INTRODUCTION

The UB Group is one of India’s largest conglomerates with annual revenues in

excess of US$ 2 billion, and with diverse interests in brewing, distilling, real estate, engineering,

fertilizers, biotechnology, information technology and aviation. It is also the largest Indian

manufacturer of beverage alcohol (beer and spirits). Dr. Vijay Mallya is the Chairman of the

Group.

United Breweries Ltd (UBL), the flagship company of the UB Group, is the largest brewing

company in India with a national market share of 50 percent. Its flagship brand, Kingfisher,

boasts a 40 percent national market share. The brand is currently available in 52 countries

outside India and leads the way amongst Indian beers in the international market.

UBL owns 16 breweries strategically located all over India, where stringent brewing

quality specifications are adhered to. UBL has entered into a strategic alliance with Scottish &

Newcastle Plc, UK, who holds a 37.5 percent stake in the company. This alliance will ensure that

the Kingfisher beer brand receives a significant boost in overseas markets through S&N’s wide

distribution network.

The UB Group's spirits business, with 145 brands including 15 millionaire brands

makes it the world's 3rd largest drinks group. In the fiscal year 2006-07, United Spirits Ltd.

(USL) sold over 66 million cases of different brands. (Each case is of nine liters.) Some of the

most popular brands from the UB stable are Bagpiper Whisky, the largest selling in India and

also the largest selling whisky in the world; McDowell’s No.1 Brandy, the largest selling brandy

in the world; and McDowell’s No.1 Celebration Rum, which is the 2nd largest selling rum in the

world. United Spirits Limited (USL), Cherthala is one among UB groups profit making unit with

a turnover of Rs 62 crores.

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INDUSTRY PROFILE

All India Distillers’ Association (the Apex body of the Distilleries in India) was

incorporated in 1952 and has 211 distilleries and bottling plants as its members.

The alcohol industry in India can be divided into the following five categories:-

1. Industrial alcohol

2. Potable alcohol

3. Mixed Distilleries (Industrial and Potable alcohol)

4. Bottling Plants (purchasing alcohol and bottling alcoholic beverages)

5. Distilleries producing alcohol from substrates other than molasses.

6. Majority of distilleries are producing alcohol from Sugar Cane Molasses

The Potable Sector Market

• Indian Made Foreign Liquor (IMFL) – Whisky, Rum, Brandy, Gin & Vodka - 97 million cases

p.a.

• Country Liquor – 160 million cases p.a.

• Beer (made from Barley and Malt) - 85 million cases p.a.

• Wine Domestic – 300,000 cases p.a.

Industry Dynamics

• Article 47 of Constitution envisages that for promotion of public health and nutrition the states

shall impose prohibition. However, efforts made repeatedly by State

Governments to impose prohibition ended in fiasco.

Alcohol Industry is State controlled.

27 States plus Union Territories with different laws, different price structures etc... Therefore, 32

different markets for all practical purposes. Four States are under prohibition – Gujarat,

Mizoram, Manipur and Nagaland

• Alcohol Industry is the second largest source of revenue of the State Exchequer – Rs. 25,000

Crores.

• The Industry Turn Over is Rs. 6,000 Crores

• It is the only Industry where inputs are de-controlled (free market price) and output is

controlled (selling price is determined by State Excise in most States.

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• The Ministry of Food Processing Industry has taken lead to rationalize and develop Model

Excise Policy. The Industry supports this totally

• The Industry would like the Ministry of Food Processing to de-license the distillation and

bottling of Alcohol from substrates other than molasses. This would help to the Industry utilize

the damaged cereals, fruits and vegetables to produce. Alcohol

Distilleries manufacture Alcohol both industrial and portable molasses, which is a

waste product of The Sugar industry is the prime and fundamental raw materials used for the

production of alcohol in a distillery industry by using fermentation techniques.

Alcohol is one the very important starting raw materials for many vital organic

chemicals. Two sources to” which industrialist in this country can look forward for industrial

development of organic chemical industries are petroleum based ethylene or alcohol of molasses.

It is only too obvious for anyone in this country that we have to preferentially develop and utilize

the taller source to the maximum possible extent. So that our dependence on petroleum and the

resulting foreign exchange drain are reduced to the maximum. Every tone of molasses yields

around 250 liters of alcohol. From that it’s given that only about 60% of the molasses is used for

the production of alcohol in our country. The remaining 40% is considered as waste product or

put to uneconomical and unproductive uses.

Alcohol being an excisable item attracts heavy duty and adds tremendously to the

exchange of the nation. The transaction of alcohol in any form is strictly controlled by. State

Excise department and tax levied on alcohol in various stages differs. It thus adds on to the state

revenue in various forms as duty, surcharge, additional duty etc.

This is one of the areas where the government’s income increases. The

production and distribution of the alcohol is done only if they got the license for it

from the state governments. In Kerala, present the distribution of the IMFL is only

by the Kerala State Beverages Corporation (KSBC)

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COMPANY PROFILE

HISTORY

United spirits Ltd formerly known as McDowell &Co. Ltd. was

incorporated in the year 1898 on September 15th and taken over by United

Breweries in 1955. It was in the isolated hamlet of varanad, situated in the backwaters of the

Vembanadu running through the Cherthala district of Kerala that the late Vittal Mallya ventured

into the liquor manufacturing business. The Cherthala district had been a bottler of imported

liquor brands such as Dorville and Honey Bee, but switched entirely to manufacturing when its

first unit was commissioned in 1960, and went into production of Indian Made Foreign Liquor

(IMFL).

An exclusive portfolio of liquor brands has flowed from Cherthala ever since. Gold

Star Brandy, Club Blend whisky and Golden Grape Brandy are just three of the brands

introduced over four decades ago, which continues to have loyal followings today.

Grape processing and malt distillation started here in 1964. In 1969, Cherthala gave

Indian whisky drinkers their first taste of light-bodied Diplomat. Then, in 1973, McDowell’s

No1 whisky arrived. It set the trend for a whole range of whisky blends, including bagpiper

which almost instantly became the best seller in its price category. McDowell’s Premium

whisky, the pride of Cherthala, was introduced in 1979, and Rare Old Cask Rum in 1981. Even

today these brands have a place of pride among all Indian whiskies and rums and compare most

favorably with the best known brands worldwide. Their introduction was followed by the re-

launch of Diplomat whisky, re-blended and re-packaged. Since its acquisition by McDowell in

1951, Cherthala has been instrumental to the success of the company; McDowell is of course,

very much older than the distillery. In fact, the company dates back to 1826, when it was

founded by Michael McDowell in Madras.

It began as a trading company, importing wines and spirits from the most famous

European liquor houses of the time, including Bisquit, Dubouche, Falcon beer and Heineken.

Later, it moved into tobacco and tea. Very much later, in 1947, it was taken over by Bathgate &

Co. of Calcutta. Four years later, in 1951, United Breweries Limited became McDowell’s

managing agent.

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In the 70’s, McDowell & Co.Ltd, extended its operations countrywide under Vittal

Mallya’s able chairmanship. New units were set up, and several running manufacturing and

marketing units were taken over. The Hyderabad unit began in 1971, Goa in1973, Hathidah in

1975. United Breweries Limited fast became the holding company of an entire Group and the

group itself led the Indian liquor business. In 1958, Phipson & Co. Ltd. was acquired. In 1961,

Carew & Co. Ltd. became a part of the group. In 1973, Herbertsons Ltd., a company established

in 1936, was acquired by the UB Group. Herbertsons Ltd. is India’s third largest spirits company

today.

Then, in the mid 70’s, it seemed that an official prohibition drive might send the

liquor business into a tailspin. But, convinced that the setback would not last, Vittal Mallya

moved to strengthen the Group even further. Units in Udaipur, Alwar, Mirganj and Trichur were

acquired. He was right, of course, indeed, the premier position of the Group today is owed

almost entirely to his dynamic leadership. That leadership is a legacy which has been almost

remarkably reinvested and multiplied by his son, the current Chairman of the United Breweries

Group.

Mr. Vijay Mallya, the current Chairman of the UB Group, took over in 1983. Since

then, the Spirits Division has earned a reputation for innovation in product development,

manufacturing and marketing strategies. In 1985, McDowell & Co. Ltd, Cherthala celebrated its

25th year. Consolidated Distilleries Ltd. was started in 1987. In 1991, the plant was innovated to

raise its production capacity from 6000L/day to 12000L/day. New products like Vintage whisky;

Celebration Rum, etc were launched. Carew Phipson Ltd. and Consolidated Distilleries Ltd. were

merged with McDowell & Co. Ltd. in 1995. In 2000, batch fermentation was replaced by

continuous fermentation and hence the production rose to 20000L/day. Most popular brand like

Brandy and Signature whisky were launched. Triumph Distillers & Vintners (TDV) was

acquired in December 2002.

In 2002, the ETP system-Praj system was introduced. This was first of its kind in

India then. Increasing the holdings in Herbertsons Ltd (HL) (February 2005). In June 2005,

Shaw Wallace and Co.Ltd – the second largest player in Indian Spirits market was acquired by

UB group. Further in 16-10-2006 the name of the company was changed from McDowell to

UNITED SPIRITS LIMITED.

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UB GROUP-MISSION STATEMENT

We constitute a large, global group based in India. We associate with world leaders in order to

adopt technologies and processes that will enable a leadership position in a large spectrum of

activities.

We are focused on assuming leadership in all our target markets.

We seek to be the most preferred employer wherever we operate.

We recognize that our organization is built around people who are our most valuable asset.

We will always be the partner of choice for customers, suppliers and other creators of innovative

concepts.

We will continually increase the long-term value of our Group for the benefit of our

shareholders.

We will operate as a decentralized organization and allow each business to develop within our

stated values.

We will be a major contributor to our National Economy and take full advantage of our strong

resource base.

We commit ourselves to the ongoing mission of achieving Scientific Excellence.

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UNITED SPIRITS LIMITED-MISSION STATEMENT

Investing in the core brands to meet ever changing consumer expectations.

Offering quality products and value for money to the consumers.

Constantly controlling costs to be the lowest cost producer.

Participating with the Government in policy formulation.

Creating an organization that is responsive, positive and driven by business and social needs.

OBJECTIVES OF THE COMPANY

1. To provide high quality IMFL and dispatch it to various consumer markets knowing the pulse

of the commissar of the locality.

2. The taste of the common man varies at various localities and income of the people differs at

different edges. The group has taken this is un objective to make liquor available to the common

man at different noon corners, anticipating his choice both quality wise and cost wise. With the

money available at this pocket a layman should get his choice and satisfaction.

3. The another objectives of the unit is to maintain consist in the quality of product. The recent

achievement is the installation of 100 BPM (Bottle per Minute).

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FUTURE PLAN

1. At present the company is able to produce 12000 liters of ENA per day list now it is planning

to enhance it to 20,000 liters with continuous fermentation.

2. At present the company is bottling around 100000 bottles but now they are planning to

enhance it to 130000.

BOARD OF DIRECTORS

Vijay Mallya - Chairman

S .R Gupte - Vice Chairman

V. K. Rekhi - Managing Director

M. R. Doraiswamy Iyengar - Managing partner

P.K Kadokar - Managing Partner

B.M. Labroo - Managing Partner

President & CFO-UB Group

Ravi Nedungadi

Company Secretary

V.S Venkataran

Auditors

Price Water House, Chartered Accountants, Mangalore

Registered Office

51, Richmond Road

Manglore-560 025

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TECHNOLOGY

Initially, McDowell & Co. Ltd. Cherthala had its distillation technology from the

French company, Sawalle. McDowell & Co. Ltd. improved its technology both in distillation and

production fields. Now Cherthala is one of the pioneer distillers in its group to introduce

instrumentation in its group to introduce instrumentation in its distillation plants with fully

computerized remote controlled operational systems. Hence it is going on with out saying that

the quality of the spirit produced in the plant has the unique character incomparable to any other

unit. The high quality Extra Neutral Alcohol (ENA) when blended with Indian and foreign

ingredients, maturated malt ad grape spirit, scotch whiskies, wines and sherries impacts very

good fragrance to its products, i.e. why people think of high quality spirits, while on McDowell

& Co.Ltd.

The company has got out 3000 casks filled with malt and grape spirit of different

ages and wooden tanks of 3600 liters to 5,000 liters to accommodate malt grape rum spirits. The

company has devised its on blending procedure where by imported and Indian ingredients malts

spirits of different age’s water produced from its own dematerialized water plant and the

experience of the chemists clubbed together makes miracle in the industry and this given

astonishment to the common man. When the blended liquor is bottled in the fully automatic plant

and when comes out with proper dressing and packing, a thrill is given to the people to insist on

McDowell’s.

OFFICE MACHINES AND EQUIPMENT

There are a large number of machines and appliances, which may be used for

different operation in an office. They are made for accuracy and speed or operations, reduce

work tension and relive monotony and fatigue. Most of the office work involves a lot of routine

works of monotones nature. So speed and accuracy in such work can be ensured only when the

human brain aided mechanical device.

Although in our country the modern office machinery has not made any great strides

as in the Western countries, now there is a growing tendency on the part of office routines. There

are different types of machines used for different operations in an office. Introduction of

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machinery makes it possible to collect a greater amount of statistical information for the purpose

efficient management. It relieves the office workers of the drudgery attached to many of the

office routines.

Machines are introduce into office for obtain the following objectives

1. Time saving

2. Labor saving

3. Accuracy

4. Minimization of fraud.

In Mc Dowell Cherthala unit, the following office machines are used.

1. Computer

2. Calculator

3. Telephone

4. Fax

5. Xerox machine

6. Punch card Machine

7. Numbering machine

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PRODUCT PROFILE

Whisky

The term ‘Whisky’ as know it in actually the modern version of Gaelic word’ usage

Baugh or“uisge beatha” meaning water of life’.

1. Mc Dowell’s premium malt Whisky

It is perfect for sophisticated whisky drinker.

2. Mc Dowell No: 1 Whisky

One of the finest blends of Scotch and Indian whiskies, Mc Dowell’s No: 1 is

popular among quality conscious achievers across the country. With our two million

cases sold it ranks among the top 100 international best sellers.

3. Mc Dowell Vintage Classic

Vintages are a special blend of premium Indian malt whiskies that have been ma -

tured in .oak casks. Its rich, full-bodied flavor makes it a favorite among

connoisseurs

4. Diplomat

Launched in 1963, Diplomat was India first scotch blended whisky it has now been

re-launched after major packaging and. imagery. Diplomat now sell over 800000

cases.

5. Gold Riband prestige Whisky

Gold Ribnad superior blend gives it a very smooth mellow after taste. Its special

formulation leases you without a hangover promising “good mornings after great

evening”.

6. Bagpiper Whisky

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Bagpiper whisky blended with Scotch whisky and selected Indian Malt. It is the

India’s largest selling whisky now world No: 5.

RUM

1. Old Cask Rum

The full bodied flavors and economical price of old cask Rum sets it apart from other brands

making it popular among young rum drinkers.

2. No: 1 Celebration Rum

No: 1 Mc Dowell’s celebration rum’s rich smooth flavors and deep, warm color has made it a

favorite among young rum drinkers.

3. No: 1 Caribbean White Rum

Mc Dowell’s Caribbean Rum’s light and mellow flavors is ideally suited to one our doors. It also

makes an excellent base for cocktails.

4. Tiger Rum

Started boiling in April 01. It contains Natural Alcohol, food flavors and Caramel. It approved as

per order No: XC4-16439/2001/R

5. Too XXX Rum

It started bottling in 2001. It contains natural alcohol food flavors and caramel.

BRANDY

1. Caesar brandy

Caesar Brandy is made from the finest grapes, grown at the famous Beramat vineyards at

western India and carefully distilled in tradition of the world best brandy makers.

2. No: 1 Me Dowell’s Brandy

The rich warm flavors of No: 1 Mc Dowell’s Brandy appeals to brandy drinkers. With

over million cases sold each year, it is the most popular brandy in India, and the sixth largest

selling brandy in the world.

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3. Rich Ribend Brandy

It contains Extra natural alcohol matured grape spirit, Food flavor and Caramel.

4. Golden Amber Brandy

It contains extra natural alcohol, matured grape, spirit, Food flavor and CARMEL

5. Gold Brand Brandy

It contain Caramel Food, flavor and ENA

GINS

1. Blue Ribend Duet

Blue Ribend Duet in premixed, ready to sip drink of Gin and lime or orange.

2. Blue Ribend Gin

A superior blend of the finest juniper bewier and exotic herbs, its disinclining flavor and clarity

of the taste has made it the largest selling Gin in the country.

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United Spirits Limited, Cherthala has eight departments under its

management which are as follows:

1) Stores and Purchases department

2) Accounts and Finance department

3) Maintenance department

4) Bottlery

5) Distillery

6) Quality Control

7) Commercial department

8) Personnel and Administration department

Each of these departments and their main functions are described further.

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PRODUCTION

DEPARTMENT

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It is the type of record which shows the formal relationship among different

positions in the organizational structure which is intended to be achieved by executive. They are

the sources of information to outsiders who are interested in getting information about the

organizational structure. The organizational chart follows by the united spirits Ltd is a traditional

chart that shows the position of each level with the flow of authority downward and flow of

responsibility upward.

The organization is headed by the General Manager, under him there are four

managers namely distillery manager, marketing manager, manager in P&A, manager

accounts

Distillery manager

The distillery manager coordinates all the activities in the distillery. Under the

distillery manger there are four sections namely plant, quality department, sales and

promotion department, maintains department and each department is headed by the

managers. In each department under the managers there are superintendent, junior

officers, supervisors and workers

Marketing manager

The company has no marketing division inside the premise, is dealt by the personnel

& administration department and is been controlled by the Head Office Mangalore.

So the information about the marketing Section is very limited

P&A manager

Personnel & Administration Department (P&A) is headed by the Manager (P&A).

Who, looks after the welfare- activities, Trade union activities, disciplinary actions

etc for the company. Under him the department consists of officer, supervisor and

clerical staff

Manager accounts

Finance Manager, who looks after the financial dealings of the company, under him

there are accounts officer, junior officer and staffs

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STORES AND PURCHASE DEPARTMENT

DEPARTMENTAL STRUCTURE

17

This department headed by the manager looks after the procurement of raw

materials, its storing and maintenance. The management has given 3 month rolling plan to the

department. The department is responsible to purchase and store the materials foe production and

maintain the records for the same and to prepare GRN and GRR.

The stores and the purchase department can reject the purchased materials if so

required, after it has been checked by the quality department.

The department has a sufficient warehouse facility for storing both purchased

material and finished goods. For storing the finished goods there is an IMFL go-down with

capacity of 40000 cases and which is nearby the department. One case carries 9 liters of blend.

Molasses is being purchased from different parts of India such as Up, Maharashtra,

Tamil Nadu, Andrapradesh, Karnataka, and the company also has an oversea contract with Iran.

Furnace oil is purchased from Indian Oil Corporation. Scotch is imported from United

Distilleries, Scotland. Grape spirit for the production of whisky is purchased from Goa,

Baramathi Distilleries, Maharashtra and the most of other purchases are localized. FIFO method

is used for dealing the stock. The firm allows a normal loss of 3% for bottles and 1% for

molasses.

The unit has a central Materials Management Division (MMD) at Mangalore to

control all purchases of raw materials and packing materials for united spirits limited. The

company purchased the generators from Kirloskar India Ltd., boilers from Westor works,

Mumbai and water treatment plant from ION Exchange India Ltd.

Major factories, which supply Bottles, Labels, Mono carton, PP caps to the company are as

follows:-

(a) Bottles

Mahalakshmi Glass Ltd, Mangalore

Haldyn Glass Ltd, Mangalore

Excell Glass Ltd, Alappuzha

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(b)Pet Bottles

Livia Polimer, Chennai.

(c)Lables

Print effect, Mumbai

Chorma Prints, Chennai

Alert Packing House, Mumbai

(d)Mono carton

Manohar Canisters

(e)Master carton

Pampa Trade & Commerce, Palarivattam, Ernakulum

Super Packing Industries, Aroor

(f)Pilfer Proofs Caps

Oriental Closures, Mumbai

L&T, Mumbai

Metal Closures, Mumbai.

(g)Transport agencies

Ashra Transport

Best road-Lines

East India Transport Agency

Kalpaka Transport Company

Kerala Transport Company

Sc Bross Lorry Transport Service

Balmurugan Transport

Bharath Transport Corporation

Sri Sai Krishnan Transport.

All these transport agencies are Ernakulum based agencies.

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ACCOUNTS AND FINANCE DEPARTMENT

DEPARTMENTAL STRUCTURE

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Finance is life-blood of any business. Finance department Is headed by the Finance Manager,

who looks after the financial dealings of the company.th department is in charge of maintaining

all financial documents such as journals, ledgers, income statement, balance sheet.

The company, besides growing revenues, showed an improved profitability ratio as in obvious

from the ratio of earnings before interest & tax (EBIT) to sales growing from 3.9% to 4.61%.

The steady improvement in the fixed asset turnover is a measure of the efficiency with which

fixed assets are employed. On an increasing revenue base, the gross block of assets has remained

more or less constant over the last four years. The company has shown a turnover of Rs 62 crores

last year.

The Profit Before Tax (PBT), which was static over the last few years, shows an upward

movement along with Profit After Tax (PAT).

USL is the flagship company for the spirits business of the UB Group. As of

September 30, 2007, USL directly owns a 31.4% stake in Shaw Wallace, which increases to 75%

when considering USL’s indirect ownership stake in Shaw Wallace. Shaw Wallace is a spirits

company that USL acquired in June 2005. As of November 22, 2007, USL own a 24.1%, and

KFR (of which we own 100%) owns a 12.8% stake in USL. Upon the conversion of foreign

currency convertible bonds issued by USL and held by KFR into equity shares of USL, our

holding in USL will be reduced marginally to 23.8% and KFR’s holding will be reduced to

12.7%. USL is also among the largest companies in India engaged in the production of Indian-

made foreign liquor (“IMFL”) and is the third largest distiller in the world by sales volume,

according to Impact International. USL sold 66 million cases and 36 million cases of its liquor

products for fiscal 2007 and for the six months ended September 30, 2007, respectively. USL’s

main products are Scotch and Indian whisky; other of its products includes dark and light rums,

brandy, gin and vodka. The merger of Shaw Wallace with USL was approved at the Board

meeting on November 28, 2007. Four fully-paid equity shares of Rs.10 each of USL will be

allotted for every 17 equity shares of Rs.10 each held in Shaw Wallace. The merger is subject to

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requisite consent approval of the requisite majority of shareholders, lenders and coeditors of our

Company and the Honorable High Court of Bombay, Karnataka and Calcutta.

USL’s total income was Rs.30, 124.6 million (on a consolidated basis) and Rs.15, 273.8 million

(on a stand-alone basis) for fiscal 2007 and for the six months ended September 30, 2007,

respectively. Dividends paid to us by USL, including dividends paid to KFR, was Rs.127.9

million for fiscal 2007. Total income of Shaw Wallace was Rs.1, 878.4 million (on a

consolidated basis with USL) and Rs.1, 023.1 million (on a stand-alone basis) for fiscal 2007 and

for the six months ended September 30, 2007, respectively. Dividends paid to USL by Shaw

Wallace were Rs.54 million for fiscal 2007.

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MAINTENANCE DEPARTMENT

DEPARTMENTAL STRUCTURE

Maintenance department is headed by maintenance engineer, who looks after the

mechanical and electrical maintenance for the company. United Spirits Limited, cherthala’s

maintenance department is entrusted to perform the entire factory maintenance works.

Company’s maintenance department is divided into two sections:

Mechanical section

Electrical section

Both these sections together constitute the total of maintenance works. Company is also taking

the external bodies on contract basis.

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PRODUCTION DEPARTMENT

DEPARTMENTAL STRUCTURE

24

Production department is headed by the Distillery manager who looks after the

Distillery section, Bottlery section, Quality Control section and Effluent Treatment Plant for the

company.

Each day 350 trucks pass through the gates of the 52 manufacturing units of UB

group’s spirits division. This is a milestone that is not within the reach of any competitor in the

country.

Each of the group’s owned units are ISO 9001 certified and maintain the highest standards of

quality.

Production department is being divided into two separate sections as follows:

a) Distillery

B) Bottlery

2.5lacs of cases is the average monthly production unit of Cherthala (ENA is the basic

component of liquor and is produced in distillery)

Raw materials for ENA production

In the past period the company had used raw materials like starchive materials,

saccharine materials and cellulose materials. But the company is currently using the saccharine

materials, mainly ‘molasses’ for the production of ENA, because of the costly nature of

Starchive and cellulose materials. Molasses is the waste from sugar mills.

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PRODUCTION PROCESS

The entire production can be summed up in following 4 steps:

Distillation

Distillation process plays a vital role in the production of branded liquor. ENA is the

basic component for liquor. ENA is produced from distilling molasses. In the distillation process,

first stage is fermenting the molasses with the media of yeast. For fermentation, company uses

continuous fermentation system.

Continuous Fermentation System

Fermentation is a process by which converting the sugar in molasses into alcohol.

Molasses is a waste from sugar factory. The molasses is in a liquid form. This liquid contains

around 12%-14%, which is in non-crystallized form, but fermentable. This fermentable sugar can

be converted into ENA by the way of yeast fermentation.

In Mc Dowell, Cherthala molasses is being stored in a separate storage tank with a

capacity of IOOOMT. For the fermentation process this molasses is been pumped to the tank,

which is situated in the plant as per requirement. In plant there is a molasses weighing system, is

an electronic system placed for computing the quantity of molasses is been taken from the main

storage tank. The company having 3 culturing vessels and yeast is been in these vessels.

The cultured yeast is moved to yeast activation tank (Y AT). When Y A T is

ready, the weighed molasses is passes to 5 huge fermentation tanks namely FRMNTR I,

FRMNTR II, FRMNTR III, FRMNTR IV, FRMNTR V. Then Cultured yeast is been pumped to

the fermentation tanks. In each of these tanks the “molasses is treated along with water. Molasses

is the main food of yeast. In the fermentation process certain factor needs to be assured- Sugar

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concentration level, Ph level (Hydrogen iron concentration) and temperature level. Ph level can

be maintained by adding sulphuric acid. For the further growth of yeast in the fermentation tank

certain additional ingredience like antifoam, nutrients, and process water to be added. Minimum

26 hours required for the completion of the fermentation process. While the fermentation, the

sugar will be converted into Ethyl Alcohol (wash) and Carbon dioxide. CO2 will be escaped to

the atmosphere. Then the remaining

Ethyl Alcohol, Yeast contents, water and other ingredients moves to the Yeast

Activation Tank (YST), here yeast settles down because of the continuous process. Overflow

happens wash and other impurities moves to Wash Settlement Tank (WST). Here the sludge

settles down and it passes to the Sludge Mixing Tank (SMT) and the remaining wash moves to

the clarified wash tank and is being pumped to the distillation plant. In the SMT, sludge mixes

with water and is pumped to the Sludge Settlement Tank (SST) and is been carries to ETP.

The plant doing optimum utilization of resources. For the same, in YST the settled

yeast is been pumped to the Yeast Holding Tank (YHT) and passes to the Yeast Treatment Tank

(YTT). Here the yeast is well treated with water and passes to the Yeast Activation Tank (Y A T)

as energetic yeast for further fermentation without wasting yeast, because entire performance of

plant is depends on an atom of YEAST.

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Distillation

Distillation is being separated by the use of steam. After the fermentation process

the resultant is wash, which contains 6-7% alcohol is pumped to Plate Heat

Exchanger (PHE) and spent wash is separated to ETP. The ENA is produced through

7 columns. The liquid alcohol is separated in 15t column is called Analyzer

Column. Then is passes through the Degasified Column, in this column the fusel oil

is being separated and it moves to Fuse Oil Column. Then the liquid alcohol passes

through Purifier Column, Rectifier Column, and Refining Column and finally spirit

is extracted. In between each of these columns two condensers are fixed to cool the

steam. There is one head concentration column- is used to separate the” heads or

technical alcohol (highly poisonous) from liquid alcohol. Process water tank is used

for providing necessary water to each section. Through distillation two items-Fuses

I and other impurities are getting separated. For the entire operation company is

using processed water. Distillation plant is fully controlled by instrumentation and

computers.

Blending

Blending is a process where different proportion of constituents is mixed up to

produce wide range of products. In this process variety of products are produced by mixing of

ENA and other ingredients in varying proportions. The main ingredients are ENA, malt spirit,

grape spirit, rum spirit, imported Scotch whisky and caramel for different products. Contents of

each product are as follows:

Brandy - ENA+ grape spirit+ caramel+ essence

Whisky - ENA+ malt spirit+ caramel+ essence

Rum - ENA+ rum spirit+ caramel+ essence

Gin - ENA+ essence

Vodka - ENA+ essence

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Bottling

During bottling the different blends are filled in their respective bottles. Company is using four

different sizes of bottle for bottling, which are as follows:

180ml- Quarter

375ml- Pint

500ml- Half

750ml- Full

The various steps of bottling are as follow:

Bottling section is divided into 12 lines each of which can function for 8 hours per day.

Effluent Treatment Plant (ETP)

ETP is also a part of the production department. It is waste management system of

the company. The waste generated from the alcohol distillation plant is been dumped in this

plant. This waste, known as spent wash is an organic pollutant that can prove destructive to the

aquatic life if disposed without proper effluent treatment.

Operation

In this plant the company is nurturing a bacterium known as ‘Methanogenic

Bacteria.’ This bacterium feeds on ‘spent wash’ and releases Biogas containing methane and

carbon dioxide. Further methane is used for burning the boilers and carbon dioxide escapes into

atmosphere. The water that remains is checked for its BOD and COD levels, treated and finally

discharged into the Vembanadu Lake.

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QUALITY CONTROL DEPARTMENT

DEPARTMENTAL STRUCTURE

United Spirits Limited; Cherthala has well advanced quality control systems.

Company’s motto is ‘Quality is the most important product.’ From the initial stage to the final

stage i.e. from the raw material to the finished goods, the company checks and assures quality.

The QC laboratory is fully equipped with advanced technologies to analyze and ascertain the

quality of the product. Molasses is classified into three types as per the sugar content in them.

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48 per cent Sugar- 1st Quality

45%-48% Sugar-2nd Quality

Below 45% Sugar- 3rd Qualities

But the company is using only the 1st and 2nd quality molasses for distillation. Third

quality molasses is generally used for producing the cattle feed products. The quality department

is making a routine analysis and censoring of water, other ingredients used for production,

analysis of ENA and blends etc.

All the packing materials like bottles, PP caps, labels, mono cartons, are thoroughly checked at

the receipt in the laboratory. For doing different tests the lab has highly precise and sophisticated

instruments like, Bursting Strength Tester(to identify the breakage limit of the carton),

Moisturizer Tester(to identify the moister content), Erma tester9for testing the color content),

etc. Bottles are checked for weight, capacity, and other dimensions.

The caps are checked for outer layers, metal thickness, shape, printed matter, enclosed matter

etc. Labels are checked for printed matter, color combination, and shape. Mono cartons and

master cartons are checked for shape, legends, logo, printed matter, Bursting strength, moister

content etc.

ENA and Blends are put across various censoring analysis. After finishing the blending process,

a sample should be drawn from each blend for testing its color, velour, etc. The products are

categorized on the basis of velour which is being calculated using a yardstick, .i.e. score. The

quality experts calculate the score level. The score level of different products is given below:

Vodka- 7score

Whisky- 6.5score

Gin- 6.5score

Rum- 5.5score

For different products different readings are fixed in the Erma Tester, each blend should show

that color. The company has a taste panel that include, superintend of Quality department,

Distillery Chief, Bottlery Manager, Plant Manager. The blend is approved for bottling, only if the

taste panel approves the blend as OK.

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MARKETING DEPARTMENT

UB Group has enjoying the 62% market share in the beverage

industry. Mc Dowell& Co. is the VB’s first spirit division in Kerala, established in

1960.The management of Mc Dowell &Co. Ltd is highly conscious on the quality,

efficiency and standards to be satisfied the product.

The company has no marketing division inside the premise, is dealt

by the personnel & administration department and is been controlled by the Head

Office Mangalore. So the information about the marketing Section is very limited.

The UB Group spirits division has earned a second global distinction by being

ranked World No.4, in terms of the largest number of millionaire brands. In 2004-

2005 the UB Group has achieved 35 million cases. And the company’s aim is to

achieve 50 million cases during 2006-2007, having a central theme was’ Let’s go

for 50 by 2006-2007'.

Products under the Mc Dowell’s No.1 umbrella, viz, Whisky,

Brandy & Rum achieved a quantum jump in sales to 1305 million cases. Me

Dowell’s No.1 Whisky, true to its “Mera No.1” claim, crossed the 5.4 million cases

mark becoming the first prestige brand in India to achieve this distinction. Mc

Dowell No. I Celebration Rum closed the year with sales of 4.3 million cases, a

significant achievement considering stagnant rum market. Mc Dowell’s brandy

captured an additional 6% market share by registering sales of3.8 million cases.

The other significant sales drives were Old Cask Rum, which sold 1.45 million

cases and the Blue Riband Series with sales of million cases. Mc Dowell Signature

Rare Whisky increased its market share in the premium whisky segment to 20% this

year closing sales of 0.24 million cases. New market launches during the year

included Scottish Crown Pure Scotch whisky. Mc Dowell Signature has a unique

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properly in its Inter Club Golf Championship event. Apart from this the Signature

Theatre Fest was held in Delhi, which will be extended to other cities in the near

future.

* Expansion and Acquisition

Mc Dowell & Co., Cherthala has monitoring the expansion programs. Mc Dowell Co.Ltd acquired their main competitor Showallace & Co. In 2004 and thereby the

company got over all market share of 60% in India.

* Trade and Sales

The company can sell its products only through Kerala State Beverage Corporation

(KSBC), is a Kerala Govt. Undertaken. Six Years back the company had certain Pvt.

Agencies, which was under the control of KSBC. But now the sales is only through

the

* Retail Agencies outside Kerala.

¨ Amalgamated Liquors Pvt.Ltd, Calcutta

¨ Rits Hotel, Ahmadabad

¨ Western India Beverages, Mumbai

¨ Sumosen Exporters Pvt.Ltd, Calcutta

¨ Balaji Traders, Mangalore

¨ Roopen Winet & AgeJ1cy, Goa.

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COMMERCE DEPARTMENT

DEPARTMENT STRUCTURE

35

Commerce department is headed by the commercial officer who deals with the dispatching of

goods to KSBC. This Department is concerned with dispatching of finished goods in accordance

with the orders. The procedure for dispatching of finished goods to KSBC includes the following

steps:

Step 1 Distillery section manager will check, whether the ordered quantity is being produced.

• Step 2 Then the plant manager will produce a bill which shows the quantity produced along

with batch number to the excise circle officer in the factory.

• Step 3 Excise officer will check the document and he will send a sample of product to the

Trivandrum Govt: Chemical Laboratory along with batch No. to conduct various tests to analyze

the food grade and other details.

• Step 4 after all the tests are done, the laboratory will give a chemical report to the excise Circle

Officer in the factory.

• Step 5 Excise Circle Inspector gives the permission to dispatch the finished goods along with

bill, copy of chemical report to the excise Commissioner of KSBC.

• Step 6 when the goods are unloaded in the KSBC go down, the Excise Commissioner will send

an excise verification certificate (EVC) to the company.

The excise department in the factory gives transport certificates, after verification of finished

goods. Commerce department is responsible to arrange the vehicles for dispatching with permit,

give the way of transporting as pr the instruction of Excise department, prepare bill and maintain

the records of dispatch of goods. If pilferage or other abnormal losses occurred, company has to

pay to the excise.

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PERSONNEL AND ADMINISTRATION DEPARTMENT

DEPARTMENTAL STRUCTURE

The major functions of Personnel and Administrative department include:-

Recruitment

Selection

Payroll administration

Training and Development

Disciplinary activities

Employee welfare

Trade unions

Performance appraisal

Public relations

Industrial relations and

Administration

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A) RECRUITMENT AND SELECTION

WORKERS SELECTION

.As of now United Spirits Limited, Cherthala has no vacancies. However, when need arises the

staff and workers category are recruited via headhunting, media advertisement etc. Selections

of workers are done by the selection committee of Mc Dowell, Cherthala. This

committee includes Personnel Manager, Unit Head and GM Works . The company is

also taking workers on contract basis. The retention of these workers is decided by the

management.

EXECUTIVE CATEGORY.

The executive category’s recruitment and selection is done at the Head Office in Mangalore. In

this category the company has a structured procedure for doing aptitude test, group discussion,

physical examination, and personal interview. Company is also following the campus

recruitment mode. These selected executives are been placed in different companies at

various posts.

TRAINING AND DEVELOPMENT

United Spirits Limited is giving both, on-the job training and off-the job training to the

employees. In the year 2003, System Analysis Program (SAP) was implemented. For its

operation company had given training to the employees.

In 2004, the company has given a managerial training to the executives, titled as ‘QUALITY

LEADERSHIP.’

In 2006, December, Quality Circle training were conducted and three quality circles were formed

which are functioning very well till date.

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PERFORMANCE APPRAISAL

Mc Dowell& Co, Cherthala having a performance appraisal committee in

Bangalore. This committee contains 6 members including the personal &

administration head of Mc Dowell Cherthala and is only for the executives.

EMPLOYEE WELFARE

Employee benefit and services include any benefits that the employee receives in

addition to direct remuneration. United Spirits Limited, Cherthala offers the following benefits to

its employees:

A) Working dress

Two pairs of working dress (2T/cotton sari and 2T/cotton shirts) are issued to the

permanent workmen every year.

It is agreed that all permanent female workers will be given two sets of working

dress (2T/cotton sari and 2 Blouse piece)

The workmen are to wear their uniform provided to them before punching in for

duty. Without working dress entry will not be permitted to any section/department.

B) Stitching charges

The stitching charges will be determined with the prevailing rate for each item at

Cherthala at the time of disbursement of working dress or management will arrange the stitching

of the uniform.

c) Washing allowances

An amount of Rs 40/- per month is given to those who are provided with working dress.

D) Toilet soap and towel

One ‘Life buoy gold’ soap and one towel (Karalla towel or ‘thorth’ which will cost

not more than Rs 12/-) will be provided to all permanent workmen per month for washing

purpose.

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E) Umbrella

One folding umbrella each is given to all permanent workmen and staff members per year.

f) Foot wear

All permanent workmen and staff are given one pair of shoes every year. It is also agreed that

ladies can have the option for getting either shoes or three pairs of Hawaii chapels every year.

Those who are given shoes are to wear them while on duty failing which disciplinary action shall

be taken.

G) Bata for drivers and other workmen

It is agreed that bata for drivers and other workmen on outstation duty are as follows:

BREAK FAST LUNCH/DINNER

Cherthala Rs 15/- Rs 25/-

Alleppy, Ernakulum, & other

major towns in the state. Rs 18/- Rs 30/-

It is further agreed that wherever, the duty of the workmen/driver demands overnight

stay, he will be paid an allowance of Rs 105/- for a full night stay (.i.e. 24 hrs duty) and in the

event the workmen/driver returns to Head Quarters between 10pm and 12 midnight will be paid

a sum of Rs 45 as allowance and it is agreed that they will not claim any OT or compensation off

for the same. It is also agreed that whenever drivers go for overnight stay and return to head

quarters after 12 midnight and 6 am they may report for duty 4 hours late and they will not be

utilized for driving work on the day. It is agreed by the unions that in the event of the above the

said drivers will do the job of the office attendants. Whenever a driver is required to work on a

Sunday or holiday, he will be given a compensatory off on his return to Head Quarters.

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h) Leave travel allowance (LTA)

An LTA of Rs 350 is disbursed to 9 permanent workmen on muster roll seniority

basis every month through salary.

I) Health care

The workmen who are not covered under the ESI are paid 5% of their salary (basic+

FDA + VDA earned) for medical expenses per month. If an employee outside the purview of ESI

Act meets with employment injury an amount equivalent to 100% of his monthly salary (basic+

FDA+ VDA) will be given to him based on the certificate issued by the OHC medical officer as

compensation and the same will not attract any other benefits.

j) Canteen subsidy

A sum of RS 8/- per day is applicable to all workmen. The payment of the same shall

be made to the canteen committee on the basis of muster roll strength and the total number of

working days will be calculated by excluding Sundays, scheduled and unscheduled holidays and

days on which general work is stopped due to reasons beyond the control of the management.

However, subsidy will be paid to the workers who are engaged for OT for a full shift except in

the case of the substitute duty.

k) Night shift allowance

Night shift allowance of Rs 8.75/- per shift is paid to permanent workmen who

actually work in the 4pm-12mn and 12mn-8is shifts.

l) Casual leave

10 days casual leave will be granted to all permanent workmen and staff members in

a calendar year. Casual leave will not be allowed to accumulate. It is also agreed that whenever a

person takes a half day leave in the forenoon he shall take permission from the department head

for attending duty in the afternoon.

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m) Sick leave

It is agreed that all permanent workmen and staff will be given 10 days sick leave

with full pay (basic+ FDA+ VDA) in a year. Sick leave will not be allowed to accumulate. Sick

leave for more than 3 days at a stretch will not be granted without a medical certificate from a

medical officer.

n) Privilege leaves (PL)

The eligibility for PL to workmen is as per the Factories Act and Rules thereto.

Eligibility of PL for who had not worked for 240 days in a calendar year will be in accordance

with the provisions of the Factories Act. Further it is agreed that the workmen will be allowed to

accumulate unveiled PL to a maximum of 30 days with a facility for encashment of unveiled PL

of the immediately preceding year.

o) National and Festival Holidays

13 national holidays and festivals as specified below are declared in a calendar year

1. Republic day

2. Varanad temple festival

3. Vishu

4. Good Friday

5. May day

6. Ramzan

7. Bakreed

8. Independence day

9. Thiru Onam

10. 3rd Onam

11. Mahanavami

12. Gandhi jayanthi

13. Christmas

It is also agreed that compensatory holiday will be given whenever any of the mentioned

holidays fall on Sundays.

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p) Festival advance

It is agreed that one month salary (basic+ FDA+ VDA) will be given as festival

advance during Onam to all permanent workmen and staff members. It is also agreed that this

festival advance shall be recovered from the monthly salary into 10 equal installments. The

recovery will start from the same month if the payment is made on or before 15th and recovery

will start from the subsequent month if the payment of advance is made after 15th of that month.

Q) Vehicle loan

It is agreed that towards the cost of a new vehicle a maximum of Rs 17500/- or 50%

of the value of the vehicle, whichever is less and in the case of a second hand vehicle (not more

than 5 years old) an amount of Rs 13500/- or 40% of the depreciated value of the vehicle,

whichever is less will paid as advance to permanent workman/staff of the company as per the

conditions specified below:

a) He/she should have completed 10 years of uninterrupted service with the company

b) The amount so advanced will be recovered within four years without interest .i.e. in 48

monthly installments.

c) No workmen/staff shall be given second loan for a vehicle during his service. However if

there are no fresh applicants during an year the applications submitted by workmen/staff who

have closed their loan account with the company will be considered provided the new applicant

is given on expiry of 10 years after closing the earlier account.

d) The amount in the case of new vehicle will be advanced only by cheque in favor of the dealer.

e) The advance will be given to 10 workers and 3 staff members per year against applications

received and on basis of seniority.

f) The vehicle has to be hypothecated to the company within 15 days from the receipt of the

cheque. If it is not done the company will recover the entire advance amount with 18% interest

from the salary/other payments due to the concerned employee.

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TRADE UNIONS

United Spirit Limited, Cherthala has four recognized unions, namely:

1. McDowell & UB Employees Union

2. McDowell & UB Mazdoor Sangh

3. McDowell Staff Union

4. McDowell Employee Association

These trade unions were formed after many bilateral discussions and finally in a meeting held on

17-12-2003 by the District Labor Officer, Alleppy, a settlement under section 12(3) of the ID

Act 1947 was arrived at on the following terms.

TERMS OF SETTLEMENT

This settlement consists of four articles relating to the following:

i. Wages.

ii. Other benefits.

iii. Bonus and essential and continuous services.

iv. General matters

.The settlement also consists of 4 annexure on the subjects as follows:

i. Production/productivity and production incentive scheme for workmen/ staff.

ii. Special provision relating to staff category.

iii. Special provision relating to loading and unloading operations.

iv. Procedure for grievance redressal.

Total No. of employees in Mc Dowell

Designation No.

Manager -

Executive 12

Officers 10

JMC 16

Secretary 1

Staff 26

Workers 278

Total No. 343

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SWOT ANALYSIS.

1.STRENGH

The company ranks second largest in the global market

The company is the market leader in Indian market

Company maintains a good employer-employee relationship

Company promotes its employee participation in management

Company has high goodwill to add to its asset

Company has a sophisticated quality control system

Company has high end production technologies

Company has gains of 40% of biogas by treating effluents for burning boiler

Company has well defined employee cost budgeting system

Company has formulated a well defined production incentive scheme, which so far

has turned out great results for the company as well as the employees.

Company has a systematic, technologically enhanced and timely payroll processing

system.

The welfare measures taken by USL are highly appreciable

The various training programs conducted since the past two years has improved

over-all discipline within the company.

Strict security system enables hassle free functioning

Company is following its standing orders

Company is Fermentation and Distillation plants were fully computerized

Company functioning in its own land and building.

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2. WEAKNESS

Company does not have any defined appraisal system for its workmen and staff

category.

Company has formulated an employee remuneration system of which 74.41% arises

out of fixed cost.

Company has no proper place to dump its waste.

3. OPPORTUNITY

The Indian liquor market now being a duopoly with USL and Sab Miller in the play,

and USL being the leader has immense opportunity for further growth.

Abolition of arrack has increased demand for the labeled foreign liquor.

4. THREATS

Chances of molasses’s shortage in near future.

Company has no proper place to dump its waste.

Duplicating Company’s labels by the other parties may affect the company’s image.

Opposition from the part of liquor prohibitionist.

High sales tax and excise duty.

5. INFERENCE

Over the last two years USL has shown a significant increase in its profits as well as the global

and Indian liquor market. The company has taken all round measures including new product

initiatives, maintaining and improving its product quality, cost controlling measures and various

other mergers and acquisitions. USL has all-through maintained an efficient team of motivated

and delighted employees which adds to its major strength. However, the company has to look

into the various issues like; alternatives in case of shortage of molasses- its major raw material;

increase the percentage of variable cost that constitutes labor cost and new alternatives for waste

disposal.

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CONCLUSION

UB makes the world’s largest selling whisky and it has 15 millionaire brands. UB Group, is the

largest brewing company in India with a national market share of 60 per cent. The

project entitled “An Organizational Study on McDowell & Co. Ltd, Varanad,

Cherthala”, was undertaken by the objective to create the idea about the

administration and management of business firms. McDowell & Co. has a successful

part build-up on its glorious past. The company is expected to come up in flying

colors in the coming years. Union management relations are very cordial. Majority of

the people in USL are happy with motivational technique provided by the company and the

superiors. When we see the age and length of service of employees in USL we can find that

people don’t want to change the organization that means they are happy with the environment

and motivational technique given by the company. By the advancement it shall acquire in

its technology and satisfaction among its customers.

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BIBILOGRAPHY

Kothari C.R., Research Methodology , New Delhi, Wishva Prakashan Pvt. Ltd., 2 nd

Edition, 2000.

Kolter Philip, Marketing Management , New Delhi, Practice – Hall of India Pvt. Ltd,

11 th edition; 2004.

Standing Order of the Company 2005 – 2006

Annual Report of the Company.

In-House Magazine of the UB, Pegasus.

McDowell website

www.clubmcdowell.com

www.mcsowellindia.com

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