TM

USL is a leader and pioneer in Indian alcobev industry with about 40% market share in the Indian Made Foreign Liquor (IMFL) market with pan India presence. Company has strong brand presence with total 140 brands, out of which 21 are millionaire brands (annual sale of more than 1 million cases). Brand leadership and high market share

becomes more relevant in India which is a regulated market with massive entry barriers. In terms of agreement entered in Nov. ’12, promoter companies belonging to UB group sold 2.52 Crs. shares of USL to Relay B.V. ( an indirect wholly owned subsidiary of Diageo Plc) at ` 1,440/share. The transaction was completed in July ’13. Prior to that in May ‘13, a preferential allotment was made to Relay B.V. of 1.45 Crs. shares at ` 1,440/share.

In July ’14, Diageo announced that it has bought 26% stake in USL from public shareholders for ` 11,420 Crs., raising its stake to 54.78%. This was Diageo’s second open offer for USL. The London-based producer of Johnnie Walker Scotch whisky and Smirnoff vodka, had announced in April ’14 that it would offer ̀ 3,030/share to buy 26% in USL from public shareholders. Diageo’s first open offer elicited poor response and Relay acquired only 58,668 shares (0.4%) at a price of ` 1,440/share. Second open offer price was more than double the first offer price and elicited good response from public shareholders. Diageo accepted 3.8 Crs. shares out of 6.9 Crs. offered. Total cost of acquisition by Diageo is put at around ` 18,000 Crs.

In June ’14, USL agreed to sell its Whyte & Mackay (W & M) business to Philippines-based brandy maker Emperador Inc. at enterprise value of £ 430 million ($738 million). The sale is subject to agreement to supply Scotch whisky to USL for 3 years. The sale was made to assuage concerns by the UK Office of Fair Trading that a takeover by Diageo could lead to higher blended whisky prices in the UK. The fact that USL could not recoup the acquisition price paid in 2007 of £595 million raises doubts whether the business has lost value, or was the acquisition grossly overpriced. Also, USL had granted a loan of ` 4,200 Crs. to its London subsidiary for acquiring W & M. The sale proceeds may be used to write off this loan in USL’s consolidated balance sheet. While the sale price may end up being a disappointment, the deal will still lighten USL’s balance sheet. With the world’s major spirit company Diageo taking over management of USL and sale of W & M, we expect fresh infusion of funds and reduction of debt. USL had net debt of ` 7,579 Crs. as of Dec. ’13. Out of this, overseas subsidiary USL Holdings (UK) Ltd. had debt of GBP 370 million (` 3,267 Crs.). Diageo is planning to consolidate USL’s accounts with parent company w.e.f. 2/7/14 (follows June year end). USL is expected to benefit from distribution strength of Diageo in India and other parts of the world. Diageo will continue premiumisation of USL’s portfolio while exiting mass end brands. Out of 140 brands, cheaper brands comprise more than 70% of overall sales by volume. As per an industry expert, margins of semi-premium

u Increasing levels of taxation coupled with over-regulation

has pushed taxes and duties to about three-fifths of the retail

prices of Company’s products.

u In a scenario where nearly three out of every four

cases are sold by the Company to para-statal organizations,

price increases are not easy to come by. Notwithstanding

this, Company has managed price increases in various states

through a mix of upgraded product launches at higher price

points and judicious price corrections in certain markets,

as also through reduced trade spends. It has also tried to do

backward integration by acquiring three distilleries targeting

to obtain at least 50% Extra Neutral Alcohol (ENA) through in

house distillation capacity.

United Spirits Ltd. is also available on www.balance-equity.co.in

TM

United Spirits Ltd.

BSE SENSEX/S & P NIFTY 26638/7954

Sector Breweries & Distilleries

Market Cap./Free Float (` Crs.) 34881/15773

Market Price as on 29/8/14 ` (FV ` 10/-) 2399

52 Week High/Low Rs. 2940/2070

Equity Shares Outstanding (in Crs.) 14.54

P/BV (March '13) 6.31

EV/EBITDA (Times) 43.96

Note: P/E ratio and ROE not calculated as Company reported net loss for 9 mths ended Dec. ‘13. EBITDA annualised for FY ‘14 for EV/EBITDA ratio.

2

Highlights

Shareholding Pattern post open offer (%)

brands are higher by 30% than those of regular segment brands. All these changes are expected to increase profitability and improve return ratios over next 2 years. Company has declared results only till Dec. ’13 till date. Attempts to adopt March ’14 results have failed three times. It has also not declared results for quarter ended June ’14. As a result of this, Company has been removed from F & O segment and NIFTY index w.e.f. 19/9/14. The results have not been adopted as Diageo has sought clarifications in respect of two dues recoverable by USL – ` 1351 Crs. lent to United Breweries (Holdings) Ltd. and sundry debtors of ` 590 Crs. for supplies made to UB group companies. In a worst case scenario both these amounts can be written off in P & L showing big loss.

Major shareholders in USL are now – Diageo through Relay – 54.78%, UB group 4.18%, USL Benefit Trust 2.38%, FII 24% and others 14.66%, as per media reports.

54.78

6.56

24

14.66

Shareholding Pattern post open offer (%)

Diageo Plc. UB group FII Others

Shareholding Pattern as per media reports

TM

United Spirits Ltd.

United Spirits Ltd. is also available on www.balance-equity.co.in

Background

Diageo Plc has taken 54.78% stake in USL through its indirect wholly owned subsidiary. Diageo is a behemoth operating in

approximately 180 countries through nearly million outlets. The company employs over 28,000 people around the world. It has

offices in 80 countries and manufacturing facilities spread across the globe including the United Kingdom, Ireland, United States, Canada,

Spain, Italy, Africa, Latin America, Australia, India and the Caribbean. Diageo reported ` 1,12,000 Crs. in revenues and ` 21,150 Crs. in net

profit for YE June ’13, with an EPS of ` 79.4. Its networth was ` 57,050 Crs. as on June ’13. It enjoys significant market share in almost all

markets across the globe with some of the legendary brands such as Johnnie Walker, J&B, Smirnoff, Ciroc and Baileys.

USL, with more than 40% market share and 140 brands is the largest alcoholic beverage (Alcobev) company in India. The Company

has nearly 21 brands selling more than one million cases a year across segments, from Whisky to Gin covering multiple price points. It has

around five brands selling more than 10 million cases a year. In the last four years, Company’s volumes grew at a CAGR of 7% as against

market CAGR of 10% plus.

3

u India has world’s largest number of whisky drinkers. Indians cumulatively consumed 1.5 billion liters of the liquor last year,

according to Euromonitor data. With brands including Bagpiper and McDowell’s whisky, USL controls about 40% of India’s spirits

market by volume, as per Euromonitor estimates.

u With Diageo, world’s biggest distiller, acquiring majority stake, India has now become one of Diageo’s largest markets and will

be a major contributor to its growth ambitions. It can now combine USL’s strong position with Diageo’s strengths to create a compelling

future in India.

u Savings in interest costs post W & M sale, partly offset by decline in operating profit due to sale, will result in higher earnings for

USL.

u Due to higher interest costs and raw material prices, Company has been reporting low margins and even net loss for nine months

ended Dec. ’13. Lack of good corporate governance by previous management has also been responsible for poor performance besides

high share of regular & below categories in total volumes. However, increasing share of premium categories coupled with low interest

costs should put Company on high growth path and enjoy premium valuations like some of its peers in the FMCG industry.

TM

United Spirits Ltd.

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As of March ‘13, Company owned 28 manufacturing facilities in India and one in Nepal, operated 13 leased facilities in India

from third parties and contracted with 49 tie-up manufacturing facilities that are capable of distilling molasses or grain to produce Extra

Neutral Alcohol (ENA) or bottling IMFL or both. This geographically diverse manufacturing footprint helps Company reduce the otherwise

high costs associated with interstate commerce by minimizing inter-state taxes and duties as also the cost of transportation, inventory etc.

Company had vast network of 64,000 outlets for distribution.

The Emerging Markets Division created in early FY ’12, had identified 4 key markets in Asia and Africa – Nigeria, Angola, Myanmar

& Vietnam - as their focus areas to start their foray into international emerging markets. Significant steps were taken in this direction

during FY ‘13 and third party local manufacturing operations commenced in Myanmar & Vietnam reducing logistics and inventory carrying

costs. In addition to this, export of IMFL continued through the Company’s subsidiary in Singapore and through UB Global, a division of UB

Holdings Ltd. Overall exports were just under 2 million cases in FY ’13.

Tamil Nadu market continued to pose problems for the Company due to artificial restrictions on capacity and production (0.75

million cases as against 1 million cases per month), with compulsion to supply medium/cheap brands to the extent of 40% of truncated

capacity. This benefits new and other existing local players as per Company.

In Nov. ’13, USL sold its Poonamallee distillery in Tamil Nadu to Enrica Enterprises Pvt. Ltd. by way of slump sale on going concern

basis for about ` 125 Crs. Under the franchisee agreement with Enrica, Company will receive royalty payment of minimum ` 15/- per case

on sale of its brands. This may be the result of Diageo’s preference for high compliance with international laws. USL may adopt a similar

arrangement in other states in order not to potentially violate international anti-graft laws.

Company had 79 subsidiaries as of March ’13, and most of them were wholly owned by USL. Book value of investments in subsidiaries

was about ` 1500 Crs. as of March ’13. Company had given ` 5,646 Crs. as loans and advances to related parties as of March ’13.Some

subsidiary companies of USL were referred to BIFR. Company was planning to convert some of the loans in to equity to make their networth

positive. Board has approved merger of two wholly owned subsidiary companies with the Company w.e.f. 1/1/14.

As of May ’13, Company had 8.9 lacs outstanding Global Depository Shares (GDSs) representing 4.45 lacs equity shares.

Diageo and USL have made huge investments to strengthen the compliance standards at USL to bring practices in line with Diageo’s

international operational and governance standards. USL has launched an enhanced Code of Business Conduct that provides greater clarity

and guidance to doing business the right way and all employees have been trained on it.

4

TM

United Spirits Ltd.

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Brands

As per the data for 2012 calendar year compiled by Impact Databank and published by Impact International, a leading alcoholic beverage

magazine, USL is one of only three players with 11 brands among the Top 100 spirits brands worldwide. 5 of the top 15 fastest growing

brands during calendar year 2012 were from the USL stable.

Out of 21 millionaire brands, 11 brands are from IMFL Whisky segment, which has about 40% market share in the market size of

nearly 179 million cases. USL’s top 10 Whisky brands have grown at CAGR of 11.5% in the last 6 years as against market growth of 10% over

the same period. In Brandy and Rum segments USL has four and two millionaire brands and forms nearly 36% and 38% of the total brandy

and rum market, respectively. Finally, even in the white spirits (gin and vodka) segment, USL has a significant presence with nearly four

millionaire brands forming 28% of the total white spirits market of the country. While in Brandy and Rum segment USL’s top brands grew

at higher than market in last 6 years, they grew at CAGR of only 5.5% in white drinks against industry CAGR of 16%. Overall, 21 millionaire

brands of USL have grown at 9% CAGR over last 4 years.

Out of the total volumes of 123.7 million cases in FY ’13, 11 millionaire brands of Whisky formed 62% of total volumes. Similarly,

millionaire brands of Rum and Brandy had a share of 17% each in total volumes, with Gin & Vodka pitching in with 4% share.

Mcdowell is India’s largest alchohol beverage franchise. It clocked volumes of 61.37 million cases in FY ’13, with net sales revenues

of ` 5157 Crs. McDowell No. 1 whisky franchise grew by 19% in FY ’13 with sales volumes of 20+ million cases. It is India’s largest selling

spirits brand as also largest selling whisky brand in the world. The McDowell’s No.1 franchise which has a presence across the Whisky,

Brandy and Rum flavours sold over 47.9 million cases in FY ‘13, an increase of 8% over the 44.5 million cases it sold in the previous fiscal.

McDowell’s No.1 Celebration Rum with sales in excess of 18.2 million cases, grew at 13.6% to become the world’s 2nd largest Rum and by

far, India’s largest, with 2/3 market share. McDowell’s VSOP Brandy, launched in FY ‘11, crossed the 2 million cases mark during FY ’13.

Black Dog brand was rearchitectured and was rated as one of the fastest growing scotch and whiskies in the World. Brand grew at

CAGR of 35% for five years ended March ’13.

Company’s foray into the nascent wine segment in India is gaining ground. Its Four Seasons range has now been extended to more

upmarket products and these have been well received by consumers.

Company’s key brands continued to do well for 9 mths ended Dec. ’13. No. 1 McDowell’s family of whisky brands for the period grew

21% y-o-y, while Rum variant grew 6%. Premium brands like Black Dog Scotch and Antiquity range of whiskies grew 18%, while Royal

Challenge, premium whisky offering was up 26%.

5

TM

United Spirits Ltd.

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Industry

Indian liquor industry is now dominated by two multinational companies Diageo Plc - on acquisition of USL, and Pernod Ricard. With

USL’s market share of 40% and that of Pernod Ricard of 10%, both firms control 50% of Indian marekt of IMFL. Apart from the

brands owned by these two firms, there are only a few successful higher margin brands of scale in India. The semi-premium segment sees

intense competition, due to large volumes and margins which are relvatively higher than in the regular segment. Margins of semi-premium

brands are higher by 30% than those of regular segment brands. As a result of this, the liquor industry in India is undergoing a structural

transformation from volume to value with premiumisation of products together with a shift from country liquor to IMFL. Also, government

preference for better quality liquor has led to shift from country liquor to IMFL – market share of IMFL increased from 45% in FY ’08 to

52% in FY ’13. Per capita consumption in the country is still low at 2 liters p.a.

The Indian Spirits Industry is the second largest market and accounted for approximately 11% of global volumes for calendar year

2012 according to International Research Agency Euromonitor. The Indian IMFL market recorded CAGR of 10%+ during FY ’05-FY ’13. The

growth, however, dropped to 3.4% in FY ’13 to 305 million cases. The growth was further down to 0.7% y-o-y for nine months ended Dec.

’13. This was due to the continuous enhancement in duties and taxes by State Governments which impact the consumption of discretionary

goods like alcoholic beverages. Analysts expect CAGR of around 6% for next 2-3 years. Internationally, the world’s top 100 brands grew at

about the same rate as the Indian market (3.5%). The top 25 brands, taken together, however, grew slightly better at 5.8%, but 14 of the top

25 brands either lost ground or grew under 5%. Out of top 25 brands, 5 belong to the USL stable.

During FY ’13, the Indian branded spirits industry was around 305 million cases, each case equal to 9 Bulk Liters. Despite relatively

high growth in the white spirits (vodka, gin & white rum), India continues to be ‘brown spirits’ territory with Whisky, Brandy & Rum

hogging over 95% of the spirits market. Out of this, Whisky constitutes about 60% of the market, Brandy 18% and Rum about 17%.

South India, due to its ban on country liquor, forms 60% of IMFL segment, followed by 12% share from North & East India and the balance

between western and canteen stores department (CSD).

The Indian alcoholic beverage market is highly regulated by the States with each state acting independently in fixing prices and

controlling demand. The multiplicity of States creates a complex tax and licensing environment which limits the ability of new manufacturers

and new products to achieve national distribution and gain any competitive advantage. Industry is a major source of revenue for state

governments. Nearly 75% of the distribution is handled by government corporations, 21% by distributors and remaining 4% comes from

direct sales.

The attempted hostile takeover of Mansion House brandy maker, Tilaknagar Industries by bigger rival Allied Blenders & Distilleries

(ABD) shows the dearth of attractive liquor brands in India and the limited options available to companies looking for acquisiton.

6

TM

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Financials

After growing in double digits for many years, the growth of Indian Spirits industry slowed down in FY ’13 to 3.5% to 305 million cases

from 295 million cases in previous year. While Company grew in line with industry growth, premiumisation across portfolio yeilded

encouraging results. The upper end of product portfolio grew at 21% during the year to nearly 29 million cases, on the top of 12% & 15%

in previous two years. The premium portofolio’s share in overall volumes went up by 3% y-o-y to 26% in FY ’13. Company reported volume

of 123.7 million cases in FY ’13, a growth of 2.9% over previous year volumes of 120.2 million cases, maintaining its position as largest

distilled spirits marketeer in the world in volume terms. Together with international subsidiaries, the volumes were 126.5 million cases in

FY ’13 as against 122 million cases in previous year.

For nine months ended Dec. ’13 total volumes were 90.9 million cases – degrwoth of 2% y-o-y. Hovever, total prestige and above

brands grew by 17% to 24.9 million cases (27.4% of total volumes). Prestige and above brands reported growth of 11% in FY ’13 as against

2.9% growth in total volumes to 123.7 million cases.

Raw materials

Commodity cycles continue to plague the alcoholic spirits industry. Government has fixed floor price of ` 40/liter for supply of Ethanol

to Oil Marketing Companies for blending, resulting in quantum jump in prices for alcoholic spirits industry. Making matters worse

is the decision taken by some local State Governments to allow export of molasses even where shortages to meet local consumption exist.

If sugarcane production reduces because of deficient rains in the current year, availability of molasses for the alcobev industry can reduce

leading to cost increases.

As early as in FY ’11, Company had outlined a strategy to build supply-side security to protect the Company against fluctuations in

price and availability of its key raw material Extra Neutral Alcohol (ENA). As part of this strategy, 3 manufacturing facilities with a combined

distillation capacity of 378 Kilo Liters Per Day (KLPD) were acquired in Maharashtra (Pioneer Distilleries Ltd.), Karnataka (Sovereign

Distilleries Ltd.) and Andhra Pradesh (Tern Distilleries Pvt. Ltd.). The target is to progressively obtain 50% of ENA requirement through

in-house distillation capacity. ENA costs continue to be a dampener for the Company. For Dec. ’13 quarter ENA costs were ` 188.53/case,

which were ` 24/case higher than FY ’13 average of ` 164.96/case.

Company has also sought to mitigate cost increases by use of alternative substrates like grain, besides using alternate packaging

like tetra brick containers and introduction of newer pack sizes.

TM

United Spirits Ltd.

United Spirits Ltd.is also available on www.balance-equity.co.in8

Sales revenue went up by 42% in two years ended FY ’13 to ` 10,749 Crs. However, EBITDA margins went down from 17.2% to

12.75% during the period. The raw material to sales ratio increased from 51.9% in FY ‘11 to 55.7% in FY ’13, while other expenses to sales

ratio increased from 14.1% to 16.6% negatively impacting the EBITDA margin. USL’s average ENA cost per case increased from ` 144 in FY

‘11 to ` 165 in FY ‘13. Interest cost as percentage of EBITDA increased from ~38% in FY ‘11 to 90% in FY ‘13, leading to a decline in PAT

margin from 5.11% in FY ’11 to 1.74% in FY ’13. Post the stake sale to Diageo by USL, we expect the interest cost as percentage of EBITDA

to gradually decline to below 50% in next 2 years, improving the net margins.

Although sales revenues remained more or less flat for 9 months ended Dec. ’13 at ` 8,106 Crs., EBITDA margins declined from

12.75% in FY ’13 to 9% in nine months ended Dec. ’13. This was mainly due to higher ENA costs. Compared to Dec. ’12 quarter, ENA prices

in Dec. ’13 quarter were ` 16/case higher, resulting in additional cost of ` 50 Crs. in Dec. ’13 quarter and ` 164 Crs. in nine months ended

Dec. ’13. At net level, Company reported loss of ` 274 Crs. for 9 mths ended Dec. ’13 as against small profit of ` 187.55 Crs. in FY ’13. The

profit figures do not include forex gain/loss and other exceptional items. Interest costs continue to be high due to high debt levels.

Segmentwise volumes & RevenuesPeriod Ended Qtr Dec. '13

(million cases)

YoY Growth (%)

Sales Revenue (` Crs.)

Revenue per case (`)

9 mths Dec. '13

(million cases)

YoY Growth (%)

Sales Revenue

(` Crs.)

Revenue per case (`)

Scotch 0.1 -2 77 7700 0.3 16 199 6633

Premium Whisky 1.4 20 277 1979 3.6 13 708 1967

Prestige & above Whisky 8.1 13 950 1173 22.3 18 2599 1165

Premium Others 0.2 35 24 1200 0.6 33 68 1133

Prestige Others 0.6 -8 44 733 1.9 5 132 695

Prestige & above Others 0.9 1 68 756 2.6 200 769

Total Prestige & above 8.9 12 1019 1145 24.9 17 2799 1124

Regular & Below 22.5 -9 1353 601 66 -7 3903 591

Total volumes 31.4 -3.7 2372 755 90.9 -2 6702 737

Note: sales revenues are imputed figures

TM

United Spirits Ltd.

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u In July ’13, Company made an unsecured loan of ` 1351.26 Crs. to United Breweries (Holdings) Ltd. (UHBL) at 9.5% interest p.a.

Some of the creditors have filed winding up petition against UBHL. Company may have to write off the principal amount and interest of

` 129 Crs. p.a. depending on the outcome of the petition. In a bid to clean up and strengthen the balance sheet of USL, Diageo may resort

to write-off & impairment of certain loans and advances, non-core assets and inventories. This could impact the near term financial

performance of USL.

u In July ’13, Company entered in to an agreement with group companies for use of trademarks/logos and sponsorship rights. USL

has spent ` 109.55 Crs. for 9 mths ended Dec. ’13, as expenses in relation to these agreements.

u The liquor distribution business in India is subject to strict regulations. The rules and regulations vary in different states. Any

change in policies by the respective state governments can impact the operational performance of the Company.

u Prices of molasses, primary raw material for the Company, has been increasing since last few years. Any further increase can impact

the profits of the Company.

u As 75% of the volumes are distributed through state government agencies, price increases are controlled by the said agencies and

are difficult to obtain, even to the extent of rise in input costs.

Concerns

9

Segmentwise volumes - FY ‘13Year Ended (million cases)

March '13 YoY Growth (%) YoY Industry Growth (%)

Scotch 0.33 31.6 5.1

Premium Whisky 4.29 10.5 14.1

Premium Others 0.62 195.2 44.5

Prestige 23.47 21.5 9.1

Prestige & above 28.7 21.3 11

Regular 82.25 -5.1 1.4

Medium/Cheap 12.75 29.2 1.8

Total volumes 123.7 2.9 3.5

TM

United Spirits Ltd.

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u Increasing costs, especially of ethanol, as well as continuous increase in duties and taxes by several state governments have hurt

the volumes and led to downtrading by customers.

u Acquisition of majority stake by Diageo, which has iconic brands like Johnnie Walker, Smirnoff,Captain Morgan, Baileys & Guiness

will help Company enforcing its leadership in the domestic market and open new opportunities in Asia and Africa.

u The vast numbers of young Indians coming of legal drinking age over the next few years, is a tremendous advantage and a huge

potential consumer base for Company. Growth in the Indian alcoholic beverage space far exceeds those of its counterparts in other

countries due to its growing young population. This, together with the dismantling of social barriers to consumption of alcoholic products

and changing life styles will augur well for Company in the foreseeable future.

u Company has sought to reduce its emphasis in a single geographical market by the creation of an emerging markets division to focus

on expanding into markets where there is substantial scope for Indian alcoholic spirit products.

u Prior to FY ’11, USL had only 20% of its portfolio from prestige and above category with 80% of portfolio from regular and medium

segment, impacting margins. It has increased proportion of prestige and above segment to 23% in FY ’13. This has further gone up to

27.4% in nine months ended Dec. ’13 to 24.9 million cases. Under Diageo management, besides reduction in debt, USL will shift from

volume to value through premiumisation process.

u The current size of the prestige and above segment in India is over 77 million cases, recording 13.2% growth in FY ‘14. Within this,

the premium whisky segment alone has grown at 17% CAGR in last 5 years.

u With nearly one-fourth volume, Pernod Ricard, USL’s nearest competitor, has been able to report nearly same EBITDA due to its

premium product portfolio.

u We expect USL’s EBITDA margin to improve in the next two years driven by stabilization in raw material expenses with internal

sourcing at 33%, cost rationalization of packaging materials and enhanced operational efficiencies. Net profit margins will improve as a

result of above factors as well as lower interest costs.

u Diageo’s geographic, category and price-point diversity is a strength that will enable it to deliver sustained growth over the long

term. India is seen as one of the biggest growth opportunities by Diageo in Alcobev industry. It sees enduring growth in consumer

demand in India and plans to combine iconic brands of both Diageo and USL portfolio with robust distribution network. It plans to invest

in brand innovation, supply chain excellence, and talent and capability development.

u While Diageo will be focusing on acquiring new customers with its prestige and premium international brands to drive margin

improvement, its management feels that there are many Indian states where volume business is also profitable.

u Between Diageo and USL, there is an excellent portfolio of brands that stretch across the price ladder and complement each other.

The management plans to focus on both portfolios at present. It will concentrate on growing existing categories and leverage its innovation

expertise to meet emerging customer needs.

u On consolidation, India will become one of Diageo’s largest markets in terms of net sales, and a major contributor to growth. Diageo

proposes to drive growth with tight management of costs and continually improving operating margins.

Comments

TM

United Spirits Ltd.

United Spirits Ltd.is also available on www.balance-equity.co.in 11

Consolidated FinancialsPeriod Ended (` Crs.) FY '11 FY '12 FY '13 9 mths Dec. '13

Revenue 7526.37 9356.07 10748.67 8106.2Changes in inventories -303.98 -475.34 292.8Cost of Materials 3395.91 4662.97 4934.13 4514.3Purchase of stock in trade 780.12 890.83 725.28Employee Cost 465.92 724.65 794.6 582.2Advt. & Sales promotion 870.32 1011.14 1080.54 981.6

Other Expenses 1023.97 1311.98 1550.78 1296.7

Total Expenses 6232.26 8126.23 9378.13 7374.8EBITDA 1294.11 1229.84 1370.54 731.4EBITDA Margin (%) 17.19 13.14 12.75 9.02

Depreciation 102.33 147.41 178.4 144.1Interest 557.5 875.67 984.91 809Taxation 265.23 148.09 178.05 348.9

Forex (Gain)/Loss -101.49 -39.71 226.01 -490.7

Exceptional Items -36.84 10.82 10.83

Non recurring items -46.28 -42.89 51.95 39.8

Other Income 60.94 99.63 102.59 296.3

Net Profit 383.71 115.41 183.72

Minority Interest 1.19 0.72 3.83

Net Profit after MI 384.9 116.13 187.55 -274.3Net Profit Margin (%) 5.11 1.24 1.74 Loss

Equity Capital (FV ` 10/-) 125.87 125.87 125.87Equity Shares (in Crs.) 12.587 12.587 12.587Reserves 4041.75 4535.9 4661.43EPS (`) 30.58 9.23 14.90Book Value (`) 331.11 370.36 380.34ROE(%) 9.24 2.49 3.92Notes:1. Exceptional item for FY ‘12 pertains to excise liability and water charges of earlier years.2. Exceptional item for FY ‘13 refers to provision made towards turnover tax pertaining to earlier years and write off of goodwill on account of diminution in investment in subsidiary. 3. 49.25 lacs shares of the Company are held by subsidiary companies, which have been netted off in cons. Accounts. 4. Nine Months figures are provisional5. Forex Gain/Loss and exceptional items are not considered for profit calculations.

TM

United Spirits Ltd.

United Spirits Ltd.is also available on www.balance-equity.co.in12

Standalone Financials Period Ended (` Crs.) FY '11 FY '12 FY '13 March '12 June '12 Sept. '12 Dec.'12 March '13 June '13 Sept.'13 Dec. '13

Revenue 6418.08 7659.88 8606.74 1881.74 2072.86 2236.77 2202.69 2094.43 2207.1 2057.56 2308.6Changes in inventories -277.33 -179.82 170.48 -71.45 59.26 238.41 -89.9 -37.29 37.19 -74.08 -151.68Cost of Materials 3109.37 3844.58 4268 997.78 971.56 1067.9 1140.18 1088.37 1090.01 1083.62 1338.73Purchase of stock in trade 762.49 859.27 725.11 209.06 178.2 111.37 244.2 191.35 172.54 210.77 212.49Employee Cost 364.71 421.01 476.44 100.67 109.01 115.82 130.07 121.54 128.86 134.01 155.5Advt. & Sales promotion 670.51 744.58 777.9 208.92 171.36 172.07 222.53 211.945 211.02 211.48 233.79

Other Expenses 775.68 903.84 1058.33 241.67 232.92 261.99 280.99 282.43 274.57 267.55 297.71

Total Expenses 5405.43 6593.46 7476.26 1686.65 1722.31 1967.56 1928.07 1858.345 1914.19 1833.35 2086.54EBITDA 1012.65 1066.42 1130.48 195.09 350.55 269.21 274.62 236.085 292.91 224.21 222.06EBITDA Margin (%) 15.78 13.92 13.13 10.37 16.91 12.04 12.47 11.27 13.27 10.90 9.62

Depreciation 47.75 60.85 71.83 17.49 16.23 18.8 17.32 19.48 19.46 16.8 18.26Interest 444.89 594.35 656.17 166.25 165.56 170.04 163.55 157.02 159.46 136.42 150.47Taxation 196.14 161.1 163.2 -2.42 68.9 20.21 45.27 28.81 59.19 46.96 31.3

Forex (Gain)/Loss 22.57 -43.08 -23.23 20.52 -34.47 33.95 -13.6 -9.11 -37.39 -6.68 19.05

Exceptional Items -36.84 10.82 21.65 -2.07 21.65

Non recurring items 22.25 -32.24 52.33

Other Income 47.33 60.38 79.94 14.69 10.62 13.06 18.48 37.77 25.94 63.56 61.94

Net Profit 393.45 278.26 371.55 28.46 110.48 73.22 66.96 68.55 80.74 87.59 83.97

Net Profit Margin (%) 6.13 3.63 4.32 1.51 5.33 3.27 3.04 3.27 3.66 4.26 3.64

Equity Capital (FV ` 10/-) 130.8 130.8 130.8 130.8 130.8 130.8 130.8 130.8 145.33 145.33 145.33

Equity Shares (in Crs.) 13.08 13.08 13.08 13.08 13.08 13.08 13.08 13.08 14.533 14.533 14.533

Reserves 4961.97 5736.69 6261.17

EPS (`) 30.08 21.27 28.41 2.18 8.45 5.60 5.12 5.24 5.56 6.03 5.78

Book Value (`) 389.36 448.58 488.68

ROE(%) 7.73 4.74 5.81

Notes:1. Exceptional item for FY ‘12 pertains to excise liability and water charges of earlier years.2. Exceptional item for FY ‘13 refers to provision made towards turnover tax pertaining to earlier years and write off of goodwill on account of diminution in investment in subsidiary. 3) Forex Gain/Loss and exceptional items are not considered for profit calculations.4) Share capitl increased in May ‘13 as a result of preferential allotment to Relay B.V. 5) 49.25 lacs shares of the Company are held by subsidiary companies, which have been netted off in consolidated accounts.

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