SKOLBreweries LTD Annual Reports

SKOL Breweries Limited
Annual Report 2008
Managing Director Speaks

prospects of the Industry and the Group. This time the conference was held in India keeping in mind the growth potential of the Indian beer market and the way the Indian economy has been performing. The holding of the Conference in India shows the commitment and confidence that the SABMiller Group has in India, in the management team here and in Indias growth story. I am happy to report that the year 2007-2008 has been a good year for the Company. The Company has made a profit of Rs 34.4 Crores. The net turnover of the Company has increased from Rs. 897.59 crores to Rs. 1086.67 crores resulting in a growth of 25%. We are happy to say that the net turnover has crossed Rs.1000 crores.
Our core brands are...

Haywards 5000 Launched in 1983, Haywards 5000 is synonymous with strong beer and is one of the largest selling beers in India. The hallmark of an original and authentic strong beer, it perfectly combines strength and quality to meet the high expectations of todays demanding consumers. Haywards 5000 has recorded a growth of 13%. The growth could have been much higher but for our inability to participate fully in Tamil Nadu. During the year under review the Brand has signed up Bollywood superstars Mr. Sanjay Dutt and Mr. Sunil Shetty as brand ambassadors. The macho image of the stars goes well with the strong image of the Brand. This association will take the Brand to new heights. Royal Challenge Launched in the year 1983, Royal Challenge Premium Lager is the second largest selling mild beer in India. The brand positioning is that this is the beer for the discerning consumer who has the confidence to make a choice based on superior taste and knowledge and stand apart rather than be part of a crowd. It offers a difference with an edge. Besides its international class packaging, premium image and path breaking advertising, what sets the brand apart is a distinctly smooth and easy flowing taste. Royal Challenge has grown by 12.8%. In Andhra Pradesh, the largest beer market in the Country, the brand is the market leader with a mild beer segment share of 52.8% and has grown by 20.9%. Knockout Launched in 1984, Knock Out has clearly carved for itself a distinctive segment The Strongest Beer and is the 3rd largest selling strong beer brand in the country. It has continued to perform well and has grown at 20.5% over the pervious year. The brand has strong presence in most southern and central states in India. The brand has Kannada action hero Mr. Darshan as its ambassador.
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Sales in Rs. Crores 1200
Dear Shareholders,
I extend my warm greetings to all of you and have the pleasure of presenting the Annual Report for the year 2007-08. The Indian economy is generally on a roll and the GDP growth rate has been at 8.7% for the year ended March 2008. This is commendable as the last three years growth rate has been around 9%. The only concern now is the slow rate of agricultural growth, a marginal slow down in manufacturing sector and the biggest challenge being control of inflation primarily led by galloping oil prices. The consumer confidence and raising income levels help in accelerating the momentum in the beer industry. Increasing urbanization and development of a large middle class is bringing in new consumers, with new attitudes and behaviors towards beer. With the Indian economy doing so well everyone is looking at India, SABMiller is no exception. Every three years the SABMiller group has a global leadership conference in which the top 300 executives meet to discuss the future
1000 897 800 611 501 400
1086
600
200
2005
2006 Years
2007
2008
The industry has grown at 14.3% and our growth is 15.8%, which is well above the Industrys average. This growth has, however, been limited by production capacity which is being addressed. Your Company is taking steps to increase its manufacturing capacity not only to meet the present demand but also the future demand.
Fosters Completed one year after coming into the SABMiller stable. The Brand had not been performing up to its potential before it was taken over by us on account of production and distribution constraints. We are happy to state that the decline which the brand was facing has not only been stemmed but the brand has grown over 45%. The Brand is now available all over India. Foster's is a clear leader in the premium segment both in volume and image terms. It leads the development of what we call the worthmore segment in India. For the year ended March 08 we had an all India market share of 34.8%. The Company is in the forefront of new product development and firmly believes that in order to grow the market it has to continuously innovate. As a part of this innovation the Company proposes to launch Indus Pride in the Mild segment which will be India's first 100% maltbased Beer alongwith a 100% malt-based beverage. The beer has been specially developed in accordance with research findings to suit the Indian tastes. Your Company has introduced its global brand Peroni in Mumbai last year and the same has also been launched in New Delhi and Bangalore. Peroni Nastro Azzurro is an intensely crisp, dry and refreshing lager, with a clean character & clarity. It is expertly brewed in Italy to the original recipe since 1963 and has an unmistakable touch of Italian style. This premium beer uses the finest variety of spring-planted barley and the highest quality maize, malts and hops. It has been very well received in the market. In Mumbai it already has 35% market share of the imported beer market. The Company is evaluating the market to see which other international brands it can launch in India. During the last couple of years five major international brewers have entered into the Indian Beer market. With Heineken likely to partner UB the market dynamics is going to undergo a sea change. With increased competition the market is only expected to grow. Your Company in order to take the business to the next level of growth has restructured itself as an organization in order to drive profitable growth. The new structure will make the Company
more responsive and in tune with market conditions. On the manufacturing front there has been an all round improvement in the Company. Water usage per HL is down 14%, Power Consumption is down 6%. This is in addition to the saving of 14% in water and 13% in power last year. These actions continue to enhance our competitiveness in the market. De-regulation of the market remains the biggest challenge for the Industry. There has been some progress but a lot needs to be done. Tamil Nadu opening its market for imports from other states is good news, considering that it is the Second biggest beer market in India. But the import duty fees being charged by Tamil Nadu are on the higher side. Your Company along with AIBA is in the forefront of lobbying with the various state governments for the rationalization in policies across states in this Industry. Your Company believes in sustainable growth. Water is very important to sustaining of life and a critical raw material for our industry. Your Company believes in saving water and has adopted the 5R' philosophy at its manufacturing locations. Namely, Replenish, Reduce, Recycle, Re-use and Redistribute. Your Company has tied up with CII and other stakeholders to identify opportunities to manage watersheds and harvesting of rain water to augment the reserves that we have. All the new plants we are
putting up will have the latest technology for conserving water and we will benchmark our water usage to global standards. Even in our Saanjhi Unnati programme we are looking at ways to grow barley using less water. In terms of our Corporate Social Responsibility, an agreement has been signed with the ILO for promoting HIV/AIDS awareness. The Companys Saanjhi Unnati Programme for development of Barley cultivation in India has been progressing very well and a large number of farmers particularly in Rajasthan have been benefited. We believe that the Saanjhi Unnati programme will in the long run help us to be self sufficient in Barley and at the same time will have a positive impact on the lives of the farmers, thereby being a win-win situation for both. As India is one of the fastest growing markets, your Company will continue to receive strong regional and global backing from SABMiller, and access to its intellectual, technology, brands and human capital. I wish to thank each one of you for your support. We look forward to an exciting year ahead of us. Cheers Jean - Marc Delpon de Vaux

SKOL currently manages nine breweries across India. These breweries share a common basic function; to brew beer to be sold to our customers. Beer is a beverage produced by the fermentation of cereal sugars by yeast. The brewing process is very similar at all of our breweries to ensure that are brands are produced consistently across the country. Throughout the year our breweries focused on making sure our processes were consistent across the country. In addition, much effort has been made to increase our capability by enhancing the competence levels of our workers, installing new plant and equipment and ensuring that all our breweries run smoothly and according to their design. All this has been done to ensure that our customers have ready access to our brands, at the right price and in perfect condition. During the year our breweries faced some common issues which were dealt with effectively. These include variable quality of raw materials (especially malt and glass bottles), easing environmental stress by reducing power and water usage rates and improving the quality of our brewing and packaging processes to provide our customers with the best beer possible. In addition to brewing beer and consistently meeting market demand, management and staff at all our breweries demonstrated commitment to serving their local communities, protecting the environment and assuring the safety and good health of everybody working in or visiting our facilities. During the year SKOL introduced the concept of Campus Breweries. This concept is an effective method of developing and communicating learnings from one brewery to others. This enables other breweries in the group to learn from each other and develop faster. Campus breweries have been set up at our larger breweries to perform specific projects, which are of benefit to all the other breweries in the group. The driving force for this is a manufacturing excellence programme (MEP), which is the tool for continuous improvement at all breweries. The MEP tree symbol is displayed at all breweries and reminds everyone what we are trying to achieve. Central Distilleries & Breweries (CDB),Uttar Pradesh Brewery capacity was enhanced by the commissioning of a new warehouse and
THE BREWERY PROCESS

Barley Malt
MILLING
MASHING
LAUTERING
BOILING WHIRLPOOLING
FILTERING
MATURING
FERMENTING
COOLING
PACKAGING
DISTRIBUTION
Here are some highlights from our breweries:
upgradation of brewing and packaging plants. In January 2008 Fosters Lager was brewed here for the first time. Rochees Breweries (RB), Rajasthan Management also focused on workplace The brewery motto, Solid 10 in 10, safety and crisis management. A training reflects the teams commitment to achieving the best tasting beer. Developing plan was implemented to improve workplace competence even further. staff capability was a priority in 2007/8. RBL is the Campus Brewery focusing on A major clean up operation and a medical hygiene and cleanliness. camp were held to help improve quality of life in the local community. Significant investment has been made enabling the successful commissioning of a new can packaging line, effluent and water treatment plants, filtration plant and yeast drier. Thus the overall capacity of the brewery was significantly enhanced. In the community the team facilitated plantation of 900 trees, organized blood donation camp, HIV awareness workshops, health camps and polio vaccinations drives. Haryana Breweries (HB), Haryana Construction of a new 1 million hl pa brewery on the current site commenced. The existing brewery maintained very high quality standards. Pals (PB), Maharashtra The major effort was to improve quality as the Campus Brewery focusing on best practice in bright beer production. A competition was held for brewery staff to design the brewery motto. The winner was SONERI SOMRAS SONERI SANDHI. A training session was held to certify 27 advanced tasters into the SABMiller Global (Beer) Tasting System. Delegates were from all over India. East Coast Breweries (ECB), Orissa The brewery stepped forward in terms of quality and safety management.
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Environment and safety awareness sessions were held in the local community. The ECB team also drove HIV awareness and set up a health camp for the people of Cuttack. Employees were encouraged to enjoy themselves at work (puja, picnics & prizes). An employee competition was held to decide on the brewery safety management statement. ECB was nominated by the labour commissioner to receive the award for the best factory with the Employer Employee Relationship Charminar Breweries (CB), Andhra Pradesh Managed by SKOL since 2003, CBL is our largest brewery. Work also commenced to increase that capacity a further 50% (including a new 21,000 bottles per hour packaging line, draft beer unit, effluent/water treatment plants, solid fuel boiler). The brewery motto is winning & working in teams. There has been emphasis on teambuilding and skills enhancement. Major strides in 2007/8 include implementation of a new maintenance management system and a major reduction in power and water usage ratios (the best in SABMiller India). CBL was runner up in the SABMiller Africa and Asia Best Brewery competition. CBL is the Campus Brewery for both yeast management and bottle washing. The team has been very active in the community; health care programmes, disease awareness programmes (AIDS, TB, Polio), providing drinking water and street lighting in Shivampet village and helping to develop the local school. Mysore Breweries (MB), Karnataka A new 15,000 units per hour canning line was commissioned. MBL is the Campus Brewery for the improvement of bottle labelling and outer packaging appearance. There has been much focus on environment and safety management, both in the brewery and the local community. During the annual Safety Awareness Week employees were given training on managing safety in the home. Families were involved and industrial theatre was used as a communication tool.
All employees were given basic fire-fighting and first aid training. Several workers with more than 25 years service each had their achievement recognized at a ceremony in February. Malabar Breweries (MB), Kerala Brewery capacity has been increased by upgrading cellars tanks and raw materials storage facilities. In August the brewery was awarded the SABMiller India Best Brewery award.
SICA Breweries (SB), Puducherry A major expansion took place to increase capacity above 300,000 hl pa. Extensive upgrades took place in Brewing, Packaging and Utilities supply areas. Management focused on workplace safety and environmental management improvement.
Board of Directors Mr. Ari Mervis - Chairman Mr. Jonathan Andrew Kirby Ms. Sue Clark Mr. Richard (Pete) L Lloyd Ms. Maya Makanjee - up to 23.06.2008 Mr. T.S.R. Subramanian - from 23.06.2008 Mr. Jean-Marc Delpon de Vaux - Managing Director Statutory Auditors BSR & Co., Chartered Accountants Maruthi Info-Tech Centre, 11-12/1, Inner Ring Road, Koramangala, Bangalore 560 071 Bankers Standard Chartered Bank ABN Amro Bank The Hongkong & Shanghai Banking Corporation Societe Generale ICICI Bank Limited
Registered Office No.1, Mahal Industrial Estate, Mahakali Road, Andheri (East), Mumbai 400 093 Corporate Office Jalahalli Camp Road, Yeshwanthpur, Bangalore-560 022 Audit Committee Mr. Jonathan Andrew Kirby - Chairman Mr. Ari Mervis Ms. Maya Makanjee - up to 23.06.2008 Mr. Richard (Pete) L Lloyd - from 23.06.2008
Registrar & Share Transfer Agent Share Transfer Sharepro Services (India) Pvt Ltd Satam Estate, 3rd Floor, Above Bank of Baroda, Cardinal Gracious Road, Chakala, Andheri (E), Mumbai 400 099
Haryana CDB RB Rajasthan HB Uttar Pradesh
Orissa PALS Maharashtra Andhra Pradesh Karnataka MB CB
ECB
HB: Haryana Breweries CDB: Central Distilleries & Breweries RB: Rochees Breweries PALS: PALS ECB: East Coast Breweries CB: Charminar Breweries MB: Mysore Breweries Malabar: Malabar Breweries SICA: SICA Breweries
Malabar Pondicherry
Kerala
SICA
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Notice
NOTICE is hereby given that the 19th Annual General Meeting of the members of the Company will be held at M.C. Ghia Hall, Bhogilal Hargovindas Building, 2nd floor, 18/20, K. Dubash Marg, Behind Prince of Wales Museum, Kala Ghoda, Mumbai 400 001 on Wednesday, the 10th September, 2008 at 3.00 p.m. to transact the following business: Ordinary Business: 01. To receive, consider and adopt the Audited Balance Sheet as at 31st March, 2008 and the Profit & Loss Account for the year ended on that date and the Report of the Directors and Auditors thereon. 02. To appoint a Director in place of Mr. Jonathan Andrew Kirby, who retires by rotation at this meeting and being eligible, offers himself for re-appointment. 03. RESOLVED THAT M/s. BSR & Co., RESOLVED THAT Chartered Accountants, who retire at the conclusion of this Annual General Meeting be and are hereby appointed as Statutory Auditors of the Company till the next Annual General Meeting at a remuneration to be fixed by the Board of Directors and billed progressively. Special Business: 04. To consider appointment of Mr. Ari Mervis as Director of the Company. To consider and if thought fit, to pass with or without modification, the following Resolution as an Ordinary Resolution: RESOLVED THAT RESOLVED THAT Mr. Ari Mervis, who in terms of Section 260 of the Companies Act, 1956 holds office till the date of this Annual General Meeting, and in respect of whom a notice has been received from a Member under Section 257 of the said Act, be and is hereby appointed a Director of the Company liable to retire by rotation. 05. To consider appointment of Mr. T.S.R. Subramanian as Director of the Company. To consider and if thought fit, to pass with or without modification, the following Resolution as an Ordinary Resolution: RESOLVED THAT RESOLVED THAT Mr. T.S.R. Subramanian, who in terms of Section 260 of the Companies Act, 1956 holds office till the date of this Annual General Meeting, and in respect of whom a notice has been received from a Member under Section 257 of the said Act, be and is hereby appointed a Director of the Company liable to retire by rotation. 06. To consider revision of remuneration of Mr. Jean-Marc Delpon de Vaux, Managing Director of the Company. To consider and if thought fit, to pass, with or without modification/s, the following Resolution as a Special Resolution: RESOLVED THAT RESOLVED THAT pursuant to the provisions of Sections 198, 269, 309 and 310 and other applicable provisions, if any, of the Companies Act, 1956 (hereinafter called the Act) read with Schedule XIII to the said Act as amended up to date or any statutory modification or reenactment thereof and subject to the approval of shareholders and Central Government, the remuneration payable to Mr. JeanMarc Delpon de Vaux is being increased as set out below with liberty to the Directors to alter and vary the terms and conditions of the remuneration as the case may be as suggested by the shareholders/ Central Government and agreed to between the Directors and Mr. JeanMarc Delpon de Vaux or as may be varied in the General Meeting. I. (a) Salary : Up to Rs. 25,00,000/- per month The annual increments will be decided by the Board of Directors depending upon the profitability of the Company and other relevant factors. All other terms and conditions as approved by the Central Government and members will remain same. RESOLVED FURTHER THAT RESOLVED FURTHER THAT in the event of loss or absence or inadequacy of profits during any financial year, the above remuneration shall be treated as minimum remuneration payable to Mr. Jean-Marc Delpon de Vaux. 07. To consider increase in Borrowing Powers. To consider and if thought fit, to pass, with or without modification/s, the following Resolution as a Special Resolution: RESOLVED THAT RESOLVED THAT pursuant to Section 293(1)(d) of the Companies Act, 1956 and other enabling provisions, if any, of the said Act, consent be and is hereby accorded to the Board of Directors of the Company for borrowing any sum or sums of money from time to time from one or more body corporate, banks or financial institutions or the public by way of cash, credit advances, deposits or other loans whether secured or unsecured by mortgage, charge, hypothecation or pledge of the Companys assets and properties whether movables and/or immovables or stock-in-trade (including book debts, bills, raw materials, stores and spare parts and components in stock or in transit) work-in-progress and debts and advances notwithstanding that the sum or sums so borrowed together with the moneys, if any, already borrowed by the Company (apart from the temporary loans obtained from the Companys
bankers in the ordinary course of business) may exceed in the aggregate paid-up capital of the Company and its free reserves which have not been set part for any specific purpose but so that the total amount up to which the moneys may be so borrowed shall not at any one time exceed Rs.1500 crores. 08. To consider an increase in the Authorized Share Capital of the Company: To consider and if thought fit, to pass, with or without modification/s, the following Resolution as a Special Resolution. RESOLVED THAT RESOLVED THAT in accordance with the provisions of Section 94 and other applicable provisions of the Companies Act, 1956 (including any statutory modification(s) or reenactment thereof, for the time being in force) the existing Authorised Share Capital of the Company be and is hereby increased from Rs. 2,500,000,000 (Rupees Two hundred fifty crores only) divided into 250,000,000 Equity shares of Rs.10/- (Rupees ten only) each to Rs. 3,000,000,000 (Rupees Three hundred crores only) divided into 300,000,000 Equity shares of Rs.10/- (Rupees Ten only) each and the Memorandum of Association of the Company be altered accordingly. RESOLVED FURTHER THAT RESOLVED FURTHER THAT the existing Clause V of the Memorandum of Association be and is hereby substituted by the following Clause V:
V .
The Authorised Share Capital of the Company is Rs. 3,000,000,000 (Rupees Three hundred crores only) divided into 300,000,000 Equity shares of Rs.10/- each. The Company has power, from time to time, to increase or reduce its capital and divide the shares in the capital for the time being into several classes and to attach thereto respectively such preferential, deferred, qualified or other special rights, privileges conditions or restrictions as may be determined by or in accordance with the Articles of Association of the Company and to vary, modify or abrogate any such right, privilege or condition or restrictions in such manner as may for the time being be permitted by the Articles of Association of the Company or the legislative provisions for the time being in force in that behalf.
SABMiller Asia B.V. 50,000,000 Equity shares of the Company of the face value of Rs.10/- each at a premium of Rs. 46/- per share. RESOLVED FURTHER THAT RESOLVED FURTHER THAT such new equity shares shall rank pari passu with the existing equity shares of the Company, except that they shall not rank for dividend, if any, declared or paid in respect of any financial year of the Company prior to the financial year in which they are allotted and shall rank for dividend pari passu from the date of their allotment in respect of the financial year in which they are allotted. RESOLVED FURTHER THAT RESOLVED FURTHER THAT Mr. Jean-Marc Delpon de Vaux and Mr. Kevin Heydenrych be and are hereby jointly and/or severally authorized to negotiate, execute and deliver any agreement, letter, deed or document or any amendments or modifications thereto in connection with the aforesaid preferential issue of shares in favour of SABMiller Asia B.V. and to sign, execute, deliver and/or file all relevant forms, filings, reports, documents, etc., required by any applicable regulations including with any regulatory authorities or an authorized dealer in terms of Indian exchange control regulations. BY ORDER OF THE BOARD Pramod S M Company Secretary Date : 23rd June, 2008 Place : Bangalore
09. To consider a preferential issue of shares. To consider and if thought fit, to pass, with or without modification/s, the following Resolution as a Special Resolution. RESOLVED THAT RESOLVED THAT , pursuant to the provisions of Section 81(1A) and other applicable provisions (if any) of the Companies Act, 1956, the Unlisted Public Companies (Preferential Allotment) Rules, 2003 and the relevant provisions of the Memorandum and Articles of Association of the Company, the consent of the Company be and is hereby accorded to offer, issue and/ or allot on preferential basis to
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NOTES: 01. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote on a poll in his/her stead. A proxy need not be a member of the Company. Proxies in order to be effective must be deposited at the registered office of the Company not less than forty-eight hours before the meeting. A blank proxy form is enclosed. 02. The Register of Members and the Share Transfer Books of the Company will remain closed from 1st September, 2008 to 10th September, 2008 [both days inclusive]. 03. For convenience of members an attendance slip is also annexed. Members are requested to affix their signature at the space provided therefore and handover the same at the place of meeting. The proxy of a member should mark on the attendance slip as Proxy. Members are also requested to bring their copies of the Annual Report to the venue of the meeting. 04. All queries relating to non-receipt of share certificates after transfer/ transmission/ dematerialization/ rematerialisation, mandates, change of address, nomination, etc., may be sent to the Registrar & Share Transfer Agents, M/s. Sharepro Services (India) Pvt. Ltd, Satam Estate, 3rd Floor, Above Bank of Baroda, Cardinal Gracious Road, Chakala, Andheri (East), Mumbai 400 099, Tel: (022) 67720334 / 67720300, Fax: (022) 28375646, Email sharepro@vsnl.com. 05. Pursuant to Section 205C of the Companies Act, 1956 all unclaimed dividends up to the Financial Year 1999-2000 have been transferred to the Investor Education and Protection Fund. Members of the erstwhile Mysore Breweries Limited, Pals Distilleries Limited, Charminar Breweries Limited and SICA Breweries Limited who have not yet claimed their dividend for the financial year 2000-2001 and thereafter, may claim from the Company before the same is transferred to the Fund. It may be noted that no claims shall lie against the Company or the Fund in respect of individual amounts which were 2.
unclaimed and unpaid for a period of 7 years and transferred to the Fund and no payment shall be made in respect of any such claim. Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956. Item Nos. 2, 4, 5, 6, 7, 8 and 9 A brief resume of the Directors offering themselves for re-election is given below: Mr. Jonathan Andrew Kirby is a B. Accounting (University of the Witwatersrand), CA (SA) and has 21 years of rich experience. He is the CFO of SABMiller Africa. Except for Mr. Jonathan Andrew Kirby, no other Director is interested in the aforesaid Resolution. 4. Mr. Ari Mervis is a B.Com with major in Economics, Marketing and Commercial Law. He is the Managing Director of SABMiller Asia. He has held a number of senior positions in the SABMiller Group. Except for Mr. Ari Mervis, no other Director is interested in the aforesaid Resolution.
5.
Mr. T.S.R. Subramanian is a Diploma in Mathematics from Imperial College, London and has done his Masters in Public Administration from Harvard University. He is an Ex IAS officer who held various senior positions in the Government including the post of Cabinet Secretary to the Government of India. Except for Mr. T.S.R. Subramanian, no other Director is interested in the aforesaid Resolution.
6.
Mr. Jean-Marc Delpon de Vaux was appointed as Managing Director of the Company w.e.f. 1st August, 2006 at the Board Meeting held on 17th July, 2006. His appointment and remuneration payable has been approved by the members and the Central Government vide its letter dated 18th June, 2007. The Remuneration Committee, subject to the approval of the Members and the Central Government has approved the increase in remuneration of Mr. Jean-Marc Delpon de Vaux. Accordingly resolution for increase in remuneration of Mr. Jean-Marc Delpon de Vaux as Managing Director is placed before you for your approval. The information as required under Schedule XIII Part II, Section II 1 (C) is given below:
I. General Information: 1. Nature of Industry 2. Date or expected date of commencement of commercial production 3. In case of new companies, expected date of commencement of activities as per project approved by financial institutions appearing in the prospectus. 4. Financial performance based on given indicators Turnover Profit before tax 5. Export performance and net foreign exchange collaborations 6. Foreign investments or collaborators, if any The Company is engaged in manufacture and sale of Beer The Company is an existing Company
N.A.
31-3-09 2732 (41) 31-3-06 0.06 Nil
31-3-10 3127 20 31-3-07 Nil
31-3-11 Rs.Crores 3700 29 31-3-08 Rs.Crores 7
Notice
II. Information about the appointee: 1. Background details Mr. Jean-Marc Delpon de Vaux worked for Unilever for 25 years where he held numerous senior marketing and general management positions, including Chairman and CEO of the Maghreb region. 2. Past remuneration 2006-07 Rs.1,49,74,236 3. 4. Recognition or awards Job profile and his suitability NA With the vast and rich experience Mr. Jean-Marc Delpon de Vaux is a suitable candidate to look after the entire Indian beer operations. Under his tenure as Managing Director the Turnover of the Company has increased by 28%. As set out in the resolution Mr. Jean-Marc Delpon de Vaux represents SABMiller which is among the leading breweries of the world and his compensation is determined in accordance with the prevalent system in the SABMiller Group and in keeping with persons of his qualification, experience. No pecuniary relationship Directly or Indirectly with the Company or any managerial personnel 2007-08 2,24,34,669 7. IV. IV. Disclosures: As the Company is not a listed company, disclosure on Corporate Governance is not mandatory and hence not given. None of the Directors are interested in the said resolution except Mr. Jean-Marc Delpon de Vaux to the extent of remuneration proposed. At the Annual General Meeting of the Company held on 29th November 2005, the Members empowered the Board of Directors under Section 293(1)(d) of the Companies Act, 1956 to borrow monies for the business purposes of the Company up to a limit of Rs.1000 Crores. Keeping in view the Companys business requirements and its investment and growth plans, it is considered desirable to increase the said borrowing limits to Rs.1500 Crores as outlined in the resolution. In terms of the provisions of Section 293 (1) (d) of the Companies Act, 1956, approval of the members is being accordingly sought through resolution under item no.7 for such increase in limits. 8. The Company requires to be capitalized to enable it to pay down some of its debts and for other corporate purposes. The Company proposes to issue and allot, on preferential basis 50000000 equity shares of face value Rs. 10/- each to SABMiller Asia B.V. at a premium of Rs. 46/- per share. This will require the Company to raise its Authorized Share Capital. The Special Resolution set out at item no. 8 in the notice is intended to obtain such approval and the Board recommends the resolution for your approval. None of the Directors of the Company are deemed to be interested in the said resolution. The Board recommends the adoption of the resolution. 9. As stated above, the Company proposes to issue and allot, on a preferential basis 50000000 equity shares of face value Rs. 10/- each to SABMiller Asia B.V. at a premium of Rs. 46/- per share (based on the valuation report) which requires
5. 6.
Remuneration proposed Comparative remuneration profile with respect to industry size of the Company, profile of the position and person (in case of expatriates the relevant details would be w.r.t. the country of his origin) Pecuniary relationship directly or indirectly with the Company, or relationship with the managerial personnel, if any.
7.
III. Other information:
1.
Reasons of loss or inadequate profits
The cost of Malt and fuel the main raw material has gone up during the year by more than 100%. Higher Depreciation and interest costs The Company has started building long term collaborative relationships with farming communities through programmes such as Saanjhi Unnati. To bring down the interest cost equity infusion is being considered.
2.
Steps taken or proposed to be taken for improvement
3.
Expected increase in productivity and profits in measurable terms.
31-3-09
31-3-10
31-3-11 Rs.Crores
Turnover Profit before tax
2732 (41)
3127 20
3700 29
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Notice
shareholders approval under section 81 (1A) of the Companies Act, 1956. Information as required under Unlisted Public Companies (Preferential Allotment) Rules, 2003 is given below. Shares of the Company to SABMiller Asia B.V. for cash and to utilize the money received hereunder for the purpose of paying down some of its debts and for other corporate purposes.
d.
a.
The price of price band at which allotment is proposed: The Equity Shares of Rs.10/- each will be allotted at a premium of Rs.46/- per Share. The relevant date on the basis of which price has been arrived at: 31st March, 2008 The objects of the issue through preferential offer: To issue Equity
The class or classes of persons to whom the allotment is proposed to be made: The allotment will be made to SABMiller Asia B.V. Intention of promoters/directors/key management persons to subscribe to the offer: SABMiller Asia B.V. has signified its intention of subscribing to the issue. Shareholding pattern of promoters and others classes of shares before and after the offer: The shareholding
Post Issue
e.
b.
c.
f.
Category No of Shares A Promoter omoter Promoters holding Sub total B a b c Non-Promoters Holding Institutional Investors Mutual Funds and UTI Banks, Insurance co, FI FII Sub total Others a b c d Private Corporate Bodies Indian public NRI Any other Sub total Total 73168 1616291 103565 1793024 231183745 2240 4008 6248 229384473 229384473
Pre Issue % 99.22 99.22
No of Shares 279384473 279384473
% 99.38 99.38
0.00 0.00 0.00
2240 4008 6248
0.00 0.00 0.00
0.03 0.70 0.04 0.78 100.00
73168 1616291 103565 1739533 281130254
0.02 0.57 0.02 0.62 100.00
pattern of the Company before and after the issue is set out below
g.
Proposed time within which the allotment shall be completed: within one year from the date of the AGM Whether a change in control is intended or expected: There will be no change in control of the Company after the preferential issue.
None of the Directors of the Company are deemed to be interested in the said resolution. The Board recommends the adoption of the resolution BY ORDER OF THE BOARD Pramod S M Company Secretary Date : 23rd June, 2008 Place : Bangalore
h.
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Directors Report
Dear Members, Your Directors have pleasure in submitting their report and the Statement of accounts for the year ended 31st March 2008. RESULTS FINANCIAL RESULTS Financial Year 2007-2008 Gross Revenue Profit before taxation Less: Provision for taxation Profit after taxation Surplus/(deficit) brought forward from previous year Balance carried to Balance Sheet OPERATIONS OPERATIONS The performance of your Company during the year 2007-08 has considerably improved. The turnover increased by 28% over the previous year to Rs.1741 Crores from Rs.1348 Crores. The net profit of the Company is lower on account of deferred taxes. The focus areas of your Company on the way forward are sustainability and long term growth. A sum of Rs.281 Crores has been invested in upgrading existing plant and machinery and in developing capacity. Your Company is putting up a state-ofthe-art one million hecto-litre capacity brown field project in the State of Haryana, which will be operational by the end of this year. There has also been continuous upgradation and implementation of best practices at all units to increase productivity and bring down the cost of production. New can lines have been put in place in Mysore Breweries and Rochees Breweries and this has enabled the Company to meet the growing demand for cans. Your Company has been requesting for a price increase from the Andhra Pradesh Beverages Corporation Limited to partly offset the increase in the cost of raw materials and other inputs. However, even after protracted requests and negotiations your Company has been unable to obtain such an increase and this led to a stand off which resulted in temporary suspension of operations at Charminar Breweries for 38 days during the peak season. The plant has since been re-opened on the assurance from the Andhra Pradesh Beverages 1741.69 40.85 6.37 34.48 129.69 95.21 (Rupees in Crores) Financial Year 2006-2007 1348.54 45.33 5.13 40.19 169.89 129.69
Corporation Limited that they would look into this issue and provide resolution. During the previous year your Company acquired the Fosters brand and trade mark in India for a consideration. An application for an advance tax ruling has been made by Fosters Australia seeking clarification on the taxability of this transaction in India. The advance ruling authorities have held that the transaction is taxable as the asset is situated in India. Your Company is sufficiently covered by Indemnity for any liability that may arise to your Company on account of any tax claim on this account. Your Board enjoys the unqualified support of all its financiers whose confidence in the future of your Company is evidenced by the fact that all borrowings have been executed without the bankers taking any charges over any of your Companys assets. As such the borrowings are short term and renewed from year to year. Your Board considers that bottles used to deliver the Companys products to the market are in substance returnable containers and that this economic reality should be reflected in the way the Company accounts for its containers. For this reason bottles are accounted for on a returnable basis, in accordance with previous years and Indian accounting practices. DIVIDEND In order to conserve cash for expansion and modernisation the Directors do not recommend any dividend on the equity capital.
VALUES The five core values of the Company are as follows: 1. Our people are our enduring advantage: This value has been at the core of the Companies approach towards its employees. The Indian growth story has all the ingredients to drive the SKOL growth story. 28% of India lives in urban areas and this is equivalent to the size of the US population. The rural population is taking on more and more urban characteristics everyday. Today the youth drives India and will continue to do so in the foreseeable future. Even in 2015, 50% of the Indian population will be under 30 years. According to a survey on GDP Growth conducted by Global Insight, Lead Indicators of Inflection are visible in India. This presents a tremendous opportunity for SKOL, especially in light of the fact that per capita beer consumption in India is only one litre compared to the global average of 22 litres. But this growth also means a huge tussle for the right human resources, both in terms of hiring and retaining talent. This has become a make or break factor for many organizations. We at SKOL are using various tools like Market Surveys, Exit Interview Analysis, Focus Group Discussions to get insights into the Indian Talent Market and Data from prospective hires and have in place strategies to address both hard and soft issues. 2. Accountability is clear and personal: personal There are clear defined accountability and goals laid down for all Directors and employees. The goals are clear, quantifiable and measurable. The performance of every employee is closely monitored and measured in accordance with their goals and it is their responsibility to accomplish them. On account of this value, there is a desire in each and every employee to achieve and exceed goals. Your Company has introduced various positive measures to drive growth through clear accountability by introducing STI method of
computation for determining the quantum of ex-gratia payment made at the end of the year in accordance with its Performance Management System. Moreover, the achievement of these goals consistently creates a growth path for executives in your organization. 3. We work and win in teams: This is not a corollary to the above value, but in fact a supporting value which highlights the importance of handshake zones where employees need to combine to help others to achieve goals. The overlapping areas are clearly identified to ensure there are no conflicts between goals of team members and overall objectives of the Company. 4. We understand and respect our consumers: customers and consumers Your Company adopts best practices in dealing with consumers and customers. A dedicated Customer Complaint Cell has been set up and all communications are monitored and relevant action is initiated. The Company has developed software to bring focus into feedback from customers with a view to betterment of product quality and service. This focus on the customer is intended to be used as a major differentiator and a competitive advantage for the Company. Moreover, your Company believes in conducting extensive market research both for monitoring existing products as well as for introduction of new products in the market with a view to satisfying the needs of the customers and consumers. Your Company has introduced new products to meet the customers aspirational values by launching Haywards Black and Peroni. 5. Our reputation is indivisible: Towards the end the Company not only internally but also externally focuses on large number of areas of Corporate Social Responsibility for betterment of the work force as well as communities that we interact with some of the examples are as follows:
12 13
CORPORATE CORPORATE SOCIAL RESPONSIBILITY SKOL has been focusing on the following areas of Corporate Social Responsibility for the betterment of its work force as well as the communities in which it operates. . Your Company recognises that HIV/AIDS is a major threat to the world of work where it affects the most productive segment of the labor force and imposes huge costs on enterprises through declining productivity and loss of skills and experience. In order to curb the menace of HIV/AIDS the need of the hour is to have a proactive approach. Your Company acknowledges the seriousness of the issue and the future impact this may have on the broader communities, if left unchecked. Your Company has signed a MOU with International Labour Organisation (ILO) for its work place programme in India. The aim of this partnership is to help prevent the transmission of HIV among workers and to mitigate the impact of the epidemic on work place productivity. Your Company has donated Medical Van in Orissa to NGO Sadhana to provide health care facilities to rural communities of Orissa. The van would work like a mobile doctor going around villages to conduct routine check ups and provide on time primary health services. Your Company also conducted various other activities such as blood donation camps, health camps, polio drives etc across its units. Saanjhi Unnati The beer industry is expected to continue growing rapidly as the Indian economy grows. Malted food industry is also growing rapidly. Barley is the key ingredient for both. Traditionally barley has been grown in India by small and marginal farmers on rain-fed land. The acreage, yield and production had been shrinking over the years and the quality was poor. Considering our future demand for high quality malting grade barley, we designed and implemented an initiative in 2005 called Saanjhi Unnati (Progress through Partnership) in Rajasthan. The programme is aimed at not only to
improve quality, enhance productivity, increase acreage and channelize barley for our malting use, but also to work towards the welfare of the farmers through social programs. The project adds value at all stages of the value chain with eventual benefits to trickle to the farmer. The farmers get certified quality seeds and other agricultural inputs from the SU centers besides the free but valuable agronomical advice from our experts. They have an assured market, transparent dealings, fair pricing, incur no hidden costs and get spot payment which they do not receive when they market their produce to traditional channels. The program has gained significant momentum, from a beginning at about 4000 acres during 2005-06; the program is extended to about 13,000 acres during 2007-08 and a member farmer base of 6020 across 4 districts in Rajasthan. During the year under review the Company has procured 7000 tonnes of Barely through this programme. ANALYSIS COMPANY SWOT ANALYSIS OF THE COMPANY Strengths: Access to SABMiller groups technology and brands Well established brands in the market Well diversified brand portfolio covering all segments of the market Nine plants spread across India covering all major beer markets High quality products On-going product innovation to attract new consumers Ability to set up new plants at minimal cost and in record time. Strong management team Weakness: Inability to raise prices of the product as mainly the price is fixed by government Each state has its own excise laws, whereby movement of goods from one state to another is time consuming and costly
Directors Report
No plant in Tamil Nadu, thereby inability to participate in the second biggest beer market in India Opportunities: Per capita consumption of Beer is one litre, way below world average Growing per capita incomes raising peoples aspirations can impact beer sales positively India has the highest number of young people who are the potential consumers for the Company Easing of the regulatory environment can lead to tremendous market growth Threats: Rising cost of raw materials Talent attraction and retention Increasingly competitive environment with all major global players entering the Indian market Heineken partnering UB gives it a national reach for an aggressive roll out of the Brand DIRECTORS In accordance with the Articles of Association, Mr. Jonathan Andrew Kirby, Director of the Company retires by rotation at this meeting and being eligible, offer himself for re-appointment. During the year Mr. Ari Mervis was appointed as an additional Director of the Company, whose term of office expires at this Annual General Meeting and is eligible for re-appointment. During the year Mr. T.S.R. Subramanian was appointed as an additional Director of the Company, whose term of office expires at this Annual General Meeting and is eligible for re-appointment. Mr. Andre Charles Parker, Chairman of the Board retired from the services of SABMiller Group. The Board places on record its appreciation for the valuable services rendered by Mr. Andre Charles Parker during his tenure as Chairman of the Board. It is on account of his vision and foresight that the Beer business of SABMiller group was set up and expanded in India. Mr.Jean-Marc Delpon de Vaux was appointed as Managing Director w.e.f. 1st August 2006 and the Central Government has approved his appointment and remuneration payable to the Managing Director vide its letter dated 18.6.2007. His remuneration is being proposed to increase from Rs.18,00,000/- to Rs. 25,00,000/per month, subject to Members and Central Government Approval. Ms. Maya Makanjee has resigned as a Director of the Company w.e.f. 23rd June 2008. The Board places on record the meritorious services rendered by Ms. Maya Makanjee during her tenure as Director on the Board. AUDIT COMMITTEE Pursuant to the provisions of Section 292A of the Companies Act, 1956 an Audit Committee has been constituted. The present members of the Committee are, Mr. Jonathan Andrew Kirby, Mr. Ari Mervis & Mr. Richard (Pete) L Lloyd. Mr. Jonathan Andrew Kirby Chairman of the Audit Committee was present at the last Annual General Meeting. AUDITORS Particulars in the Report of Board of Directors) Rules, 1988 to the extent applicable are set in the annexure hereto. DIRECTORS RESPONSIBILITY STA STATEMENT U/S 217 (2AA) OF THE COMPANIES ACT, COMPANIES ACT, 1956 Your Directors state that: 1. The financial statements have been prepared in conformity with the generally accepted accounting principles and applicable accounting standards in India. The Directors have selected such accounting policies as are applicable and have applied them consistently and made reasonable and prudent judgment and estimates 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 for the year. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
2.
3.
M/s BSR & Co., Chartered Accountants, retiring Auditors, have signified their 4. The financial statements have been willingness to be reappointed as prepared on the basis of Going Statutory Auditors of the Company. They Concern considering the ability of have confirmed that their reappointment the Company to carry on its if made will be within the limits prescribed business in the foreseeable future. under Section 224(1B) of the Companies Act, 1956. Your Directors recommend ACKNOWLEDGEMENT their appointment at the ensuing Annual Your Directors wish to place on record General Meeting. their appreciation to employees at all PUBLIC DEPOSIT levels for their co-operation. The Directors would also like to acknowledge During the year, the Company has not the continued support of the Companys accepted any public deposits as defined Bankers, Distributors, Shareholders, in the Companies (Acceptance of Customers and Suppliers. Deposits) Rules, 1975. ARTICULARS PARTICULARS OF EMPLOYEES The details of employees covered under the provisions of Section 217 (2A) of the Companies Act, 1956 and the rules framed thereunder, as amended to date is attached herewith. CONSERV CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION The statement pursuant to Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of
FOR AND ON BEHALF OF THE BOARD Jonathan Andrew Kirby Director Jean-Marc Delpon de Vaux Managing Director Place: Bangalore Dated: June 23, 2008
14 15
Directors Report
COMPANIES PAR ARTICULARS DISCLOSURE AS PER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF DIRECTORS) RULES, 1988. A. CONSERV CONSERVATION OF ENERGY The output performance for boiler fuel consumption and electricity of the Company is as under:
Boiler energy consumption MJ/HL 250 200 150 100 50 0 F05 F06 F07 F08 18 16 14 12 10 8 6 4 2 0 F05 F06 F07 F08 Electricity consumption in kWh/HL
The measures taken by the Company at its various units are as under1. 2. 3. Extensive benchmarking including international and target setting. Use of methane generated from waste water treatment as boiler fuel. Fuel switch from fossil fuel to biomass in selected breweries to reduce the carbon footprint. Focussed initiatives on Water conservation and recycling in breweries. Use of treated effluent for gardening of the factory campus by drain system. Use of UF & RO technology to recycle treated effluent water at strategic sites. Identification of refrigeration as a major energy user and preparation of a health check to minimize power consumption in the coming years. New capacity with new technology and economy of scale. Rationalizing the Brewing operations in line with packing production plan (especially during the low volume and non season periods) TECHNOLOGY ABSORPTION Research & Development Shared learning transferred from global company community. Close co-operation with supply chain partners to improve quality and reduce waste.
b)
Technology absorption, adaptation and innovation Efforts in brief made towards technology absorption, adaptation and innovation. It has always been our endeavour to adopt the latest developments in Brewing Technology in order to minimize our environmental impact. Trying various new types of brewing aids to improve our quality is an ongoing and continuous process. The Company strives for continuous improvement in quality, cost and availability.
4.
5.
Benefits derived as a result of the above efforts are product improvement, cost reduction, product development, import substitution. In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year)
6.
Keg cleaning and filling technology. Flash pasteurization technology. Special bottle filling and labelling technology. Brewhouse technologies.
7. 8.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO During the year, the Company has earned Rs.7 Crores in foreign exchange earnings. An amount of Rs.47.4 Crores was incurred in foreign exchange. FOR AND ON BEHALF OF THE BOARD Jonathan Andrew Kirby Director Place: Bangalore Dated: June 23, 2008 Jean-Marc Delpon de Vaux Managing Director
B. a)
16 17
Auditors Report
Breweries To the Members of SKOL Breweries Limited We have audited the attached balance sheet of SKOL Breweries Limited (the Company) as at 31 March 2008, the profit and loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors Report) Order, 2003 (the Order), as amended, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order. Further to our comments in the Annexure referred to above, we report that: (i) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit; in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; the balance sheet, the profit and loss account and the cash flow statement dealt with by this report are in agreement with the books of account; (iv) in our opinion, the balance sheet, the profit and loss account and the cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956; (v) on the basis of written representations received from the directors of the Company as on 31 March 2008, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31 March 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; and
(vi) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: a. in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2008; b. in the case of the profit and loss account, of the profit of the Company for the year ended on that date; and c. in the case of the cash flow statement, of the cash flows for the year ended on that date.
for BSR & Co. Chartered Accountants

Zubin Shekary Partner Membership No. 48814 Bangalore 23 June 2008
(ii)
(iii)
Annexure to the Auditors report

Annexure referred to in the Auditors Report to the Members of SKOL Breweries Limited (the Company) for the year ended 31 March 2008. We report that: i. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets, except for returnable containers where the nature of the trade does not permit itemised recording of the location of returnable containers at any particular point of time. (b) The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified over a period of three years, except for returnable containers where the nature of the trade does not permit physical verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification. (c) Fixed assets disposed during the year were not substantial, and therefore, do not affect the going concern assumption. ii. (a) The inventory, except for goodsin-transit and stock lying with third parties, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year-end, written confirmations have been obtained. (b) The procedures for the physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. (c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material. iii. (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, paragraph 4(iii)(a), 4(iii)(b), 4(iii)(c) and 4(iii)(d) of the Order is not applicable. (e) The Company has taken a loan from a Company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount outstanding during the year and the year-end balance of such loans was Rs 483,141,746 and Rs 385,269,911 respectively. (f) In our opinion, the rate of interest for the above loan taken from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company. Tenure and repayment terms have not been specified for such loans. (g) According to the information and explanations given to us, the tenure and repayment terms have not been specified for the above mentioned loan. Consequently, we are unable to comment on paragraph 4(iii)(g) of the Order. iv. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to the sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit. v. In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that Section. vi. In our opinion, and according to the information and explanations given to us, the Company has complied with the provisions of Section 58A, Section 58AA or other relevant provisions of the Companies Act, 1956 and the rules framed thereunder/ the directives issued by the Reserve Bank of India (as applicable) with regard to deposits accepted from the public. Accordingly, there have been no proceedings before the Company Law Board or National Company Law Tribunal (as applicable) or Reserve Bank of India or any Court or any other Tribunal in this matter and no order has been passed by any of the aforesaid authorities. vii. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business. viii. The Central Government has not prescribed the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 for any of the products manufactured and services rendered by the Company. ix. (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess, Investor Education and Protection Fund and other material statutory dues, have been regularly deposited during the year by the Company with the appropriate authorities though there has been a slight delay in a few cases.
18 19
Further, since the Central Government has till date not prescribed the amount of cess payable under Section 441A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the Company in depositing the same. According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees State Insurance, Income-tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Period to which the amount relates Excise Duty under State Excise Acts
2001 02 to 2004 05 1974 75 to 1990 91 2000 01 1997 98 to 1999 00 1998 99 to 2004 05 1983 84 to 1988 89 2005 06 1996 97 to 1999 00 1989
Investor Education and Protection Fund and other material statutory dues were in arrears as at 31 March 2008 for a period of more than six months from the date they became payable. In respect of sales tax, the Company is in process of collecting Statutory Forms. Management has represented that the same would be submitted to the authorities at the time of the assessment. Hence payment of differential sales tax has not been made on the Statutory Forms which are pending to be collected for the periods for which assessments have not been completed. Amount (Rs million)
10.88 13.75 1.04 0.33 6.68 0.55 2.15 70.24 3.22 92.73 5.97 1.26 4.14 13.62 3.68 0.19 1.51 1.45 11.98 6.18 7.47 5.43 4.03 68.73 0.38 0.05 0.14 8.05 32.73 0.15
(b) According to the information and explanations given to us, the following dues of Income-tax, Sales Tax and Excise Duty have not been deposited by the Company on account of disputes. There are no dues of Wealth Tax, Service Tax, Customs Duty and Cess, which have not been deposited with the appropriate authorities on account of any dispute.
Forum where dispute is pending

Orissa High Court Financial Commissioner, Haryana Commissioner of State Excise, Maharashtra Karnataka High Court Karnataka High Court Bombay High Court Orissa High Court Customs Excise Service Tax Appellate Tribunal, Mumbai Orissa High Court Appellate Tribunal, Orissa Appellate Tribunal, Haryana Assistant Commissioner of Commercial Taxes (Appeals), New Delhi Appellate Tribunal, Maharashtra Appellate Tribunal, Maharashtra Andhra Pradesh High Court Appellate Tribunal, Uttar Pradesh Appellate Tribunal, Maharashtra Appellate Tribunal, Maharashtra Assessing Authority, Pondicherry Chandigarh High Court Supreme Court Appellate Tribunal, Uttar Pradesh Commissioner of Appeals, Uttar Pradesh Deputy Commissioner, Meerut Deputy Commissioner, Meerut Joint Commissioner, Meerut Additional Commissioner Sales Tax, New Delhi Deputy Commissioner, Mumbai Appellate Tribunal, Mumbai Appellate Tribunal, Mumbai
Tax Tax Sales Tax under State Sales Tax Acts

1994 95 to 2000-01 1989 90 to 1996 97 and 1998 99 to 2003 04 2002 03 to 2003 04 1995 96 2001 02 1991 92 to 1992 1993 2003 04 1992 93 1996 97 1981 82 to 1984 85 and 1997 98 to 1998 99 2000 01 to 2003-04 2003 04 to 2005 06 2002 03 2003 04 2004 05 2003 07 2006 07 2004 05 2002 03
Income-tax under Income-tax Act, 1961

AY 2003 04 AY 1996 97
Annexure to the Auditors report

x. The Company has accumulated losses of Rs 952,184,208 at the end of the financial year. The Company has not incurred cash losses in the financial year and in the immediately preceding financial year. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to its bankers. The Company did not have any outstanding dues to any financial institutions or debentureholders during the year. opinion that funds raised on shortterm basis amounting to Rs. 2,652,096,907 have been used for long-term investment in fixed assets and investments. xviii. The Company has not made any preferential allotment of shares to companies/ firms/ parties covered in the register maintained under Section 301 of the Companies Act, 1956. xix. The Company did not have any outstanding debentures during the year. xx. The Company has not raised any money by public issues during the year. xxi. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of the audit.
xi.
xii. In our opinion the Company has maintained adequate records in cases where it has granted loans and advances on the basis of security by way of pledge of shares. The Company has not granted any loans and advances on the basis of security by way of pledge of debentures and other securities. xiii. In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. xiv. According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. xv. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. xvi. In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised. xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the

Zubin Shekary Partner Membership No. 48814 Bangalore 23 June 2008
20 21
Balance sheet as at 31 March 2008

(Rs.) Schedule SOURCES OF FUNDS Shareholders funds Share capital Reserves and surplus As at 31 March 2008 As at 31 March 2007
2 3
2,311,837,450 6,406,852,856 8,718,690,306 -
1,979,158,880 4,610,316,326 6,589,475,206 1,863,000,000 4,652,648,467 13,105,123,673
Share application money pending allotment of shares Loan funds Unsecured loans Deferred tax liability, net 4 18 (10)
3,774,422,006 63,744,036 12,556,856,348
APPLICATION APPLICATION OF FUNDS Fixed assets Gross block Less: Accumulated depreciation Less: Provision for impairment of fixed assets Net block Capital work-in-progress
5 10,973,596,079 (2,074,943,657) (156,563,671) 8,742,088,751 1,491,630,978 10,233,719,729 6 11,359,225 8,795,466,503 (1,525,150,636) (52,523,898) 7,217,791,969 756,309,965 7,974,101,934 2,178,050
Investments Current assets, loans and advances Inventories Sundry debtors Cash and bank balances Loans and advances Current liabilities and provisions Current liabilities Provisions
7 8 9 10
1,183,482,865 2,536,219,383 311,251,107 1,242,942,582 5,273,895,937 4,058,160,935 361,193,684 4,419,354,619 854,541,318 1,457,236,076 12,556,856,348
774,519,494 1,484,582,230 4,047,462,855 1,114,045,283 7,420,609,862 3,387,142,064 426,751,996 3,813,894,060 3,606,715,802 1,457,236,076 1,296,961,395 (1,232,069,584) 64,891,811 13,105,123,673
11 12
Net current assets

Amalgamation adjustment reserve account Debit balance in profit and loss account Less: Balance in general reserve account
S ignificant accounting policies Notes to the accounts
1 18
The schedules referred to above form an integral part of the balance sheet As per our report attached

Zubin Shekary Partner Membership No. 48814
for SKOL Breweries Limited

Jean-Marc Delpon de Vaux Managing Director Kevin Heydenrych Chief Finance Officer Jonathan Andrew Kirby Director Pramod S M Company Secretary
Bangalore 23 June 2008
Profit and loss account for the year ended 31 March 2008
(Rs.) For the year ended 31 March 2007 13,384,952,487 100,449,130 13,485,401,617 (4,840,701,234) (612,303,595) 8,032,396,788 227,208,154 179,188,724 8,438,793,666 2,197,111,990 603,282,581 4,348,072,365 625,247,195 (101,662,427) 313,366,314 7,985,418,018 453,375,648 37,573,724 151,668 13,758,454 401,891,802 (1,698,853,197) (1,296,961,395)
Schedule Income Sale of manufactured goods, gross Sale of traded goods, gross Less: Excise duty Less: Discounts Sales, net Income from marketing operations Other income Expenditure Material cost of sales Personnel costs Other expenses Depreciation Provision for impairment of fixed assets Interest 13
For the year ended 31 March 2008 17,120,144,115 296,758,472 17,416,902,587 (6,307,912,578) (743,348,972) 10,365,641,037 219,335,661 281,767,214 10,866,743,912 3,059,852,296 804,928,296 5,469,854,808 858,090,043 117,306,243 148,166,541 10,458,198,227 408,545,685 (37,573,724) 238,542 30,320,522 70,783,158 344,777,187 (1,296,961,395) (952,184,208)
14 15 16 5 18 (14) 17
Profit before tax Provision for tax - current tax - pertaining to earlier years - wealth tax - fringe benefit tax - deferred tax Profit after tax Debit balance in profit and loss account brought forward Debit balance in profit and loss account carried over to the balance sheet Earnings per share (par value: Rs. 10 each) - Basic earnings per share - Diluted earnings per share
18 (10)
18 (3) 1.52 1.49 2.14 2.13
Significant accounting policies Notes to the accounts
1 18
The schedules referred to above form an integral part of the profit and loss account. As per our report attached


Jean-Marc Delpon de Vaux Managing Director Kevin Heydenrych Chief Finance Officer Jonathan Andrew Kirby Director Pramod S M Company Secretary
22 23
Schedules to the financial statements

1. Significant accounting policies management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements and the results of operations during the reporting period end. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods. 1.4 Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be measured reliably. (i) Sale of goods Revenue from sale of goods is recognised on transfer of all the significant risks and rewards of ownership to the buyer which normally takes place on despatch. The amount recognised as sale is net of sales tax and sales returns. Sales are presented both gross and net of excise duty. (ii) Income from services Income from marketing operations is recognised when the services are rendered in accordance with the arrangements with tie up units. (iii) Interest Interest is recognised using the time proportion basis taking into account the amount outstanding and the interest rate applicable. 1.5 Fixed assets Fixed assets are carried at cost of acquisition or construction less accumulated depreciation and provision for impairment of assets. The cost of fixed assets includes freight, duties, taxes and other incidental expenses related to the acquisition or construction of the respective assets. Borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalised to the extent they relate to the period till such assets are ready to be put to use. Intangible assets are recorded at their acquisition cost. Advances paid towards the acquisition or construction of fixed assets outstanding at the balance sheet date and the cost of the fixed assets not ready for their intended use before such date, are disclosed as capital work-in-progress. The Company considers containers procured as fixed assets due to its substantive nature of arrangement, that the Company sells beer and not the accompanying container and empty containers are essentially returnable. Accordingly, new containers purchased are capitalised as fixed assets and the obligation arising on sale, for these returnable containers are disclosed separately in the balance sheet as liability for returnable containers. 1.6 Depreciation Depreciation on fixed assets is provided on the straight-line method as per the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956 are considered as minimum rates. However, where the managements estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the managements estimate of useful life/ remaining useful life. Leasehold land is amortised over the lease term. Leasehold improvements are amortised over the lease term or its estimated useful life of five years, whichever is lower.
Background SKOL Breweries Limited (the Company or SKOL) was incorporated as a public limited company under the Companies Act, 1956 on 18 November 1988. The Company is primarily engaged in the business of brewing, packaging, distribution, marketing and sale of beer. 1.1 Basis of preparation The financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting. The financial statements have been prepared to comply in all material respects with the mandatory Accounting Standards (AS) prescribed by Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956, to the extent applicable. These financial statements are prepared and presented in Indian Rupees. 1.2 Going concern These financial statements have been prepared on a going concern basis, notwithstanding accumulated losses, due to the following considerations: Expected steady future growth reflected in financial projections prepared by the management; Expected continual technical and financial support by the SABMiller group. In the current year 33,267,857 equity shares of Rs 10 each were allotted at a premium of Rs 46 per share, resulting in increase in share capital by Rs 1,863,999,992.
These financial statements, therefore, do not include any adjustments relating to recoverability and classification of asset amounts or to amounts and classification of liabilities that may be necessary if the Company was unable to continue as a going concern. 1.3 Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles in India requires
Pursuant to this policy the following fixed assets are depreciated to their residual value over their estimated useful life:
Class of assets
Returnable containers (included in plant and machinery) Wooden pallets (included under plant and machinery) Computer equipments Furniture, fittings and office equipments Brands Computer software Pro-rated depreciation is provided on all assets purchased or sold during the year. Assets, costing individually Rs 5,000 or less, other than returnable containers, are depreciated in full in the year of purchase. The useful lives of brands, which primarily represent brand licenses purchased, have been determined based on managements assessment of market conditions in India, intent to use and ability to maintain these assets, previous history of these brands and internationally accepted practices. 1.7 Impairment The Company periodically assesses whether there is any indication that an asset or a group of assets comprising a cash generating unit may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. For an asset or group of assets that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the profit and loss account. The recoverable amount is higher of the assets, net selling price and value in use. After recognition of impairment loss, depreciation is provided on the revised carrying amount of the
Years
2 3 4 6 20 3 asset, less its residual value (if any), over its remaining useful life. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost. An impairment loss is reversed only to the extent that the carrying amount of asset does not exceed the net book value that would have been determined; if no impairment loss had been recognised. 1.8 Borrowing costs Borrowing costs directly attributable to acquisition or construction of those fixed assets, which necessarily take a substantial period of time to get ready for their intended use, are capitalised. Other borrowing costs are accounted as an expense. 1.9 Investments Long-term investments are carried at cost less any other-thantemporary diminution in the value, as determined by management on commercial consideration determined separately for each individual investment.
1.10 Inventories
Inventories are valued at lower of cost and net realisable value. Cost of inventories comprises purchase price, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The methods of determination of cost of various categories of inventories are as follows:
24 25
Raw materials, packing materials and stores and spares First-infirst-out (FIFO) method Work-in-progress and finished goods FIFO method. Production overheads are allocated on the basis of normal capacity of production facilities. Maintenance spares, which are in regular use and are not an integral part of any fixed asset, are treated as inventory and valued at cost. The comparison of cost and net realisable value is made on an itemby-item basis. The net realisable value of work-in-progress is determined with reference to the selling prices of related finished goods in the ordinary course of business, less estimated cost of completion and estimated costs necessary to make the sale. Raw materials, packing materials and other supplies held for use in production of inventories are not written below cost except in cases where material prices have declined, and it is estimated that the cost of the finished products will exceed their net realisable value. 1.11 Foreign exchange Foreign exchange transactions are recorded at the rates of exchange prevailing on the dates of the respective transactions. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the profit and loss account for the year. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rate on that date; the resultant exchange differences are recognised in the profit and loss account. Forward contracts are entered into to hedge the foreign currency risk of the underlying outstanding at the balance sheet date. The premium or discount on all such contracts arising at the inception of each contract is amortised as income or expense over the life of the contract. Any profit or loss arising on the cancellation or renewal of forward contracts is recognised as income or as expense for the period.
The exchange difference on the forward exchange contract entered into to hedge the foreign currency risk of the underlying outstanding at the balance sheet date, is calculated as the difference between the foreign currency amount of the contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period, and the corresponding foreign currency amount translated at the later of the date of inception of the forward exchange contract and the last reporting date. Such exchange differences are recognised in the profit and loss account in the reporting period in which the exchange rates change. In accordance with the ICAI announcement Accounting for derivatives, the Company provides for losses in respect of all outstanding derivative contracts at the balance sheet date by marking them to market. 1.12 Retirement benefits (i) Contributions to provident funds, which is a defined contribution scheme, are charged to the profit and loss account on an accrual basis. The Company has an arrangement with Life Insurance Corporation of India to administer its superannuation scheme, which is a defined contribution scheme. The contributions to the said scheme are charged to the profit and loss account on an accrual basis. Liability for gratuity, which is a defined benefit schemes is provided for based on an actuarial valuation carried out by an independent actuary as at the balance sheet date. Actuarial gains/ losses are recognised immediately in the profit and loss account and are not deferred.
accordance with the transitional provision in AS 15 - Employee benefits (Revised 2005), Rs 13,670,268 (net of deferred tax asset of Rs 7,039,122) has been adjusted to the general reserve. This change did not result in a material impact on the profit for the current year. 1.13 Leases Leases where the lessor effectively retains substantially all the risks and rewards of ownership of the leased asset, are classified as operating leases. Operating lease payments are recognised as an expense in the profit and loss account on a straight-line basis over the lease term.
(ii)
(iii)
(iv) Long term compensated absences are provided for based on actuarial valuation. In the current year due to adoption of the AS 15 - Employee benefits (Revised 2005), the Company has provided for long term compensated absences based on actuarial valuation. Further in

1.14 Provisions and contingent liabilities The Company recognises a provision when there is a present obligation as a result of an obligating event that probably requires outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure of a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made. Provisions for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it, are recognised when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event, based on a reliable estimate of such obligation. 1.15 Taxation Income tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with the income tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carried forward business loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realised. The Company offsets, the current (on a year on year basis) and deferred tax assets and liabilities, where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis. Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in the guidance note issued by ICAI, the said asset is created by way of a credit to the profit and loss account. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income tax during the specified period. The Company provides for and discloses the Fringe Benefit Tax (FBT) in accordance with the provisions of Section 115 WC of the Income-tax Act, 1961 and the guidance note on FBT issued by ICAI. 1.16 Earnings per share The basic earnings per share is computed by dividing the net profit or loss attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year. The number of equity shares used in computing diluted earnings per share comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares, which would have been issued on conversion of all potentially dilutive equity shares. Potential dilutive equity shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. The potentially dilutive equity shares have been adjusted for the proceeds receivable had the shares been actually issued at a fair value (i.e. the average market value of the outstanding shares). In computing the dilutive earnings per share, only potential equity shares that are dilutive and that either reduces the earnings per share or increases loss per share are included. 1.17 Employee stock compensation cost The Company applies intrinsic value method of accounting for stock options granted by the ultimate holding company to the employees of the Company after 1 April 2005. The intrinsic value of the employee services received in exchange for the grant of such options is recognised as an expense. The amount recognised is spread over the vesting period which is also the period over which some of the scheme performance criteria relate. At each balance sheet date, the estimates of the number of options that are expected to become excercisable are revised. It recognises the impact of the revision of the original estimates, if any, in the profit and loss account over the remaining vesting period. The effect of uncertainty as to whether any performance criteria of share options will be met is dealt with by estimating the probability of shares vesting and therefore the cost is adjusted and readjusted for the probability of vesting in the vesting period.
26 27

(Rs.) 2. Share capital Authorised 250,000,000 (previous year: 200,000,000) equity shares of Rs. 10 each Issued, subscribed and paid up 231,183,745 (previous year: 197,915,888) equity shares of Rs. 10 each fully paid-up Of the above : 1) 142,041,561 (previous year: 142,041,561) equity shares of Rs. 10 each are held by SABMiller Breweries Private Limited (formerly Fosters India Private Limited), the holding company. 87,341,038 (previous year: 54,073,181) equity shares of Rs. 10 each are held by SABMiller Asia B.V. SABMiller Plc is the ultimate holding company. 2) Pursuant to a scheme of arrangement 34,636,335 (previous year: 34,636,335) equity shares of Rs. 10 each were allotted, in earlier years, for consideration other than in cash. (Rs.) As at 31 March 2007 2,000,000 As at 31 March 2008 2,500,000,000 2,500,000,000 2,311,837,450 2,311,837,450 As at 31 March 2007 2,000,000,000 2,000,000,000 1,979,158,880 1,979,158,880
3. Reserves and surplus Capital reserve Securities premium At the beginning of the year Addition during the year General reserve At the beginning of the year Less: Adjustment for employee benefit provision (net of tax of Rs. 7,039,122) (Refer to note 1.12) Less: Debit balance in profit and loss account
As at 31 March 2008 2,000,000
4,608,316,326 1,530,321,422 6,138,637,748 1,232,069,584 (13,670,268) (952,184,208) 266,215,108 6,406,852,856
3,500,620,686 1,107,695,640 4,608,316,326 1,232,069,584 (1,232,069,584) 4,610,316,326 (Rs.) As at 31 March 2007 -
4. Unsecured loans
As at 31 March 2008 263,732,853
Bank overdraft Short term loans From banks From others Other loans and advances From banks [Refer note (a) below] From others: - loan from holding company [Refer note (b) below] - deferred sales tax loan
2,650,010,288 -
3,115,000,000 700,000,000
442,092,599 385,269,911 33,316,355 3,774,422,006
624,887,850 179,444,262 33,316,355 4,652,648,467
Notes: a) Amount repayable within a period of 12 months Rs. 207,625,175 (previous year: Rs. 264,545,950). b) Tenure and terms for repayment have not been specified for loans obtained from holding Company.
5. Fixed assets
Gross Block Accumulated Depreciation Net block
Description
Additions Deletions Charge As at 31 March 2008 As at 1 April 2007 Deletions As at 31 March 2008 As at 31 March 2008 As at 31 March 2007
As at 1 April 2007
Provision for impairment as at 31 March 2008 (refer note 2 below)
Tangible assets
46,185,015 9,698,369 443,976,590 36,896,827 1,190,787,234 115,374,408 55,231,991 23,630,357 146,976,042 8,466,565 1,035,344,627 9,698,369 488,904 488,904 9,209,465 15,831,621 3,536,169 1,015,095 4,551,264 11,280,357 10,805,695 182,896,936 16,600,000 166,296,936 130,917,616 12,295,452 646,600,028
Freehold land
147,517,616
Leasehold land
15,831,621
Leasehold improvements
Buildings
783,707,471
Plant and machinery 884,245,631 1,394,037,647 18,691,706 8,153,255 1,952,750 32,300,867 8,899,376 3,006,371 590,385 11,315,362 62,350,116 26,513,938 8,127,195 34,641,133 2,079,814 78,991,059 45,425,841 16,288,010 1,974,094 59,739,757 841,707 804,358 258,556 146,774,326 4,407,793,634 862,546,465 313,851,063 91,947,826 1,084,449,702 129,592,485 436,707,701 1,510,709,393 234,012,381 273,183,404 190,154,360 317,041,425 1,193,667,968 3,193,751,447 18,409,595 26,904,625 20,726,949 829,159,082 2,283,792,985 16,953,326 27,682,923 25,354,241
- Returnable containers (Refer note 1 below)
1,063,171,463
- Others
3,160,530,313
Computer equipment
62,379,167
Furniture, fittings and office equipment
54,196,861
Motor vehicles
34,253,617
Intangible assets
8,358,476 858,090,043 71,316,605 22,750,620 16,351,998 39,102,618 3,410,920,245 206,091,438 170,546,012 376,637,450 156,563,671 3,034,282,795 32,213,987 8,742,088,751 3,204,828,807 40,207,509 7,217,791,969
Brands
3,410,920,245
Computer software
62,958,129
Total Total
8,795,466,503
2,813,346,689 635,217,113 10,973,596,079 1,525,150,636
308,297,022 2,074,943,657
Previous year
6,143,511,506
3,020,533,559
368,578,562
8,795,466,503
1,056,802,634
625,247,195
156,899,193
1,525,150,636
52,523,898
7,217,791,969
Note 1: Deletions to gross block include Rs 246,432,320 (previous year: Rs 189,386,897) representing normative cost, which has been adjusted with container liability. Loss on deletion in excess of normative cost has been included in cost of returnable containers in the profit and loss account. (Rs.)
Note 2: Provision for impairment (Also refer note 14 of Schedule 18):
Provision for impairment

Charge Charge / (reversal) Deletion As at 31 March 2008 16,600,000 8,466,565 129,592,485 841,707 804,358 258,556 156,563,671 13,266,470 13,266,470 115,401,622 841,707 804,358 258,556 117,306,243
Description
As at 1 April 2007
Freehold land
16,600,000
Buildings
21,733,035
Plant and machinery - others
14,190,863
Computer equipment
Furniture, fittings and office equipment
Motor vehicles
Total otal
52,523,898

(101,662,427) -
Previous year
154,186,325
52,523,898
28 29
(Rs.) 6. Investments As at 31 March 2008 As at 31 March 2007
Long term investments 1. Non trade - unquoted (i) Government and trust securities National Savings Certificates Indira Vikas Patra
2,019,500 26,550 2,046,050
2,151,500 26,550 2,178,050
(ii) Fully paid equity shares 1 (previous year: Nil) fully paid equity shares of Rs. 10 each of MBL (AP) Breweries Limited 12,000 (previous year: Nil) fully paid equity shares of Rs. 10 each of Shushruta Medical Aid and Research Hospitals Limited 5,000 (previous year: Nil) fully paid equity shares of Rs. 10 each of Maini Granites Limited 300 (previous year: Nil) fully paid equity shares of Rs. 10 each in AP Heavy Machinery & Engineering Limited 10,000 (previous year: Nil) fully paid equity shares of Rs. 10 each in Ramanashree Comforts Limited 10,000 (previous year: Nil) fully paid equity shares of Rs. 10 each in Anusha International Limited 1,700 (previous year: Nil) fully paid equity shares of Rs. 100 each in Maa Communication Bozel Limited 7,000 (previous year: Nil) fully paid equity shares of Rs. 10 each in Sachdev International Limited 12,500 (previous year: Nil) fully paid equity shares of Rs. 10 each in Scarlet Flowers and Agritech Limited 100 (previous year: Nil) fully paid equity shares of Rs. 10 each in Indana Spices and Food India Limited 80,000 (previous year: Nil) fully paid equity shares of Rs. 10 each in Vulcan Leasing and Investments Limited 5,005 (previous year: 5,005) fully paid equity shares of Rs. 100 each in Janata Sahakari Bank Limited 295 (previous year: 295) fully paid equity shares of Rs. 100 each in Haryana State Cooperative Bank Limited
1 12,000 5,000 300 10,000 10,000 1,700 7,000 12,500 100 80,000 500,500 29,500 668,601
500,500 29,500 530,000
2. Non trade - quoted Fully paid equity shares 15,000 (previous year: Nil) fully paid equity shares of Rs. 1 each in ITC Limited 400 (previous year: Nil) fully paid equity shares of Rs. 10 each in Ultratech Cement Limited 80 (previous year: Nil) fully paid equity shares of Rs. 10 each in Tata Motors Limited 15,000 (previous year: Nil) fully paid equity shares of Rs. 2 each in Gujarat Ambuja Cement Limited 500 (previous year: Nil) fully paid equity shares of Rs. 2 each in Larsen & Toubro Limited 700 (previous year: Nil) fully paid equity shares of Rs. 2 each in Satyam Computers Limited 50,000 (previous year: Nil) fully paid equity shares of Rs. 10 each in Super Star Distilleries Limited 8,600 (previous year: 8,600) fully paid equity shares of Rs. 10 each in Syndicate Bank Limited
2,619,750 400,060 56,944 2,115,000 2,598,850 633,500 50,000 700,470 9,174,574
2,708,050 (530,000) 2,178,050
Total long term investment term Less: Provision for, other than temporary, diminution in the value of investments
11,889,225 (530,000) 11,359,225
The aggregate book value and market value of quoted investments and book value of unquoted investments are as follows: Quoted investment Aggregate book value 9,174,574 Aggregate market value 7,775,281 Aggregate book value of unquoted investments 2,184,651 2,178,050

(Rs.) 7. Inventories As at 31 March 2008 424,926,983 61,739,226 124,986,877 560,769,112 3,372,180 7,688,487 1,183,482,865 As at 31 March 2007 337,185,005 52,980,580 99,559,379 272,181,012 9,755,154 2,858,364 774,519,494 (Rs.) As at 31 March 2007
Raw materials and packing materials Stores and spares Work-in-progress Finished goods Goods in transit - finished goods Traded goods
8. Sundry debtors
As at 31 March 2008
Unsecured Debts outstanding for a period exceeding six months - considered good - considered doubtful
30,028,871 210,674,357 240,703,228
24,356,971 251,018,532 275,375,503
Other debts - considered good - considered doubtful
Less: Provision for doubtful debts
2,506,190,512 88,980,586 2,835,874,326 (299,654,943) 2,536,219,383
1,460,225,259 31,803,092 1,767,403,854 (282,821,624) 1,484,582,230 (Rs.) As at 31 March 2007 716,440 12,177,795 3,369,335,296 663,375,409 1,857,915 4,047,462,855
9. Cash and bank balances
As at 31 March 2008 666,437 41,338,772 256,264,031 11,864,657 1,117,210 311,251,107
Cash on hand Cheques in hand Balances with scheduled banks - in current accounts - in deposit accounts (Refer note below) - in unclaimed dividend accounts
Note: Balance in deposit account include Rs. Nil (previous year: Rs. 651,824,262) held in an escrow account pursuant to a share purchase agreement and Rs. 11,864,657 (previous year: Rs. 11,551,147) in margin money account.
30 31

(Rs.) As at 31 March 2007
10. Loans and advances
As at 31 March 2008
Unsecured Considered good Advances recoverable in cash or in kind or for value to be received Inter-corporate deposits [Refer note (b) below] Other deposits Advance fringe benefit tax (net of provision) Advance tax and tax deducted at source (net of provision for income-tax) Balances with excise authorities Interest accrued but not due Considered doubtful Advances recoverable in cash or in kind or for value to be received Less: Provision for doubtful advances
537,839,857 172,613,021 1,264,449 135,499,862 393,797,080 1,928,313 1,242,942,582 170,218,956 (170,218,956) 1,242,942,582
629,683,132 117,947,601 98,352,285 3,163,673 80,469,118 182,569,025 1,860,449 1,114,045,283 78,697,798 (78,697,798) 1,114,045,283
Notes: (a) Dues from companies under the same management outstanding as at the balance sheet date: MBL Investments Limited SABMiller India Limited Maximum amount outstanding during the year: MBL Investments Limited SABMiller India Limited (b) Terms for repayment, utilisation and tenure are not specified for inter-corporate deposits.
110,785,131 7,162,470
128,785,130 9,560,863
1,285,871,421 7,162,470
11. Current liabilities
As at 31 March 2008
(Rs.) As at 31 March 2007 75,794,196 22,730,751 841,449,692 592,392,333 69,767,947 299,863 23,225,241 452,728,876 293,875,492 140,906,636 872,083,122 1,857,915 30,000 3,387,142,064 (Rs.) As at 31 March 2007 36,231,793 33,649,994 96,752,121 260,118,088 426,751,996
Acceptances 19,956,173 Sundry creditors - micro and small enterpises 34,630,832 - others 710,036,322 Payable to group companies 1,008,195,088 Deposits from customers and del credre 81,907,134 Book overdraft Interest accrued but not due 11,167,966 Liability for returnable containers 601,678,875 Accrual for schemes 302,293,444 Excise duty payable 290,387,687 Other current liabilities 996,760,204 Investor education and protection fund shall be credited by the following amounts when due: - Unclaimed dividend 1,117,210 - Unclaimed matured public deposit 30,000 4,058,160,935
12. Provisions
As at 31 March 2008 48,395,186 44,489,785 96,752,121 171,556,592 361,193,684
Provision for other retirement benefits Provision for gratuity Provision for income-tax (net of advance tax and tax deducted at source) Provision for claims (Refer to note 8 to Schedule 18)
(Rs.) 13. Other income For the year ended 31 March 2008 107,032,547 3,692,493 48,743,316 111,962,935 10,335,923 281,767,214 For the year ended 31 March 2007 68,652,855 76,980,042 7,082,208 482,590 25,991,029 179,188,724 (Rs.) For the year ended 31 March 2007 54,968,572 2,049,716,722 163,061,821
Sale of spent malt and scrap Interest - inter-corporate deposit [tax deducted at source Rs. 836,719 (previous year: Rs. 17,274,321)] - fixed deposit [tax deducted at source Rs. 10,294,726 (previous year: Rs. 1,412,752)] Profit on sale of fixed assets, net Foreign exchange gain, net Miscellaneous income
14. Material cost of sales
For the year ended 31 March 2008 129,050,240 2,902,518,808 172,798,620
Cost of traded goods sold Raw materials and packing materials consumed Malt processing charges
Opening stock Work-in-progress Finished goods

Less: Excise duty on opening stock (A)
99,559,379 281,936,166 381,495,545 140,906,636 240,588,909
73,454,460 216,594,652 290,049,112 120,095,328 169,953,784
Closing stock Work-in-progress Finished goods

Less: Excise duty on closing stock (B) (Increase) in work-in-progress and finished goods
124,986,877 564,141,292 689,128,169 304,023,888 385,104,281 (A-B) (144,515,372) 3,059,852,296
99,559,379 281,936,166 381,495,545 140,906,636 240,588,909 (70,635,125) 2,197,111,990 (Rs.) For the year ended 31 March 2007 530,219,354 24,512,076 (368,972) 13,532,254 35,387,869 603,282,581
15. Personnel costs
For the year ended 31 March 2008 729,129,579 27,672,075 10,839,791 1,625,400 35,661,451 804,928,296
Salaries, wages and bonus Contributions to provident and other funds Gratuity expense Other retirement benefits Workmen and staff welfare
32 33
16. Other expenses
For the year ended 31 March 2008 1,652,361,344 399,092,351 641,104,558 594,402,878 579,909,782 409,179,310 220,206,608 132,552,686 187,930,192 97,313,383 102,150,451 75,261,801 12,283,695 24,739,869 25,023,663 31,940,020 21,112,274 24,455,559 16,833,319 14,296,898 11,613,540 91,521,158 8,322,007 (88,561,496) 5,348,994 49,754,609 129,705,355 5,469,854,808
(Rs.) For the year ended 31 March 2007 1,321,272,433 295,341,245 478,639,388 511,425,819 494,186,897 317,551,028 179,916,536 88,661,721 167,139,691 82,708,264 78,409,579 31,655,513 4,787,995 20,486,550 6,328,192 25,257,507 23,304,872 18,781,313 14,063,536 13,321,823 10,115,826 7,553,477 7,465,500 5,847,358 3,652,936 140,197,366 4,348,072,365 (Rs.) For the year ended 31 March 2007 62,310,463 218,907,190 32,148,661 313,366,314 313,366,314
Cost of returnable containers Sales scheme expenses Freight outward Power and fuel Advertisement and publicity License fees Rates and taxes Legal and professional fees Clearing and forwarding Travel Consumption of stores and spares Rent Repairs and maintenance - buildings - plant and machinery - others Telephone and other communication Training and development Insurance Provision for doubtful debts Bad debts written off Printing and stationery Provision for doubtful loans and advances Doubtful advances written off Provision for claims, net Bank charges Loss on sale of fixed assets/ assets discarded, net Foreign exchange loss, net Miscellaneous expenses
17. Interest
For the year ended 31 March 2008 37,764,439 111,094,489 17,297,303 166,156,231 (17,989,690) 148,166,541
On long term loans On short term loans Others
Less: Interest capitalised

18 . Notes to the accounts 1. Contingent liabilities and other commitments As at 31 March 2008 Claims against the Company not acknowledged as debts in respect of: a) Sales tax matters b) Excise matters c) Other matters Other commitments d) Bank guarantees e) Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for 16,414,057 1,243,881,396 11,423,917 526,933,187 99,301,341 91,641,840 32,379,016 19,266,669 12,008,822 32,379,016 (Rs.) As at 31 March 2007
2.
Auditors remuneration, net of service tax (included under legal and professional fees) For the year ended 31 March 2008 Audit fees Taxation matters Other matters Reimbursement of expenses 8,300,000 1,000,000 1,750,000 466,327
(Rs.) For the year ended 31 March 2007 8,300,000 1,000,000 467,271
3.
Earnings per share
(Figures in Rs. except number of shares) For the year ended 31 March 2008 For the year ended 31 March 2007 401,891,802 188,085,831 380,211 188,466,042 2.14 2.13
Profit for the year attributable to equity shareholders Weighted average number of equity shares of Rs. 10 each used for calculation of basic earnings per share Adjustments for dilutive effect of share application money Weighted average number of equity shares of Rs. 10 each used for calculation of diluted earnings per share Basic earnings per share Diluted earnings per share
344,777,187 227,184,330 3,999,415 231,183,745 1.52 1.49
34 35

18. Notes to the accounts 4. Additional information pursuant to the provisions of paragraphs 3, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956 (quantitative information has been compiled from records and technical data in respect of each class of goods manufactured/ purchased by the Company): (a) Details of finished goods and turnover For the year ended 31 March 2008 Beer Opening stock Sales (gross of excise duty and discounts)* Closing stock Quantity (in cases) 1,330,528 47,428,745 2,182,355 Amount (Rs.) 281,936,166 17,120,144,115 564,141,292 For the year ended 31 March 2007 Quantity Amount (in cases) (Rs.) 936,242 39,022,719 1,330,528 216,594,652 13,384,952,487 281,936,166
* Includes 62,321 (previous year: 102,035) cases charged to consumption on account of breakages, damages and wastage.
(b) Details of traded goods For the year ended 31 March 2008 Beer Opening stock Purchases Sales (gross of excise duty and discounts)** Closing stock Quantity (in cases) 11,154 837,335 831,010 17,479 Amount (Rs.) 2,858,364 133,880,363 296,758,472 7,688,487 For the year ended 31 March 2007 Quantity (in cases) 412,834 401,680 11,154 Amount (Rs.) 57,826,936 100,449,130 2,858,364
** Includes 65 (previous year: 46) cases towards breakages, damages and wastage.
(c) Details of capacity and production For the year ended 31 March 2008 Licensed capacity Installed capacity* Actual production
* Installed capacity is as certified by management and relied upon by the auditors being a technical matter.
(in cases) For the year ended 31 March 2007 50,544,973 47,358,393 39,417,005
50,126,379 50,007,210 48,280,572
(d) Consumption of raw materials and packing materials For the year ended 31 March 2008 Units Malt (Note 1) Cartons Cans Others (Note 2) Total
Note 1: Includes processing charges. Note 2: It is not practicable to furnish quantitative information in view of the large number of items which differ in size and nature, each being less than 10% in value of the total consumption.
For the year ended 31 March 2007 Quantity 44,869 35,189,509 35,294,669 Amount (Rs.) 883,393,935 214,282,721 235,326,858 879,775,029 2,212,778,543
Quantity 55,597 43,940,130 53,451,141
Amount (Rs.) 1,349,766,485 263,950,089 348,979,529 1,112,621,324 3,075,317,427
MT Nos Nos
18. Notes to the accounts (e) Consumption of imported and indigenous raw materials and packing materials For the year ended 31 March 2008 Amount (Rs.) 477,663,725 2,597,653,702 3,075,317,427 Percentage 16 84 100 For the year ended 31 March 2007 Amount (Rs.) 264,642,115 1,948,136,428 2,212,778,543 Percentage 12 88 100
Imported Indigenous Total
(f) Consumption of imported and indigenous stores and spares For the year ended 31 March 2008 Amount (Rs.) 1,749,696 100,400,755 102,150,451 Percentage 2 98 100 For the year ended 31 March 2007 Amount (Rs.) 2,002,513 76,407,066 78,409,579 Percentage 3 97 100 (Rs.) For the year ended 31 March 2008 Raw materials and packing materials Spare parts Capital goods 6. Gratuity plan The Company has a defined gratuity plan. Every employee who has completed 5 years or more of service, is eligible for gratuity on separation, worked out at 15 days salary (last drawn salary) for each completed year of service. The obligation under the scheme is partially funded by contributions being made to an insurance company. Profit and loss account Net employee benefit expense (recognised in personnel expenses) Particulars Current service cost Interest cost on benefit obligation Expected return on plan assets Net actuarial loss/ (gain) recognised for the year Net benefit expense Actual return on plan assets Balance Sheet Details of provisions for gratuity Particulars Defined benefit obligations Fair value of plan assets Plan liabilities As at 31 March 2008 62,980,939 18,491,154 44,489,785 For the year ended 31 March 2008 6,028,085 4,503,848 (1,569,374) 1,877,232 10,839,791 1,318,667 (Rs.) For the year ended 31 March 2007 5,981,296 3,497,924 (1,530,691) (8,317,501) (368,972) 1,680,632 447,980,124 1,367,463 128,484,910 577,832,497 For the year ended 31 March 2007 220,932,703 1,463,646 18,639,095 241,035,444
Imported Indigenous Total 5. imports Value of imports on CIF basis
(Rs.) As at 31 March 2007 51,632,939 17,982,945 33,649,994
36 37
18. Notes to the accounts Changes in the present value of the defined benefit obligation Particulars (Rs.) For the year ended 31 March 2007 55,673,233 5,981,296 3,497,924 (5,351,954) (8,167,560) 51,632,939 (Rs.) For the year ended 31 March 2007 18,726,037 1,530,691 149,941 2,928,230 (5,351,954) 17,982,945
For the year ended 31 March 2008 51,632,939 6,028,085 4,503,848 (810,458) 1,626,525 62,980,939
Opening defined benefit obligation Current service cost Interest cost Benefits paid Actuarial loss/ (gain) on obligation Closing defined benefit obligation Changes in the fair value of plan assets Particulars
For the year ended 31 March 2008 17,982,945 1,569,374 (250,707) (810,458) 18,491,154
Opening fair value of plan assets Expected return on plan assets Actuarial gain/(loss) on plan assets Contributions by employer Benefits paid Closing fair value of plan assets
The Company expects to contribute Rs. 10,000,000 in the qualifying insurance policy during 2008-09. Major categories of plan assets as a percentage of the fair value of total plan assets Particulars
As at 31 March 2008 100%
As at 31 March 2007 100%
Investments with the insurer
Principal assumptions used in determining gratuity benefit obligations for the Companys plan Particulars As at 31 March 2008 Discount rate Expected rate of return on plan assets Salary increase Employee turnover Retirement age
As at 31 March 2007
7.60% 8.10% 7.50% 7.50% 10% for Executives 10% for Executives 7% for Workers 7% for Workers 10% for Executives 10% for Executives 2% for Workers 2% for Workers 55 - 60 Years 55 60 Years
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. The overall expected rate of return on plan assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled. Amounts for the current and previous two periods Particulars (Rs.) As at 31 March 2006 55,673,233 18,726,037 36,947,196 (105,070)
As at 31 March 2008 62,980,939 18,491,154 44,489,785 (293,399) (250,707)
As at 31 March 2007 51,632,939 17,982,945 33,649,994 (904,245) 149,941
Defined benefit obligation Plan assets Surplus/(deficit) Experienced adjustments on plan liabilities Experienced adjustments on plan assets

18. Notes to the accounts 7. Segment reporting The Companys sole business segment is Beer and the only geographical segment is India. Consequently, the requirement for a separate disclosure as required under AS 17 Segment Reporting is not applicable. 8. Provision for claims The provision for claims is utilised to settle previously anticipated and determined adverse outcomes of legal cases against the Company. The provision is based on independent advice obtained by the Company from external legal counsel. The time frame of utilization of the provision is determined by the course of the legal proceedings. (Rs.) 31 March 2007 262,046,509 7,465,500 (9,393,921) 260,118,088
31 March 2008 Opening balance Add: Addition during the year Less: Amounts used during the year Less: Unused amounts reversed during the year Closing balance 260,118,088 (88,561,496) 171,556,592
Details of provisions reversed during the year are: (i) Franchisee fees The Orissa State Excise Department had raised a demand for franchisee fee pertaining to the brands owned by Shaw Wallace Breweries Limited (SWBL), and manufactured in East Coast Breweries and Distilleries Limited (ECBDL, now a unit of the Company). The Company had provided Rs. 54,845,466 against the said demand. During the current year, the honourable Supreme Court of India has ruled the case in favour of the Company. Consequently, the said provision, has been reversed. (ii) Labour related cases The Haryana State Government had imposed a prohibition on manufacture and sale of beer in the state of Haryana in 1996. Accordingly, Haryana Breweries Limited (HBL, now a unit of the Company) temporarily discontinued its operations and terminated services of employees. Subsequently, HBL re-commenced operations in 2001, after relaxation of rules by the State Government and hired services of new employees. The erstwhile employees of HBL were aggrieved of this decision and hence filed cases against the Company for reinstatement/ compensation. The Company had provided Rs. 33,716,030 against the said labour demands. During the current year, majority of the cases were settled in favour of the Company and the probability of adverse outcome in the rest of the cases has been assessed as remote. Hence, provision has been reversed.
38 39

18. Notes to the accounts 9. Related parties (i) Names of related parties and description of relationship with the Company:
Enterprises where control exists 1. Ultimate holding SABMiller plc company 2. Holding company SABMiller Asia & Africa BV (effective 30 March 2007). SABMiller Breweries Private Limited (formerly Fosters India Private Limited) (effective 30 March 2007) SABMiller Asia B.V. (up to 30 March 2007) SABMiller India Limited (up to 30 March 2007) MBL Investments Limited (up to 30 March 2007) Names of other related parties with whom transactions have taken place during the year
1. Fellow subsidiaries MBL Property Developers Limited SABMiller Finance B.V. S.p.A. Birra Peroni SABMiller Breweries Private Limited (formerly Fosters India Private Limited) (up to 30 March 2007) SABMiller Asia & Africa BV (up to 30 March 2007) MBL Investments Limited (from 30 March 2007 to 30 September 2007) SABMiller India Limited (effective 30 March 2007) SABMiller Asia B.V. (effective 30 March 2007) SABMiller Africa & Asia (Pty) Limited Richard Mark Rushton, Managing Director (up to 31 July 2006) Jean-Marc Delpon de Vaux, Managing Director (effective 1 August 2006) (ii) Related party transactions (Rs.) Nature of transactions Holding / ultimate holding company 83,191,895 (-) (73,823,431) 41,910,792 (-) (-) 2,758,904 (-) (-) 76,072,145 (1,111,255) 15,350,134 (11,900,755) (7,094,402) (1,218,523,943) Fellow subsidiaries (48,222,324) 3,692,493 (87,762) 110,443,152 (5,339,795) 409,179,310 (317,551,028) (16,767) 217,094 (16,302,884) 1,895,208 (9,056,742) (-) 117,947,601 (-) Key managerial personnel (-) (-) (-) (-) 22,434,668 (20,706,454) (-) (-) (-) (-) Total
2. Key managerial personnel
Income from marketing operations
83,191,895 (48,222,324) 3,692,493 (73,911,193) 152,353,944 (5,339,795) 409,179,310 (317,551,028) 2,758,904 (16,767) 22,434,668 (20,706,454) 76,289,240 (17,414,139) 17,245,342 (20,957,497) (7,094,402) 117,947,601 (1,218,523,943)
Interest income
Purchase of traded goods and raw materials
License fees
Interest expense
Remuneration
Reimbursement of expenses incurred on behalf of the Company Reimbursement of expenses incurred on behalf of other companies Inter-corporate deposit given, net
Inter-corporate deposit refunded, net
18. Notes to the accounts (Rs.) Nature of transactions Holding / ultimate holding company (503,185) 205,825,649 (-) (-) (1,348,499,040) (-) 1,352,663 (-) (-) Fellow subsidiaries (1,000,000) (220,000,000) (1,863,000,000) (-) 9,313,175 (-) (-) 738,310 (-) Key managerial personnel (-) (-) (-) (-) (-) (-) (-) Total
Loan repaid, net
(1,503,185) 205,825,649 (220,000,000) (1,863,000,000) (1,348,499,040) 9,313,175 (-) 1,352,663 (-) 738,310 (-)
Loan taken, net
Share application money received
Proceeds from issue of shares
Purchase of investments
Sale of fixed assets
Purchase of fixed assets
(iii)
Amount outstanding as at the balance sheet date: (Rs.) Holding / ultimate holding company 385,269,911 (179,444,262) 12,953,750 (9,882,626) (-) 1,001,003 (-) Fellow subsidiaries (-) 995,241,338 (582,509,707) (117,947,601) 8,521,725 (-) Key managerial personnel (-) (-) (-) (-) Total
Nature of transactions
Unsecured loans
385,269,911 (179,444,262) 1,008,195,088 (592,392,333) (117,947,601) 9,522,728 (-)
Payable to group companies
Inter corporate deposit
Advances recoverable in cash or in kind or for value to be received

Figures in brackets represent previous year figures.
(iv)
Tenure and terms for repayment have not been specified for unsecured loan obtained from the holding Company.
40 41
18. Notes to the accounts 10. Deferred tax assets/ (liabilities) As at 31 March 2008 Deferred tax assets Investments Debtors Loans and advances Provision for retirement benefits Provision for claims Others Unabsorbed depreciation Total Deferred tax liabilities Fixed assets Total Deferred tax liabilities, net 1,029,367,235 1,029,367,235 (63,744,036) 782,961,155 782,961,155 180,147 94,153,813 51,127,403 31,571,602 52,349,240 7,681,544 728,559,450 965,623,199 178,398 87,573,603 19,824,999 23,522,210 63,189,810 37,050,862 551,621,273 782,961,155 (Rs.) As at 31 March 2007
In view of the accumulated losses and in accordance with AS 22 Accounting for taxes on income, deferred tax assets on unabsorbed depreciation and other temporary timing differences have been recognised only to the extent of those timing differences, the reversal of which will result in sufficient taxable income. The above deferred tax liability includes Rs. 7,039,122 of deferred tax credit recognised directly in general reserve, which pertains to provision towards employee benefits recognised directly in general reserve, using the transitional provision of AS 15 (Revised). 11. Expenditure in foreign currency (accrual basis) For the year ended 31 March 2008 8,672,944 409,179,310 29,531,653 23,244,952 8,791,717 479,420,576 (Rs.) For the year ended 31 March 2007 6,441,321 317,551,028 45,744,418 14,793,793 1,621,200,000 12,054,585 2,017,785,145
Travel License fees Interest Professional and consultation fees Brand Others

18. Notes to the accounts 12. Derivative instruments and un-hedged foreign currency exposure Derivative instruments Particulars Forward contract Currency swap contract Currency swap contract Purpose Hedge against repayment of foreign currency loan Hedge against repayment of foreign currency loan Hedge against repayment of foreign currency loan As at 31 March 2008 JPY 113,010,836 JPY 260,000,000 USD 7,000,000
Hedge transactions are those which are defined as such at the inception of the transaction. No periodic evaluation of re-designation of hedges is required to be carried out. Notwithstanding the above, all hedge transactions are translated at year end rates and the resulting gain or loss is recognised in the profit and loss account. Particulars of un-hedged foreign currency exposure as at the balance sheet date Underlying asset / liability As at March 2008 Foreign currency amount Bank balance Sundry creditors Interest accrued but not due Payable to group companies USD 237,368 JPY 111,163,791 USD 645,120 EURO 950,423 USD 266,437 USD 5,409 ZAR 2,635,493 Amount in Rs 9,504,220 44,474,410 25,830,605 54,009,069 10,668,131 216,587 12,953,750 As at 31 March 2007 Foreign currency amount USD 36,016 USD 13,340 ZAR 1,602,984 Amount in Rs 1,553,729 575,474 9,533,569
13. Managerial remuneration The details of remuneration paid to the managing director are as follows: For the year ended 31 March 2008 Salary and allowance Perquisites 13,231,671 9,202,997 22,434,668 (Rs.) For the year ended 31 March 2007 11,277,721 9,428,733 20,706,454
Note: As the future liability for gratuity and leave encashment is provided on an actuarial basis for the Company as a whole, the amount pertaining to managing director is not ascertainable and, therefore not included above. 14. Provision for impairment of fixed assets The impairment loss amounting to Rs. 117,306,243 in the current year represents the write down of certain fixed assets to their recoverable amount. These fixed assets (excluding assets already impaired in the prior year) have been rendered as redundant / idle as a result of significant capacity expansion at certain breweries and have been identified as such based on the physical verification conducted by the management during the year. In the previous year, due to significant growth in the beer market and constraints in capacities, management revisited its decision to discontinue one of its brewery, which was impaired in earlier years. Accordingly, management had reassessed the recoverable value of the brewery which resulted in reversal of impairment loss amounting to Rs. 101,662,427 being the lower of recoverable value and the carrying amount of fixed assets determined (net of depreciation) had there been no impairment.
42 43

18. Notes to the accounts
15. Management has initiated the process of identifying enterprises which have provided goods and services to the Company and which qualify under the definition of micro and small enterprises, as defined under Micro, Small and Medium Enterprises Development Act, 2006. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2008 has been made in the financials statements based on information received and available with the Company. Further in the view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the said Act is not expected to be material. The Company has not received any claim for interest from any supplier under the said Act. (Rs.) 31 March 2008 (i) (ii) The principal amount remaining unpaid to any supplier as at the end of each accounting year; The amount of interest paid by the Company along with the amounts of the payment made to the supplier beyond the appointed day during the year; The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under this Act; 34,095,709 Nil 31 March 2007 22,387,599 Nil
(iii)
Nil
Nil
(iv) The amount of interest accrued and remaining unpaid at the end of the year (v) The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise.
535,123 535,123
343,152 343,152
16. Operating leases The Company is obligated under non-cancellable operating leases for office premises which are renewable at the option of both the lessor and lessee. Total rental expense under non-cancellable operating leases entered on or after 1 April 2001 amounted to Rs. 8,260,160 (previous year: Rs. Nil) for the year ended 31 March 2008. Future minimum lease payments under non-cancellable operating leases are as follows: Period Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years As at 31 March 2008 16,336,414 32,588,625 (Rs.) As at 31 March 2007 -
The Company is also obligated under cancellable lease for residential, vehicles and office premises, which are renewable at the option of both the lessor and lessee. Total rental expense under cancellable operating lease entered amounted to Rs. 67,001,641 (previous year: Rs. 31,655,513) for the year ended 31 March 2008. 17. Employee stock compensation cost Guidance Note on Accounting for Employee Share Based Payments issued by the ICAI (the Guidance Note) establishes financial and reporting principles for employees share based payments plans. The Guidance Note applies to employee share based payment plans, the grant date in respect of which falls on or after 1 April 2005. SABMiller Plc (the Group) operates a variety of equity-settled share-based compensation plans for the employees of the Company. (i) During the year ended 31 March 2008, the Group had the following share-based payment arrangements for the employees of the Company.
18. Notes to the accounts
arrangement Type of arrangement
Executive Share Option Scheme [Approved and (No.2) Scheme] As at March 2008 As at March 2007 19 May 2006 95,377 Equity 10 years 3 years Achievement of a target growth in earnings per share International Performance Share Award Sub-Scheme As at March 2008 As at March 2007 -
Date of grant Number of shares granted Method of settlement Contractual life Vesting period Vesting conditions
18 May 2007 92,200 Equity 10 years 3 years Achievement of a target growth in earnings per share
arrangement Type of arrangement
Date of grant Number of shares granted Method of settlement Contractual life Vesting period Vesting conditions
18 May 2007 7,000 Equity 10 years 3 years Achievement of a target growth in earnings per share
(ii)
The details of the activity under Executive Share Option Scheme [Approved and (No.2) Scheme] are as follows: 31 March 2008 31 March 2007
Number of Options
Outstanding at the beginning of the year Granted during the year Lapsed during the year Transferred during the year * Outstanding at the end of the year Exercisable at the end of the year 125,677 92,200 3,950 38,750 217,877 -
Weighted average exercise price (Rs)

801 942 794 779 865 -
Number of Options
73,000 95,377 168,377 -
Weighted average exercise price (Rs)

643 911 800 -
* The options transferred represents options relating to employees transferred to other companies within the SABMiller Group during the year.
The weighted average share price at the date of exercise for stock options exercised during the year was Rs. 961 (previous year: Rs. 881). The options outstanding as at 31 March 2008 had a weighted average remaining contractual life of 8.3 years (previous year: 8.7 years).
44 45
18. Notes to the accounts The details of the activity under International Performance Share Award Sub-Scheme are as follows: 31 March 2008 Number Weighted of Options average exercise price Outstanding at the beginning of the year Granted during the year Outstanding at the end of the year Exercisable at the end of the year 7,000 7,000 31 March 2007 Number Weighted of Options average exercise price -
The weighted average share price at the date of exercise for stock options exercised during the year was Rs. 961. The options outstanding as at 31 March 2008 had a weighted average remaining contractual life of 9.3 years. (iii) The weighted average fair value of stock options granted during the year is Rs. 283 (previous year: Rs. 234). The estimate of fair value on the date of the grant was made using the Black-Scholes model with the following assumptions: For the year ended 31 March 2008 Share price at the grant date Exercise price at the grant date Expected volatility Contractual life (vesting and exercise period) in years Expected dividends Average risk-free interest rate Rs. 961 Rs. 942 22.5% 10 years 2.11% 4.48% For the year ended 31 March 2007 Rs. 881 Rs. 910 22.5% 10 years 2.11% 4.49%
The expected volatility was determined based on historical volatility by assessing the historic share price data in the United Kingdom and South Africa since May 1999 and May 2001 respectively. (iv) Since the Company used the intrinsic value method the impact on the reported net profit and earnings per share by applying the fair value based method. The Guidance Note requires the Proforma disclosures of the impact of the fair value method of accounting of employee stock compensation accounting in the financial statements. Applying the fair value based method defined in the said Guidance Note, the impact on the reported net profit and earnings per share would be as follows: For the year ended 31 March 2008 Net income as reported Add: Employee stock compensation under intrinsic value method Less: Employee stock compensation under fair value method Proforma net income Earnings per share as reported - Basic - Diluted Proforma earnings per share - Basic - Diluted 344,777,187 18,391,746 326,385,441 1.52 1.49 1.44 1.41 (Rs.) For the year ended 31 March 2007 401,891,802 10,912,108 390,979,694 2.14 2.13 2.08 2.07
18. The comparative figures have been regrouped/ reclassified, wherever necessary, to conform with the current years presentation.

Jean-Marc Delpon de Vaux Managing Director Kevin Heydenrych Chief Finance Officer Bangalore 23 June 2008 Jonathan Andrew Kirby Director Pramod S M Company Secretary
46 47
Cash flow statement for the year ended 31 March 2008

(Rs.) For the year ended 31 March 2007
For the year ended 31 March 2008 Cash flows from operating activities Profit / (Loss) before tax Adjustments: Provision for impairment of fixed assets Depreciation Interest expense Interest income Loss/ (profit) on sale of fixed assets/ assets discarded Unrealised foreign exchange difference Operating cash flows before working capital changes Increase in sundry debtors Increase in loans and advances Increase in inventories Increase in current liabilities and provisions Cash generated from operations Taxes paid Net cash provided by operating activities Cash flows from investing activities Purchase of fixed assets Proceeds from sale of fixed assets Inter-corporate deposits, net Interest received Purchase of investments Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Share application money received Proceeds from borrowings Repayment of borrowings Interest paid Unclaimed dividend paid Net cash (used in)/ provided by financing activities Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Net increase in cash and cash equivalents*
408,545,685 117,306,243 858,090,043 148,166,541 (52,435,809) (111,953,510) (36,484,812) 1,331,234,381 (1,051,637,153) (193,645,516) (408,963,371) 1,032,704,887 709,693,228 (46,116,860) 663,576,368 (3,724,094,832) 179,174,811 117,947,601 52,367,945 (9,181,175) (3,383,785,650) 3,383,785,650) 20,529,309,506 (21,386,584,822) (160,223,816) (740,705) (1,018,239,837) 2,237,371 (3,736,211,748) 4,047,462,855 311,251,107 (3,736,211,748)
453,375,648 (101,662,427) 625,247,195 313,366,314 (84,062,250) 17,028,530 1,223,293,010 (5,096,929) (321,708,500) (235,213,089) 1,186,712,169 1,847,986,661 (70,489,732) 1,777,496,929 (3,655,242,114) 5,263,942 1,151,723,818 83,612,459 (2,414,641,895) 1,348,499,040 1,863,000,000 15,127,038,959 (13,599,646,487) (311,185,951) (341,582) 4,427,363,979 3,790,219,013 257,243,842 4,047,462,855 3,790,219,013
c d a+b+c+d
*Balance in deposit account include Rs. Nil (previous year: Rs. 651,824,262) held in an escrow account pursuant to a share purchase agreement and Rs. 11,864,657 (previous year: Rs. 11,551,147) in margin money account. As per our report attached

Jean-Marc Delpon de Vaux Managing Director
Jonathan Andrew Kirby Director
Kevin Heydenrych Chief Finance Officer Bangalore 23 June 2008 Bangalore 23 June 2008
Pramod S M Company Secretary
Additional information pursuant to Part IV of Schedule VI of the Companies Act, 1956.

COMPANYS BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE I Registration Details Registration No : Balance Sheet Date: II 49687 31-Mar-08 State Code :11
Capital Raised during the year (Amount In Rs Thousands) Public Issue Nil Bonus Issue Nil Rights Issue Nil Private Placement 186,300
III
Position of Mobilisation and Deployment of Funds (Amount In Rs Thousands) Total Liabilities 8,257,520 Total Assets 8,257,520
Sources of Funds
Paid - up Capital 2,311,837 Secured Loans 0 Reserves and Surplus 6,406,852 Unsecured Loans 3,774,422
Application of Funds
Net Fixed Assets 8,742,088 Net Current Assets 854,541 Accumulated Losses Nil IV Performance of the Company (Amount In Rs Thousands) Turnover 10,584,976 Profit/(Loss) Before Tax 408,545 Earnings Per Share in Rs 1.52 V Total Expenditure 10,458,198 Profit/ Loss After Tax 344,777 Dividend Rate % 0 Investments 11,359 Misc Expenditure Nil
Generic Names of Three Principal Products/ Services of the Company (as per monetary terms) Item code No [ITC Code] Product Description 220300 Beer

Jean-Marc Delpon de Vaux Managing Director Kevin Heydenrych Chief Finance Officer Bangalore 23 June 2008 Jonathan Andrew Kirby Director Pramod S M Company Secretary
48 49
SKOL BREWERIES LIMITED Regd. Office: No.1, Mahal Industrial Estate, Mahakali Road, Andheri (East), Mumbai-400 093
PROXY FORM

I/We

as my/our proxy to attend and vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held at M.C. Ghia Hall, Bhogilal Hargovindas Building, 2nd Floor, 18/20, K. Dubash Marg, behind Prince of Wales Museum, Kala Ghoda, Mumbai 400 001 on Wednesday, the 10th September, 2008 at 3.00 p.m. and at any adjournment thereof. Signed this Signed by the said N.B.: This Proxy form must reach the Registered Office of the Company not less than 48 hours before the time of holding the meeting. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Please cut along this line- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - SKOL BREWERIES LIMITED Regd. Office: No.1, Mahal Industrial Estate, Mahakali Road, Andheri (East), Mumbai-400 093 ATTENDANCE SLIP Please complete this Attendance Slip and hand it over at the entrance of the Meeting Hall. SKOL Breweries Limited No.1, Mahal Industrial Estate, Mahakali Road, Andheri (East), Mumbai-400 093 I hereby record my presence at the Annual General Meeting of the Company to be held at M.C. Ghia Hall, Bhogilal Hargovindas Building, 2nd Floor, 18/20, K. Dubash Marg, behind Prince of Wales Museum, Kala Ghoda, Mumbai 400 001 on Wednesday, the 10th September, 2008 at 3.00 p.m. Members Name (in Block Capitals): Share Ledger Folio No. : DP ID No. Client ID No. Members/Proxys Signature:

day of
of
(or failing whom)
of
being a Member(s) of the above named Company hereby appoint
of
50 51
SKOL Breweries Limited 1, Mahal Industrial Estate, Mahakali Caves Road, Andheri East, Mumbai - 400 093 Maharashtra, India
T el +91(0)22 - 67103890-93 Fax +91(0)22 - 67103894
www.sabmiller.in
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SKOL Breweries Limited

Annual Report 2008

Managing Director Speaks

Our core brands are...

Sales in Rs. Crores 1200

SKOL Breweries Limited

THE BREWERY PROCESS

Here are some highlights from our breweries:

SKOL Breweries Limited

SKOL Breweries Limited

Haryana CDB RB Rajasthan HB Uttar Pradesh

Orissa PALS Maharashtra Andhra Pradesh Karnataka MB CB

SKOL Breweries Limited

SKOL Breweries Limited

31-3-09 2732 (41) 31-3-06 0.06 Nil

31-3-10 3127 20 31-3-07 Nil

31-3-11 Rs.Crores 3700 29 31-3-08 Rs.Crores 7

III. Other information:

Reasons of loss or inadequate profits

Steps taken or proposed to be taken for improvement

Expected increase in productivity and profits in measurable terms.

Turnover Profit before tax

SKOL Breweries Limited

Pre Issue % 99.22 99.22

No of Shares 279384473 279384473

0.00 0.00 0.00

2240 4008 6248

0.00 0.00 0.00

0.03 0.70 0.04 0.78 100.00

73168 1616291 103565 1739533 281130254

0.02 0.57 0.02 0.62 100.00

SKOL Breweries Limited

SKOL Breweries Limited

SKOL Breweries Limited

SKOL Breweries Limited

for BSR & Co. Chartered Accountants

Annexure to the Auditors report

SKOL Breweries Limited

Forum where dispute is pending

Tax Tax Sales Tax under State Sales Tax Acts

Income-tax under Income-tax Act, 1961

Annexure to the Auditors report

for BSR & Co. Chartered Accountants

SKOL Breweries Limited

Balance sheet as at 31 March 2008

2,311,837,450 6,406,852,856 8,718,690,306 -

1,979,158,880 4,610,316,326 6,589,475,206 1,863,000,000 4,652,648,467 13,105,123,673

3,774,422,006 63,744,036 12,556,856,348

Net current assets

S ignificant accounting policies Notes to the accounts

for BSR & Co. Chartered Accountants

for SKOL Breweries Limited

Bangalore 23 June 2008

Bangalore 23 June 2008

18 (3) 1.52 1.49 2.14 2.13

Significant accounting policies Notes to the accounts

for BSR & Co. Chartered Accountants

for SKOL Breweries Limited

Bangalore 23 June 2008

Bangalore 23 June 2008

SKOL Breweries Limited

Schedules to the financial statements

SKOL Breweries Limited