Group 7 united spirits ltd.

1. United Spirits Limited

2. Presented by Karan Mehta B015 Neeta Pai B018 Vishal Agrawal B001 Kishori Sawant B038 Kavita Shetty B027

3. Global Scenario Legally consumed in most countries, and over 100 countries have laws regulating their production, sale, and consumption Minimum drinking age varies between 16 and 25 years, depending upon the country and the type of drink. Most nations set it at 18 years of age The 2 16 billion dollorsglobal spirits market grew at its fastest pace in a decade at 9.75% during the same period. Nearly half of the top 100 liquor brands in 2010 were from Asia

4. Global Scenario

5. Indian Scenario About 19 million Indians enter the legal drinking age in the country every year The Indian spirits market grew 16% from a year ago to 234.40 million cases in 2010, IWSR data showed The Indian market for alcohol — mostly spirits and beer, as well as wine — totaled $14 billion last year, and was one of the fastest-growing alcohol markets in the world. Over the next five years, the Indian market for alcohol is projected to grow at 10% a year Hard liquor is far more popular than beer and wine, with spirits accounting for about 70% of the market. India is the largest whiskey market in the world, so American whiskey producers figure they've got a head start in India compared to other new markets The wine market has grown from virtually zero 10 years ago to $253 million last year, and it is expected to more than double to $630 million by 2013.

6. The Market for Beverage Alcohol Regulatory environment : The Indian market is highly regulated, highly restricted and highly taxed. Licensing requirement exists for Raw material procurement, Stocking of raw material, Production, Inter-state movement, Retailing and Distribution. Controls also exist on Brand entry, Advertising, Distribution & Pricing. These regulatory hurdles constitute an entry barrier to the industry

7. The Indian Market Re-distribution structure – Government market (65%) –State government is the sole distributor Auction market (16%) – State government auctions geographical territories which has led to monopolies / cartels Free market (19%) – Through trade licenses Bargaining power in the distribution network is commanded by players with premium brands, large volume base and product range The UB Group enjoys a unique advantage as the Leader in both Spirits and Beer Segments

8. The Indian Market Regulatory hurdles constitute an entry barrier to the industry The alcohol distribution structure is 65% state government controlled UB group with its premium brands,large volume base and product range has better bargaining power with the distribution network Market category and consumption Whisky constitutes 54% ,followed by rum at 27% Youngsters seeking western lifestyle typically begin by drinking beer and move up to spirits .The brand positioning of UB spirit brands are designed to attract these upwardly mobile and aspirational consumers.

9. V I S I O N T o bring all Spirits business together and create “United Spirits” “Alcohol may be man's worst enemy, but the bible says love your enemy.”

10. M I S S I O N T o be the recognized leader in our target markets. T o be the preferred employer wherever we operate. T o recognize the value of our human assets. T o be the partner of choice for customers, suppliers, and other creators of innovative concepts T o be increase the long-term value of our Group for the benefit of our shareholders. T o focus on assuming leadership in all our target markets T o be a major contributor to our National Economy and take full advantage of our strong resource base. “Alcohol may be man's worst enemy, but the bible says love your enemy.”

11. Q U A L I T Y Q uality leadership is vital to the long-term success of the UB Group in B uilding quality into our workplace, products and service T he UB Group will work to provide products and services that always meet or exceed expectations W ill create an environment in which each employee can contribute skills, talents and ideas to a never-ending process of improvement “Alcohol may be man's worst enemy, but the bible says love your enemy.”

12. Introduction of United Spirits Ltd. India’s Largest Beverage Alcohol Group and The Largest in the World Total worth of its spirits division brands is over $ 5 billion US Dollars Market Leader with over 59% market share of India Spirits Business 114 million cases in the year 2010-11 Portfolio comprises of a wide range of Brands including 21 Millionaire Brands Won the most prestigious awards for flavors, ranging from Mondial to International Wine and Spirit Competition (IWSC) to International Taste & Quality Institute (ITQI). Innovator in the industry USL has a global footprint with exports to over 37 countries. It has a sizeable presence in India

13. Introduction of United Spirits Ltd USL’s Wine Business in India operates through two companies – United Vintners Limited and Four Seasons Wines Limited. UVL imports wines from all over the world to offer a portfolio of wines of different origin, varietals, styles and price points. The current portfolio comprises a selection of some exquisite ‘New world’ & ‘Old world’ wines from New Zealand, Australia, Portugal, South Africa and France.

14. History of United Spirits “Beer is proof that God loves us and wants us to be happy.” 1857 - Mr. Thomas Leishman formed United Breweries Ltd. 1947 - Mr. Vittal Mallya became the first Chairman of Indian Origin. 1974 - International beer exports began to Aden and Middle East. 1983 - Dr. Vijay Mallya became the Chairman of the UB group.

15. Milestones 1999 :- United Spirits (UNITDSPR) is the spirits division of the UB Group. It was originally incorporated as McDowell & Co. in 1999. On the amalgamation of eight spirit companies into the company including Herbertsons, 2002 :- McDowell Alcobev became the wholly owned subsidiary of the company. UB group gave a new look to No.1 McDowell's, its flagship in the prestige segment of the whisky market. Forges alliances with US, Australia and French Cos. for bulk wine import. Phipson Distilley became a wholly owned subsidiary of McDowell & Co. Acquired 85% equity stake of Truimph Distilleries & Vinters Pvt Ltd.

16. Milestones 2003 :- Rolled out its new Whisky brand, 'Derby Special Whisky' in Andhra Pradesh Market. Forged alliance with Newzealand Co called Independent Liquor to pursue an agressive growth strategy in the ready-to-drink segment. No 1 Celebration rum crossed sales over 3 million during the year. McDowell Alcobev made open offer to acquire 25% stake in Intertia Industries. McDowell and Company soars 9.18% to Rs.49.35 on offer for Herbertsons. McDowell & Phipson made a counter offer to buy out 45.2 % equity in Herbertsons Ltd., priced at Rs.200 a share. McDowell unleash new Vodka 2004 :- McDowell unveils `Signature` in TN market

17. History of United Spirits 2 005:- Triumph Distillers & Vintnersgot , and Shaw Wallace, the company got its current name 2006 :- United Spirits acquired of Bouvet Ladubay SAS, a Company in France engaged in manufacture of wines. This acquisition has been made by Asian Opportunities and Investments Limited, a wholly owned subsidiary of USL in Mauritius. The acquisition involved the purchase of entire share capital of Bouvet Ladubay SAS for a consideration of Euro 14.75 Million. 2007:- United Spirits Limited, the flagship of The UB Group acquired a hundred percent of Whyte & Mackay for £595m. It is one of the major acquisitions which Vijay Mallya . 2008 :- United Spirits Limited ranked the world’s 3rd largest spirits company unveiled Bagpiper Whisky and McDowell’s Celebration Rum, in a revolutionary “bullet” pack of 60 ML and 90 ML respectively, creating the biggest packaging innovation for the spirits industry.

18. History of United Spirits Ltd. 2008:- Its board had approved the merger of Balaji Distilleries, into USL in an all stock deal with effect from Apr. 01, 2009. 2009:- United Spirits Ltd sells 90 million cases in 2008-2009; Narrows the gap to the No 1 position in the global spirits market. A special initiative by United Spirits to modernize and enhance consumer experience, this is multi-brand Spiritz & More  experience store in the city is the upgraded version of Wine Supply Depot, one of the oldest spirits retail stores in Bangalore. Spiritz & More currently has 12 outlets in Bangalore and another 19 elsewhere in the country. 2010:- Merger of Balaji Distilleries Ltd into United Spirits Ltd Approved They created dimension in liquor retailing with the launch of Spiritz and More @ House of Spirits- India’s largest Hypermall.

19. Critical Success Factors Core Competencies Focus on Brand Imagery USL has successfully positioned different brands on different platforms relevant to different consumers, different need states USL has appropriated some of the category values including ‘refreshment’ Brand Association Have sponsored many concerts and Live events Owns a team in IPL McDowell Pump in Whopping Rs 28 Cr for Indian Derby United Soccer Leagues has entered into a partnership agreement with Enterprise Rent-A-Car which will allow USL teams to receive the best available rental rates from Enterprise. .

20. Critical Success Factors Core Competencies Focus on Value to Consumer. Develop Synergies Through Mergers and Acquisitions. Dominance at point of purchase / consumption through Visibility Innovation In product In packaging In Promotion Volume growth Implementation of price increase in key states Reduction in cost of sales driven by bottle cost

21. New Product Initiatives To achieve the national roll out of McDowells’ Diet Mate whisky (using a proprietary and US patented technology from the Group Research Foundation – VMSRF) Launching of unique Diet Vodka (using another US patented technology from VMSRF)

22. New Marketing Initiatives - To pursue the launch of existing products in innovative packaging variants (tetra packs, pre-formed sachets, etc) and there by reduce the packaging cost as well as the price point to consumers in addition to the convenience of the pack itself . Pre-formed Sachets

23. Product Portfolio

24. Malt based Whiskey Premium Basic

25. Vodka wines

26. Whisky Brandy Rum Vodka & Gin Bagpiper • McDowell’s No.1 • Director’s Special • Old Tavern • Haywards • McDowell’s Green Label • Gold Riband • Royal Challenge • DSP Black • Signature • McDowell’s No.1 • Honey Bee • John Ex-Shaw Celebration Rum • Old Cask Rum • Old Adventurer Rum • White Mischief • Romanov • Blue Riband

27. USL PERFORMANCE HIGHLIGHTS USL Brands grew 14% World’s Top 100 Spirits Brands grew 1%* 18 of the Top 25 global Premium brands lost ground Smirnoff, Bacardi, Johnnie Walker, Absolut collectively lost 4 million cases* USL is one of two companies with more than 10 brands featuring in the Top 100 brand listing*

28. USL dominant market share & the fastest growing brands

29. Geographical Presence

30. Particulars Total Number Comments Brands 140 19 of these are millionaire brands and there are about 151 brand variants SKU’s 2992 Distillery-State-Brand-Pack combinations Distillery/Bottling Plants 79 30 Owned Manufacturing facilities;49 contract manufacturing units Depots 48 Break-bulk points for finished goods distribution Retail Outlets 64000 Inclusive of both on and off premise outlets

31. USL has a global footprint with exports to over 37 countries. It has a sizeable presence in India with distilleries and sales offices all across the country, and a committed team of over 7500 people dedicated to the fulfillment of the company's mission. It has established manufacturing and bottling plants in every state of India. In addition, to deliver its products to customers located anywhere in India, USL has established a robust distribution network covering the whole country. USL acquired Balaji Distilleries Limited in 2008. This acquisition gave the company the strategic advantage to consolidate the Group’s leadership position in a critical, large and growing State like Tamil Nadu. For its annual production requirement, the company has already entered into long term contractual agreement with local farmers for 500 acres and will enter into contractual agreements for a further 2000 acres of vineyards. Besides, the company will also share its technical expertise with the local farmers of Baramati and help in viticulture. Geographical Presence

32. Financial Performance Over the Years

33. United Spirits       (in Crores) Particulars 2007 2008 2009 2010 2011 Sales 4679 5519 7471 9206 12837 Operating Profit 441.2 613.3 643.4 798.8 940.9 EBITDA 474.2 6463 682.5 878.5 1032 (per Share) Particulars 2007 2008 2009 2010 2011 EPS 52.21 31.06 29.62 29.94 29.47 Book Value per Share 141.2 200.6 309.7 381.1 390.2 Dividend per share 2.5 1.5 2 2.5 2.5

34. Ratios 2007 2008 2009 2010 2011 Gross Profit Ratio% 12.63 18.38 14.87 15.42 14.03 Net Profit% 17.81 9.82 7.22 7.59 6 ROCE 15.37 18.9 12.56 9.39 10.87 Return on Networth 36.81 15.48 9.56 7.91 7.55 Current Ratio 1.83 1.53 1.22 2.47 5.34 Debt Equity Ratio 1.11 0.58 0.62 0.73 0.71 Financial Charges Coverage RATIO 3.8 4.72 3.33 2.6 2.47 Total Assets Turnover Ratio 0.98 0.99 0.81 0.59 0.73 Debtors Turnover Ratio 8.43 8.19 7.57 6.12 6.68

35. Competition   (in crores) Particulars USL Radico Khaitan Sales 12837 1742.31 Operating Profit 940.88 149.01 EBITDA 1032.1 160.13 (per Share) Particulars USL Radico Khaitan EPS % 29.47 5.49 BOOK VALUE PER SHARE 390.21 49.14 Dividend per share % 25 35

36. Competition Ratios USL Radico Khaitan Gross Profit Ratio% 14.03 12.23 Net Profit% 6 7.22 ROCE 10.87 11.63 Return on Networth 7.55 11.17 Current Ratio 5.34 3.58 Debt Equity Ratio 0.71 0.75 Financial Charges Coverage RATIO 2.47 4.77 Total Assets Turnover Ratio 0.73 0.87 Debtors Turnover Ratio 6.68 3.59

37. Porter’s Five Forces

38. Potential Entrants Barrier To Entry-customer loyalty, high setup costs. Industry Competitors Strong Image, Brand Loyalty, and Innovative R& D Buyers Retailers Power increasing Suppliers Global Economies Of scale keep supplier prices low Substitutes Other emerging brands

39. SWOT Analysis

40. S W Worldwide known Brand Oldest & Largest Player In India Huge Finances backing from UB Group Strongest Distribution System. Different Brands under Same Company Less concentration on Wine market

41. O T Alcohol consumption is increasing Brand Extension Benefits High Taxes & Regulations Prohibition on Advertising Indian Culture is a Major Hindrance Many International Player Entering In India

42. Strategies Adopted By Company So Far

43. ACQUISITION Almost all acquisitions have been very successful for the Group. Acquisitions. Alcoholic Drinks: Acquired McDowell, Shaw-Wallace, Whyte and MacKay, etc. EXPANSION Expansion policies have rapidly changed over time. The Group expanded by acquisition, innovation in products and entering new markets. Currently, it is more focused on introducing more products in the existing markets and Globalization- entered Europe, Africa. DIVERSIFICATION Concentric diversification is one of the major strategies of the Group.Beer , Whisky, etc. Conglomerate Diversification is not a part of their practices at presently.

44. Strategies To Be Followed By The Company

45. Strategic Themes Metrics & Objectives Increase profitability to bring USL in line with other FMCG companies in India Value growth to lead volume growth Focus on increasing market share in premium segments Managing market share for profitability in other segments Enhance MS in scotch and premium whisky segments Increase Market share

46. Strategic Themes Metrics & Objectives To increase exports Indian Whisky to be exported in bulk to African Countries for packaging in Sachets. To build 3 large multi sub strata plants enabling manufacture and export of grain based whisky to US and Europe Enter Wines Segment Acquisition of International Brands and Viticulture technology. Enhance existing Winery. Introduce Balance Scorecard.

47. Statutory warning: Consuming alcoholic drinks is injurious to health.