Internal Audit function is responsible to assist the Audit Committee on an independent basis with a full status of the risk assessments and management.

Awards and Recognition:

During the year Radico Khaitan received numerous awards for its leading brands at various international events. These awards are testament to the Company's understanding of the customer preference as well as the superior quality of its products. Some of the awards received during the year were:

Award Details

Name of Brands Monde Selection Award in 2015

Magic Moments Vodka Gold

Magic Moments Remix Green Apple Flavoured Vodka Gold

Magic Moments Remix Lemongrass & Grand Gold Ginger Flavoured Vodka

Morpheus Brandy Gold

Magic Moments Remix Orange Flavoured Vodka Gold

Magic Moments Remix Lemon Flavoured Vodka Gold

Magic Moments Remix Chocolate Flavoured Vodka Gold

Magic Moments Remix Raspberry Flavoured Vodka Gold

M2 Verve Magic Moments Super Premium Vodka Gold

M2 Verve Magic Moments Green Apple Gold Premium Flavoured Vodka

M2 Verve Magic Moments Orange Gold Premium Flavoured Vodka

Magic Moments Remix Peach Flavoured Vodka Grand Gold

Name of Brands International High quality Trophy Award in 2015 from Monde Selection for having achieved Gold for 3 consecutive years

Magic Moments Vodka Gold

Magic Moments Remix Green Apple Flavoured Vodka

Magic Moments Remix Lemongrass & Gold Ginger Flavoured Vodka

Morpheus Brandy

Magic Moments Remix Orange Flavoured Vodka Gold

Magic Moments Remix Lemon Flavoured Vodka Gold

Magic Moments Remix Chocolate Flavoured Vodka Gold

Magic Moments Remix Raspberry Flavoured Vodka Gold

M2 Verve Magic Moments Super Premium Vodka Gold

M2 Verve Magic Moments Green Apple Gold Premium Flavoured Vodka

M2 Verve Magic Moments Orange - Premium Flavoured Vodka

Magic Moments Remix Peach Flavoured Vodka -

Employee Stock Option Scheme: [ESOP Scheme]

To provide the employees with an opportunity to share in the growth of the Company and to reinforce long term commitment, Radico Khaitan implemented the Employees ESOP Scheme in 2006. However, during the year under review, the Company has not issued any new shares on the exercise of stock options under the Employees Stock Option Scheme 2006. The particulars of the options as required by SEBI (Employees Stock Option Scheme and Employees Purchase Scheme) guidelines, 1999 are appended as annexure 'A' and forms part of this report.

Dividend:

The Company has a dividend policy that balances the dual objective of appropriately rewarding its shareholders and retaining capital to support future growth, Despite a challenging year, your Directors are pleased to recommend a dividend of Rs. 0.80 per equity share or 40% on face value of Rs. 2.00 each for the year ended March 31,2015. The total dividend payout for the financial year will be Rs. 12.81 Crore including a dividend distribution tax of Rs. 2.17 Crore. This consistent dividend payout is to demonstrate our commitment towards our shareholders. The dividend is subject to approval of shareholders at the Annual General Meeting on 30.09.2015 and will be paid to the shareholders whose names appear in the Register of Members as on 25th September 2015.

Dematerialisation:

During the year 150,885 shares of the Company constituting 0.11% of the issued and subscribed Share Capital of the Company, were dematerialised. Around 98.01% of the shares of the Company have now been dematerialized as on March 31,2015. Your Directors would request all the members who have not yet converted their holdings into dematerialized form, to do so thereby facilitating trading of their shares. As per SEBI guidelines it is now mandatory that the shares of a company are in dematerialized form for trading.

Public Deposits:

During the year under review, your Company has neither invited nor accepted any fixed deposits from the public within the meaning of Section 73 of the Companies Act, 2013, read with the Companies (acceptance of Deposits) Rules, 2014.

Subsidiaries and Joint Ventures:

During the year under review, the Company has no subsidiary company. Further, during the year, Radico Global Limited, Dubai ceased to be the associate of the Company. The company is having only one joint venture in the name of Radico N.V. Distilleries Maharashtra Limited. In the joint venture company hold 36% of shareholding.

Transfer to Investor Education & Protection Fund:

Section 124 of the Companies Act, 2013 (Section 205A of the Companies Act, 1956) mandates that companies 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), To ensure maximum disbursement of unclaimed dividend, the Company sends reminders to the concerned investors, before transfer of dividend to IEPF. Unclaimed dividend has been transferred to IEPF as per below table:

Financial Date of Declaration Total Dividend Year of Dividend (Rs.)

FY 2002 17.07.2002 38,579,176.0

FY 2003 19.07.2003 34,721,258.4

FY 2004 17.07.2004 38,579,176.0

FY 2005 16.11.2005 42,437,093.6

FY 2006 25.09.2006 48,223,970.0

FY 2007 26.09.2007 48,223,970.0

Financial Unclaimed Dividend Due Date of Transfer Year as on 31-3-2015 (Rs.) to IEPF account (Rs.)

FY 2002 730,556.0 22.08.2009

FY 2003 914,312.0 24.08.2010

FY 2004 973,284.0 22.08.2011

FY 2005 983,341.0 21.12.2012

FY 2006 11,35,840.0 30.10.2013

FY 2007 922,432.0 05.11.2014

Key Managerial Personnel:

During the year under review, the Company has appointed & reconfirmed following persons as Key Managerial Personnel;

No. Name of the person Designation

1. Mr. Abhishek Khaitan Managing Director & Chief Executive Officer

2. Mr. K.P, Singh Whole Time Director

3. Mr. Dilip K. Banthiya Chief Financial Officer

4. Mr, Amit Manchanda Group Head - Legal & Company Secretary

Remuneration of the Directors and Employees:

The remuneration payable to each non-executive director is based on the remuneration structure as determined by the Board, and is revised from time to time depending upon individual contribution, the Company's performance and the provisions of the Companies Act, 2013,

The compensation policy of Radico Khaitan is aimed to attract, retain, reward and motivate talented individuals critical for achieving the long term strategic goals of the Company, Your Company's approach is to have performance based compensation culture. The compensation system should also take into account factors such as roles, skills, competencies, experience and grade to differentiate pay appropriately on the basis of contribution, skill and availability of talent on account of competitive market forces. Details pertaining to remuneration as required under Section 197 (12) of the Companies Act, 2013 read with rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed as Annexure B with this report.

Particulars of Employees:

In accordance with the provisions of Section 134, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the Directors' Report, as an addendum thereto. During FY2015, 8 persons employed throughout the year, were in receipt of remuneration of Rs.60 lacs per annum or more amounting to Rs. 14.24 crores. During FY2015, the Company had 1150 employees.

The above annexure is not being sent along with this Report to the Members of the Company in line with the provision of Section 136 of the Companies Act, 2013. Members who are interested in obtaining these particulars may write to the Company Secretary at the Registered Office of the Company. The aforesaid Annexure is also available for inspection by Members at the registered Office of the Company, 21 days before the 31th Annual general meeting and up to the date of the ensuing Annual General meeting during the business hours on working days.

None of the employees listed in the said annexure is a relative of any director of the Company, None of the employees hold (by himself or along with his spouse and dependent children) more than two percent of the equity shares of the Company,

The Business Responsibility Reporting as required by Clause 55 of the Listing Agreement within the Stock Exchanges is not applicable to your Company for the financial year ending March 31,2015.

Audit Report for the Year Ended FY 2015:

The observations made in the Auditors Report are self-explanatory and therefore do not call for any further comments under Section 134of the Companies Act, 2013.

Statutory Auditors:

M/s. V. Sankar Aiyar & Co., Chartered Accountants, (Firm Registration No. 109208W) who are Statutory Auditors of the Company hold office up to the forthcoming Annual General Meeting and are recommended for re-appointment to audit the accounts of the Company for the financial year 2015-16. As required under the provisions of Section 139 of the Companies act, 2013, Radico Khaitan has obtained written confirmation from M/s. V. Sankar Aiyar & Co. that their appointment, if made, would be in conformity with the limits specified in the said Section.

Cost Auditor:

As per the requirement of Central Government and pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, your Company has been carrying out audit of cost records relating to Industrial Alcohol every year.

The Board of Directors, on the recommendation of audit committee, has appointed Mr. S.N. Balasubramanian Cost Accountants, as cost auditor to audit the cost accounts of the Company for the financial year 2015-16 at a remuneration of Rs.1 lac plus service tax as applicable and reimbursement of out of pocket expenses. As required under the Companies Act, 2013, a resolution seeking member's approval for the remuneration payable to the Cost Auditor forms part of the Notice convening the Annual General Meeting.

The cost audit report for FY2015 was filed with the Ministry of Corporate Affairs on May 1,2015.

Secretarial Audit:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made thereunder, the Company has appointed M/s.Tanuj Vohra & Associates, a firm of Company Secretaries in Practice (C.P. No. 5253) to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is included as Annexure-C and forms an integral part of this Report.

There is no secretarial audit qualification for the year under review.

Internal Control Systems and their Adequacy:

Your Company has effective internal control and risk-mitigation systems, which are constantly assessed and strengthened with new and revised standard operating procedures. The Company's internal control system is commensurate with its size, scale and complexities of its operations. The internal and operational audit is performed by M/s. Grant Thornton. The main thrust of internal audit is to test and review controls, appraisal of risks and business processes, besides benchmarking controls with best practices in the industry.

The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The Company has a robust Management Information System, which is an integral part of the control mechanism.

The Audit Committee of the Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective actions taken. Audit plays a key role in providing assurance to the Board of Directors. Significant audit observations and corrective actions taken by the management are presented to the Audit Committee of the Board. To maintain its objectivity and independence, the internal Audit function reports to the Chairman of the Audit Committee.

Particulars of Loans, Guarantees or Investment by the Company:

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to Financial Statements.

Vigil Mechanism;

Pursuant to the requirement of section 177 (9) a (10) of the Companies Act, 2013, Radico Khaitan has adopted a Vigil Mechanism, which allows employees of the Company to raise their concerns relating to fraud, malpractice or any other activity or event which is against the interest of the Company or society as a whole. Details of complaints received and the action taken are reviewed by the Audit Committee. The functioning of the Vigil Mechanism is reviewed by the Audit Committee from time to time.

The Vigil Mechanism Policy has been uploaded on the website of the Company at http: //www. radicokhaitan. com/data pdf/whistle Mechanism Whistte Blower Policy. pdf

Related Party Transactions:

All transactions entered with Related Parties for the year under review were on arm's length basis and in the ordinary course of business and that the provisions of Section 188 of the Companies Act, 2013 are not attracted, and disclosure in Form AOC-2 is not required. Further, there are no material related party transactions during the year under review with the Promoters, directors or Key Managerial Personnel. The Company has developed a Related Party Transactions framework through Standard Operating Procedures for the purpose of identification and monitoring of such transactions.

All Related Party Transactions are placed before the Audit Committee as also to the Board for approval. Omnibus approval was obtained on a quarterly basis for transactions which were of repetitive nature. Transactions entered into pursuant to omnibus approval were regularly audited and a statement giving details of all Related Party Transactions were placed before the Audit Committee and Board for review and approval on a quarterly basis.

The policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the website of the Company at www.radicokhaitan.com. None of the directors has any pecuniary relationship of transactions vis- a-vis the Company.

Environmental Protection Measures Taken by the Company:

In view of the Corporate Responsibility on Environmental Protection, the Company has adopted a number of measures to improve in the field of environment, safety and health. Measures like standard operating procedures, training programmes for all levels of employees regarding resource conservation, housekeeping, Green Belt development and onsite emergency plan have been taken. Sustainable living is a part of long-term business strategy and your Company continuously strives to reduce our environmental footprint, while enhancing the livelihood of millions of people across our product value chain.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo:

As required under Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules 2014, the relevant information and data is given at "Annexure" - D.

i) the steps taken or impact on conservation of energy;

ii) the steps taken by the company for utilising alternate sources of energy;

iii) the capital investment on energy conservation equipment;

The Company has continued its efforts to improve energy usage efficiencies and endeavours to identify and evaluate the risks associated with the future energy expansion. The Company has always been at the forefront of new technology absorption and continues to enhance its position in the rapidly evolving technology driven business. Furthermore, your Company views foreign exchange as a priority and engages with the overseas markets in a fair and careful manner to seek growth for the business.

Corporate Social Responsibilities (CSR):

At Radico, Corporate Social Responsibility has been an intrinsic part of the long-term sustainability plan. Your Company believes that the holistic development of the society and community is strongly linked to the conducive business environment required for the Company's growth. Radico Khaitan believes in the concept of 'Social Inclusive Growth' and continues its efforts for the same. Your Company understands its responsibility as a corporate citizen towards the community at large and has taken series of corporate social initiatives. As a part of its initiative under the Corporate Social Responsibility (CSR) drive, the Company has undertaken projects in the area of rural development and promoting health care. These projects are in accordance with Schedule VII of the Companies Act, 2013 and the Company's CSR policy. The Report on CSR activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out as Annexure-E forming part of this Report.

As per the CSR Policy, the Company looks forward to spent CSR amount across the country, wherever the Company has its plant operations. The difference between amount required to be spent and amount spent stands at Rs.71.86 lacs for which the Company was not able to identify suitable avenues in few states and also due to extensive time spent on identifying social concerns/locations, which is expected to be covered in the current year.

There are no material changes and commitments, if any, affecting the financial position of the Company.

Significant and Material Orders Passed by the Regulators or Courts:

There has been no significant and material order passed by the Regulators or Courts that would impact the going concern status of the Company and its future operations.

Directors' Responsibility Statement:

To the best of knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134(3) (c) of the Companies Act, 2013.

I) that in the preparation of the Annual Accounts for the year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii) and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2015 and of the profit of the Company for the year ended on that date;

iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

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

v) that the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were opera ting effectively; and

vi) that the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Extract of Annual Return:

Pursuant to Section 92 (3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return is provided in Annexure-F

Management Discussion and Analysis for FY2015:

Management Discussion and Analysis Report, as required under the Listing Agreement with the Stock Exchanges enclosed and forms part of this report.

Corporate Governance Report for FY2015:

Report on Corporate Governance along with the certificate of statutory Auditors, M/s. V, Sankar Aiyar & Co., confirming compliance of conditions of Corporate Governance, as stipulated under Clause 49 of the Listing Agreement, forms part of the Annual Report.

Acknowledgements:

Your Directors would like to express their sincere appreciation to the investors and bankers for their continued support during the year. Your Directors extend their sincere gratitude to all the Regulatory Authorities such as SEBI, Stock Exchanges and other Central & State Government authorities and agencies, Registrars for their guidance and support. Your Directors place on record their deep appreciation to employees at all levels for their efforts, dedication and commitment. Their enthusiasm and hard work has enabled the Company to be at the forefront of the industry. We also take this opportunity to thank all our valued customers who have appreciated our products.

For & on behalf of the Board Sd/- Dr. Lalit Khaitan Place: New Delhi Chairman & Managing Director Date: 10.08.2015 DIN - 00238222


Mar 31, 2014

Dear Members,

The Directors are pleased to present their 30th Annual Report together with the audited financial statement of the Company for the year ended 31st March 2014.

Financial Results: (Rs. in Crore)

2013-14 2012-13

Sales (including sales from arrangements with other Distilleries / Bottling units) 4,337.41 3,768.42

Gross Profit (before depreciation and tax) 145.16 144.59

Profit before tax 106.40 109.28

Profit after tax 71.25 77.28

Prior period adjustments 0.00 0.00

Surplus brought forward from last year 89.81 74.97

Profit available for appropriation 161.07 152.25

Transfer to General Reserve 50.00 50.00

Proposed Dividend and tax thereon 12.45 12.44

Balance carried forward 98.61 89.81

Operations Review:

FY2014 was a very challenging year for the overall economy. Despite these short term challenges, your Company was able to sustain growth and profitability. Radico Khaitan has a long standing, successful strategy of premiumization which is evident from the performance of Prestige & Above category brands which registered a strong growth of 20.7% y-o-y in FY2014 to reach 37.17 lakh cases. Overall IMFL volume was 203.60 lakh cases, representing a growth of 7.1%. Furthermore, Prestige & Above category brands as a percentage of total IMFL sales increased from 16.2% in FY2013 to 18.3% in FY2014. Prestige & Above brands sales revenue accounted for 37% of total IMFL sales in FY2014 compared to 35% in FY2013. Net Sales was Rs.1,857.2 Crore an increase of 8.2% compared to the same period last year driven by a robust performance of Prestige & Above brands. EBITDA increased by 10.7% to Rs.212.6 Crore and margins improved by 26 basis points to 11.4% compared to FY2013.

Radico Khaitan''s Magic Moments vodka continued to be the market leader in the fast growing premium vodka segment. Encouraged by the success of Magic Moments, the Company launched Verve super premium vodka in October 2012. In FY2014, this was followed by the launch of Verve Magic Moments Green Apple and Verve Magic Moments Orange flavoured premium vodka in North India and select states in West India. Within few months of its launch, the new variants of Verve vodka received the Gold award at the coveted Monde Selection Quality awards 2014. During the year, the Company also launched Morpheus Blue, an upgraded version of the super premium Morpheus Brandy to further strengthen its premium product offerings.

Capital Structure and Liquidity:

Share Capital

During the year, the Company issued 138,385 shares on the exercise of stock options granted under the Employees Stock Option Scheme 2006. As a result of this, the outstanding, issued and paid-up equity shares increased from 132,900,380 shares as of March 31, 2013 to 133,038,765 shares as of March 31, 2014.

General Reserve

An amount of Rs. 50 Crore has been transferred to the General Reserve out of Radico Khaitan''s profit of Rs. 71.3 Crore for the financial year ended March 31, 2014.

Term Loan and Working Capital

As of March 31, 2014, the Company had total debt of Rs. 903.8 Crore, Cash and Cash Equivalents were Rs. 15.3 Crore resulting in Net Debt of Rs. 888.5 Crore. Total Debt consists of Rs. 405.6 Crore of Working Capital loans and Rs. 498.3 Crore of Long Term loans, including Long Term loans maturing within 12 months of the balance sheet date. As of March 31, 2014, Radico had a conservative leverage with Debt/Equity ratio of 1.1x.

Capital Market Ratings:

The Company continued to enjoy credit rating from Credit Analysis & Research Ltd (CARE) which has reaffirmed the rating of "CARE A "assigned for the long term facilities. CARE A rating is considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk.

CARE has re-affirmed the rating of "CARE A1 "assigned for the short term facilities, which is considered to have very strong degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk.

Future Outlook and Strategy:

The ongoing developments in the Indian spirits industry and changing consumer preferences are expected to result in a structural shift from volume based growth to value driven business model. According to Euromonitor, IMFL volume is expected to reach 2,979 million liters or 331 million cases. During the 2014-18 period IMFL sales value is expected to grow at a CAGR of 7.9%. Key drivers of this growth are changing preference of customers due to rising per capita income, higher aspiration level, favourable demographic profile, increasing urbanization and better penetration. As a result of inclusion of higher number of youngsters in the working population, all the major spirits manufacturers are focused on launching new value added products to capitalize on this opportunity. Innovative packaging and consumer preferred variants are new trends to generate mass appeal. This structural change may also result in further consolidation of the industry to achieve operational efficiencies and strengthening of market position for the larger and established companies.

With this changing environment, Radico Khaitan''s longstanding and successful premiumization strategy will improve the Company''s revenue and profitability in the near term. The Company continues to make investment in developing new products and variants. Our investments in brand building over the past couple of years have resulted in a large consumer base outside India. Going forward the Company expects to increase profitability in exports business through focus on premium brands and newer geographies.

Awards and Recognition:

During the year Radico Khaitan received numerous awards for its leading brands at various international events. These awards are testament to the Company''s understanding of the customer preference as well as the superior quality of its products. Some of the awards received during the year were:

Indspirit 2014 ''Popular Product of the Year'' Award: Magic Moments vodka

Monde Selection (International Institute for Quality Selection) 2014 awards:

- Grand Gold Award: Magic Moments Remix Lemon Grass & Ginger flavoured vodka

- Gold Award: Verve Magic Moments Super Premium vodka

- Gold Award: Verve Magic Moments Green Apple Premium flavoured vodka

- Gold Award: Verve Magic Moments Orange Premium flavoured vodka

- Gold Award: Magic Moments Vodka

- Gold Award: Magic Moments vodka (5 flavours)

- Gold Award: Morpheus XO Blended Premium brandy

In addition, senior management of the Company received the following awards:

- Dr. Lalit Khaitan received the ''Legend of the Industry'' award at Spiritz 2014, in addition to Radico Khaitan receiving the ''Brand Premiumisation Award'' and ''Excellence in Marketing Award''

- Mr. Abhishek Khaitan received the Indspirit 2014 ''Young Entrepreneur of the Year'' Award

Employee Stock Option Scheme:

To provide the employees with an opportunity to share in the growth of the Company and to reinforce long term commitment, Radico Khaitan implemented the Employees ESOP Scheme in 2006.

The Compensation Committee, at its meetings held on 5.08.2013, 21.10.2013 and 12.02.2014 allotted 45,300, 52,460 and 40,625 equity shares, respectively to the eligible employees, as per the Employees Stock Option Scheme 2006.

The particulars of the options as required by SEBI (employee stock option scheme and employee purchase scheme) guidelines, 1999 are appended as Annexure ''A'' and forms part of this report.

Dividend:

The Company has a dividend policy that balances the dual objective of appropriately rewarding its shareholders and retaining capital to support future growth. Your Directors are pleased to recommend a dividend of Rs. 0.80 per equity share or 40% on face value of Rs. 2.00 each for the year ended March 31, 2014. The total dividend payout for the financial year will be Rs. 12.5 Crore including a dividend distribution tax of Rs. 1.8 Crore. This consistent dividend payout is to demonstrate our commitment to enhancing value to our shareholders. The dividend is subject to approval of shareholders at the Annual General Meeting on 30th September 2014 and will be paid to the shareholders whose names appear in the Register of Members as on the date of book closure, i.e. 24.9.2014.

Dematerialisation:

Around 97.89% of the shares of the Company have now been dematerialized. Your Directors would request all the members who have not yet converted their holdings into dematerialized form, to do so thereby facilitating trading of their shares. As per SEBI guidelines it is now mandatory that the shares of a company are in dematerialized form for trading.

Public Deposits:

During the year under review, your Company has neither invited nor accepted any fixed deposits from the public.

Subsidiaries and Joint Ventures:

During the year under review, the Company has no subsidiary company.

Radico NV Distilleries Maharashtra Ltd (RNVDML), a Joint Venture (JV) of the Company has developed a state-of-the-art 120 KLPD molasses based distillery in Aurangabad, Maharashtra. It also has 50 KLPD grain based plant.

The commercial production in JV started in December 2008. RNVDML is the largest manufacturer of alcohol in the state of Maharashtra and is currently operating at optimal capacity levels. In FY2014, RNVDML received Private Sector Investment (PSI) subsidy from Government of Maharashtra of Rs. 39.8 Crore and expected subsidy to be received in FY2015 is Rs. 45 Crore.

During the year, the JV contributed Gross Sales of Rs. 367.8 Crore, an increase of 7.9% compared to same period last year. Net Sales of the JV increased by 4.2% compared to FY 2013 and stood at Rs. 250.0 Crore. Profit Before Tax during the period was at Rs. 14.9 Crore, indicating a growth of 41.4% compared to same period last year.

During FY 2014, the JV modified its distillation plant to reduce the consumption of steam in production of alcohol. RNVDML has also installed a evaporation plant with molasses alcohol plant which has the effect of reducing generation of effluent by about 80% and has made the plant a zero discharge plant.

Transfer to Investor Education & Protection Fund:

As per the Companies Act, 1956, dividends that are unclaimed for a period of seven years, statutorily get transferred to the Investor Education and Protection Fund (IEPF) administered by the Central Government and thereafter cannot be claimed by investors. To ensure maximum disbursement of unclaimed dividend, the Company sends reminders to the concerned investors, before transfer of dividend to IEPF. Pursuant to Section 205A of the Companies Act, 1956, as amended by the Companies (Amendment) Act, 1999, unclaimed dividend has been transferred to IEPF as per below table:

Financial Year Date of Declaration Total Dividend Unclaimed Dividend Due Date of of Dividend as on 31-3-2014 Transfer to IEPF account

FY 2002 16.07.2002 38579176.00 730556.00 22.08.2009

FY 2003 19.07.2003 34721258.40 914312.00 24.08.2010

FY 2004 17.07.2004 38579176.00 973284.00 22.08.2011

FY 2005 16.11.2005 42437093.60 983341.00 21.12.2012

FY 2006 25.09.2006 48223970.00 1135840.00 30.10.2013

Directors:

Mr. K.P. Singh shall retire by rotation and being eligible, offers himself for reappointment at the forthcoming Annual General Meeting (AGM). Dr. Raghupati Singhania, Mr. K.S. Mehta, Mr. Ashutosh Patra and Mr. Sarvesh Srivastava, all independent directors of the Company are proposed to be reappointed / appointed at the ensuring Annual General Meeting of the Company for a period of 5 years. Brief profiles of the proposed appointees together with other disclosures in terms of Clause 49 of the Listing agreement are part of the Corporate Governance Report.

Auditors:

M/s. V. Sankar Aiyar & Co., Chartered Accountants, the auditors of your company, retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

The Company has received letters from the Auditors to the effect that their re-appointment, if made, would be within the prescribed limits under Section 139 (1) of the Companies Act, 2013, and that they are not disqualified for re-appointment within the meaning of Section 141 of the said Act.

Audit Report for the Year Ended 2013-14:

The observations made in the Auditors Report are self explanatory and therefore do not call for any further comments under Section 217 (3) of the Companies Act, 1956.

Cost Auditor:

During the year under review, your Directors had with the approval of the central government, appointed Mr. S.N. Balasubramanian, cost auditor, to carry out the cost audit in respect of the distillery units of the Company for the year 2013-2014. The cost audit for the year 2013-2014 shall be completed within stipulated time as prescribed in the Companies Act, 1956 read with Cost Audit (Report) Rules, 2011.

Environmental Protection Measures Taken by the Company:

In view of the Corporate Responsibility on Environmental Protection company has adopted number of measures to make improvement in the fields of environment, safety and health. Measures like standard operating procedures, training programmes for all levels of employees regarding resource conservation, housekeeping, Green Belt development, onsite emergency plan etc. have been taken.

During the year, Radico Khaitan installed and commissioned integrated evaporators in the grain spirits plant, which converts the entire thin slop into wet cake that can be sold as cattle fodder. This has helped in bringing down the effluent discharge from grain plant to zero. The Company also installed and commissioned integrated evaporators in the molasses distillation plant resulting in reduction of spent wash generation by approximately 45%. After the effluent is passed through the RO plant, additional 45% effluent volume is reduced and only about 25% of the total effluent is left for bio-composting. Radico Khaitan has also increased the bio-composting area by 7 acres to consume more effluent in bio-composting and has reduced fresh water consumption by recycling process condensate and lees from distillation plants to fermentation.

Corporate Social Responsibilities (CSRs):

As your Company continues to serve its consumers, it does not overlook its responsibility towards society. It has been an integral part of the Company''s strategy to design and implement CSR programmes in the context of your Company''s businesses and encompasses much more than social outreach programs. Your Company understands its responsibility as a corporate citizen towards the community at large and has taken series of corporate social activities. The activities such as organizing eye camps, overall management of two primary schools, distribution of blankets and woollen clothes, maintenance of village roads and tree plantation, distribution of food packets to flood affected areas were undertaken in the financial year 2013-14. Your Company endeavours to raise the bar every year on the CSR front. The Company''s social responsibility strategy also includes community initiatives which aim at empowering individuals through developmental initiatives such as education and livelihood support. A CSR policy in accordance with the provisions of the Companies Act, 2013 is approved by the Board in its meeting held on 30.5.2014.

Directors'' Responsibility Statement:

In terms of provisions of Section 217 (2AA) of the Companies Act, 1956 (Act), your Directors confirm that:

i) In preparation of the Annual accounts Accounting standards have been followed, along with proper explanation relating to material departures, wherever applicable.

ii) The Directors have selected such accounting policies and applied them consistently and made judgementsand estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company, as at the end of the accounting year and of the profit of the Company for that period.

iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) The Directors have prepared the annual accounts on a going concern basis.

Particulars of Employees:

In accordance with the provisions of Section 217 (2A), read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the Directors'' Report, as an addendum thereto. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Report and accounts, as therein set out, are being sent to all members of the Company excluding the aforesaid information about the employees. Any member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Office of the Company.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo:

As required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, the relevant information and data is given at "Annexure" - B.

Management Discussion and Analysis for FY2014:

Management Discussion and Analysis Report, as required under the Listing Agreement with the Stock Exchanges enclosed and forms part of this report.

Corporate Governance Report for 2013-14:

Report on Corporate Governance along with the certificate of statutory Auditors, M/s. V. Sankar Aiyar & Co., confirming compliance of conditions of Corporate Governance, as stipulated under Clause 49 of the Listing Agreement, forms part of the Annual Report.

Acknowledgements:

Your Directors would like to express their sincere appreciation to the investors and bankers for their continued support during the year. Your Directors extend their sincere gratitude to all the Regulatory Authorities such as SEBI, Stock Exchanges and other Central & State Government authorities and agencies, Registrars for their guidance and support. Your Directors place on record their deep appreciation to employees at all levels for their efforts, dedication and commitment. Their enthusiasm and hard work has enabled the Company to be at the forefront of the industry. We also take this opportunity to thank all our valued customers who have appreciated our products.

For & on behalf of the Board

Sd/-

Place: New Delhi Dr. Lalit Khaitan

Date : 12.08.2014 Chairman & Managing Director

DIN - 00238222


Mar 31, 2013

The Directors are pleased to present their 29th Annual Report together with the audited statement of accounts of the Company for the year ended 31 st March, 2013.

Financial Results:

(Rs. in million)

2012-13 2011-12

Sales (including sales from arrangements with other Distilleries/ Bottling units) 37,684.17 30,107.19

Gross Profit (before depreciation and tax) 1,445.94 1,322.98

Profit before tax 1,092.82 994.59

Profit after tax 772.82 636.60

Prior period adjustments 0.00 0.00

Surplus brought forward from last year 749.68 536.47

Profit available for appropriation 1,522.50 1,173.07

Transfer to General Reserve 500.00 300.00

Proposed Dividend and tax thereon 124.40 123.39

Balance carried forward 898.11 749.68

Operations Review:

Your Company continues to remain focused on enhancing its premium portfolio. This is evident from the performance of Prestige & Above category brands which registered a strong growth of 19.2% y-o-y in FY2013. Furthermore, Prestige & Above category brands as a percentage of total IMFL sales increased from 14.6% in FY2012 to 16.2% in FY2013. Prestige & Above brands sales revenue accounted for 35% of total IMFL sales in FY2013 compared to 31% in FY2012. During the year, Radico Khaitan launched Florence, a super premium brandy and Verve, super premium vodka. Building on the continuing success of these brand launches across categories, a flavoured edition of Verve vodka was launched in March 2013. The newly introduced brands in the premium categories such as After Dark whisky, Florence brandy, Morpheus brandy and Verve vodka continue to gain positive traction with consumers and are in line with management''s expectations. In FY2013, the industry faced rising of state level excise duties and sustained inflation in input costs resulting in margin pressure. During the second half of the year, your Company received price increases in certain south Indian states such as Karnataka and Andhra Pradesh, the effect of which will be fully reflected in the performance of FY2014.

Future Strategy and Growth:

According to Euromonitor International, the IMFL demand in India is expected to grow at a CAGR of 6.4% between 2013-17 in terms of volume and at 10.8% in value. This growth is expected to be primarily driven by rising disposable incomes and affluence, growth in middle class households, favourable demographics, changing social attitude towards liquor consumption amongst urban upper middle class families and gradual shift towards IMFL from country liquor. Single malt scotch, blended scotch and vodka are expected to lead the growth with 2013-17 CAGR of 17.7%, 15.2% and 11.1%, respectively. The increasing urbanization in India and young adults reaching eligible drinking age will be the primary drivers for the growth in these categories.

The recent corporate developments in the sector are expected to change the industry dynamics significantly, resulting in a further increase in premiumization. The increasing presence of MNCs in India will ensure greater transparency and operational efficiency. This will also change the competitive landscape.

Your Company is optimally placed to capitalize on the arising opportunities supported by its strong distribution network and its continued focus on premiumizatiom strategy. Your Company''s longstanding and successful premiumization strategy will improve the Company''s revenue and profitability in the near term. The Company is primarily focused on increasing volumes of premium brands, price increases across key markets, penetration in south Indian markets and improvement in operational efficiencies.

Exports and International Business:

The Company has a strong export base in more than 30 countries. Overall export volumes in FY2013 were in line with FY2012. Radico Khaitan is focused on enhancing its base in newer geographies such as the US, UK and Canada with more premium products. The Company''s investments in brand building over the past couple of years have resulted in a large consumer base outside India. Going forward the Company expects to increase profitability in exports business through focus on premium brands and newer geographies.

Awards and Recognition:

Radico continued to win a number of awards at the Monde Selection (International Institute for Quality Selection). This is a testimony to the Company''s continued focus on quality and customer satisfaction. Monde Selection (International Institute for Quality Selection) 2013 include:

- Magic Moments Remix Lemon Grass & Ginger and Lemon flavoured vodka: Grand Gold Award

- Magic Moments vodka (5 flavours): Gold Awards

- Morpheus brandy: Gold Award

- Verve vodka: Gold Award

- After Dark whisky: Silver Award

Employee Stock Option Scheme:

Radico Khaitan views the grant of employee stock options as a mechanism to provide the employees with an opportunity to share in the growth of the Company and to reinforce long term commitment. In this context, the Company implemented the Employees ESOP Scheme in 2006.

The particulars of the options as required by SEBI (employee stock option scheme and employee purchase scheme) guidelines, 1999 are appended as Annexure ''A'' and forms part of this report.

Dividend:

Your Directors are pleased to recommend a dividend of Rs. 0.80 per equity share or 40% on face value of Rs. 2.00 each for the year ended March 31, 2013. The total dividend payout for the financial year will be Rs.12.44 Crores including a dividend distribution tax of Rs. 1.81 Crores. This consistent dividend payout is to demonstrate our commitment to enhancing value to our shareholders. The dividend is subject to approval of shareholders attheAnnual General Meeting on 30th September 2013 and will be paid to the shareholders whose names appear in the Register of Members as on the date of book closure, i.e. 24th September 2013.

Dematerialisation:

Around 97.76% of the shares of the Company have now been dematerialized. Your Directors would request all the members who have not yet converted their holdings into dematerialized form, to do so thereby facilitating trading of their shares. As per SEBI guidelines it is now mandatory that the shares of a company are in dematerialized form for trading.

Public Deposits:

During the year under review, your Company has neither invited nor accepted any fixed deposits from the public.

Subsidiary Companies:

During the year under review, the Company incorporated a Company in Mauritius with the intention to make it a subsidiary for investment in Angola. However, due to some changes in local level at Angola, the shares were not subscribed.

Transfer to Investor Education & Protection Fund:

Pursuant to Section 205A of the Companies Act, 1956, as amended by the Companies (Amendment) Act, 1999, unclaimed dividend for the financial year ended 31 st December 1996, 31 st December 1997, 31st December 1998, 31st December 1999, 31st December 2000, 31st March 2002, 31st March 2003, 31st March 2004 and 31st March 2005 have been transferred to the Investors Education and Protection Fund established by Central Government under Sub Section (1) of Section 205 (C) during August 2004, July 2005, August 2006, July 2007, July 2008, July 2009, August 2010, August 2011 and August 2012, respectively. Further, unclaimed dividend for the financial year ended 31.3.2006 will be transferred to the said fund within the stipulated time as prescribed in the Companies Act, 1956 read with rules made thereunder.

Directors:

Mr. Ashutosh Patra and Mr. K.P. Singh shall retire by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offer themselves for reappointment. Brief profiles of the proposed appointees together with other disclosures in terms of Clause 49 of the Listing agreement are part of the Corporate Governance Report.

Dr. Lalit Khaitan, Chairman & Managing Director, whose term ended on 19.2.2013 was reappointed as a Chairman & Managing Director for a term of 5 (five) years with effect from 20.2.2013. The shareholders'' approval is sought in the ensuing Annual General Meeting for the aforesaid reappointment.

Mr. Abhishek Khaitan, Managing Director, whose term ended on 19.2.2013 was reappointed as a Managing Director for a term of 5 (five) years with effect from 20.2.2013. The shareholders'' approval is sought in the ensuing Annual General Meeting for the aforesaid reappointment.

Mr. K.P. Singh, Whole Time Director, whose term ended on 19.2.2013 was reappointed as a Whole Time Director for a term of 5 (five) years with effect from 20.2.2013, liable to retire by rotation. The shareholders'' approval is sought in the ensuing Annual General Meeting for the aforesaid reappointment.

Auditors:

M/s. V. Sankar Aiyar & Co., Chartered Accountants, the auditors of your Company, retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

Audit Report for the Year Ended 2012-13:

The observations made in the Auditors Report are self explanatory and therefore do not call for any further comments under Section 217 (3) of the Companies Act, 1956.

Cost Auditor:

During the year under review, your Directors had with the approval of the central government, appointed Mr. S.N. Balasubramanian, cost auditor, to carry out the cost audit in respect of the distillery units of the Company for the year 2012- 2013. The cost auditfortheyear 2012-2013 shall be completed within stipulated time as prescribed in the Companies Act, 1956 read with Cost Audit (Report) Rules, 2011.

Environmental Protection Measures Taken by the Company:

In view of the Corporate Responsibility on Environmental Protection company has adopted number of measures to improve in the fields of environment, safety and health. Measures like standard operating procedures, training programmes for all levels of employees regarding resource conservation, housekeeping, Green Belt development, onsite emergency plan etc. have been taken.

Corporate Social Responsibilities (CSRs):

At Radico Khaitan, Corporate Social Responsibility (CSR) encompasses much more than social outreach programs and is an integral part of the way the Company conducts its business. Your Company understands its responsibility as a corporate citizen towards the community at large and has taken series of corporate social activities. The activities like organizing of twelve eye camps, overall management of two primary schools, distributions of blankets and woollen clothes to the needy, maintenance of village roads and tree plantations were undertaken in the financial year 2012-13.

Your Company is always willing and committed to give back to the society through all measures possible.

Directors'' Responsibility Statement:

In terms of provisions of Section 217 (2AA) of the Companies Act, 1956, your Directors confirm that:

i) Accounting standards have been followed, along with proper explanation relating to material departures, wherever applicable.

ii) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company, as at the end of the accounting year and of the profit of the Company for that period.

iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) The Directors have prepared the annual accounts on a going concern basis.

Particulars of Employees:

In accordance with the provisions of Section 217 (2A), read with the Companies (Particulars of Employees) Rules, 1975, as amended the names and other particulars of employees are to be set out in the Directors'' Report, as an addendum thereto. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Report and accounts, as therein set out, are being sent to all members of the Company excluding the aforesaid information about the employees. Any member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Office of the Company.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo:

As required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, the relevant information and data is given at "Annexure" - B.

Management Discussion and Analysis:

Management Discussion and Analysis Report, as required under the Listing Agreement with the Stock Exchanges enclosed and forms part of this report.

Corporate Governance Report for 2012-13:

Report on Corporate Governance along with the certificate of statutory Auditors, M/s. V. Sankar Aiyar & Co., confirming compliance of conditions of Corporate Governance, as stipulated under Clause 49 of the Listing Agreement, forms part of the Annual Report.

Acknowledgements:

Your Directors would like to express their sincere appreciation to the investors and bankers for their continued support during the year. Your Directors extend their sincere gratitude to all the Regulatory Authorities such as SEBI, Stock Exchanges and other Central & State Government authorities and agencies, Registrars for their guidance and support. Your Directors place on record their deep appreciation to employees at all levels for their efforts, dedication and commitment. Their enthusiasm and hard work has enabled the Company to be at the forefront of the industry. We also take this opportunity to thank all our valued customers who have appreciated our products.

For & on behalf of the Board

Sd/-

Place: New Delhi Dr. Lalit Khaitan

Date: 5th August 2013 Chairman & Managing Director


Mar 31, 2012

The Directors are pleased to present their 28th Annual Report together with the audited statement of accounts of the Company for the year ended 31st March, 2012.

FINANCIAL RESULTS:

(Rs. in Million)

2011-2012 2010-2011

Sales (including sales from arrangements with other Distilleries / Bottling units) 30,107.19 24,778.54

Gross Profit (before depreciation and tax) 1,322.98 1,265.97

Profit before tax 994.59 994.51

Profit after tax 636.60 728.01

Prior period adjustments 0 00 0.00

Surplus brought forward from last year 536.47 333.74

Profit available for appropriation 1173.07 1,028.23

Transfer to General Reserve 300.00 383.71

Proposed Dividend and tax thereon 123.39 107.86

Balance carried forward 749.68 536.47

OPERATIONS REVIEW:

During the year, your Company continued to consolidate and strengthen its position as one of the leading players in the spirits industry in India. Our premium brands, Magic Moments and Morpheus maintained their growth momentum with strong year over year growth rates of 17.5% and 57.1%, respectively. The Company's flagship brand, 8PM also recorded a remarkable volume of 4.6 million cases with a growth rate of 13.4% year over year. Old Admiral brandy crossed the 3 million cases mark during the year representing a corresponding growth of 10.8%. However, Contessa rum, the leading rum for the Canteen Stores Department ("CSD"), recorded a marginal volume decline due the recent destocking policy of the CSD. Overall, IMFL volumes growth was 9.9% driven by mainline brands which grew by 11.1%. FY2012 export sales registered a growth of 92.4% compared to the previous year and accounted for 15.6% of Net Sales. The Company's exports are growing in line with expectations and act as a natural hedge for its foreign currency debt.

Sugar production upto the end of March 2012 in the current sugar season was 23.2 million tons, an increase of 13% compared to previous year. This growth was primarily driven by an increase in the area under sugarcane production to 50.9 lakh acres in 2011-2012, as compared to 49.4 lakh acres in 2010-2011. The total production for the current sugar season is expected to be 26.0 million tons. Higher sugar production during the 2011-2012 season is likely to result in increased molasses production.

CAPITAL PROJECTS:

During the year under review, your Company made important capital investments to increase capacities at its owned plants. This included the setting-up of additional molasses storage capacities, self bottle printing machines, a new bottling hall and tetra pack machines. The Company also made a strategic investment by acquiring select brands from the Yezdi Group. All of these involved a total capital expenditure of Rs. 840 million. These strategic initiatives will enable the Company to be optimally positioned to capitalize on the growing demand in the spirits industry.

FUTURE STRATEGY & GROWTH:

According to Euromonitor International, the Indian alcoholic drinks industry volume is forecasted to grow at a 2011-2016 CAGR of 10%. This was higher than the growth rates registered across the rest of the Asia Pacific countries. Premium products remained the growth driver in 2011. Rising disposable incomes coupled with increasing social acceptance of drinking in India are key reasons for this demand growth.

Your Company's continued focus on premiumization is clearly reflected in the increasing share of premium brands in the overall sales volumes. Premium brand revenues increased from 28% of total IMFL sales in FY2011 to 31% in FY2012.

Your Company's new launches After Dark whisky and Morpheus brandy continue to grow at a fast pace and are receiving favourable feedback from both the end consumers as well as trade channels. In FY2012, both of these brands were registered with the Canteen Stores Department (CSD) and delivered encouraging sales volumes. This will further strengthen Radico Khaitan's presence in the CSD.

Magic Moments vodka crossed the 2 million cases mark during the year and continued to show strong volume growth. This brand is well positioned to capitalize on the growth in vodka consumption and popularity as the youth in India continue to shift from brown spirits to white spirits, particularly vodka. The flagship, 8PM whisky brand is performing in line with our strategy and is expected to achieve desired growth in the current year.

During the year, your Company acquired Royal Lancer and Elkays whisky brands from Mysore based Yezdi Group and also took on long term lease their entire bottling capacity. Both these brands are selling more than 0.5 million cases primarily in Karnataka and Andhra Pradesh. These volumes are expected to be strengthened by Radico Khaitan's distribution network. This is a strategic acquisition and is expected to reinforce the Company's presence in Karnataka, Andhra Pradesh and other South Indian states. Radico Khaitan is also planning to install tetra pack machines at Yezdi Distilleries, Mysore, which will increase the bottling capacity further to meet production requirements in the state of Karnataka.

Your Directors are confident that the Company has the most effective strategies in place to capitalize on market growth, capture market share and consolidate its leadership position,

CAPITAL STRUCTURE:

On July 25, 2011, the Company redeemed all of its remaining $50 million, 3.5% Foreign Currency Convertible Bonds ("FCCB") that were issued in July and August 2006. The total redemption of $44.22 million (inclusive of a redemption premium of $10.31 million) was funded using proceeds from a new 7-year maturity External Commercial Borrowing ("ECB") with a moratorium period of 2 years. The repayment for the ECBs will start in FY2014.

EMPLOYEE STOCK OPTION SCHEME:

Radico Khaitan views the grant of employee stock options as a mechanism to provide the employees with an opportunity to share in the growth of the Company and to reinforce long term commitment. In this context, the Company implemented the Employees ESOP Scheme in 2006.

The Compensation Committee, at its meetings held on 27.4,2011, 2.8.2011 and 9.11.2011 allotted 16,000, 73,750 and 55,925 equity shares, respectively to the eligible employees, as per the Employees Stock Option Scheme 2006.

The particulars of the options as required by SEBI (employee stock option scheme and employee purchase scheme) guidelines, 1999 are appended as Annexure A' and forms part of this report.

DIVIDEND:

Your Directors are pleased to recommend a dividend of 40% on the paid-up capital of the Company. This equates to Rs. 0.80 per equity share of Rs.2/- each (face value) to be appropriated from the profits of FY2012 subject to the approval of the shareholders at the upcoming Annual General Meeting. This increased dividend is to demonstrate our commitment to enhancing value to our shareholders.

DEMATERIALISATION:

More than 97.62% of the shares of the Company have now been dematerialized. Your Directors would request all the members who have not yet converted their holdings into dematerialized form, to do so thereby facilitating trading of their shares. As per SEBI guidelines it is now mandatory that the shares of a company to be in dematerialized form for trading.

PUBLIC DEPOSITS:

During the year under review, your Company has neither invited nor accepted any fixed deposits from the public.

SUBSIDIARY COMPANIES:

During the year under review, the Company has no subsidiary company. However, in the meeting held on 7.2.2012 your Board of Directors have approved the setting up of a Wholly Owned Subsidiary (WOS) in Mauritius for investment in Angola.

TRANSFER TO INVESTORS EDUCATION & PROTECTION FUND:

Pursuant to Section 205A of the Companies Act, 1956, as amended by the Companies (Amendment) Act, 1999, unclaimed dividend for the financial year ended 31st December, 1996, 31st December 1997, 31st December 1998, 31st December 1999, 31st December 2000, 31st March 2002, 31st March 2003 and 31st March 2004 have been transferred to the Investors Education and Protection Fund established by Central Government under Sub Section (1) of Section 205 (C) during August, 2004, July 2005, August 2006, July 2007, July 2008, July 2009, August 2010 and August 2011, respectively. Further, unclaimed dividend for the financial year ended 31.3.2005 will be transferred to the said fund with in the stipulated time as prescribed in the Companies Act, 1956 read with rules made there under.

DIRECTORS:

Dr. Raghupati Singhania and Mr. K.S. Mehta shall retire by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offer themselves for reappointment.

AUDITORS:

M/s. V. Sankar Aiyar & Co., Chartered Accountants, the auditors of your company, retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

AUDIT REPORT FOR THE YEAR ENDED 2011-12:

The observations made in the Auditors Report are self explanatory and therefore do not call for any further comments under Section 217 (3) of the Companies Act, 1956.

COST AUDITOR:

During the year under review, your Directors had with the approval of the central government, appointed Mr. S.N. Balasubramanian, cost auditor, to carry out the cost audit in respect of the distillery units of the Company for the year 2011 - 2012. The cost audit for the year 2011-2012 shall be completed within stipulated time as prescribed in the Companies Act, 1956 read with Cost Audit (Report) Rules, 2011.

ENVIRONMENTAL PROTECTION MEASURES TAKEN BY THE COMPANY:

In view of the Corporate Responsibility on Environmental Protection company has adopted number of measures to improve in the fields of environment, safety and health. Measures like standard operating procedures, training programmes for all levels of employees regarding resource conservation, housekeeping, Green Belt development, onsite emergency plan etc. have been taken.

CORPORATE SOCIAL RESPONSIBILITIES (CSR):

1. Nine Eye check up camps organized by the Company through K.D. Dalmia Eye Hospital at 4 places (Ajitpur, Chamrava, Nagar Palika Parisad and Bhot Village) approx.2000 patient got benefited of these camps.

2. Arrangement was made at various units of the company for health check of employees.

3. Academic Excellence Awards were given to the District Topers for every education session.

4. Two primary schools are run by the Company at Panwaria Village and Balmiki Mandir near City Ramlila Ground, Kosi Mandir Road, Rampur.

5. 2000 Blankets were distributed to the poor people of nearby areas of Rampur in the Winter Season.

6. Financial help was provided at Ajitpur Village for a concrete road in the interior of Ajitpur Village and also one Pulia (over-bridge) was constructed.

7. Three line tree plantations were done in and around 2km of the factory boundary wall on the Judges Road.

8. 5000 food packets distributed to villagers in flood affected area with District Administration.

DIRECTORS' RESPONSIBILITY STATEMENT:

In terms of provisions of Section 217 (2AA) of the Companies Act, 1956 (Act), your Directors confirm that:

i) In the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures, wherever applicable.

ii) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company, as at the end of the accounting year and of the profit of the Company for that period.

iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) The Directors have prepared the annual accounts on a going concern basis.

PARTICULARS OF EMPLOYEES:

In accordance with the provisions of Section 217 (2A), read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the Directors' Report, as an addendum thereto. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Report and accounts, as therein set out, are being sent to all members of the Company excluding the aforesaid information about the employees. Any member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Office of the Company.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

As required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, the relevant information and data is given at "Annexure" - B.

MANAGEMENT DISCUSSION AND ANALYSIS FOR FY2012:

Management Discussion and Analysis Report, as required under the Listing Agreement with the Stock Exchanges enclosed and forms part of this report.

CORPORATE GOVERNANCE REPORT FOR FY2012:

Report on Corporate Governance along with the certificate of statutory Auditors, M/s. V. Sankar Aiyar & Co., confirming compliance of conditions of Corporate Governance, as stipulated under Clause 49 of the Listing Agreement, forms part of the Annual Report.

ACKNOWLEDGEMENTS:

Your Directors would like to express their sincere appreciation to the investors and bankers for their continued support during the year. Your Directors extend their sincere gratitude to all the Regulatory Authorities such as SEBI, Stock Exchanges and other Central & State Government authorities and agencies, Registrars for their support. Your Directors also place on record their appreciation for the dedicated services rendered by the employees at various levels and look forward to their continued support in the future as well. We also take this opportunity to thank all our valued customers who have appreciated our products.

For & on behalf of the Board

Sd/-

Place : New Delhi Dr. Lalit Khaitan

Date : 31.7.2012 Chairman & Managing Director


Mar 31, 2011

Dear Members,

The Directors are pleased to present their 27th Annual Report together with the audited statement of accounts of the Company for the year ended 31st March, 2011.

FINANCIAL RESULTS:

(Rs. in Million)

2010-2011 2009-2010

Sales (including sales from arrangements with other Distilleries / bottling units) 25.272.64 21163.19

Gross Profit (before depreciation and tax) 1,265.97 755.44

Profit before tax 994.51 499.39

Profit after tax 728.01 415.39

Prior period adjustments 0 0

Surplus brought forward from last year 333.74 260.63

Profit available for appropriation 1028.23 676.02

Transfer to General Reserve 383.71 250.00

Proposed Dividend and tax thereon 107.86 92.28

Balance carried forward 536.47 333.74

OPERATIONS REVIEW:

During the year, your Company continued to consolidate and strengthen its position as one of the leading players in the spirits industry in India. Magic Moments continued its stellar performance with 33.2% growth as compared to last year. The 8PM whisky brand achieved a remarkable volume of 4 million cases during the year. Morpheus brandy which was launched in the last year continued to perform well and achieved a volume of 230,000 cases during the year. During Q3 FY2011, your Company test marketed its premium whisky brand, After Dark. The brand has been appreciated by the consumers for its taste and unique packaging. The brand would be made available on a nationwide basis in 2011. Overall, the mainline brands continued to perform strongly, in line with our premiumization strategy.

The 2010-11 sugar season in India was expected to be strong with total sugar production of 24.2 million tonnes. There was a significant off-take of molasses due to the ongoing ethanol blending program which resulted in the molasses price remaining steady during the year.

Glass prices increased approximately by 17% during FY2011 compared to the previous year. Increased raw material costs have resulted in key spirits manufacturers considering price increases.

CAPITAL PROJECTS:

During the year, your Company invested Rs. 407.9 million on various projects to ensure optimal positioning for the future. Capital expenditure consisted of primarily enhancing IMFL bottling capacity, bottle printing capacity and routine maintenance expenses.

FUTURE STRATEGY & GROWTH:

According to Euromonitor International, the Indian alcoholic drinks industry volume is forecasted to grow from 2010-15 at a CAGR of 10%. As one of the fastest growing emerging markets, India's impressive growth trajectory is supportive of acceleration of the premiumization trend.

Your Company's focus has been on premiumization of its portfolio over the past few years. The Company recently launched After Dark whisky in the premium category in FY2011. The brand was initially launched on a test marketing basis and would be made available on a pan India basis in current year.

Morpheus brandy is expected to further consolidate its leadership position in the market and continue to grow at a fast pace. It is expected to create a niche market for itself due to its unique price point in the brandy segment.

Magic Moments continues to gain market share and is well positioned to capitalize on growth in vodka consumption and popularity. The rejuvenated 8PM whisky brand is expected to perform in line with our strategy.

In April 2011, your Company signed an agreement with Suntory of Japan, one of the world's largest premium spirits companies. Under the agreement, your Company intends to market and distribute some of Suntory's super premium brands in India including Yamazaki 12YO single malt and Hibiki 17YO blended whisky. This agreement will further strengthen the Company's international brand division.

Your Directors are confident that the Company has the most effective strategies in place to capitalize on market growth, capture market share and consolidate its leadership position.

CAPITAL STRUCTURE:

Your Company had raised US$ 50 million through an issue of FCCBs on 26th July 2006 (US$ 40 million) and 25th August 2006 (US$ 10 million on exercise of green shoe option). The FCCBs were convertible into equity shares of the Company at the option of the bondholder at a conversion price of Rs.159.20 per shares (original conversion price being Rs.172.50 reset on 6th August 2008 pursuant to clause 6.4 of the subscription agreement). The FCCBs carried a coupon rate of 3.50% per annum with a maturity of five years and one day from the date of issue and were listed on the Singapore stock exchange.

On 25th July 2011, your Company redeemed all of its remaining US$ 33.91 million, 3.5% FCCBs by making final redemption payment of US$ 44.22 million (inclusive of premium) in accordance with the terms and conditions of the issue. Your Company is therefore not required to allot any equity shares arising out of a potential conversion of these remaining FCCBs.

Your Company has funded the total amount paid of US$ 44.22 million from a new External Commercial Borrowing (ECB) of seven year maturity.

EMPLOYEE STOCK OPTION SCHEME:

The employee stock option is a mechanism which provides our employees with opportunity to share in the growth of the Company and to foster long term commitment. To enable our employees to participate in the success of the Company, Radico Employees ESOP Scheme was implemented in 2006.

The Compensation Committee, at its meeting held on 31.08.2010 and 01.02.2011, granted 62,500 and 2,60,000 equity stock options respectively to the eligible employees, as per the Employees Stock Option Scheme 2006. These options shall be vested with the eligible employees in four equal tranches.

The particulars of the options as required by SEBI (Employee Stock Option Scheme and Employee Purchase Scheme) guidelines, 1999 are appended as Annexure 'A' and forms part of this report.

DIVIDEND:

Your Directors are pleased to recommend a dividend @ 35% on the paid-up capital of the Company i.e. Rs.0.70 per equity share of Rs.2/- each (face value) to be appropriated from the profits of FY2011 subject to the approval of the shareholders at the ensuing Annual General Meeting.

DEMATERIALISATION:

More than 97.45% of the shares of the Company have now been dematerialized. As SEBI has made it compulsory for the shares of the Company to be in dematerialized form for trading, your Directors would request all the shareholders who have not got their holdings dematerialized to do so to enable easy trading of shares.

PUBLIC DEPOSITS:

During the year under review, your Company has neither invited nor accepted any fixed deposits from the public.

SUBSIDIARY COMPANIES:

During the year under review, the Company has no Subsidiary Company.

TRANSFER TO INVESTORS EDUCATION & PROTECTION FUND:

Pursuant to Section 205A of the Companies Act, 1956, as amended by the Companies (Amendment) Act, 1999, unclaimed dividend for the financial year ended 31st December, 1996, 31st December 1997, 31st December 1998, 31st December 1999, 31st December 2000, 31st March 2002 and 31st March 2003 have been transferred to the Investors Education and Protection Fund established by Central Government under Sub Section (1) of Section 205 (C) during August, 2004, July 2005, August 2006, July 2007, July 2008, July 2009 and August 2010 respectively. Further, unclaimed dividend for the financial year ended 31.03.2004 will be transferred to the said fund with in the stipulated time as prescribed under the Companies Act, 1956 read with rules made thereunder.

DIRECTORS:

Mr. K.P. Singh and Mr. Mahendra Kumar Doogar shall retire by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offer themselves for re- appointment.

AUDITORS:

M/s. V. Sankar Aiyar & Co., Chartered Accountants, the auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

AUDIT REPORT FOR THE YEAR ENDED 2010-11:

The observations made in the Auditors Report are self explanatory and therefore do not call for any further comments under Section 217 (3) of the Companies Act, 1956.

COST AUDITOR:

During the year under review, your Directors had with the approval of the central government, appointed Mr. S.N. Balasubramanian, cost auditor, to carry out the cost audit in respect of the distillery units of the Company for the year 2010-2011. The cost audit for the year 2010-2011 shall be completed within stipulated time as prescribed in the Companies Act, 1956 read with Cost Audit (Report) Rules, 2001.

AWARDS AND RECOGNITION:

Your Company continued to win a number of awards at the Monde Selection (International Institute for Quality Selection) in Belguim for the fourth consecutive year. This reflects your company's continued focus on quality and customer satisfaction.

Magic Moments Remix/Lemon Grass and Ginger flavored vodka received the Grand Gold Award. The Company also received Gold Awards for three brands in the Magic Moments Remix range and a Bronze for Magic Moments Remix Green Apple flavor vodka.

Morpheus Brandy won the Gold Award for the second consecutive year. After Dark premium whisky received a Silver Award in the first year of its launch.

ENVIRONMENTAL PROTECTION MEASURES TAKEN BY THE COMPANY:

In view of the Corporate Responsibility on Environmental Protection, your Company has adopted number of measures in the field of Environment, safety and Health. Measures like Standard Operating Procedures. Training programmes for all levels of employees regarding resource conservation, housekeeping, Green Belt development, onsite emergency plan etc. have been taken.

CORPORATE SOCIAL RESPONSIBILITIES (CSRS):

1. Three Eye camps organised wherein approximately 1200 patients were provided treatment.

2. Blood donation camps organised in Delhi and 30 units blood donated by the employees.

3. Organised free medical check up of employees of all levels.

4. Academic excellence awards distributed to district toppers at Rampur ( First three ) for 12th & 10th Standard of Hindi and English medium students.

5. Medicine and other help to Nehru Kusth Ashram.

6. Woolen pullovers and other amenities provided to Orphan House Rampur.

7. 700 Blankets distributed to the poor in the winter season.

8. Sponsored Veteran Cricket tournament of the state level at Rampur.

9. Two primary schools are being given financial aid in village Panwaria and one Valmiki Mandir in the town.

10. Street lights and RCC road construction in Panwaria village.

DIRECTORS' RESPONSIBILITY STATEMENT:

In terms of provisions of Section 217 (2AA) of the Companies Act, 1956 (Act), your Directors confirm that:

i) In the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures, wherever applicable.

ii) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company, as at the end of the accounting year and of the profit of the Company for that period.

iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) The annual accounts has been prepared on a going concern basis.

PARTICULARS OF EMPLOYEES:

In accordance with the provisions of Section 217 (2A), read with the Companies (Particulars of Employees) Rules, 1975,

the names and other particulars of employees are to be set out in the Directors' Report, as an addendum thereto. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Report and accounts, as therein set out, are being sent to all members of the Company excluding the aforesaid information about the employees. Any member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Office of the Company.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

As required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, the relevant information and data is given at "ANNEXURE" - B.

MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR 2010-2011:

Management Discussion and Analysis Report, as required under the Listing Agreement with the Stock Exchanges enclosed and forms part of this report.

CORPORATE GOVERNANCE REPORT FOR THE YEAR 2010-2011:

Report on Corporate Governance along with the certificate of statutory Auditors, M/s. V. Sankar Aiyar & Co., confirming compliance of conditions of Corporate Governance, as stipulated under Clause 49 of the Listing Agreement, forms part of the Annual Report.

ACKNOWLEDGEMENTS:

Your Directors would like to express their sincere appreciation to the investors and bankers for their continued support during the year. Your Directors extend their sincere gratitude to all the Regulatory Authorities like SEBI, Stock Exchanges and other Central & State Government authorities / agencies, Registrars for their support. Your Directors also place on record their appreciation for the dedicated services rendered by the employees at various levels and look forward to their continued support in the future as well. We also take this opportunity to thank all the valued customers who have appreciated our products and have patronized them.

For & on behalf of the Board

Sd/- Place : New Delhi Dr. Lalit Khaitan Date : 02.08.2011 Chairman & Managing Director


Mar 31, 2010

The Directors are pleased to present their 26th Annual Report together with the audited statement of accounts of the company for the year ended 31st March, 2010.

FINANCIAL RESULTS:

(Rs. in Million)

2009-2010 2008-2009

Sales (including sales from arrangements

with other Distilleries / bottling units) 21163.19 15752.45

Gross Profit (before depreciation and tax) 755.44 354.88

Profit before tax 499.39 123.66

Profit after tax 415.39 65.36

Prior period adjustments 0 0

Surplus brought forward from last year 260.63 236.30 Profit available for appropriation 676.02 301.66

Transfer to General Reserve 250.00 5.00

Proposed Dividend and tax thereon 92.28 36.03

Balance carried forward 333.74 260.63

OPERATIONS REVIEW:

The Company operates in one core business segment, i.e., manufacturing, sales & distribution of Indian Made Foreign Liquor (IMFL). The year of 2009-10 was a year of return on growth path for the Company after the two consolidation years of 2007-08 and 2008-09 in all the business segments. The Company carries a boutique of Branded portfolio catering all the major segments of market i.e. Whisky, Rum, Brandy & Vodka. The overall strategy has been to focus on growth of its mainline brands and development of New Brands through in-house research & innovation. Your company closed the year with Sales volume of close to 14.6 million cases, where sales of all the key brands grew significantly over the last fiscal.

Companys policy of premiumization of branded portfolio is now paying well as is evident from growth in sale volume of our Magic Moments Vodka. Magic Moments saw a volume growth of 39% over last year and closed the year with sale volume of 1.42 mn c/s. Launch of our new "Morpheus" Super Premium Brandy was also a success with brand witnessing sale of 80K case in the launch year itself. We expect good growth in the current year.

Company was able to get the price increase from the trade and thus improved its sale realization per c/s and also the operating margins through a mix of improvement in saliency of premium brand as well as the price increases.

Molasses prices after going through the roof in the first quarter of 2009-10 started falling and are now in comfort Zone. Due to the improvement in the acreage, yield as well as hike in the minimum support prices of Sugarcane by the state Govt, we hope that it should result in higher Molasses Production in the country in the Sugar Year 2010-11, which would further ease off pressure on Molasses Prices and enable us to improve our margins.

CAPITAL PROJECTS

During the year your Company has incurred Rs.275 Million on the various capital projects for capacity addition to take care of future, it includes putting additional Printing Machines at bottle Printing Unit, capacity expansion at Pet bottle plant and Malt spirit Maturation facility .

Your Joint Venture Company, Radico NV Distilleries Maharashtra Ltd. has successfully commissioned another 12 million litres of quality Grain ENA Distillery in Maharashtra in February 2010 This distillery is meeting our Alcohol requirement of Contract bottling units in the Western & Southern states. Now your Company has two of its own distilleries in major sugar producing belts of Uttar Pradesh and Maharashtra, having total Molasses ENA, Grain ENA & Malt Spirits manufacturing capacity of 151 million litres of Alcohol.

FUTURE STRATEGY & GROWTH

Indian Made Foreign Liquor (IMFL) industry is growing steadily over the last decade with many enablers working in its favour on the back of improved demography, increasing social acceptance, favorable bias towards Spirits and consistent growth in GDP. The IMFL has grown at a CAGR of over 10% in volumes and over 12% in value term during the period CY03-09 which is expected to be maintained or even -escalate over the next few years.

The Alcoholic Beverage industry in India comprises of five key segments, that is, beer, wine, IMFL, bottled in origin alcoholic products and country liquor. IMFL consists of whisky, rum, brandy and white spirits (gin and vodka). IMFL space is one of the fastest growing and lucrative markets in the world. Another important trend witnessed in this segment is the premiumisation in brandy, whisky and vodka.

In June 10, Company introduced another whisky brand, "After Dark" Whisky, in the Premium segment and initial response is quite encouraging. Product offers a perfect mix of quality blend & packaging and is targeted towards young population. Our Product portfolio now offers brands in each flavour to the consumers in the semi premium / premium segments of the market.

Your Company has been successful in launch of three brands each in Vodka, Brandy and whisky categories in span of last 4 years in the semi premium/premium category and we believe that with growing IMFL market in these categories, the operating performance should improve substantially in coming years. Company is proud to have four millionaire brands in its portfolio, which have been developed inhouse over last 12 years.

With the Launch of "After Dark" and "Eagles Dare" whiskies in the Premium segment, we have completed our product offerings for now. Our full concentration from now is to expand our volumes by focusing on growth of premium brands and consolidating our portfolio in regular segment.

8 PM Whisky volume growth has not been in line with our expectations and we are fully conscious of this fact. We have conducted detailed market research for the brand and as per the study, we have entered the 8 PM Whisky Brand in Key states with new packaging. We have also widened our distribution reach to the consumers. We are very hopeful that we shall close the year with good growth in brand volumes.

Last year, company entered into bottling contracts with two new bottlers in TamilNadu and gained good volumes in Tamil Nadu. It also allowed entry of our Morpheus brandy into the Tamil Nadu market, which is one of the major market for Brandy consumers.

Management is fully confident that with right strategies in place for the premium brand launches, their placement at right price points and also a fully functional manufacturing & distribution infrastructure in place, the future is certainly bright for the Company.

QUALIFIED INSTITUTIONAL PLACEMENT (QIPs)

During the year your Company raised long term funds of USD 75 millions equivalent to Rs.341.79 crores from QIBs by way of Qualified Institutional Placements (QIPs) in terms of Chapter VIII of the SEBI (Issue of Capital & Disclosure Requirements) Regulations 2009. Pursuant to that 2,89,19,000 equity shares having face value of Rs.2/- each at a premium of Rs.116.19 per equity share, were issued and allotted to the investors on 22.03.2010. The funds thus raised have been used for repayment of loans as per the terms of the issue and the amount remaining unutilised are held in mutual funds.

FUNDING THROUGH ISSUE OF FCCBs / CCPs / GDRs / ADRs:

The company has raised USD 50 million through an issue of FCCBs on 26th July 2006 (USD 40 million) and 25th August 2006 (USD 10 million on exercise of green shoe option). The FCCBs are convertible into equity shares of the company at the option of the bondholder at a conversion price of Rs.159.20 per shares (original conversion price being Rs.172.50 reset on 6th August 2008 pursuant to clause 6.4 of the subscription agreement). The FCCBs carry a coupon rate of 3.50% per annum with a maturity of five years and one day from the date of issue and are listed on the Singapore stock exchange. The balance outstanding FCCBs of US$ 33.91 million unless previously converted, redeemed or cancelled are liable to be redeemed on the maturity date at a premium of 30.3961% of the principal amount.

EMPLOYEE STOCK OPTION SCHEME:

From time to time Company has been taking steps to reward performance & retention of the employees who are hardworking, dedicated and committed towards the growth of organization. To enable the employees to have a sense of participation in the Company, Radico Employees ESOP Scheme was implemented in the year 2006.

The Compensation Committee, at its meeting held on 18.6.2009 and 21.7.2009, granted 5,30,000 and 2,07,500 equity stock options respectively to the eligible employees, as per the Employees Stock Option Scheme 2006. These options shall be vested with the concerned employees in Four equal tranches.

The particulars of the option as required by SEBI (employee stock option scheme and employee purchase scheme) guidelines, 1999 are appended as Annexure A and forms part of this report.

DIVIDEND:

Your directors are pleased to recommend a dividend @ 30% on the paid-up capital of the Company i.e. Rs.0.60 per equity share of Rs.2/- each (face value) to be appropriated from the profits of the year 2009-10 subject to the approval of the shareholders at the ensuing Annual General Meeting.

DEMATERIALISATION:

More than 96.53% of the shares of the Company have now been dematerialized. Your Directors would request all the members who have not yet got their holdings dematerialized to do so to enable easy trading of the shares, as SEBI has made it compulsory for the shares of the Company to be in dematerialized form for trading.

PUBLIC DEPOSITS:

During the year under review, your Company has neither invited nor accepted any fixed deposits from the public.

SUBSIDIARY COMPANIES:

During the year under review, the Company has no subsidiary Company.

TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND:

Pursuant to Section 205A of the Companies Act, 1956, as amended by the Companies (Amendment) Act, 1999, unclaimed dividend for the financial year ended 31st December, 1996, 31st December 1997, 31st December 1998, 31st December 1999, 31st December 2000 and 31st March 2002 have been transferred to the Investors Education and Protection Fund established by Central Government under Sub Section (1) of Section 205 (C) during August, 2004, July 2005, August 2006, July 2007, July 2008 and July 2009 respectively. Further, unclaimed dividend for the financial year ended 31.3.2003 will be transferred to the said fund with in the stipulated time as prescribed in the Companies Act, 1956 read with rules made thereunder.

DIRECTORS:

Mr. Ashutosh Patra and Mr. K.S. Mehta shall retire by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offer themselves for re-appointment. Both Mr. Ashutosh Patra and Mr. K.S. Mehta do not hold any shares in the company.

During the year Mr. Mahendra Kumar Doogar has joined as Additional Director of the Company. His detailed profile is provided in point no.6 of the explanatory statement to the notice of the Annual General Meeting.

AUDITORS:

M/s. V. Sankar Aiyar & Co., Chartered Accountants, the auditors of the company, retire at the conclusion of the ensuing annual general meeting and being eligible, offer themselves for re-appointment.

AUDIT REPORT FOR THE YEAR ENDED 2009-10:

The managerial remuneration paid to the Chairman & Managing Director, Managing Director and Whole Time Director in the year 2008-09 is pending for the approval of the Central Government.

Other observations made in the Auditors Report are self explanatory and therefore do not call for any further comments under Section 217 (3) of the Companies Act, 1956.

COST AUDITOR:

During the year under review, your directors had with the approval of the central government, appointed Mr. S.N. Balasubramanian, cost auditor, to carry out the cost audit in respect of the distillery units of the Company for the year 2009- 2010. The cost audit for the year 2009-2010 shall be completed within stipulated time as prescribed in the Companies Act, 1956 read with Cost Audit (Report) Rules, 2001.

AWARDS AND RECOGNITION:

Radico has received a series of awards and recognitions for achievements in the business and operations.

MORPHEUS BRANDY which entered the Monde Selection award competition for the first time post its launch last year has won the prestigious Monde Gold for its unparallel quality in its segment.

MAGIC MOMENTS VODKA has been granted the Gold Medal i.e. INTERNATIONAL HIGH QUALITY TROPHY 2010 at the MONDE SELECTION and is winning accolades for 3 consecutive years.

Remix Chocolate Flavored Vodka has won accolades in the International arena by winning the Silver Medal at the prestigious International Spirits Challenge 2010 held in UK.

Magic Moments Green Apple winning SILVER in the Flavoured category at Vodka Masters awards held at UK.

ENVIRONMENTAL PROTECTION MEASURES TAKEN BY THE COMPANY:

In view of the Corporate Responsibility on Environmental Protection company has adopted number of measures to improve in the field of environment, safety and Health.

Measures like Standard operating Procedures, Training programmers for all levels of employees regarding resource conservation, house keeping, Green Belt development, onsite emergency plan etc. have been taken.

CORPORATE SOCIAL RESPONSIBILITIES (CSRs):

Events organized by Radico, Rampur, in the year 2009-10 under Corporate Social Reponsibilities:

1. Initiatives for blanket distribution for poor populations at Rampur during winter (around 2 thousand in numbers)

2. Fire wood distribution during winter season

3. Two education centers are running for basic education of poor children in Rampur backward areas.

4. Medicine distribution to Leprosy ashram every month.

5. Up to Rs. 100000.00 (Rs. One Lac Only ) as donation to different schools for their buildings & others as required by the school management.

6. Adoption of Ajitpur village near Rampur for providing roads, lights etc.

7. Frequent blood donation camp thrice in a year in the factory premises and donated blood provided to the needy person in the Rampur Distt.

8. Helping local administration in the event of any natural calamities by providing ambulance, food packets and other relative items & services.

9. Providing trophies & cash amount to the topper of Rampur Distt. Students of class X & XII every year (CBSE, ICSE Board & U.P. Board).

10. Providing eye camps for needy persons of Rampur & surroundings for free operation & other related treatment.

DIRECTORS RESPONSIBILITY STATEMENT:

In terms of provisions of Section 217 (2AA) of the Companies Act, 1956 (Act), your Directors confirm that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures, wherever applicable.

(ii) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company, as at the end of the accounting year and of the profit of the Company for that period.

(iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(iv) The Directors have prepared the annual accounts on a going concern basis.

Particulars of Employees:

In accordance with the provisions of Section 217 (2A), read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the Directors Report, as an addendum thereto. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Report and accounts, as therein set out, are being sent to all members of the /Company excluding the aforesaid information about the employees. Any member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Office of the Company.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

As required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, the relevant information and data is given at ANNEXURE - B.

MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR 2009-2010:

Management Discussion and Analysis Report, as required under the Listing Agreement with the Stock Exchanges is enclosed and forms part of this report.

CORPORATE GOVERNANCE REPORT FOR THE YEAR 2009-2010:

Report on Corporate Governance along with the certificate of statutory Auditors, M/s. V. Sankar Aiyar & Co., confirming compliance of conditions of Corporate Governance, as stipulated under Clause 49 of the Listing Agreement, forms part of the Annual Report.

ACKNOWLEDGEMENTS:

Your Directors would like to express their sincere appreciation to the investors and bankers for their continued support during the year. Your Directors extend their sincere gratitude to all the Regulatory Authorities like SEBI, Stock Exchanges and other Central & State Government authorities / agencies, Registrars for their support.

Your Directors also place on record their appreciation for the dedicated services rendered by the employees at various levies and look forward to their continued support in the future as well. We also take this opportunity to thank all the valued customers who have appreciated our products and have patronized them.

For & on behalf of the Board

Sd/- Place : New Delhi Dr. Lalit Khaitan

Date : 27.07.2010 Chairman & Managing Director

 
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