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Directors Report of United Breweries (Holdings) Ltd.

Mar 31, 2016

Report of the Directors

Report of the Directors

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

Financial Performance of the Company

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

(Rs. in crores)

2015-2016

2014-2015

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

52.989

(42.041)

Less:

- Provision for doubtful advances

55.000

57.896

- Bad advances / debts written off

12.513

128.624

- Provision for diminution in value of investment

21.246

280.962

- Depreciation

16.615

21.505

Loss before exceptional item and tax

(52.385)

(531.03)

Add:

- Exceptional item ( profit on sale of pledged shares)

7.254

965.001

Profit / (Loss) before tax

(45.130)

433.974

Less: Tax

-

-

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

(45.130)

433.974

Dividend

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

Operations of the Company

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

Despite the return of significant number of Indian consumers from the Gulf and the Far East due to rationalization of jobs because of continued low oil prices, UB Global - the export division of your Company, has managed to remain India''s largest exporter of beer in the year under review. A judicious mix of domestic and export orders also ensured an exponential growth in your Company''s apparel business. The FEDERATION OF KARNATAKA CHAMBER OF COMMERCE & INDUSTRY has, once again, awarded the Export Excellence award to your Company.

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

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

Subsidiaries and Associate Companies

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

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

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

Directors and Key Managerial Personnel

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

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

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

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

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

Directors'' Responsibility Statement

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

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

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

(c) proper and sufficient care have been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act,

2013, for safeguarding the assets of the Company and for prevention and detection of fraud and other irregularities;

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

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

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

Statutory Auditor

(a) Reappointment

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

(b) Auditors'' qualification & Board responses

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

Corporate Governance & Management Discussion and Analysis Report

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

Disclosures

Board and its Committees

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

Independent Directors Declaration

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

Internal Financial Controls

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

Risk Management

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

Particulars of Conservation of Energy, Technology Absorption

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

Foreign Exchange Earnings and outgo

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

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

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

Performance Evaluation of the Board and Committees

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

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

Vigil Mechanism

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

Particulars of Employees and related disclosures

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

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

Familiarization programme for Independent Directors

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

Particulars of Loans, Guarantees and Investments

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

Corporate Social Responsibility

The Company, being an apex holding company of the UB Group, takes its role as a responsible corporate citizen seriously and encourages all its constituents of investee companies to pursue their business in a responsive manner.

The Company has in place a Corporate Social Responsibility Committee (CSR) for overseeing CSR activities. Since the average net profit of the Company for the preceding three years was negative, there was no necessity for the Company to carry out any CSR spending for the period under review.

Secretarial Audit

(a) Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Sudhir Hulyalkar, Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Report furnished by Auditor in the format prescribed under The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure F to this Report.

(b) Qualifications & Board responses

The Board responses to the qualifications of the Secretarial Audit are as under:

(a) While efforts are still on for appointment of a suitable candidate for the position of the Managing Director, the Chief Financial Officer was appointed w.e.f April 20, 2016.

(b) The Board is seized of the matter regarding appointment of minimum number of Directors in terms of the Articles of Association of the Company and efforts are on in this regard despite the difficulty in getting suitable persons under the prevailing circumstances.

(c) The Company has applied for condonation of delay to the Central Government for filing the required Form.

Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT -9 is annexed herewith as Annexure G.

Major litigations involving the Company

Major litigations of the Company are as follows:

(i) The appeal before the Hon''ble Supreme Court against the Order of the Division Bench of the Hon''ble High Court of Karnataka which has set aside the permission granted by the Hon''ble Company Judge under Section 536(2) of the Companies Act 1956 vide its Order dated December 20, 2013 to dispose of the shares of USL in favour of Diageo Plc / Relay BV is continuing and is yet to be adjudicated. Meanwhile, the Hon''ble Supreme Court has, by its Order dated February 10, 2014, directed that status quo be maintained in respect of the transaction of sale of shares to Diageo. By another Order dated November 17, 2015, the Hon''ble Supreme Court, have amongst others, admitted the SLP filed by Diageo and posted for final hearing and disposal. The SLPs are still continuing.

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

(iii) Three lenders who have extended pre-delivery payment (PDP) loans to KFA for purchase of aircrafts from M/s. Airbus S.A.S. and who claim to be beneficiaries of Corporate Guarantees purportedly executed by the Company, have filed proceedings before the DRT for recovery of total dues amounting to Rs.192.51 crores. By an ex-parte order dated February 4, 2014, in I.A. No. 543/2014, the Hon. DRT has passed an ad-interim order attaching pre-delivery payments made by KFA to M/s. Airbus S.A.S. up to Rs.192.51 crores. Thereafter, vide final order dated March 28, 2016 the Hon''ble DRT had issued a Demand Notice directing the Company to pay an amount of Rs. 192,51,08,484.67.

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

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

(v) In the SREI suit in Bangalore, SBI claimed that the deposit of Rs.651 crores kept with the Hon''ble High Court of Karnataka, being surplus sale proceeds received from sale of pledged shares, be made available to them. The Company opposed the said relief claim and the Hon''ble Court of XXVIII Addl. City Civil Judge, Bangalore while upholding the objections of the Company was pleased to dismiss the application filed by SBI vide its order dated July 16, 2016. The Suit is still in progress.

(vi) The Company has filed a suit claiming an amount of USD 210,400,000 along with Rs.162,10,00,000/- by way of Damages against one of the above Petitioners who has filed a winding up Petition against the Company, in the City Civil Court, Bangalore and the same is pending adjudication. In the said suit the Defendants therein filed applications challenging the jurisdiction of the Hon''ble City Civil Court, Bangalore. However, the said applications have since been dismissed by the Hon''ble City Civil Court by its order dated April 30, 2016.

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

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

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

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

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

Significant and material orders passed by the Regulators/ Courts

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

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

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

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

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

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

SEBI in its communication dated April 27, 201 5 had advised the Company to restate the Accounts for the Financial Years 2012-13 and 2013-14 to address the qualifications made in the Report by the Statutory Auditors, despite a representation that most of the required adjustments have already been made in the accounts for the subsequent Financial Year 2013-14. The Hon''ble Securities Appellate Tribunal by its Order dated March 29, 2016 quashed and set aside the orders passed by SEBI dated April 27, 201 5 with the liberty to the SEBI to pass fresh order on the merits and in accordance with law.

Post the Hon''ble Securities Appellate Tribunal Order dated March 29, 2016, SEBI has again vide its letter dated July 25, 2016 advised the Company to comply with its new circular dated May 27, 2016 regarding disclosure of the "Impact of Audit Qualifications" beginning from the financial year 2012-13. Although this circular is applicable for the period ending on or after March 31, 2016 which is being complied, the Company has sought legal view regarding compliance for the previous years beginning from financial year 2012-13.

(iv) Attachment of assets by Enforcement Directorate

The Directorate of Enforcement (ED), Ministry of Finance-Dept. of Revenue, Government of India, vide its Provisional Attachment Order No. 11/2016 dated June 11, 2016, received by the Company, has provisionally attached the immovable properties of the Company based in Bangalore and Mumbai under Section 5(1) of Prevention of Money Laundering Act, 2002 for a period of 180 days from the date of the Order in connection with investigation against Dr. Vijay Mallya, Kingfisher Airlines Limited & Others. Pursuant to a Show Cause Notice dated July 11, 2016 received from the Adjudicating Office in this regard, the Company is in consultation with its Legal Counsels for taking appropriate steps that may be required including but not limited to defending the case before the Adjudicating Authority in Delhi.

As part of the investigations of the affairs of the Kingfisher Airlines Limited ("KFA"), the Company has cooperated with all the Investigating Agencies by providing all relevant information, records, data and facts as and when required by the said Agencies.

Listing requirements

Your Company''s Equity shares are listed on the BSE Limited (formerly Bombay Stock Exchange Limited) and National Stock Exchange of India Limited. The listing fees have been paid to all these Stock Exchanges for the year 2016-2017.

Fixed Deposits

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

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

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

Transfer to Investor Education and Protection Fund

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

Contracts and Arrangements with related parties

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

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

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

General

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

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

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

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

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Acknowledgement

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

By Order of the Board

Place: London Dr. Vijay Mallya

Date: August 31, 2016 Chairman


Mar 31, 2014

Dear members,

The Directors present the 98th Annual Report of your Company together with the Audited Accounts for the year ended March 31, 2014.

FINANCIAL RESULTS

The Annual Report and related financial statements are presented on lines similar to last year in view of the clarifications by Ministry of Corporate Affairs, Government of India vide its circular reference no. 1/19/2013-CL-V-dated April 4, 2014.

The summary of financial results of the Company for the financial year

ended March 31, 2014 is as under: (Rs. in million) 2013-2014 2012-2013

The working for the year resulted in

(Loss) from Operations (2,807.289) (2,400.450)

Less:

*Provision for doubtful advances 12,717.054 -

*ad advances/debts written off 24,505.944 -

Add: 19,878.906 863.025

*Exceptional Items

Less:

*Depreciation 81.639 92.145

Loss for the year carried to the Balance Sheet (20,233.020) (1,669.570)





DIVIDEND

In view of loss for the year, your Directors are unable to recommend any dividend for the year ended March 31, 2014.

OPERATIONS OF THE COMPANY

The operations of the Company comprise primarily of investment including purchase and sale of shares and other securities, international trade including export sales, development of real estate including both sale and rental of constructed premises, licensing of Trade Marks, advancing of loans and providing guarantees.

The Company has, over the year promoted a number of businesses including the country''s leading Brewery & Spirits Companies. These businesses have, where appropriate, formed strategic associations with global leaders in their respective fields, thereby bringing about significant value accretion.

Some other ventures, notably Kingfisher Airlines (KFA), suffered due to a hostile environment,engine failure, lack of funding support from banks and incurred losses over its years in business, leading to a shut down of operations in September, 2012. The Company continued to support KFA throughout its difficult period by way of loans, guarantees etc. It has been the practice of the Company to provide support for all businesses promoted by it. Post shut down, the Company has been in discussion with potential investors for revival of the airline and had maintained minimal financial support to KFA.

During the year, the Board performed a critical review of its investments in and advances to its various investee companies, having regard to their financial position, their future prospects etc. Consequent to this review, amounts recoverable from certain subsidiaries totaling to Rs 2450.59 crores have been written off. Certain additional amounts totaling Rs. 1271.71 crores due from a Subsidiary and an Associate Company has been provided for as a measure of abundant caution.

During the year under review, some of the shares pledged by the Company to lenders of KFA were invoked and sold by the lenders. This action has been contested by the Company in appropriate courts.

Following the very successful joint venture for the beer business between United Breweries Limited and Heineken, the Company had been looking to forge a strong global association with a spirits major to strengthen the long term prospects of United Spirits Limited concluding with an agreement with Diageo plc, the world''s leading spirits company.

SALE OF SHARES TO DIAGEO PLC

Pursuant to the Share Purchase Agreement entered into by the Company and its subsidiary Kingfisher Finvest India Limited (KFIL) for sale of 16,716,987 equity shares held by the Company and KFIL in United Spirits Limited to Relay B.V., an indirect wholly owned subsidiary of Diageo plc., the Company, on July 4, 2013, pursuant to the judgement and order dated May 24, 2013 passed by the Hon''ble Company Judge of the Hon''ble High Court of Karnataka (in the various winding up petitions filed against the Company), granting leave under Sec. 536(2) of the Companies Act, 1956 ("24th May Order"), sold 10,141,437 Equity shares. Appeals were thereafter filed by the petitioners in the various winding up petitions before the Division Bench of the Karnataka High Court seeking to set aside the 24th May Order of the Company Judge. The Hon''ble Division Bench of the High Court of Karnataka in OSA No. 25 of 2013 connected with OSA Nos. 26, 27, 29, 30 & 43 of 2013, vide its judgement and order dated December 20, 2013 (20th December Order"), while partly allowing the appeals, has set aside the impugned 24th May Order granting permission to sell 13,612,591 equity shares of USL held by the Company to Relay B.V and Diageo plc and others acting in concert, at a sale price of Rs. 1,440/- equity share. The Division Bench has further reiterated that the Company shall not in any way sell, transfer, part with possession or do any act in respect of all other assets of the Company including the shares, pending disposal of the Company Petition on merits and have also ordered the Company to handover the Fixed Deposit of Rs. 3,797,506,272/- with Lakshmi Vilas Bank to the Registrar General of the High Court of Karnataka. The Company has complied with the 20th December Order. Your Company and Diageo Plc have filed Special Leave Petitions in the Hon''ble Supreme Court against the 20th December Order, being SLP Nos. 967, 1016, 1331, 1344, 1433, 1362, 1501 and 1163 of 2014. The Hon''ble Supreme Court by its Order dated February 10, 2014 has ordered status quo with regard to the transaction which has not been approved by the Division Bench in the 20th December Order. Accordingly the sale of the above shares has been recognized in the accounts of this year.

COMPETING OPEN OFFER OF MCF SHARES

Pursuant to and in compliance with Regulation 20 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as amended ("SEBI (SAST) Regulations") read with Regulation 3(1) and other applicable regulations of the SEBI (SAST) Regulations, Zuari Fertilizers and Chemicals Limited (Acquirer) together with Zuari Agro Chemicals Limited [together referred to as "Zuari Group"] and the Company along with its wholly owned subsidiary Kingfisher Finvest India Limited and an associate company McDowell Holdings Limited [ together referred to as "UB Group"], as persons acting in concert, made an competing offer/open offer for acquisition of up to 3,08,13,939 (Three Crore Eight Lakh Thirteen Thousand Nine Hundred and Thirty Nine) fully paid-up equity shares of face value of Rs. 10 each ("Equity Shares") from all the public shareholders of Mangalore Chemicals and Fertilizers Limited (MCF) constituting 26% of the fully diluted voting equity share capital at a price of Rs. 68.55 per Equity Share ("Offer Price"), payable in cash (the "Competing Offer"). This Offer is a competing offer, under Regulation 20 of the SEBI (SAST) Regulations, to the open offer made by SCM Soilfert Limited along with Deepak Fertilizers and Petrochemicals Corporation Limited on April 23, 2014 (Original Offer). In view of the legal restrains presently faced by the UB Group, Zuari Group has agreed to subscribe to all the shares that would be tendered in the Competing Offer and all financial obligations, costs, charges and expenses including payment of considerations to public shareholders in terms of the Takeover Regulations will be borne by the Zuari Group alone. Your Company will continue to have management control of MCF. The salient features of the Agreement entered into by UB Group with the Zuari Group, pursuant to which the Competing Offer was made, are mentioned in detail in Clause No. 2.1.5 of the draft Letter of Offer. The Public Announcement for the Competing Offer was made on May 12, 2014, the Detailed Public Statement was published on May 20, 2014, the Draft Letter of Offer was filed with Securities and Exchange Board of India ("SEBI") and the concerned stock exchanges on May 27, 2014. On July 15, 2014 SEBI gave it clearance to the Draft Letter of Offer.. The UB Group, the current promoters of MCF and desirous of protecting its investment, had to make this Competing Offer against the Original Offer.

EXPORT BUSINESS

In the year under review, UB Global recorded a turnover of Rs. 350 crores. Apparel exports performed well with a growth of 52%. For the sixth time, UB Global bagged the "EXPORT EXCELLENCE AWARD" for the year 2014 from the Federation of Karnataka Chamber of Commerce and Industry, Karnataka. The liquor export business has reduced considerably as United Spirits Limited has decided to do direct business in certain parts of the world. However, dialogue is on with United Spirits Limited for continuing the liquor export business as in the past. The Company is also exploring other export options to maintain its export turnover.

PROPERTY DEVELOPMENT

The construction work for development of a luxury residential building "Kingfisher Towers - Residences at UB City" in the available land in UB City is progressing as per schedule and is expected to be completed in 2015. The super built up area of the building would be 7,67,870 sq. ft. The super built up area falling to the share of the Company would be 4,18,388 sq. ft.

Your Company continues to earn rentals from the retail and office spaces let out in UB City.

LITIGATION UPDATE

Your Company through itself and through its other subsidiaries holds 6.67% of the paid up capital of Kingfisher Airlines Limited [KFA].

Your Company has significant exposure on various counts in KFA by way of loans and guarantees.

The lenders of KFA have, pursuant to certain Corporate Guarantees given by the Company (the validity of which is disputed), demanded from the Company, their alleged dues from KFA amounting to Rs. 6203.35 crores and unapplied interest have moved the Debt Recovery Tribunal ("DRT") for recovery of these alleged dues. The Company has taken steps to defend the proceedings before the DRT as per the advice of its lawyers.

The Goa Senior Division Court has granted an interim injunction against any coercive action by lenders of KFA in respect of the Company''s property in Goa, tenanted to United Spirits Limited. Subsequently, KFA lenders have sent a notice under the SARFAESI Act in respect of the said property. The Company has responded to the notice issued to the Company purportedly under the SARFAESI Act challenging the same.

KFA lenders have also sold certain investments belonging to the Company pursuant to invocation of the purported pledge by the Company of certain investments. The Company and others have filed a suit in the Hon''ble Bombay High Court, being Suit No. 311 of 2013 against the consortium of bankers (Bombay Suit) who have advanced loans to KFA, inter alia, seeking the following reliefs:-

(a) For a declaration that the Corporate Guarantee dated December 21, 2010 given by the Company and the Pledge Agreement dated December 21, 2010, are void ab-initio and non-est;

(b) For a permanent order and injunction restraining the consortium of bankers, their servants, agents or assigns, or any other person claiming by, through or under them or any of them, from acting upon, in furtherance or in any manner giving effect to the impugned Notices dated March 16, 2013, or from taking any other or further steps to act upon or in furtherance of the Pledge Agreement dated December 21, 2010, save and except in accordance with the procedure set out in clause 8.1 of the Master Debt Recast Agreement (MDRA), including issuing a notice there under.

(c) For a permanent order and injunction restraining the consortium of bankers, their servants, agents or assigns, or any other person claiming by, through or under them or any of them, from acting upon, in furtherance of the Corporate Guarantee dated December 21, 2010 given by the Company and the Pledge Agreement dated December 21, 2010;

(d) That an order and decree of damages of the sum of Rs. 3,199.68 crores. as set out in the Particulars of Claim be awarded to the Plaintiffs.

(e) That the maximum limit under the Company''s Corporate Guarantees be Rs. 1601.43 crores for reasons set out in the Suit.

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

The Company (UBHL) and Kingfisher Finvest India Limited (KFIL, a wholly owned subsidiary of the Company) have filed a suit, against IDBI Trusteeship Services Limited and SREI Venture Capital Limited in the City Civil Court at Calcutta, being T.S. No. 966 of 2013, for a declaration inter alia, that the Security Trustee Agreement dated June 30, 2008 and the Consolidated Deed of Pledge dated December 21, 2010 (in respect of 4,937,375 equity shares of United Spirits Limited held by UBHL and KFIL) are void, unenforceable and of no effect. The said suit is pending.

SBICAP Trustee and the Consortium of Banks, which have advanced loans to KFA have filed a suit, inter alia, against IDBI Trusteeship Services Limited, SREI Venture Capital Limited, UBHL and KFIL in the Court of City Civil Judge in Bangalore, being O.S. No. 25877 of 2013 to enforce their alleged rights under the Release of Residual Interest Agreement dated December 21, 2010 in respect of the 3,147,985 shares held by UBHL in USL, 59,150,000 shares held by UBHL in KFA and 1,789,410 shares held by KFIL in USL. In the suit, the Plaintiffs have called upon the Defendants to sell the pledged shares in the market, discharge their loan commitment and pass on the residue to the consortium. By an Order dated June 14, 2013, the Hon''ble Judge granted ex-parte reliefs restraining the defendants therein from selling the pledged shares below the best available market price and at any event, at any price below Rs. 2350.68 per share (95% of the average closing market price on 07/06/2013 on the BSE/NSE), without the consent of the Plaintiffs therein, and restraining the Defendant Nos. 1 to 3 (IDBI Trusteeship Services Limited, SREI Venture Capital Limited and India Global Competitive Fund) from returning/ handing over the pledged shares to UBHL and KFIL and/or releasing the pledge over the pledged shares and/or altering the nature of the pledge in any manner, till the disposal of the suit. The Consortium of Banks also filed Writ Petition No. 28577 of 2014 in the Hon''ble Karnataka High Court in respect of the pledged shares. On June 10, 2014, IDBI Trusteeship Services Limited transferred the pledged shares to India Global Competitive Fund (managed by SREI Venture Capital Limited), who in turn sold 4,937,395 shares of and in United Spirits Limited held by UBHL and KFIL. By an order dated June 20, 2014 in Writ Petition No. 28577 of 2014, India Global Competitive Fund has been ordered to deposit the surplus/balance sales proceeds from the aforesaid sale of shares in USL after India Global Competitive Fund purportedly adjusted Rs. 690 crores against its alleged dues from KFA. UBHL is defending the aforesaid Writ Petition No. 28577 of 2014, O.S. No. 25877 of 2013 and the ex-parte ad-interim orders passed therein.

Guarantee Commission arising out of the corporate guarantee given and Security Commission arising out of security pledged in favour of lenders of KFA, have not been accrued in view of KFA being precluded by its Bankers from making payment of any Guarantee Commission and in view of the stand taken by the Company and the other Plaintiffs in the Bombay Suit. Similarly, interest has not been accrued on the outstanding loans relating to KFA.

Certain alleged Corporate Guarantees on behalf of KFA have been invoked and certain purported beneficiaries of Corporate Guarantees issued on behalf of KFA including the Consortium of Banks have filed petitions against the Company under Sections 433/434 of the Companies Act 1956. On November 19, 2013, the Hon''ble Karnataka High Court admitted Company Petition No. 248 of 2013 filed by BNP Paribas, one of the purported beneficiaries. Your Company filed Original Side Appeal No. 52 of 2013 before the Division Bench of the Karnataka High Court challenging the judgment and order dated November 19, 2013 which appeal was dismissed by a judgment and order dated December 16, 2013. Your Company has now filed a Special Leave Petition in the Hon''ble Supreme Court of India, being Special Leave Petition No. 1163 of 2014 challenging the order of the Karnataka High Court dated December 16, 2013. The said Special Leave Petition is pending.

On December 13, 2013, the Hon''ble Karnataka High Court also admitted Company Petition No.185 of 2012 filed by Avions De Transport Regionale, one of the other purported beneficiaries. Your Company has filed Original Side Appeal No. 18 of 2014 before the Division Bench of the Karnataka High Court challenging the judgment and order dated December 13, 2013. The said appeal is still pending.

Punjab National Bank and Corporation Bank had sent notice of their intention to classify your Company as a "willful defaulter" under the Master Circular on Wilful Defaulters issued by the RBI dated July 1, 2013. Your Company submitted its reply and appeared before the Grievance Redressal Committee''s of the respective banks. No decision classifying your Company as a willful defaulter has been communicated by the said banks thereafter. Similarly, United Bank of India ("UBI") has initiated steps to try and classify KFA, its Chairman & Managing Director and erstwhile directors as willful defaulters. Thereafter, UBI addressed an email dated June 16, 2014 to your Company erroneously contending that in the event of Kingfisher Airlines Limited being declared willful defaulters, as a consequence, for Company would also be declared a willful defaulter. Your Company, on legal advice, has responded to the said email stating that the email was an afterthought, and in any event in breach of the principles of natural justice, neither was an opportunity given to your Company to be informed about UBI''s basis for attempting to declare your Company a willful defaulter nor was your Company given an opportunity to refute UBI''s case and place its say in the matter on record.

The Company, ably assisted by eminent Counsel is taking all necessary steps to protect the interests of the Company.

SUBSIDIARIES

The following are the subsidiaries of the Company:

A.Indian Subsidiary Companies

1.Bangalore Beverages Limited

2.Bestride Consultancy Private Limited

3.City Properties Maintenance Company Bangalore Limited

4.Kingfisher Finvest India Limited [Formerly Kingfisher Radio Limited]

5.Kingfisher Training and Aviation Services Limited [Formerly Kingfisher Airlines Limited]

6.Kingfisher Aviation Training Limited [Formerly Kingfisher Training Academy Limited]

7.Kingfisher Goodtimes Private Limited

8.UB Electronic Instruments Limited

9.UB Infrastructure Projects Limited

10.UB International Trading Limited

11.UB Sports Limited

B.Overseas Subsidiary Companies

12.Inversiones Mirabel, S.A.

13.Mendocino Brewing Co. Inc, USA

14.Rubic Technologies Inc

15.Rigby International Corp

16.Releta Brewing Company LLC

17.UB Overseas Limited

18.UBHL [BVI] Limited

19.United Breweries of America Inc., Delaware

20.United Breweries International [UK] Limited

21.Kingfisher Beer Europe Limited (Formerly UBSN Limited)

The statement pursuant to Section 212(1)(e) also forms part of this Annual Report.

Summarised financials of the Subsidiary Companies as required in terms of general exemption granted under Section 212(8) of the Companies Act, 1956, by the Government of India, Ministry of Corporate Affairs, vide General Circular No. 2/2011, dated February 8, 2011 are attached and form part of this report.

Consolidated Accounts

As per the Listing Agreement, the Consolidated Accounts conforming to the applicable Accounting Standards forms part of this Annual Report. The accounts of seven subsidiary companies, whose ability to transfer funds to your Company has been significantly impaired, have been excluded from consolidation as per AS 21 prescribed under ICAI regulations.

DIRECTORS

Mr. V Shashikanth who was appointed as Managing Director of the Company with effect from August 21, 2013 for a period of three years resigned as a Director and Managing Director of the Company with effect from close of business hours on April 17, 2014. He however continues to be an Executive of the Company. The Company is in the process of appointing a Managing Director in place of Mr. V Shashikanth.

After the resignation of Mr. V. Shashikanth as Managing Director on April 17, 2014, the Company is yet to appoint a Whole-Time Director or Managing Director. The Company also does not have a Chief Financial Officer. The Board aided by the Chairman is looking for suitable persons to be appointed as Managing Director / Whole - Time Director and Chief Financial Officer.

Mr. V K Rekhi resigned as Director of the Company with effect from May 6, 2014.

Mr. Sidhartha V Mallya, Director, retires by rotation and, being eligible, offers himself for re-appointment, as a Director liable to retire by rotation.

The Company has, pursuant to the provisions of Clause 49 of the Listing Agreements entered into with Stock Exchanges, appointed Mr. N Srinivasan, Mr. M S Kapur and Dr. Lalit Bhasin as Independent Directors of the Company. The Company has received declarations from the said Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under the said Clause 49. In accordance with the provisions of Section 149(4) and proviso to Section 152(5) of the Companies Act, 2013, these Directors are being appointed as Independent Directors to hold office as per their tenure of appointment mentioned in the Notice of the forthcoming Annual General Meeting of the Company.

A brief resume of the Directors proposed to be appointed/ re-appointed is given in the Annexure to the Notice.

AUDITORS

Messrs. Vishnu Ram & Co., Chartered Accountants, retire as Auditors of the Company at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment.

In terms of the provisions contained in the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014 the appointment of Statutory Auditors is proposed for a period of three financial years commencing 2014- 2015 to hold office from the conclusion of the Ninety Eighth Annual General Meeting till the conclusion of One Hundred and First Annual General Meeting. Their appointment during the aforesaid term of three financial years shall be subject to ratification by the Members at subsequent Annual General Meetings.

QUALIFICATIONS OF AUDITORS AND MANAGEMENT RESPONSE

With reference to observations in the Auditors Report regarding non-provision for loans and advances to certain Subsidiaries and an Associate Company and for decline in value of investment in certain Subsidiaries and an Associate Company, the relevant notes on the accounts comprehensively explain the management''s views on such matters.

LISTING OF SHARES OF THE COMPANY

The shares of your Company are listed on Bangalore Stock Exchange Limited [Regional Exchange], BSE Limited (formerly Bombay Stock Exchange Limited) and National Stock Exchange of India Limited. The Listing Fees for the year 2014-2015 has been paid to all the above Stock Exchanges.

CORPORATE GOVERNANCE

A report on Corporate Governance is annexed separately as part of the report along with a Certificate of Compliance from the Statutory Auditor.

MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, Management Discussion and Analysis Report is appended and forms an integral part of the Report on Corporate Governance which is appended.

FIXED DEPOSITS

The Fixed Deposits accepted from the Public and Shareholders stood at Rs. 211.720 million as on March 31, 2014 (including an amount of Rs. 29.593 million accepted during the year under review).

A sum of Rs. 0.132 million from Public and Shareholders remained unclaimed as at March 31, 2014.

The Board of Directors has decided henceforth not to renew or accept fresh deposits.

There have been no defaults in the repayment of fixed deposits during the year excepting occasional short delay for which interest had been paid along with matured deposits.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Section 205A[5] and 205C of the Companies Act, 1956, an amount of Rs. 0.330 million [Previous Year Rs. 0.237 million] being the aggregate of the Unclaimed Dividend and Deposits, remaining unclaimed and unpaid for more than 7 years, have been transferred to the Investor Education and Protection Fund.

PARTICULARS OF EMPLOYEES

The information as are required to be provided in terms of Section 217[2A] of the Companies Act, 1956 read with Rules made thereunder, in respect of employees of the Company, forms part of the this Report. In terms of Section 219(1)(b)(iv) of the Companies Act, 1956, the Reports and Accounts are being sent to the Members excluding the aforesaid annexure. Any Member interested in obtaining a copy of the same may write to the Company Secretary.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUT GO

Particulars of Conservation of Energy, Technology Absorption

The Provisions of Section 217[1][e] of the Act relating to conservation of energy and technology absorption do not apply to this Company since it is not engaged in manufacturing activities.

Foreign Exchange Earnings and outgo

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

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217[2AA] of the Companies Act, 1956 the Board of Directors hereby state that:

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

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

(iii) proper and sufficient care have been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for prevention and detection of fraud and other irregularities.

(iv) the Annual Accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENT

Your Directors place on record the support received from Group Companies, shareholders, depositors, banks, financial institutions and employees.

By Order of the Board

London Dr. Vjay Mallya

August 13, 2014 Chairman


Mar 31, 2013

The Directors have pleasure in presenting the 97th Annual Report of your Company together with the Audited Accounts for the year ended March 31, 2013.

FINANCIAL RESULTS

The summary of financial results of the Company for the financial year ended March 31, 2013 is as under:

(Rs.in million)

2012-2013 2011-2012

The working for the year resulted in

- Profit/(Loss) from Operations (1,577.425) 185.315

(Add)/Less

- Depreciation (92.145) 102.328

- Taxation 6.499

Profit /(Loss) after tax (1,669.570) 76.488

Profit /(Loss) for the year carried to the Balance Sheet (1,669.570) 76.488

DIVIDEND

In view of loss for the year, your Directors are unable to recommend any dividend for the year ended March 31, 2013.

OPERATIONS

The Company''s revenues comprise of sale/lease rentals of property at UB City, Bangalore, Export Sales, Trade Mark License Fees, Dividends, Guarantee Commission and Interest on Loans and Deposits.

PROPERTY DEVELOPMENT

The construction work for development of a luxury residential building "Kingfisher Towers - Residences at UB City" in the available land in UB City is progressing fast and is expected to be completed in 2015. The super built up area of the building would be 7,67,870 sq. ft. and the share of the Company would be 4,18,388 sq. ft. When completed, this residential development will become a landmark in Bangalore and will also augment revenues on sale of the residential units.

Your Company continues to earn rentals from the retail and office spaces let out in UB City.

EXPORT BUSINESS

For an unprecedented eighteenth consecutive year, UB Global has been awarded the Golden Trophy Award by Agricultural Produce Export Development Authority of India for achieving the highest exports of beverage alcohol. This helped UB Global in achieving its highest sales of Rs. 328 crores, despite uncertain market sentiment in Europe. With the addition of another manufacturing unit, apparel sales has grown by 32%.

SUBSIDIARIES

The following are the subsidiaries of the Company:

A. Indian Subsidiary Companies

1. Bangalore Beverages Limited

2. Bestride Consultancy Private Limited

3. City Properties Maintenance Company Bangalore Limited

4. Kingfisher Finvest India Limited [Formerly Kingfisher Radio Limited]

5. Kingfisher Training and Aviation Services Limited [Formerly Kingfisher Airlines Limited]

6. Kingfisher Aviation Training Limited [Formerly Kingfisher Training Academy Limited]

7. Kingfisher Goodtimes Private Limited

8. UB Electronic Instruments Limited

9. UB Infrastructure Projects Limited

10. UB International Trading Limited

11. UB Sports Limited

B. Overseas Subsidiary Companies

12. Inversiones Mirabel, S.A.

13. Mendocino Brewing Co. Inc, USA

14. Rubic Technologies Inc

15. Rigby International Corp

16. Releta Brewing Company LLC

17. UB Overseas Limited

18. UBHL [BVI] Limited

19. United Breweries of America Inc., Delaware

20. United Breweries International [UK] Limited

21. Kingfisher Beer Europe Limited (Formerly UBSN Limited)

A summary of performance of all the above mentioned subsidiaries including turnover, profit before and after taxation are available in the statement under the heading Summarized Financials of Subsidiary Companies 2012 -13 included in the Annual Report. The Company had invested in the above subsidiaries besides significant advances to them over the years.

The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2/2011 dated February 8, 2011 has issued directions under Section 212(8) of the Companies Act, 1956 granting general exemption from applicability of the provisions of Section 212 of the Companies Act, 1956 in relation to the Subsidiary Companies, subject to fulfillment of the conditions specified in the said circular.

The Company has availed the benefit of general exemption provided by the aforesaid circular and accordingly, the documents mentioned in Section 212(a) to (d) of the Companies Act, 1956 relating to the Company''s subsidiaries are not attached to the Accounts of the Company. In terms of the said circular, your Company shall fulfill the prescribed conditions, make the requisite disclosures and further undertake that the Annual Accounts of the Subsidiary Companies and the related detailed information shall be made available to Shareholders of the Company and its Subsidiary Companies seeking such information. These documents will also be available for inspection during business hours at the Registered Office of the Company and of the respective Subsidiary Companies concerned.

SALE OF INVESTMENTS IN UNITED SPIRITS LIMITED TO RELAY B.V., AN INDIRECT WHOLLY OWNED SUBSIDIARY OF DIAGEO PLC

On November 9, 2012, the Board of Directors of your Company approved the execution, delivery and performance of a share purchase agreement between your Company, Kingfisher Finvest India Limited (a wholly owned subsidiary of the Company), certain other shareholders of United Spirits Limited ("USL"), Diageo plc and Relay B.V., an indirect wholly owned subsidiary of Diageo plc ("Share Purchase Agreement"), which agreement provided for the sale and purchase of certain shares of USL to Relay B.V. Further on November 9, 2012, your Company, Kingfisher Finvest India Limited the wholly owned subsidiary of your Company, Diageo plc and Relay B.V., entered into a shareholders agreement

to record their respective rights and obligations as shareholders of USL ("Shareholders Agreement") which agreement would become effective upon the completion of the sale and purchase of USL shares as contemplated under the Share Purchase Agreement ("Completion"). The sale of shares under the Share Purchase Agreement was subject to various conditions precedent, including obtaining leave of relevant High Court under Sections 536(2) and 537(1) of the Companies Act, 1956 in respect of winding up petitions filed against your Company (and other sellers, if any) before Completion. Accordingly, the Company filed applications before the Hon''ble High Court of Karnataka ("High Court") under Sections 536(2) and 537(1) of the Companies Act, 1956 and the High Court passed an order on May 24, 2013 granting leave to the Company to sell 13,612,591 equity shares of USL to Relay B.V. at a price of Rs. 1,440 per share (the "Court Order"). Following receipt of the Court Order, on July 4, 2013, your Company sold 10,141,437 equity shares of the face value of Rs.10/- each held by your Company in USL to Relay B.V. for a consideration of Rs. 1,440/- per equity share and an aggregate consideration ofRs. 14,603,669,280 and Kingfisher Finvest India Limited sold 6,575,550 equity l shares of the face value of Rs. 10/- each held by it in USL '' to Relay B.V. for a consideration of Rs. 1,440/- per equity share and an aggregate consideration of Rs. 9,468,792,000. As contemplated under the Share Purchase Agreement, the shares sold by your Company were released by '' certain lenders (in whose favour some of the shares were pledged) along with the simultaneous transfer of the sale consideration to those lenders as repayment of amounts owed to them through an escrow mechanism. With the completion of the Share Purchase Agreement, the Shareholders'' Agreement between Diageo plc, Relay B.V, your Company and Kingfisher Finvest India Limited became effective from July 4, 2013 and Relay B.V. and Diageo plc have been included as co-promoters of USL, together with your Company and other existing promoters. Following the sale, your Company, together with, Kingfisher Finvest India Limited now holds 16,108,323 shares representing I 11.08% of USL''s share capital. Consequent upon the above sale, United Spirits Limited, will not be considered as an Associate, for accounting purposes.

The Hon''ble High Court of Karnataka in the Company Petitions while passing an Order on May 24, 2013 granting leave to the Company to sell 13,612,591 equity shares of USL to Relay B.V. at a price of Rs..1,440 per share has imposed some restrictions on your Company, inter alia refraining your Company "from creating pledge/ hypothecation/charge/encumbrance over its movable and immovable properties pending disposal of the company winding up petitions." Your Company is complying with these restrictions imposed by the Hon''ble High Court of Karnataka and has applied for modification of the Order.

KINGFISHER AIRLINES LIMITED

| Kingfisher Airlines Limited [KFA] is an Associate of the Group where your Company through itself and through its other subsidiaries holds 30.25% of the paid up capital

I of KFA. As a significant shareholder in KFA, your Company has significant exposure on various counts in it by way of loans and guarantees.

The lenders of KFA have, pursuant to certain Corporate Guarantees given by the Company (the validity of which is disputed), demanded from the Company, their alleged

| dues from KFA amounting to Rs. 6203.35 crores and have moved the Debt Recovery Tribunal ("DRT") for recovery of

| these alleged dues. The Company is taking steps to defend

| the proceedings before the DRT as per the advice of its

i lawyers.

The Goa Senior Division Court has granted an interim injunction against any coercive action by lenders of KFA I in respect of the Company''s property in Goa, tenanted to United Spirits Limited. Subsequently, KFA lenders have sent a notice under the SARFAESI Act in respect of the said property. The Company has responded to the notice issued to it purportedly under the SARFAESI Act challenging the same.

KFA lenders have also sold certain investments belonging

I to the Company pursuant to invocation of the purported pledge by the Company of certain investments. The Company and others have filed a suit in the Hon''ble Bombay High Court, being Suit No. 311 of 2013 against the '' consortium of bankers (Bombay Suit) who have advanced loans to KFA, inter alia, seeking the following reliefs:-

(a) For a declaration that the Corporate Guarantee dated 21st December, 2010 given by the Company and the Pledge Agreement dated 21st December, 2010, are void ab-initio and non-est;

(b) For a permanent order and injunction restraining the consortium of bankers, their servants, agents or assigns, or any other person claiming by, through or under them or any of them, from acting upon, in furtherance or in any manner giving effect to the impugned Notices dated 16th March, 2013, or from taking any other or further steps to act upon or in furtherance of the Pledge Agreement dated 21st December, 2010, save and except in accordance with the procedure set out in clause 8.1 of the Master Debt Recast Agreement (MDRA), including issuing a notice there under.

(c) For a permanent order and injunction restraining the consortium of bankers, their servants, agents or assigns, or any other person claiming by, through or under them or any of them, from acting upon, in furtherance of the Corporate Guarantee dated 21st December, 2010 given by the Company and the Pledge Agreement dated 21st December, 2010;

(d) That an order and decree of damages of the sum of Rs. 3,199.68 Cr. as set out in the Particulars of Claim be awarded to the Plaintiffs.

(e) That the maximum limit under the Company''s Corporate Guarantees be Rs. 16,014.300 million for reasons set out in the Suit.

The said Suit is pending adjudication in the Hon''ble Bombay High Court.

The Company (UBHL) and Kingfisher Finvest India Limited (KFIL, a wholly owned subsidiary of the Company) have filed a suit, inter alia, against IDBI Trusteeship Services Limited and SREI Venture Capital Limited in the City Civil Court at Calcutta, being T.S. No. 966 of 2013, inter alia, for the Security Trustee Agreement dated 30th June, 2008 and the Consolidated Deed of Pledge dated 21st December, 2010 (in respect of 4,937,375 equity shares of United Spirits Limited held by UBHL and KFIL) are void, unenforceable and of no effect.

SBICAP Trustee and the Consortium of Banks, which have advanced loans to KFA have filed a suit, inter alia, against IDBI Trusteeship Services Limited, SREI Venture Capital Limited, UBHL and KFIL in the court of City Civil Judge in Bangalore, being O.S. No. 25877 of 2013 to enforce their alleged rights under the Release of Residual Interest Agreement dated 21st December, 2010 in respect of the 3,147,985 shares held by UBHL in USL, 59,150,000 shares held by UBHL in KFA and 1,789,410 shares held by KFIL in USL. In the suit, the Plaintiffs have called upon the Defendants to sell the pledged shares in the market, discharge their loan commitment and pass on the residue to the consortium. By an Order dated 14th July, 2013, the Judge granted ex-parte reliefs restraining the defendants therein from selling the pledged shares below the best available market price and at any event, at any price below Rs. 2350.68 per share (95% of the average closing market price on 07/06/2013 on the BSE/NSE), without the consent of the Plaintiffs therein, and restraining the Defendant Nos. 1 to 3 (IDBI Trusteeship Services Limited, SREI Venture Capital Limited and India Global Competitive Fund) from returning/ handing over the pledged shares to UBHL and KFIL and/or releasing the pledge over the pledged shares and/or altering the nature of the pledge in any manner, till the disposal of the suit. UBHL is in the process of obtaining appropriate legal advice to defend the aforesaid O.S. No. 35877 of 2013 and the ex-parte ad-interim orders passed therein.

Guarantee Commission arising out of the corporate guarantee given and Security Commission arising out of security pledged in favour of lenders of KFA, has not been accrued in view of KFA being precluded by its Bankers from making payment of any Guarantee Commission and in view of the stand taken by the Company and the other Plaintiffs in the Bombay Suit. Similarly, interest has not been accrued on the outstanding loans relating to KFA.

Certain alleged Corporate Guarantees on behalf of KFA have been invoked and certain purported benefactors of Corporate Guarantees issued on behalf of KFA have filed petitions against the Company under Sections 433/434 of the Companies Act 1956.

The Company ably assisted by eminent Counsel is taking all necessary steps to protect the interest of the Company.

Although KFAs license has expired on December 31, 2012, under civil aviation regulations, KFA has a period of 24 months to reinstate the same. A revival plan has been submitted to DGCA which is under consideration. Further, discussions are in progress with some prospective investors for restarting the airline operations which of course will be subject to statutory and regulatory approvals.

The Board of Directors of your Company at an appropriate time will discuss the merits of commissioning an in- depth study to assess the recoverability of the amounts advanced to KFA as part of its strategic review of all core investments. Meanwhile, in order to keep its investment prospects alive, your Board has decided to keep the Airline funded on a need basis.

DIRECTORS

Dr. Lalit Bhasin was appointed as Director of the Company with effect from May 30, 2013 in the casual vacancy caused by the demise of Mr. Shrikant G. Ruparel.

Mr. V Shashikanth was appointed as an Additional Director with effect from August 14, 2013 to hold office up to the date of the ensuing Annual General Meeting. The Company has received notice under Section 257 of the Companies Act, 1956, from a Member signifying his intention to propose Mr. V Shashikanth as a candidate for the office of the Director of the Company not liable to retire by rotation. Mr. V Shashikanth was also appointed by the Board as Managing Director of the Company with effect from August 21, 2013 for a period of three years subject to approval of the Members at the ensuing Annual General Meeting.

Mr. A Harish Bhat was appointed as Managing Director of the Company, without remuneration, with effect from the close of business hours on August 20, 2010 for l a period of three years . Accordingly, the term of office '' of Mr. Bhat as Managing Director ends on August 20, 2013. Mr. Bhat will cease to be a Director and Managing | Director of the Company with effect from close of i business hours on August 20, 2013. The Board wishes I to place on record the valuable services rendered by Mr. Bhat during his tenure as Director and Managing Director of the Company.

Mr. Shrikant G. Ruparel, a Member of the Board of Directors of the Company expired on February 11, 2013. Mr. Ruparel was a Director for the past 22 years since December 21, 1991. The Board placed on record the valuable services rendered by Mr. Ruparel during his tenure as a Director of the Company.

Mr. B S Patil resigned as Director of the Company with effect from June 1, 2013. The Board placed on record the valuable services rendered by Mr. Patil during his tenure as a Director of the Company.

Mr. M S Kapur and Mr. N. Srinivasan, Directors, retire by rotation and, being eligible, offer themselves for re- appointment, as Directors liable to retire by rotation.

A brief resume of the Directors proposed to be appointed/ re-appointed is given in the Annexure to the Notice.

AUDITORS

Messrs. Vishnu Ram & Co., Chartered Accountants, retire as Auditors of the Company at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment.

With reference to observations in the Auditors Report regarding accrual of guarantee/security commission from an Associate Company (erstwhile subsidiary), inclusion of interest from Subsidiaries and Associates, non- I provision for loans & advances to certain Subsidiaries and an Associate Company and for decline in value of investment in certain Subsidiaries and an Associate Company, the relevant notes to the accounts comprehensively explain the management''s views on such matters.

LISTING OF SHARES OF THE COMPANY

The shares of your Company are listed on Bangalore Stock Exchange Limited [Regional Exchange], The BSE Limited, Mumbai and National Stock Exchange of India Limited.

CORPORATE GOVERNANCE

¦ A Report on Corporate Governance is annexed separately i as part of the Report along with a Certificate of Compliance ] from the Statutory Auditor. Necessary requirements | of obtaining certifications/declarations in terms of Clause 49 of the Listing Agreement have been complied with.

MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, Management Discussion and Analysis Report is annexed and forms an integral part of the Annual Report.

FIXED DEPOSITS

The Fixed Deposits accepted from the Public and Shareholders stood at Rs. 524.754 million as on March 31, 2013 (including an amount of Rs. 132.553 million accepted during the year under review).

A sum of Rs. 0.261 million from Public and Shareholders remained unclaimed as at March 31, 2013.

There have been no defaults in the repayment of fixed deposits during the year excepting occasional short delay for which interest had been paid along with matured deposits.

The Board of your Company has decided not to accept fresh deposits or renewals.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Section 205A[5] and 205C of the Companies Act, 1956, an amount of Rs. 0.237 million [Previous Year Rs. 0.132 million] being the aggregate of the Unclaimed Dividend and Deposits, remaining unclaimed and unpaid for more than 7 years, have been transferred to the Investor Education and Protection Fund.

PARTICULARS OF EMPLOYEES

The information as are required to be provided in terms of Section 217[2A] of the Companies Act, 1956 read with the Companies [Particulars of Employees] Rules, 1975 is enclosed.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUT GO

Particulars of Conservation of Energy, Technology Absorption

The Provisions of Section 217[1][e] of the Act relating to conservation of energy and technology absorption do not apply to this Company since it is not engaged in manufacturing activities.

Foreign Exchange Earnings and outgo

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

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217[2AA] of the Companies Act, 1956 the Board of Directors hereby state that:

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

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

(iii) proper and sufficient care have been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for prevention and detection of fraud and other irregularities.

(iv) the Annual Accounts have been prepared on a going concern basis.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company is carrying out CSR activities through its other Associate Companies.

GREEN INITIATIVE

Annual Report is transmitted through emails to those identifiable members while print version of the Annual Report is posted to others. The other details are available in the Company''s website www.theubgroup.com.

ACKNOWLEDGEMENT

Your Directors place on record the support received from Group Companies, shareholders, depositors, banks, financial institutions and employees.

By Order of the Board

Goa Dr. Vijay Mallya

August 14, 2013 Chairman


Mar 31, 2012

The summary of financial results of the Company for the financial year ended March 31, 2012 is as under:

(Rs. in million)

2011-2012 2010-2011

The working for the year resulted in

- Profit from Operations 185.315 720.186 Less:

- Depreciation 102.328 101.335

- Taxation 6.499 201.963

Profit after tax 76.488 416.887

Profit for the year 76.488 416.887

Your Directors have made the following appropriations:

- Proposed Dividend - 66.819

- Tax on Proposed Dividend - 11.099

- Transfer to General Reserve Surplus carried to the Balance Sheet 76.488 338.970

DIVIDEND

With a view to conserve resources for working capital, your Directors do not recommend any dividend for the year ended March 31, 2012.

OPERATIONS

The Company's revenues comprise of sale/lease rentals of property at UB City, Bangalore, Export Sales, Trademark License Fees, Dividends, Guarantee Commission and Interest on Loans and Deposits.

PROPERTY DEVELOPMENT

The construction work for development of a luxury residential building named as "Kingfisher Towers - Residences at UB City" on the available land in UB City is progressing fast. The super built up area of the building would be 7,67,870 sq. ft. The super built up area falling to the share of the Company would be 4,18,388 sq. ft. When built, this residential development will become a landmark building in Bangalore and will also augment revenues by sale of the residential units.

Arising from the economic slow down, several Lessees of rental space especially the retail lessees have re-negotiated the rentals. This has impacted the potential revenue of the Company.

SALE OF PROPERTY

During the year, the Company sold Commercial Space measuring 43,822.61 sq.ft. of saleable super built up commercial area in UB City.

EXPORT BUSINESS

UB Global, the Export division of the Company was again awarded the "Golden Trophy" by APEDA, in continued appreciation of its dominant export performance in the Beverage Alcohol category. Also, the Federation of Karnataka Chambers of Commerce & Industry (FKCCI) conferred the "Special Recognition Certificate - Merchant Category" on UB Global, in recognition of its export excellence.

The Export division registered its highest ever Revenues and Profits, despite severe economic volatility in key markets such as Europe and currency swings. High level of domestic inflation continues to remain a concern, as it increases input costs.

The beverage alcohol business registered its highest ever sales Volume, Revenue and Profits. The distribution of Kingfisher Bohemia Wines was further widened, increasing its footprint in several developed markets.

During the year, the apparel business performed exceedingly well and with the second factory in operation for the full year, turnover increased by 67%.

The Company's investments in Leather footwear business has continued in Ambur, the hub of Leather industry in South India. This has enabled manufacturing of high quality shoes.

SUBSIDIARIES

The following are the subsidiaries of the Company:

A. Indian Subsidiary Companies

1. Bangalore Beverages Limited

2. Bestride Consultancy Private Limited

3. City Properties Maintenance Company Bangalore Limited

4. Kingfisher Finvest India Limited [Formerly Kingfisher Radio Limited]

5. Kingfisher Training and Aviation Services Limited [Formerly Kingfisher Airlines Limited]

6. Kingfisher Aviation Training Limited [Formerly Kingfisher Training Academy Limited]

7. Kingfisher Good times Private Limited

8. UB Electronic Instruments Limited

9. UB Infrastructure Projects Limited

10. UB International Trading Limited

11. UB Sports Limited

B. Overseas Subsidiary Companies

12. Inversiones Mirabel, S.A.

13. Mendocino Brewing Co. Inc, USA

14. Rubic Technologies Inc

15. Rigby International Corp

16. Releta Brewing Company LLC

17. UB Overseas Limited

18. UBHL [BVI] Limited

19. United Breweries of America Inc., Delaware

20. United Breweries International [UK] Limited

21. Kingfisher Beer Europe Limited (Formerly UBSN Limited)

A summary of performance of all the above mentioned subsidiaries including turnover, profit before and after taxation are available in the statement under the heading Summarized Financials of Subsidiary Companies 2011 -12 is included in the Annual Report. The Company had invested in the above subsidiaries besides significant advances to them over the years. Being strategic long term investment and considering the respective business plans of the respective subsidiaries, no impairment is presently addressed.

The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2/2011 dated February 8, 2011 has issued directions under Section 212(8) of the Companies Act, 1956 granting general exemption from applicability of the provisions of Section 212 of the Companies Act, 1956 in relation to the Subsidiary Companies, subject to fulfillment of the conditions specified in the said circular.

The Company has availed the benefit of general exemption provided by the aforesaid circular and accordingly, the documents mentioned in Section 212(a) to (d) of the Companies Act, 1956 relating to the Company's subsidiaries are not attached to the Accounts of the Company. In terms of the said circular, your Company shall fulfill the prescribed conditions, make the requisite disclosures and further undertake that the Annual Accounts of the Subsidiary Companies and the related detailed information shall be made available to Shareholders of the Company and its Subsidiary Companies seeking such information. These documents will also be available for inspection during business hours at the Registered Office of the Company and of the respective Subsidiary Companies concerned.

Kingfisher Airlines Limited

Kingfisher Airlines Limited [KFA] has ceased to be Company's subsidiary as on February 18, 2012 consequent upon it allotting shares against Optionally Convertible Debentures. However, the Company is exposed to significant guarantees given on behalf of KFA. It is to be stated that till date no such guarantees has ultimately devolved on the Company.

The Indian airline industry and KFA in particular is currently exposed to one of the toughest operating environments and is expected to struggle with profitability pressures. One of the highest prices for Jet Fuel in the world, high tax structure, recent depreciation of the rupee, and high cost of borrowing all contribute to the challenges facing domestic aviation. The Government of India is committed to usher in fiscal measures and reforms that will make the operating environment more conducive for a sustainable business.

When these initiatives are implemented by the Government, KFA will undertake a phased and pragmatic approach to re-induction of capacity as well as further market expansion in future.

DIRECTORS

Mr. Piyush G Mankad resigned as Director of the Company with effect from February 19, 2012. The Board placed on record the valuable services rendered by Mr. Mankad during his tenure as a Director of the Company.

Mr. V K Rekhi who was appointed as Director of the Company in the casual vacancy caused by the resignation of Mr. R N Pillai with effect from August 2, 2011 vacates office at the ensuing Annual General Meeting. The Company has received a notice under Section 257 of the Companies Act, 1956 from a Member signifying his intention to propose Mr. V. K. Rekhi as a candidate for the office of the Director of the Company liable to retire by rotation.

Mr. Sidhartha V Mallya and Mr. S G Ruparel, Directors, retire by rotation and, being eligible, offer themselves for re-appointment, as Directors liable to retire by rotation.

A brief resume of the Directors proposed to be appointed/ re-appointed is given in the Annexure to the Notice.

AUDITORS AND AUDITORS' REPORT

Messrs. Vishnu Ram & Co., Chartered Accountants, retire as Auditors of the Company at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment.

With reference to observations in the Auditors Report regarding accrual of Guarantee/security commission from an Associate Company (erstwhile subsidiary), inclusion of interest from Subsidiaries and Associates, non-provision for loans & advances to certain Subsidiaries an Associate Company and for decline in value of investment in certain Subsidiaries an Associate Company, the relevant notes to the accounts comprehensively explain the management's views on such matters.

LISTING OF SHARES OF THE COMPANY

The shares of your Company are listed on Bangalore Stock Exchange Limited [Regional Exchange], The Bombay Stock Exchange Limited, Mumbai and National Stock Exchange of India Limited.

CORPORATE GOVERNANCE

A report on Corporate Governance is annexed separately as part of the report along with a Certificate of Compliance from the Statutory Auditor. Necessary requirements of obtaining certifications /declarations in terms of Clause 49 of the Listing Agreements have been complied with.

MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, Management Discussion and Analysis Report is appended and forms an integral part of the Report on Corporate Governance which is appended.

FIXED DEPOSITS

The Fixed Deposits accepted from the Public and Shareholders stood at Rs. 850.797 million as on March 31, 2012 (including an amount of Rs. 128.54 million accepted during the year under review).

A sum of Rs. 0.498 million from Public and Shareholders remained unclaimed as at March 31, 2012.

There have been no defaults in the repayment of fixed deposits during the year excepting occasional short delay for which interest had been paid along with matured deposits.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Section 205A[5] and 205C of the Companies Act, 1956, an amount of Rs. 0.167 million [Previous Year Rs. 0.367 million] being the aggregate of the Unclaimed Dividend and Deposits, remaining unclaimed and unpaid for more than 7 years, have been transferred to the Investor Education and Protection Fund.

PARTICULARS OF EMPLOYEES

The information as are required to be provided in terms of Section 217[2A] of the Companies Act, 1956 read with the Companies [Particulars of Employees] Rules, 1975 is enclosed.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars of Conservation of Energy, Technology Absorption

The Provisions of Section 217[1][e] of the Act relating to conservation of energy and technology absorption do not apply to this Company si nee it is not engaged in manufacturing activities.

Foreign Exchange Earnings and outgo

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

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217[2AA] of the Companies Act, 1956 the Board of Directors hereby state that:

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

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

(iii) proper and sufficient care have been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for prevention and detection of fraud and other irregularities.

(iv) the Annual Accounts have been prepared on a going concern basis.

GREEN INITIATIVE

Annual Report is transmitted through Emails to those identifiable members while print version of the Annual Report are posted to others. The other details are available in the Company's website www.theubgroup.com.

ACKNOWLEDGEMENT

Your Directors place on record the support received from Group Companies, shareholders, depositors, banks, financial institutions and employees.

By Order of the Board

Mumbai Dr. Vijay Mallya

August 24, 2012 Chairman


Mar 31, 2011

Dear Members,

The Directors have pleasure in presenting the 95th Annual Report of your Company together with the Audited Accounts for the year ended March 31, 2011.

FINANCIAL RESULTS

The summary of financial results of the Company for the financial year ended March 31, 2011 is as under:

(Rs. in million)

2010-2011 2009-2010

The working for the year resulted in

- Profit from Operations 720.186 419.748

Less:

- Depreciation 101.335 107.072

- Taxation 201.963 570.806

Add:

- Exceptional Income - 960.420

Profit after tax 416.888 702.290

Profit for the year 416.888 702.290

Your Directors have made the following appropriations:

- Proposed Dividend 66.819 66.819

- Tax on Proposed Dividend 11.099 11.099

- Transfer to General Reserve - -

Surplus carried to the Balance Sheet 338.970 624.372

DIVIDEND

Taking into account the results for the year and the need for resources for meeting the business needs of the Company, your Directors have recommended a dividend of Re.1 per share (10%) for the year ended March 31, 2011 which is the same as in last year.

OPERATIONS

The Company's revenues comprise of sale/lease rentals of property at UB City, Bangalore, Export Sales, Trade Mark License Fees, Dividends, Guarantee Commission and Interest on Loans and Deposits.

PROPERTY DEVELOPMENT

The Company executed a Joint Development Agreement with a Developer on April 26, 2010 for development of a luxury residential building named as "Kingfisher Towers - Residences at UB City" in the available land in UB City. The super built up area of the building would be 7,67,870 sq. ft. The super built up area falling to the share of the Company would be 4,18,388 sq. ft. The statutory approvals for construction of the building have been received and the construction has since begun. When built, this residential development will add yet another landmark to Bangalore's skyline besides augmenting revenues by sale of the residential units.

Arising from the global economic slow down, several Lessees of rental space both office and retail have re- negotiated the rentals. This has impacted the potential revenue of the Company. A re-negotiated rental package with the retail lessees is now in place.

SALE OF PROPERTY

During the year, the Company sold Commercial Space measuring 31,103.64 sq.ft. of saleable super built up commercial area in UB City.

EXPORT BUSINESS

In recognition of consistent export performance, through innovative marketing initiatives, and aggressive growth strategies in the Alcoholic Beverages category, UB Global, the Export Division of the Company was once again awarded the ‘Golden Trophy' by APEDA. The Federation of Karnataka Chambers of Commerce & Industry also honoured UB Global with the "Star Exporter Award" in the Merchant category.

The Export Division registered its highest ever profits this year, even though economic volatility in key markets of Europe and currency swings remained a major concern. High levels of domestic inflation, resulting in input cost spikes, affected the revenues of the Division. However, prudent management of foreign exchange and realigning of certain products stood the Division in good stead.

Shipment of beer soared above the million cases mark once again. Kingfisher Bohemia wines entered new markets and adds to our on-premise presence in 10 countries.

The apparel business has consistently expanded its customer base, unit realizations, volumes and profitability. During the year, a new facility in Bangalore, entirely funded out of internal accruals, commenced production of premium casual wear.

The Division continued to invest in improving production capacity in the Leather footwear manufacturing unit at Ambur, a leather industry hub in Tamil Nadu. This enabled them to undertake production of high end women's footwear aimed at European customers.

KINGFISHER AIRLINES LIMITED

Kingfisher Airlines Limited [KFA], a major subsidiary of the Company which is supported by your Company by way of guarantees and pledge of securities achieved a substantial turnaround in its fortunes towards the end of the year. It was helped in the process by agreeing a Master Debt Recast Agreement [MDRA] with its Bankers to which your Company is a signatory. The terms of the MDRA include inter-alia:

a) Conversion of part the outstanding loan into Compulsorily Convertible Preference Shares [CCPS] and part into Cumulative Redeemable Preference Shares [CRPS] redeemable at par after twelve years.

b) The remnant loans will be repayable over a nine year period including a two year moratorium and a graduated schedule over seven subsequent years.

c) Interest for the period from July 2010 to March 2011 will be converted into a term loan repayable over five years.

d) Interest rate on loans reduced to by over 300 bps.

e) Sanction of additional loan of Rs. 768 crores.

The Company's existing guarantees and pledge of securities to secure the KFA debt have been appropriately extended.

Simultaneously the Company along with Kingfisher Finvest India Limited [KFIL] a wholly owned subsidiary has converted the existing loan and preference shares aggregating to Rs. 745 crores into Compulsorily Convertible

Preference Shares [CCPS] on January 3, 2011 which was subsequently converted into equity shares on March 31, 2011 at a conversion price of Rs. 64.48 per equity share as per the formula for pricing prescribed in the SEBI Regulations. Consequent to the above conversion, the percentage of holding of the Company along with KFIL in KFA stood reduced to 52.85% (shareholding along with other subsidiaries stood at 55.57%).

STRATEGIC INVESTMENT IN APB INDIA

During the year under review, your Company through its Wholly Owned Overseas Subsidiary has acquired strategic interest by way of acquisition of 50% of the issued and paid up capital of UB Ajanta Breweries Private Limited and UB Nizam Breweries Private Limited (collectively referred to as "APB India") from Heineken International B.V., Netherlands.

DIRECTORS

Mr. R N Pillai resigned as Director of the Company with effect from August 2, 2011. The Board placed on record the valuable services rendered by Mr. Pillai during his tenure as a Director of the Company.

Mr. V K Rekhi was appointed as Director of the Company in the casual vacancy caused by the resignation of Mr. R N Pillai with effect from August 2, 2011.

Mr. Piyush G Mankad and Mr. N Srinivasan Directors, retire by rotation and, being eligible, offer themselves for re-appointment, as Directors liable to retire by rotation.

A brief resume of the Directors proposed to be re- appointed is given in the Annexure to the Notice.

AUDITORS

Messrs. Vishnu Ram & Co., Chartered Accountants, retire as Auditors of the Company at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment.

With regard to observations in the Auditors' Report on the accounts for the year ended March 31, 2011, the relevant financial notes are self explanatory and do not require further elucidation.

LISTING OF SHARES OF THE COMPANY

The shares of your Company are listed on Bangalore Stock Exchange Limited [Regional Exchange], The Bombay Stock Exchange Limited, Mumbai and National Stock Exchange of India Limited.

CORPORATE GOVERNANCE

A report on Corporate Governance is annexed separately as part of the report along with a Certificate of Compliance from the Statutory Auditor. Necessary requirements of obtaining certifications / declarations in terms of Clause 49 of the Listing Agreements have been complied with.

SUBSIDIARIES

The following are the subsidiaries of the Company:

A. Indian Subsidiary Companies

1. Bangalore Beverages Limited

2. City Properties Maintenance Company Bangalore Limited

3. Kingfisher Finvest India Limited [Formerly Kingfisher Radio Limited]

4. Kingfisher Airlines Limited [Formerly Deccan Aviation Limited)

5. Kingfisher Training and Aviation Services Limited [Formerly Kingfisher Airlines Limited]

6. Kingfisher Aviation Training Limited [Formerly Kingfisher Training Academy Limited]

7. Kingfisher Goodtimes Private Limited

8. UB Electronic Instruments Limited

9. UB Infrastructure Projects Limited

10. UB International Trading Limited

11. UB Sports Limited

12. Vitae India Spirits Limited

B. Overseas Subsidiary Companies

13. Inversiones Mirabel, S.A.

14. Mendocino Brewing Co. Inc, USA

15. Rubic Technologies Inc

16. Rigby International Corp

17. Releta Brewing Company LLC

18. UB Overseas Limited

19. UBHL [BVI] Limited

20. United Breweries of America Inc., Delaware

21. United Breweries International [UK] Limited

22. Kingfisher Beer Europe Limited (Formerly UBSN Limited)

A summary of performance of all the above mentioned subsidiaries including turnover, profit before and after taxation are available in the statement under the heading

Summarized Financials of Subsidiary Companies 2010 -11 included in the Annual Report.

The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2/2011 dated February 8, 2011 has issued directions under Section 212(8) of the Companies Act, 1956 granting general exemption from applicability of the provisions of Section 212 of the Companies Act, 1956 in relation to the Subsidiary Companies, subject to fulfillment of the conditions specified in the said circular.

The Company has availed the benefit of general exemption provided by the aforesaid circular and accordingly, the documents mentioned in Section 212(a) to (d) of the Companies Act, 1956 relating to the Company's subsidiaries are not attached to the Accounts of the Company. In terms of the said circular, your Company shall fulfill the prescribed conditions, make the requisite disclosures and further undertake that the Annual Accounts of the Subsidiary Companies and the related detailed information shall be made available to Shareholders of the Company and its Subsidiary Companies seeking such information. These documents will also be available for inspection during business hours at the Registered Office of the Company and of the respective Subsidiary Companies concerned.

MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, Management Discussion and Analysis Report is appended and forms an integral part of the Report on Corporate Governance which is appended.

FIXED DEPOSITS

The Fixed Deposits accepted from the Public and Shareholders stood at Rs.1,343.843 million as on March 31, 2011 (including an amount of Rs.62.355 million accepted during the year under review).

A sum of Rs.0.631 million from Public and Shareholders remained unclaimed as at March 31 2011.

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

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Section 205A[5] and 205C of the Companies Act, 1956, an amount of Rs.0.367 million [Previous Year Rs.0.134 million] being the aggregate of the Unclaimed Dividend and Deposits, remaining unclaimed and unpaid for more than 7 years, have been transferred to the Investor Education and Protection Fund.

PARTICULARS OF EMPLOYEES

The information as are required to be provided in terms of Section 217[2A] of the Companies Act, 1956 read with the Companies [Particulars of Employees] Rules, 1975 is enclosed.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUT GO

Particulars of Conservation of Energy, Technology Absorption

The Provisions of Section 217[1][e] of the Act relating to conservation of energy and technology absorption do not apply to this Company since it is not engaged in manufacturing activities.

Foreign Exchange Earnings and outgo

The particulars are as under:

[R in million]

Description Year ended March 31, 2011 March 31, 2010

Foreign exchange 1854.132 1888.084 earnings

Foreign exchange outgo 2075.281 1747.185

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217[2AA] of the Companies Act, 1956 the Board of Directors hereby state that:

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

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

(iii) proper and sufficient care have been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for prevention and detection of fraud and other irregularities.

(iv) the Annual Accounts have been prepared on a going concern basis.

GREEN INITIATIVE

Statutory disclosures in the print version of the Annual Report and other details are available in our website www.theubgroup.com.

ACKNOWLEDGEMENT

Your Directors place on record the support received from Group Companies, shareholders, depositors, banks, financial institutions and employees.

By Order of the Board

Mumbai Dr. Vijay Mallya

August 25, 2011 Chairman


Mar 31, 2010

The Directors have pleasure in presenting the 94th Annual Report of your Company together with the Audited Accounts for the year ended March 31, 2010.

FINANCIAL RESULTS

The summary of financial results of the Company for the financial year ended March 31, 2010 is as under:

[Rs. in million] 2009-2010 2008 - 2009

The working for the year resulted in

- Profit before Exceptional Income 419.748 595.443

- Add Exceptional Income 960.420 -

- Profit before Depreciation and Taxation 1,380.168 595.443

Less:

- Depreciation 107.072 80.799

- Taxation 570.806 106.769

Profit after tax 702.290 407.875

Profit for the year 702.290 407.875

Your Directors have made the following appropriations:

- Proposed Dividend 66.819 -

- Corporate Tax on Proposed Dividend 11.099 -

- Transfer to General Reserve - -

Surplus carried to the Balance Sheet 624.372 407.875

DIVIDEND

Taking into account the improved results for the year and also the need for resources for expanding business activities of the Company, your Directors have recommended a dividend of Re.1 per share (10%) for the year ended March 31, 2010.

OPERATIONS

The Companys revenues comprise of rentals of property at UB City, Bangalore, Export Sales, Trade Mark License Fees, Dividends, Guarantee Commission and Interest on Loans and Deposits.

PROPERTY DEVELOPMENT

A Joint Development Agreement was executed on April 26, 2010 with Prestige Estates Projects Limited [PEPL] to develop 1,93,266 sq. ft [4.44 acres] in the residential area "Brewery House" in the property bearing Municipal No.33, Vittal Mallya Road, Bangalore into a Luxury Residential Apartment Buildings with first class specifications.It is intended to develop a minimum super built up area of 500000 sq. ft. or such area as may finally be approved by the authorities and the Company will be entitled to 55% of the constructed area. The sanction of the plan is awaited. When built, this residential development will add yet another landmark to Bangalores skyline.

Reflecting the changed scenario arising from the global economic slow down since last year, several Lessees of rental space (both office and retail) have re-negotiated the rentals. This has impacted the potential revenue. A re-negotiated package worked out with the retail lessees is now in place.

SALE OF PROPERTY

During the year, the Company has sold Commercial Space measuring 26,696 sq.ft. of saleable super built up area inclusive of proportionate share in all the common areas in the Comet Block in ‘UB CITY and 7868.50 sq.ft. of undivided right, title and interest and ownership in the land in the UB City Property together with 30 covered parking spaces in basement to the developer of the property, Prestige Estates Projects Ltd.

EXPORT BUSINESS

For the eleventh consecutive year, UB Global was awarded APEDAs Golden Trophy for outstanding export performance of Alcoholic Beverages, along with the Silver Award for the Best Merchant Exporter from the Federation of Karnataka Chamber of Commerce and Industry.

Recessionary economic conditions continued to haunt UB Globals markets, with several European countries

experiencing a liquidity crisis. The gradual boom witnessed by the domestic economy only added to the woes through increased input costs. The combined effect of such environmental impediments marginally affected revenues and profitability. However, performance in the branded leather footwear and apparel export was satisfactory.

For the first time, the overseas beer shipments crossed the one million cases mark during the year. Exports of wines to South Africa, which commenced in January 2009, widened its foot-print, spreading its presence to twelve countries.

Recognizing the financial benefits accruing from owned production units, UB Global acquired a footwear manufacturing unit at Ambur, a leather industry centre in Tamil Nadu, which is currently in an expansion phase. The exports division is focusing on ascending the value- chain and will be putting up a new facility to produce high-end casual-wear apparel from the following financial year. Both production units have been entirely funded from internal accruals.

DIRECTORS

During the year, Mr. M S Kapur was appointed as an Additional Director to hold office up to the date of the next Annual General Meeting. The Company has received notice under Section 257 of the Companies Act, 1956, from a Member signifying his intention to propose Mr. M S Kapur as a candidate for the office of the Director of the Company liable to retire by rotation.

Mr. R N Pillai was re-appointed as Managing Director with effect from March 18, 2010 up to the close of business hours of August 20, 2010 without remuneration subject to approval of the Members at the ensuing Annual General Meeting. The Board wishes to place on record the valuable services rendered by Mr. Pillai during his tenure as Managing Director of the Company. Mr. R N Pillai will however continue to be a Director of the Company.

Mr. A Harish Bhat was appointed by the Board as Managing Director of the Company, without remuneration, from the close of business hours of August 20, 2010 for a period of three years or date of superannuation whichever is earlier subject to approval of the Members at the ensuing Annual General Meeting.

Mr. S G Ruparel and Mr. B S Patil, Directors, retire by rotation and, being eligible, offer themselves for re-appointment, as Directors liable to retire by rotation.

A brief resume of the Directors offering themselves for appointment /re-appointment is given in the Annexure to the Notice.

AUDITORS

Messrs. Vishnu Ram & Co., Chartered Accountants, retire as Auditors of the Company at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment.

With regard to observations in the Auditors Report on the accounts for the year ended March 31, 2010, the relevant financial notes are self explanatory and do not require further elucidation.

LISTING OF SHARES OF THE COMPANY

The shares of your Company are presently listed on Bangalore Stock Exchange Limited [Regional Exchange], The Bombay Stock Exchange Limited, Mumbai and National Stock Exchange of India Limited.

CORPORATE GOVERNANCE

A report on Corporate Governance is annexed separately as part of the report along with a Certificate of Compliance from the Statutory Auditor. Necessary requirements of obtaining certifications / declarations in terms of Clause 49 of the Listing Agreements have been complied with.

SUBSIDIARIES

During the current year, UB Sports Limited became a wholly owned subsidiary of the Company.

The following are the subsidiaries of the Company:

A. Indian Subsidiary Companies

1. Bangalore Beverages Limited

2. City Properties Maintenance Company Bangalore Limited

3. Kingfisher Finvest India Limited [Formerly Kingfisher Radio Limited]

4. Kingfisher Airlines Limited [Formerly Deccan Aviation Limited)

5. Kingfisher Training and Aviation Services Limited [Formerly Kingfisher Airlines Limited]

6. Kingfisher Aviation Training Limited [Formerly Kingfisher Training Academy Limited]

7. UB Electronic Instruments Limited

8. UB Infrastructure Projects Limited

9. UB International Trading Limited

10. Vitae India Spirits Limited

B. Overseas Subsidiary Companies

11. Inversiones Mirabel, S.A.

12. Mendocino Brewing Co. Inc, USA

13. Rubic Technologies Inc

14. Rigby International Corp

15. Releta Brewing Company LLC

16. UB Overseas Limited

17. UBHL [BVI] Limited

18 United Breweries of America Inc., Delaware

19. United Breweries International [UK] Limited

20. UBSN Limited

A summary of performance of all the above mentioned subsidiaries including turnover, profit before and after taxation are available in the statement under the heading Summarized Financials of Subsidiary Companies 2009-10 included in the Annual Report.

The Ministry of Corporate Affairs, Government of India, has granted exemption from attaching the annual accounts of the above Subsidiaries in view of the publication of consolidated financials. The Consolidated Financial Statements in the Annual Report include financial information of the Subsidiary Companies.

The Company will, however, make available the Audited Annual Accounts and related information of the Subsidiary Companies, upon request by any member of the Company. These documents will also be available for inspection during business hours at the Registered Office of the Company and at the venue of the Annual General Meeting.

MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, Management Discussion and Analysis Report is appended and forms an integral part of the Report on Corporate Governance which is appended.

FIXED DEPOSITS

The Company started accepting fresh deposits during the year. The response to the Fixed Deposit Scheme was quite good. Fixed Deposits from the Public and Shareholders stood at Rs.1349.024 million as on March 31, 2010.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Section 205A[5] and 205C of the Companies Act, 1956, an amount of Rs.0.134 million [Previous Year Rs.1.129 million] being the aggregate of the Unclaimed Dividend and Deposits, remaining unclaimed and unpaid for more than 7 years, have been transferred to the Investor Education and Protection Fund.

PARTICULARS OF EMPLOYEES

The information as are required to be provided in terms of Section 217[2A] of the Companies Act, 1956 read with the Companies [Particulars of Employees] Rules, 1975 is enclosed.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUT GO

Particulars of Conservation of Energy, Technology Absorption

The Provisions of Section 217[1][e] of the Act relating to conservation of energy and technology absorption do not apply to this Company since it is not engaged in manufacturing activities.

Foreign Exchange Earnings and outgo

The particulars are as under:

[Rs. in million]

Year ended Description March 31, 2010 March 31, 2009

Foreign exchange earnings 1888.084 1947.960

Foreign exchange outgo 1747.185 152.513

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217[2AA] of the Companies Act, 1956 the Board of Directors hereby state that:

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

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

(iii) proper and sufficient care have been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for prevention and detection of fraud and other irregularities.

(iv) the Annual Accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENT

Your Directors place on record the support received from Group Companies, shareholders, depositors, banks, financial institutions and employees.

By Order of the Board

Bangalore Dr. Vijay Mallya

August 20, 2010 Chairman

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