SKOL Breweries Limited1, Mahal Industrial Estate, Mahakali Caves Road, Andheri East, Mumbai - 400 093Maharashtra, India
Tel +91(0)22 - 67103890-93 Fax +91(0)22 - 67103894
SKOL Breweries Limited Annual Report 2008
Managing Director Speaks
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
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.
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.
Our core brands are...
2005 2006 2007 2008
Sales in Rs. Crores
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.
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%.
Launched in 1984, Knock Out has clearly carved for itself a distinctive segment
rdThe Strongest Beer and is the 3 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.
SKOL Breweries Limited 1http://www.sabmiller.in/brands_haywards_5000.htmlhttp://www.sabmiller.inhttp://www.sabmiller.in/brands_roya_challenge_strong.htmlhttp://www.sabmiller.in/brands_royal-challenge.html
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.
Jean - Marc Delpon de Vaux
FostersCompleted 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% malt-based 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 http://www.sabmiller.in/beerwise_campaign.htmlhttp://www.sabmiller.in/hiv.htmlhttp://www.sabmiller.in/brands_royal-challenge.htmlhttp://www.sabmiller.in/our_priorities.html
SKOL Breweries Limited
THE BREWERY PROCESS
FILTERING MATURING FERMENTINGCOOLING
SKOL currently manages nine breweries across India. These bre