The UB Group

PRESENTATION ON

McDOWELL & COMPANYUNITED BREWERIES LTD

27th October 2005

UB Group (India)

• The UB Group, is the market leader in both Spirits & Beer business in the country• The Group has a turnover of Rs 3700 crores • The core Beverage Alcohol business account for 80% of the group turnover• Other interests include Fertilizer, Engineering , Life Science, Infrastructure development & Media• The Group is professionally managed and is headed by Dr Vijay Mallya, the Group Chairman

The UB Group- An introduction

Beer : 48% market share nationally Sold in over 52 countries India’s 1st global consumer brand - Kingfisher

Spirits : 54% market share in the domestic market 2nd largest player in the world

Both businesses poised for spectacular growth

Compelling demographics Rapid rise in disposable income Changing lifestyle & spending pattern Slow but sure dismantling of regulatory controls

India’s leading drinks group

UB Group (India)

The Market for Beverage Alcohol

These regulatory hurdles constitute an entry barrier to the industry

Regulatory environment :

• The Indian market is highly regulated, highly restricted and highly taxed.

• Licensing requirement exists for Raw material procurement, Stocking of raw material, Production, Inter-state movement, Retailing and Distribution.

• Controls also exist on Brand entry, Advertising, Distribution & Pricing.

UB Group (India)

The Indian Market

The UB Group enjoys a unique advantage as theLeader in both Spirits and Beer Segments

Re-distribution structure –• Government market (65%) –State government is the

sole distributor• Auction market (16%) – State government auctions

geographical territories which has led to monopolies / cartels

• Free market (19%) – Through trade licenses• Bargaining power in the distribution network is

commanded by players with premium brands, large volume base and product range

UB Group (India)

The Indian Market Spirits Market -

• India is a 112 million cases market, growing at around 9-10% p.a

• Armed Forces – another 12.5 million cases• Whisky dominates – 62%• Low Spirits consumption – Per capita < 2.1 liters p.a• Changing lifestyle, exposure to global trends fueling

growth• MNC’s entered 10 years ago, but yet to emerge strongly• Industry has seen some shakeout consequent to

marginalization of smaller players

UB has aggressively consolidated its leadership position by - Acquiring brands (Gilbeys Whisky) & Companies (SWC)

- Investing heavily in brand buildingUB Group (India)

Acquisition of Shaw Wallace• Shaw Wallace was the 2nd largest player in spirits in India

(MS - 15%).• UB Group acquired ~ 55% stake for a consideration of

Rs.13,000 mio in July 2005• Stakes increased to 75% through open offer.• Valuation underpinned by growth prospects and synergies

arising from combined MS.• Vision to bring all Spirits business together and create

“United Spirits” • Combined business would be amongst top 50 private sector

companies in India.

UB Group (India)

Combined brand portfolio gives leadership in ALL flavors, geographies and price points

Phase I • Investment division of McD to be demerged into NewCo

– All non-spirits investments to be demerged– Demerged entity to have mirror shareholding as McD

• Merge all operating spirits companies into McD–Swap ratios decided basis KPMG & Haribhakti valuations

• SWC itself may be merged few months later upon resolution of tax / other litigations

- However McD will directly hold 75% of SWC even in the interim stage

Phase II• Merger of SWC & its upstream overseas holding companies into McD

– McD’s holding in SWC to be transferred to a Trust – SWC’s holding in McD to be cancelled

Restructuring Mechanics

UB Group (India)

• Merger schemes of Phase I filed with Stock Exchanges• Time frame for completion of mergers

• April – May 2006• Appointed date April 1, 2005

• Following entities being merged• McDowell & Company Limited (Listed)• Herbertsons Limited (Listed)• Triumph Distillers & Vintners Private Limited• United Distillers India Limited• Baramati Grape Industries Limited• Phipson Distillery Limited• United Spirits Limited• Asian Opportunities & Investments Limited•McDowell International Brands Limited•Zelinka Limited• Shaw Wallace Distilleries Limited together with its subsidiaries

• Non-spirits Investments being divested into McDowell India Spirits Limited, a wholly-owned subsidiary

Restructuring Process – Status Report

UB Group (India)

UB Group (India)

Mergers…update• Filing of schemes with Stock exchanges

completed• Schemes to be filed with courts –1st week of

December’05• Court convened meetings- Mid January• Final hearing by Courts –End March ’06• Filing of orders with RoC and listing by end

April ‘06

Sales Performance HY–I -- FY’06

UB Group (India)

Company LineMillion cases

% GrwthHY-I FY’04 HY-I FY’05

McDowellMain line 9.39 11.16 19%TOTAL 12.39 13.51 9%

Company LineMillion cases

% GrwthHY-I FY’04 HY-I FY’05

‘UNITED SPIRITS’

Main line 18.83 23.33 24%TOTAL 27.13 30.17 11%

Resultant Structure

MCD (Spirits)

UBHL & Associates

Public

X%

z%Trust

y%

MCD(Investments)*

UBHL & Associates

Public

42.47%

57.53%

* Includes non-spirits investments Aventis, Mangalore Chemicals, UBHL, UBL etcUB Group (India)

McD Results Sep’05Rs Crores

YoY 2005 2004Net sales 17% 630.57 541.2

Cost of goods Sold 400.26 63% 337.32 62%staff cost 41.68 7% 41.57 8%Advt & Sp 36.72 6% 38.84 7%Other overheads 79.43 13% 83.58 15%E B I T D A 82% 72.49 11% 39.90 7%

Interest /Finance cost 36.74 15.4

Depreciation 7.49 7.86

Profit before Tax 70% 28.26 4% 16.65 3%

Tax 12.26 6.73

Profit after Tax 61% 16.00 3% 9.92 2%

UB Group (India)

United Spirits Sep ‘05 Rs Crores

U S LNet sales 957.22

Cost of goods Sold 477.22 51%

EBITDA 122.16 13%Interest/Finance cost 75.39Depreciation 12.21

P B T 34.56 4%

Brand Performance HY–I -- FY’06

UB Group (India)

Brand FY’05 FY’06 % GrwthBagpiper Whisky 3.49 5.45 56%McDowell’s No.1 Whisky 2.56 3.02 18%McDowell’s No.1 Brandy 2.32 2.80 21%McDowell’s Celebration Rum 2.03 2.18 7%McDowell’s Signature Whisky 1.48 2.04 38%Old Cask Rum 0.82 0.82 1%Gilbey’s Green Label Whisky 1.15 1.11 (4%)Blue Riband Gin Series 0.56 0.56 1%Gold Riband Whisky 0.46 1.04 127%Antiquity Rare Whisky 0.04 0.06 53%Royal Challenge Whisky 0.44 0.46 6%Director’s Special Black Whisky 2.27 3.49 54%Director’s Special Whisky 1.93 2.38 18%White Mischief Vodka 2.78 4.20 51%

• Spirit prices have been rising since early 2004 • Failed sugarcane crop• Increased dosage of alcohol in motor spirit

• Spirit prices softening – but quantum step-up from earlier levels• Furnace Oil prices spiralling

Raw Material Price Trends

UB Group (India)

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

'94-95 '95-96 '96-97 '97-98 '98-99 '99-00 '00-01 '01-02 '02-03 '03-04 '04-05 APR05

MAY05

JUNE05

JULY05

AUG05

Rs. /

MT

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

Rs. /

BL

MOLASSES Rs/MT RECTIFIED SPIRIT Rs/BL ENA Rs/BL

• Cost push offset by• Increase in NSR• Decrease in market spends• Strategic buying of raw material including stock build-up

• Increase in NSR / Decrease in Spends• UB has been in the forefront of the industry initiatives to drive prices up and spends down• Have spearheaded industry meetings with State Govts to obtain price increases e.g. TN, Kerala, Delhi, Rajasthan • McDowell’s NSR increase Rs 29 / case

• Decrease in COG• Stocks built up pre-April 2004 cushioning impact of the rise in prices• Imported molasses• Strategic timing of purchases to effect price reductions • Result:

• HY-I costs of FY’04 are still lower than HY-I of FY’05 by Rs.19/case• Fuel cost impact accounts for Rs.5/case

Trends - Realization & Costs

UB Group (India)

• Brand building exercise continues• Packaging Innovations introduced; Others on the anvil

• Reduces costs; beats counterfeiting• Tetra packs • Pouch Packs to replace mono-cartons • Other Tamper-proof and tamper-evident packaging

• Synergies• Detailed exercise undertaken with help of Accenture to identify potential areas

• Procurement • Market spends• Terms of Trade• Removal of clashing interests e.g. Competing Brands, Duplicate Mfg Sources• Duplicate Services / Infrastructure • Costs of Business e.g. levies

Trends - Realizations & Costs (contd.)

UB Group (India)

Synergies – Costs & Revenues

UB Group (India)

• Total synergies estimated in excess of Rs 100 cr on a sustainable

basis (Rs 0.50/bottle)

• Major synergies from areas other than consumer price increases

• Majority of revenue synergies not quantified

• Sales Volumes > 61 million cases

• Bagpiper – India’s Largest Alcobev brand > 11 million cases

• McDowell’s No.1 family - ~ 17 million cases

• EBITDA Rs. 275 crores

•Realization of synergies would have commenced in full swing

Outlook FY’06 United Spirits

UB Group (India)

UB Group (India)

• The UB Group, is the market leader in both Spirits & Beer business in the country• The Group has a turnover of Rs 3700 crores • The core Beverage Alcohol business account for 80% of the group turnover• Other interests include Fertilizer, Engineering , Life Science, Infrastructure development & Media• The Group is professionally managed and is headed by Dr Vijay Mallya, the Group Chairman

The UB Group- An introduction

UB Group (India)

United Breweries Limited

UB Group (India)

• The UB Group, is the market leader in both Spirits & Beer business in the country• The Group has a turnover of Rs 3700 crores • The core Beverage Alcohol business account for 80% of the group turnover• Other interests include Fertilizer, Engineering , Life Science, Infrastructure development & Media• The Group is professionally managed and is headed by Dr Vijay Mallya, the Group Chairman

The UB Group- An introduction

UB Group (India)

Key Highlights• PBDIT (UBL) for the half year Rs. 64.3 crores, and

increase of Rs.40.5 crores versus last year

• PBDIT (Combined business) Rs. 78.1crores, and increase of Rs.68 crores versus last year

• Volume growth of 22% in UBL & in the combined business and continues to outperform the industry

• Price increases achieved in a number of key states

• Interim dividend of 15% paid by UBL

• UBL - Winner of Super brands award

UB Group (India)

• The UB Group, is the market leader in both Spirits & Beer business in the country• The Group has a turnover of Rs 3700 crores • The core Beverage Alcohol business account for 80% of the group turnover• Other interests include Fertilizer, Engineering , Life Science, Infrastructure development & Media• The Group is professionally managed and is headed by Dr Vijay Mallya, the Group Chairman

The UB Group- An introduction

UB Group (India)

Summary P & LProfitability Statement Year endedUnited Breweries Limited 30.9.2005 30.9.2004 31.3.2005In rupees crore AuditedIncomeNet Sales/ Income from operations 272.00 211.93 453.91 Other Income 9.08 3.64 Total Income 281.07 215.57 453.91 ExpenditureCost of Production 107.09 104.94 209.12 Advertisement & Sales Promotion 69.03 52.47 110.17 Other operating Cost 40.64 34.36 78.01 PBIDT 64.31 23.80 56.61 Finance charges 10.39 14.61 20.82 Depreciation 5.68 4.39 10.57 Profit Before Non recurring items &Taxation 48.24 4.80 25.22 Non Recurring items (13.18) - Provision for Taxation (17.17) (1.20) (11.18) Profit after tax 17.90 3.60 14.04 COMBINED BEER BUSINESSPBIDT 78.14 10.12 Finance Charges 26.61 25.45 Depreciation 16.14 15.57 Profit Before Taxation 35.39 (30.90)

Half year ended

Unaudited

UB Group (India)

• The UB Group, is the market leader in both Spirits & Beer business in the country• The Group has a turnover of Rs 3700 crores • The core Beverage Alcohol business account for 80% of the group turnover• Other interests include Fertilizer, Engineering , Life Science, Infrastructure development & Media• The Group is professionally managed and is headed by Dr Vijay Mallya, the Group Chairman

The UB Group- An introduction

UB Group (India)

Key Drivers of Performance

• Volume growth• Implementation of price increase in key

states• Reduction in cost of sales driven by bottle

cost• Synergized operation between UBL &

MAL

UB Group (India)

• The UB Group, is the market leader in both Spirits & Beer business in the country• The Group has a turnover of Rs 3700 crores • The core Beverage Alcohol business account for 80% of the group turnover• Other interests include Fertilizer, Engineering , Life Science, Infrastructure development & Media• The Group is professionally managed and is headed by Dr Vijay Mallya, the Group Chairman

The UB Group- An introduction

UB Group (India)

2003-04

UBL, 46

SAB, 31

M M, 6

Others, 17

UBL

SAB

M M

Others

2004-05

UBL, 48

SAB, 31

M M, 5

Others, 16

UBL

SAB

M M

Others

Apr to Sept 05

UBL, 49

SAB, 28

M M, 6

Others, 17UBL

SAB

M M

Others

Market Share Movements

UB Group (India)

• The UB Group, is the market leader in both Spirits & Beer business in the country• The Group has a turnover of Rs 3700 crores • The core Beverage Alcohol business account for 80% of the group turnover• Other interests include Fertilizer, Engineering , Life Science, Infrastructure development & Media• The Group is professionally managed and is headed by Dr Vijay Mallya, the Group Chairman

The UB Group- An introduction

UB Group (India)

Volume Performance

Volume Performance

91

57

22

36

22

9

44

27

11

0102030405060708090

100

2004-05 Ytd Sept 05 Qtr Sept 05

Volu

me

- mio

cas

es

Industry

UB

Combined

UB Group (India)

• The UB Group, is the market leader in both Spirits & Beer business in the country• The Group has a turnover of Rs 3700 crores • The core Beverage Alcohol business account for 80% of the group turnover• Other interests include Fertilizer, Engineering , Life Science, Infrastructure development & Media• The Group is professionally managed and is headed by Dr Vijay Mallya, the Group Chairman

The UB Group- An introduction

UB Group (India)

Analysis by Pack TypePack Salience Sept 04

Bottle Quartz88%

Bottle Pint10%

Cans1%

Draught1%

Pack Salience Sept 05

Bottle Quartz86%

Bottle Pint11%

Cans2%

Draught1%

UB Group (India)

• The UB Group, is the market leader in both Spirits & Beer business in the country• The Group has a turnover of Rs 3700 crores • The core Beverage Alcohol business account for 80% of the group turnover• Other interests include Fertilizer, Engineering , Life Science, Infrastructure development & Media• The Group is professionally managed and is headed by Dr Vijay Mallya, the Group Chairman

The UB Group- An introduction

UB Group (India)

Average Realization and Cost of sales

Sales Realization Cost Index

100 106115

129

63 68 72 70

0

20

40

60

80

100

120

140

SRCOS

Realization drivers:• Andhra – Price revision after 7 years

• Kerala – Price revision after 4 years

• Delhi – Matched Kerala prices

• Rajasthan – Auction market to Govt. distribution, policy changes

• Price increases in 2004-05 to offset bottle cost maintained

Cost Drivers:• Rationalization in bottle prices

• Optimization of Power & inputs costs

• Synergy of operation – economies of Scale

UB Group (India)

• The UB Group, is the market leader in both Spirits & Beer business in the country• The Group has a turnover of Rs 3700 crores • The core Beverage Alcohol business account for 80% of the group turnover• Other interests include Fertilizer, Engineering , Life Science, Infrastructure development & Media• The Group is professionally managed and is headed by Dr Vijay Mallya, the Group Chairman

The UB Group- An introduction

UB Group (India)

Cost of Sales AnalysisCost to Sales - Ytd Sept 05

Bottles41%

Others59%

Cost to Sales - Ytd Sept 04

Bottles52%

Others48%

UB Group (India)

• The UB Group, is the market leader in both Spirits & Beer business in the country• The Group has a turnover of Rs 3700 crores • The core Beverage Alcohol business account for 80% of the group turnover• Other interests include Fertilizer, Engineering , Life Science, Infrastructure development & Media• The Group is professionally managed and is headed by Dr Vijay Mallya, the Group Chairman

The UB Group- An introduction

UB Group (India)

Integration of UBL and MABL

• Rationalisation of brand portfolio by state• Changes to sourcing of beer to achieve least

cost supply• Closure of Mumbai based MABL head office• Synergies taken in the areas of:

– Raw material procurement– Marketing and promotional costs– Headcount

UB Group (India)

• The UB Group, is the market leader in both Spirits & Beer business in the country• The Group has a turnover of Rs 3700 crores • The core Beverage Alcohol business account for 80% of the group turnover• Other interests include Fertilizer, Engineering , Life Science, Infrastructure development & Media• The Group is professionally managed and is headed by Dr Vijay Mallya, the Group Chairman

The UB Group- An introduction

UB Group (India)

Trading Outlook• Strong volume performance expected to continue

– Strong beer segment to continue lead• Hardening of raw material costs

– Barley• Other Costs in line with the growth in volume• Substantial capital expenditure – over Rs.400 crore

approved by the board to be incurred over a period of seven years to meet the growing demand

• Proposal to discuss merger of various subsidiaries, in place – Substantial improvement in cash profits.

UB Group (India)

• The UB Group, is the market leader in both Spirits & Beer business in the country• The Group has a turnover of Rs 3700 crores • The core Beverage Alcohol business account for 80% of the group turnover• Other interests include Fertilizer, Engineering , Life Science, Infrastructure development & Media• The Group is professionally managed and is headed by Dr Vijay Mallya, the Group Chairman

The UB Group- An introduction

UB Group (India)

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