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United Spirits Ltd.

BSE: 532432 Sector: Consumer
NSE: MCDOWELL-N ISIN Code: INE854D01016
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OPEN 3396.00
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VOLUME 20538
52-Week high 3469.75
52-Week low 1818.60
P/E 87.00
Mkt Cap.(Rs cr) 48,665
Buy Price 0.00
Buy Qty 0.00
Sell Price 3346.00
Sell Qty 25.00
OPEN 3396.00
CLOSE 3391.85
VOLUME 20538
52-Week high 3469.75
52-Week low 1818.60
P/E 87.00
Mkt Cap.(Rs cr) 48,665
Buy Price 0.00
Buy Qty 0.00
Sell Price 3346.00
Sell Qty 25.00

United Spirits Ltd. (MCDOWELL-N) - Director Report

Company director report

Your Directors are pleased to present the 18th Annual Report of yourCompany and the audited financial statements for the year ended March 31 2017.

1. Financial Results#
` Million

Standalone

Consolidated

2016-17 2015-16 2016-17 2015-16
The working of your Company for the year under review resulted in Profit / Loss from operations 7131 5452 7194 5508
Exceptional and other non-recurring items 3262 1280 3681 274
Less:
Depreciation 1323 1017 1886 1572
Taxation (including deferred tax) 847 1936 697 2228
Profit / (Loss) after tax 1699 1219 930* 1434*
Profit B/F from previous year (42590) (52244) (46815) (56621)
Minority Interest appropriation - - 71 -52
Foreign Currency Translation Reserve - - 29 -215
Considered separately
Total Comprehensive Income 499 86 468 290
Transfer between reserves 68 8349 68 8349
Profit / (Loss) available for appropriation (40324) (42590) (45248) (46815)
Your Directors have made the following appropriations:
General Reserve - - - -
Dividend paid in respect to previous years - - - -
Proposed dividend - - - -
Corporate Tax on Proposed Dividend - - - -
Corporate Tax on Dividend paid - - - -
Balance carried to the Balance sheet (40324) (42590) (45248) (46815)
EPS–Basic & Diluted(Rupees) 11.69 8.39 7.06 9.75

* Excluding minority interest

# Previous year's figures varies compared to 17th Annual Report inview of the implementation of Indian Accounting Standard (Ind AS) effective April 1 2016.

1.1 Subsidiary Companies

In accordance with section 129(3) of the Companies Act 2013(‘Companies Act') a statement containing salient features of the financialstatements of the subsidiary companies in Form AOC1 is provided as Annexure - 1 tothis report.

In accordance with the third proviso to section 136(1) of the CompaniesAct the annual report and financial statements of each of the subsidiary companies havealso been placed on the website of the Company www.diageoindia.com

2. Board's Responses to Observations Qualifications andAdverse Remarks in Auditor's Report

The Statutory Auditors have given unqualified opinion on the FinancialStatements for the year ended March 31 2017 and hence this is not applicable.

The Secretarial Auditor has given an unqualified opinion in theSecretarial Audit Report for the year ended March 31 2017 referred to in Annexure 3 andhence this item is not applicable.

3. Material Changes and Commitments/ Events Subsequent to thedate of the Financial Statements

The details of material changes and commitments/ event subsequent tothe date of the financial statement is provided under Management Discussion and AnalysisReport and the report on Risk Management forming part of this Annual Report.

4. Change in nature of Business if any

The details of change in nature of business is provided underManagement Discussion and Analysis Report and the Report on Risk Management forming partof this Annual Report.

5. Dividend

In view of the accumulated losses of the preceding years yourdirectors have not recommended any dividend. No amount is proposed to be carried toreserves.

6. Capital

The authorized share capital of your Company remains unchanged at `7192000000 divided into 548000000 equity shares of ` 10/- each amounting to ` 5480million 159200000 Preference shares of ` 10/- each amounting to ` 1592.0 million and1200000 7% non-cumulative redeemable Preference Shares of ` 100/- each amounting to `120 million.

The issued subscribed and paid-up equity share capital of your Companyremain unchanged at ` 1453277430/- divided into 145327743 equity shares of ` 10/-each.

7. Global Depository Shares

During the financial year 2005-06 the Company had issued 17502762global depository shares (GDSs) representing 8751381 equity shares with 2 GDSsrepresenting 1 equity share of face value of ` 10/- each at US$ 7.4274 per GDSaggregating to US$ 130 million listed on the Luxembourg stock exchange. These GDSs didnot carry any voting rights. The Company as mentioned in its letter dated September 222016 addressed to Deutsche Bank Trust Company Americas Depository for the GDS hadelected to terminate the deposit agreement in respect of the GDSs and the same wascommunicated to the Luxembourg Stock Exchange with the objective of delisting these GDSslisted with Luxembourg stock exchange. The Company vide its letter dated January 09 2017extended the termination date to February 10 2017 and eventually the Depository forglobal depository shares (GDSs) was terminated by virtue of which the GDSs have beencancelled. Notwithstanding this development the number of shares outstanding or issuedand subscribed in the share capital of the Company remains unchanged at` 1453 millionbeing 145327743 equity shares of ` 10 each fully paid up and the Company's sharescontinue to be listed with the National Stock Exchange of India Limited and BSE Limited.Consequent to this the GDS listed with the Luxembourg Stock Exchange had been delisted.

8. Performance of the Company

During the year under review your Company has achieved a salesvolume of over 90 million cases and this resulted in decline of 3.2% compared to priorperiod (previous year 93 million cases excluding royalty / franchise markets). Netsales/income from operations of the Company's brands grew 3.6% in the financial yearended March 31 2017 and stood at ` 85476 million net of duties and taxes (previous year` 82482 million). Sales volume of the Company's brands in the ‘Prestige andAbove' segment grew 7.7% in the financial year ended March 31 2017 and stood at 37million cases (previous year 34 million cases). Net sales of the 'Prestige andAbove' segment grew 13% and stood at ` 49660 million net of duties and taxes(previous year ` 46013 million). The 'Prestige and Above' segment represents41% of total sales volumes and 58% of total net sales with 4 basis points and 5 basispoints improvement respectively compared to previous year.

9. Details of Subsidiary Companies Joint Ventures and AssociateCompanies and their Financial Position

Your Company continues to have 19 subsidiary companies in the financialyear ended on March 31 2017. The information required under the first proviso to section129(3)of the Companies Act is given inform AOC- 1 in Annexure 1. The

Company's policy for determining material subsidiaries isavailable at Company's website www.diageoindia.com.

Performance of Associates Subsidiaries and Joint Ventures and theircontribution to overall performance of the Company is covered as part of the ConsolidatedFinancial statement and in form AOC-1 annexed to and forming part of this Annual Report.

10. Prospects/Outlook

The details about prospects/ outlook of your Company are provided underthe Management Discussion and Analysis Report forming part of this Annual Report.

11. Depository System

The trading in the equity shares of your Company is under compulsorydematerialisation mode. As on March 31 2017 equity shares representing 98.77% of theequity share capital are indematerialised form. As the depository system offers numerousadvantages members are requested to take advantage of the same and avail of the facilityof dematerialisation of the Company's shares.

12. Board Meetings Board of Directors Key Managerial Personnel &Committees of Directors.

12.1 A. Appointment change in designation and resignation

Details on appointments changes in designation resignation ofDirectors key managerial personnel and Committees of Directors as well as on Board andCommittee meetings of your Company and the matters required to be specified pursuant tosections 134 and 178 of the Companies Act 2013 and the SEBI (Listing Obligations AndDisclosure Requirements) Regulations 2015 (SEBI (LODR) Regulations) are provided in theCorporate Governance Report that is annexed to and form part of this Annual Report.

B. Re-appointment

As per the provisions of the Companies Act Mr Vinod Rao retires byrotation at the ensuing Annual General

Meeting (AGM) and being eligible offers himself for re- appointment.

Members may please note that Mr Vinod Rao who is a nominee of Relay BV was appointed as a Director at the 17th Annual General Meeting (AGM).

A brief profile of Mr Vinod Rao is provided in the Notice convening18th AGM.

C. Independent Directors and Nominee Directors

Mr Sudhakar Rao an Independent Director of the Company resigned asdirector with effect from May 19 2016.

Mr Ravi Rajagopal a Non-Executive Director of the Company resigned asdirector with effect from October 13 2016.

Dr Nicholas Bodo Blazquez a Non-Executive Director of the Companyresigned as director with effect from January 22 2017.

Your directors place on record their sincere appreciation of thevaluable services rendered by Mr Sudhakar Rao Mr Ravi Rajagopal and Dr Nicholas BodoBlazquez during their tenure as directors of the Company.

Mr V K Viswanathan was appointed as an Independent Director with effectfrom October 17 2016

Pursuant to nominations received from Relay B.V. the holding companyof your Company Mr Vinod Rao Mr John Thomas Kennedy and Mr Randall Ingber wereappointed as Directors of the Company with effect from May 24 2016 August 17 2016 andFebruary 2 2017 respectively.

Brief profiles of Mr V K Viswanathan Mr Vinod Rao Mr John ThomasKennedy and Mr Randall Ingber are provided in the Notice convening 18th AGM.

D. Executive Director

Mr Sanjeev Churiwala Chief Financial Officer was nominated by Relay BV for appointing him as an Executive Director and accordingly the Board of Directors ofthe Company appointed him as an

Executive Director and Chief Financial Officer of the Company witheffect from April 1 2017.

A brief profile of Mr Sanjeev Churiwala is provided in the Noticeconvening 18th AGM.

E. Number of Meetings of the Board

The details of the Board Meetings and other Committee Meetings heldduring the financial Year 2016-17 are stated in the Corporate Governance.

F. Board Committees

The Company has setup the following committees of the Board:

Audit and Risk Management Committee Nomination and RemunerationCommittee Stakeholders Relationship Committee Corporate Social Responsibility Committeeand General Committee of Directors.

The composition of each of the above Committees their respective rolesand responsibilities are provided in the Corporate Governance Report.

G. Recommendations of the Audit and Risk Management Committee

All the recommendations of the audit and risk managment committee havebeen accepted by the Board.

H. Details of remuneration to Directors

As required under Section 197(12) of the Companies Act informationrelating to remuneration paid to Directors during the financial year 2016–17 isprovided in the Corporate Governance Report and in form MGT 9 that is annexed to andforming part of this Annual Report as Annexure-4.

As stated in the Corporate Governance Report sitting fees are paid toNon-Executive Directors for attending Board/ Committee meetings. They are also entitled toreimbursement of actual travel expenses boarding and lodging conveyance and incidentalexpenses incurred in attending such meetings in accordance with the travel policy forDirectors. In addition the Non-Executive Directors are also eligible for commission everyyear not exceeding 1% of the net profits of the Company calculated in accordance withSection 198 of the Companies Act as approved by the shareholders at the AGM held onSeptember 30 2014. Such approval remain in force until revoked. The payment of Commissionis to be decided by the Board of Directors based on the recommendation of the Nominationand Remuneration Committee. Criteria for payment of remuneration to Non-ExecutiveDirectors is as below:

1. Membership of Committees

2. Chairmanship of the Committees/Board

3. Benchmarking with other companies

The Company has made a provision of ` 21.5 million for payingcommission to the Non-Executive Directors pursuant to the provisions of the Companies Act2013.

The criteria for payment of remuneration to executive directors isdetermined by the Nomination and Remuneration Committee.

I. Board Evaluation Criteria

Pursuant to the provisions of the Companies Act and Regulation 17 ofthe SEBI (LODR) Regulations the Board has carried out an annual performance evaluation ofits own performance the Directors individually as well as the Board Committees. Theevaluation process considered the effectiveness of the Board and the committees withspecial emphasis on the performance and functioning of the Board and the Committees. Theevaluation of the Directors was based on the time spent by each of the Board Members corecompetencies expertise and contribution to the effectiveness and functioning of the Boardand the Committees.

12.2 Vigil Mechanism

Your Company has a well-established vigil mechanism in place which ismanaged by the compliance & ethics team. ‘SpeakUp' is a confidential serviceavailable to employees to make a report when they believe there to be a potential breachof the code policies or applicable laws. ‘SpeakUp' is managed by an externalagency with staff who are trained to deal with the calls and translators who areimmediately available to assist if required. Access to the Chairman of the Audit Committeeis provided for in appropriate/ exceptional cases as required under the Companies Act andthe SEBI (LODR) Regulations. All complaints are investigated by the compliance and ethicsteam and appropriate action taken in accordance with your Company's policies.

12.3 Related Party Transactions

The Company's policy on dealing with related party transactionswas adopted by the Board on June 15 2015.

This policy has been amended from time to time and is available on theCompany's website www.diageoindia. com.

All related party transactions that were entered into during thefinancial year were on an arm's length basis and were in the ordinary course ofbusiness. There are no materially significant related party transactions made by theCompany with promoters directors key managerial personnel or other designated personswhich may have a potential conflict of interest with the Company at large.

The details of related party transactions required under section134(3)(h) of the Companies Act read with Rule 8 of the Companies (Accounts) Rules 2014 isgiven in form AOC-2 and the same is enclosed as Annexure-2.

13. Auditors 13.1 Financial Audit

M/s. Price Waterhouse & Co Chartered Accountants LLP (FRN 304026E/E-300009) Statutory Auditors of your Company were appointed as Auditors of your Companyfrom the conclusion of the 17th AGM for a period of 5 years subject to rati_cation of theappointment by the members at every AGM.

13.2 Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act and theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 aSecretarial Audit has been carried out by Mr Sudhir V Hulyalkar Practising CompanySecretary and his report is annexed as Annexure 3.

14. Listing of Shares of the Company

The equity shares of your Company continue to be listed with theBSE Limited and the National Stock

Exchange of India Limited (NSE). The listing fees due as on date havebeen paid to the respective stock exchanges. The GDS listed with Luxembourg Stock Exchangehad been delisted consequent upon the termination of the Depository Agreement entered intowith the Depository namely Deutsche Bank Trust Company Americas.

15. Corporate Governance

A Corporate Governance Report is annexed separately as part of thisreport.

16. Management Discussion and Analysis Report

The Management Discussion and Analysis Report is annexed separately aspart of this report.

17. Fixed Deposits

As reported in the previous year's annual report your Companydiscontinued accepting fixed deposits from the public and shareholders effective January1 2014. In addition pursuant to section 74(1)(b) of the Companies Act the Board ofDirectors at their meeting held on August 1 2014 decided to repay all fixed depositsmaturing on or after March 31 2015 by March 31 2015. Fixed Deposits from the public andshareholders which remained unclaimed and for which instructions had not been receivedfrom the depositors as on March 31 2017 stood at ` 11205419. This amount wastransferred into a separate non-interest bearing escrow account opened specifically forthe purpose of re-payment has been re-paid consistent with the provisions of theCompanies Act and the rules made thereunder. Of this amount a sum of ` 4902310 (as ofJune 30 2017) has since been paid as per instructions received after the year end. Thebalance unclaimed fixed deposits continue to remain in the escrow account.

18. Extract of Annual Return

The extract of the Annual Return in Form MGT-9 is annexed as Annexure4.

19. Transfer to Investor Education and Protection Fund (IEPF)

An amount of ` 2777294/- and ` 560826/- in respect of theunclaimed/unpaid dividend and fixed deposits respectively during the financial year2009-10 have been transferred to Investors Education and Protection Fund pursuant to theprovisions of Sections 124 of the Companies Act read with Rule 8 of the Companies(Accounts) Rules 2014. The details of the shareholders and Fixed Deposit holders with thenames of those shareholders and deposit holders are available on the website of theCompany.

The details of unclaimed/unpaid Dividends and Fixed Deposits which havenot been transferred to the IEPF account as the period of seven years has not beencompleted is given below pursuant to the provisions of the Companies Act and theapplicable Rules there under.

Dividend:

Financial Year No. of Members who have not claimed their dividend Unclaimed dividend as on March 31 2017 (Amount in `) Unclaimed dividend as% to total dividend Date of declaration Last date for claiming the dividend prior to its transfer to IEPF
2009-10 12416 2690870 0.86 29-Sep-2010 4-Dec-2017
2010-11 14390 2833572 0.86 29-Sep-2011 4-Dec-2018
2011-12 16459 3138447 0.96 25-Sep-2012 30-Nov-2019
2012-13 10356 2030605 0.56 24-Sep-2013 29-Nov-2020
2013-14 - Not applicable - Not applicable as no dividend was declared for the year 2013-14. Not applicable
2014-15 - Not applicable - Not applicable as no dividend was declared for the year 2014-15. Not applicable
2015-16 - Not applicable - Not applicable as no dividend was declared for the year 2015-16. Not applicable

Fixed Deposits:

1. Accepted during the year NIL
2. Remained unpaid or unclaimed as at the end of the year YEAR AMOUNT in `
2016-17 Not Applicable
2015-16 Not Applicable
2014-15 2850572.00
2013-14 2527021.00
2012-13 3526798.00
2011-12 1076345.00
2010-11 796623.00
3. Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so number of such cases and the total amount involved NIL
4. The Details of deposits which are not in compliance with the requirements of Chapter V of the Companies Act Not Applicable

Necessary compliance under Rule 3 of the Investor Education andProtection Fund (Uploading of information regarding unpaid and unclaimed amounts lyingwith companies) Rules 2012 has been ensured.

20. Human Resources

Employee relations remained cordial at all the locations of theCompany. Particulars of employees drawing an aggregate remuneration of ` 10200000/- orabove per annum or ` 850000/- or above per month as well as additional information onemployee remuneration as required under the provisions of rule 5(1) 5(2) and 5(3) of theCompanies (Appointment and Remuneration of Managerial personnel) Rules 2014 is annexed aspart of this report in Annexure 5 hereto.

21. Employees Stock Option Scheme

Your Company has not offered any stock options to its employees duringthe year 2016-17. During the year 2015–16 the Board approved a Stock AppreciationRights (SAR) plan for grant of 500000 SARs and authorised the Nomination and RemunerationCommittee to decide the criteria for grant and vesting of the SARs to employees andeligible directors. Since there will be no fresh issue of shares as a result of the SARsthere will be no dilution of equity and earning per share.

22. Particulars of Loans Guarantees and Investments

Loans guarantees and investments covered under Section 186 of theCompanies Act are detailed in Notes to the financial statements which are as follows:

Notes 4.1 and 4.2 relating to investments Notes 5 6 and 9 relating toloans given and Note 37 relating to guarantee given as per the standalone financialstatements for the year ended March 31 2017 include these disclosures.

23. Risk Management

Details on Risk Management are annexed as part of this report inAnnexure 6 hereto.

24. Internal Financial Controls

The Board considered materials placed before it and after reviewing theconfirmation from external parties and reviewing the effectiveness of the policies andprocedures adopted by the Company for ensuring orderly and efficient conduct of itsbusiness including adherence to Company's policy safeguarding its assetsprevention and detection of frauds and errors and completeness of accounting records andtimely preparation of financial statements the Board has satisfied itself that theCompany has laid down internal financial controls which commensurate with size of thecompany and that such internal financial controls are broadly adequate and are operatingeffectively. The certification by the auditors on internal financial control forms part ofthe audit report. A statement to this effect is also appearing in the Directors'Responsibility Statement.

25. Corporate Social Responsibility

Information on the composition of the Corporate Social Responsibility(CSR) Committee is provided in the Corporate Governance Report that forms part of thisAnnual Report. Furthermore as required by section 135 of the Companies Act and the rulesmade thereunder additional information on the policy and implementation of CSR activitiesby your Company during the year are provided in Annexure 7 to this report. BusinessResponsibility Report under Regulation 34(2) (f ) of the SEBI (LODR) Regulations has beenenclosed as Annexure 9 and also uploaded on to the Company's websitewww.diageoindia.com

26. Conservation of Energy Technology Absorption Foreign ExchangeEarnings and Outgo

The particulars prescribed under section 134(3)(m) of the CompaniesAct read with Rule 8 of the Companies (Accounts) Rules 2014 are set out in Annexure8 to this report.

27. Details of Significant and Material Orders Passed by the Regulatorsor Courts Impacting the Going Concern Status and Company's Operations in Future

The Company has not received any significant or material order passedby regulators or courts impacting the Company's going concern status or theCompany's operations in future. The Management Discussion and Analysis Report readwith the report on Risk Management contains impact on the business due to regulatorychanges.

28. Disclosure as required Under Section 22 of Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013

The Company has implemented a prevention of sexual harassment policy inline with the requirements of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 (SHWWA). An Internal Complaints Committee (ICC) hasbeen set up to redress complaints received regarding sexual harassment and ongoingtraining is provided to employees as required by the SHWWA. During the financial year2016-17 no complaint was received.

29. Highlights of performance of subsidiaries associates and jointventure companies of the Company

The highlights of performance of subsidiaries associates and jointventure companies of the Company and their contribution to the overall performance of theCompany is covered as part of the Consolidated Financial Statement and form AOC-1 annexedas part of this report. Out of

20 subsidiary/associate companies 13 are inoperative companies.

30. Directors' Responsibility Statement

Pursuant to section 134 (5) of the Companies Act in relation tofinancial statements (together with the notes to such financial statements) for the year2016-17 the Board of Directors report that: (i) in the preparation of the annualaccounts the applicable accounting standards have been followed along with properexplanation relating to material departures; (ii) the Directors have selected suchaccounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company at the end of the financial year and of the profit/ loss of the Company forthat period; (iii) the Directors have taken proper and sufficient care for the maintenanceof adequate accounting records in accordance with the provisions of the Companies Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities; (iv) the Directors have prepared the financial statements on a goingconcern basis; (v) the Directors have laid down internal financial controls to be followedby the Company commensurate with the size and nature of its business and the complexity ofits operations and that such internal financial controls are adequate and are operatingeffectively and the control gaps noticed in invoicing has since been appropriatelyaddressed; and (vi) the Company has a system of getting reports of compliance periodicallyfrom the units and has substantially implemented a process having comprehensive systems toensure compliance with the provisions of all applicable laws and is operating effectively.

Your Directors place on record their sincere appreciation for thecontinued support from the shareholders customers suppliers banks and financialinstitutions and other business associates.

A particular note of thanks to all employees of your Company withoutwhose contribution your Company could not have achieved the year's performance.

By Authority of the Board
Anand Kripalu Mahendra Kumar Sharma
MD & CEO Chairman
Bengaluru
July 23 2017

#CGStart#

CORPORATE GOVERNANCE REPORT

1. Company's Philosophy on Code of Corporate Governance

1.1 Your Company is committed to good corporate governance and adheresto the tenets of integrity accountability fairness and transparency in all itsoperations. The Company continuously endeavors to improve upon these aspects on an ongoingbasis and adopts innovative approaches for leveraging resources converting opportunitiesinto achievements through proper empowerment and motivation fostering a healthy growthand development of human resources to take the Company forward.

1.2 Your Company pursues growth by adopting best corporate practicesand timely disclosures which will enhance the long term value to all stakeholders andalso inspires us to follow best practices which not only meet applicable legislation butgo beyond in many areas of our functioning. We are committed to doing things the right waythat is ethical and is in compliance with applicable legislation. Our code of corporategovernance is an extension of our values and reflects our continued commitment to ethicalbusiness practices across our operations.

2. Board of Directors

2.1 As on the date of this report the Board of Directors of theCompany comprises: ? A Non-Executive Independent Director as Chairman; ? TwoExecutive Directors; ? Three Non-Executive Non-Independent Directors; and ?Five Independent Directors including the Chairman as above.

2.2 None of the Directors is related to any other Director.

2.3 Your Company has a balanced mix of executive and non- executive andIndependent Directors from various diverse backgrounds which enables the Board todischarge its duties and responsibilities in an effective manner.

2.4 During the financial year under review 10 Board Meetings wereheld i.e. on April 28 2016 May 12 2016 May 26 2016 June 08 2016 July 9 2016July 14 2016 July 26 2016 October 27 2016 January 21 2017 and March 27 2017.

2.5 Attendance of each Director at the Board Meetings and at theprevious AGM and details of the number of outside directorship and committee positionsheld by each of the Directors are given below.

Name of Director Category of Directorship No. of Board Meetings attended during the year Attendance at last AGM held on 14/07/2016 No. Of other Companies in which Director as on the date No. of committees (other than the Company) as Chairman / Chairperson / Member
Mr Mahendra Kumar Sharma Independent Non-Executive Chairman 10 Yes 10 3
(Chairman in 2 out of 3)
Mr Anand Kripalu Managing Director and 10 Yes 1 Nil
Chief Executive Officer
Mr Sanjeev Churiwala1 Executive Director and NA Yes 3 Nil
Chief Financial Officer
Mr V K Viswanathan2 Independent Non-Executive Director 3 Not Applicable 8 6
(Chairman in 3 out of 6)
Dr (Mrs) Indu Shahani Independent Non-Executive Director 8 Yes 7 5
(Chairman in 1 out of 5)
Mr D. Sivanandhan Independent Non-Executive Director 10 No 12 4
Mr Rajeev Gupta Independent Non-Executive Director 7 No 8 4
Mr Vinod Rao Non-Executive Nominee Director 8 Not Applicable Nil Nil
Mr John Thomas Kennedy3 Non-Executive Nominee Director 3 Not Applicable Nil Nil
Mr Randall Ingber4 Non-Executive Nominee Director 1 Not Applicable Nil Nil
Dr Nicholas Bodo Blazquez5 Non-Executive Director 5 No Nil Nil
Mr Sudhakar Rao6 Independent Non-Executive Director 1 Not Applicable 11 7
(Chairman of 1)
Mr Ravi Rajagopal7 Non-Executive Director 5 No Nil Nil

1 Appointed as an Executive Director of the Company with effectfrom April 1 2017.

2 Appointed as an Additional Director in the capacity ofIndependent Director with effect from October 17 2016.

3 Appointed as a Non-Executive Nominee Director with effect fromAugust 17 2016.

4 Appointed as a Non-Executive Nominee Director with effect fromFebruary 2 2017.

5 Resigned as a Non-Executive Director with effect from January22 2017.

6 Resigned as a Non-Executive Independent Director with effectfrom May 19 2016.

7 Resigned as a Non-Executive Director with effect from October13 2016.

NOTE: The above details are in respect of their Directorships only inIndian Companies and Committee membership in only Audit Committee and StakeholdersRelationship Committee.

2.6. Other Corporate Governance Requirements

In compliance with Regulation 23 the Company has framed policy onRelated Party Transactions which can be viewed through the web linkhttp://www.diageoindia. com/investor.aspx

Regulation 24 with respect to Independent Directors on UnlistedMaterial Subsidiaries is not applicable. During the financial year the IndependentDirectors have been familiarised about the Company through various programs and the samecan be viewed through the web link http://www.diageoindia.com/investor.aspx and otherrequirements of Regulation 24 to the extent applicable are complied with.

Regulation 25 with respect to Independent Directors are complied with.

Regulation 26 with respect to Directors and Senior Management has beencomplied with to the extent applicable.

Regulation 27 with respect to quarterly compliance report has beencomplied with.

Regulation 46(2)(b) to Regulation 46(2)(i) pertaining to disseminatinginformation on website has been complied with.

The declarations by the Independent Directors pursuant to Section149(7) read with Section 149(6) of the

Companies Act have been given and the requirements in relation theretocomplied with in accordance with the requirements of the Companies Act.

Other requirements of Corporate Governance as per the SEBI (LODR)Regulations are disclosed on the Company's website www.diageoindia.com

2. 7 Disclosures regarding appointment and reappointment of directorsa. Directors retiring by rotation and being proposed for reappointment: Mr Vinod Rao (DIN:01788921)

Mr Vinod Rao was appointed as Director in previous AGM. He is liable toretire by rotation and has offered himself for re-appointment. His brief profile is givenin the Notice of the 18th AGM.

b. Appointment of Directors i. Mr V K Viswanathan (DIN:01782934)

Mr V K Viswanathan was appointed as an additional Director with effectfrom October 17 2016 and he will hold office of director upto the date of the ensuing AGMpursuant to the provisions of the Companies Act. He is proposed to be appointed as anIndependent director at the 18th AGM. His brief profile is given in the Notice convening18th AGM.

ii. Mr Randall Ingber (DIN: 07529943)

Mr Randall Ingber was appointed as an additional Director with effectfrom February 2 2017 and he will hold office of director upto the date of the ensuing AGMpursuant to the provisions of the Companies Act 2013. He is proposed to be appointed as adirector at the 18th AGM. His brief profile is given in the Notice convening 18th AGM.

iii. Mr John Thomas Kennedy (DIN: 07529946) Mr John Thomas Kennedy wasappointed as an additional Director with effect from August 17 2016 and he will holdoffice of director up to the date of the ensuing AGM pursuant to the provisions of theCompanies Act 2013. He is proposed to be appointed as a director at the 18th AGM. Hisbrief profile is given in the Notice convening 18th AGM.

ANNUAL REPORT 2016_17

3. Audit and Risk Management Committee

3.1 The Audit and Risk Management Committee constituted by theCompany is presently comprised of 5 directors as follows:

Mr V K Viswanathan Non-Executive Independent Director
(Chairman)
Dr (Mrs) Indu Shahani Non-Executive Independent Director
Mr D. Sivanandhan Non-Executive Independent Director
Mr Rajeev Gupta Non-Executive Independent Director
Mr Vinod Rao Non-Executive Director

3.2 PursuanttotheprovisionsofSection177oftheCompanies Act and theprovisions of the SEBI (LODR) Regulations the brief description of the terms of referenceof the Audit and Risk Management Committee are given below: a. Oversight of theCompany's financial reporting process and the disclosure of its financial informationto ensure that the financial statement is correct sufficient and credible. b.Recommending the appointment and removal of external auditor fixation of audit fee andalso approval for payment for any other services. c. Reviewing with management the annualfinancial statements before submission to the Board focusing primarily on: i. Majoraccounting entries based on exercise of judgment by management; ii. Qualifications indraft audit report; iii. Significant adjustments arising out of audit; and iv. Disclosureof any related party transactions.

d. Reviewing with the management performance of statutory and internalauditors external and internal auditors the adequacy of internal control systems riskmanagement systems. e. Reviewing the adequacy of internal audit function including thestructure of the internal audit department reporting structure coverage and frequency ofinternal audit. f. Discussion with internal auditors on any significant findings andfollow up thereon. g. Reviewing the findings of any internal investigations by theinternal auditors and external consultants into matters where there is suspected fraud orirregularity or a failure of internal control systems of a material nature and reportingthe matter to the board. h. Discussion with statutory auditors before the audit commencesnature and scope of audit as well as post- audit discussions to ascertain any area ofconcern.

i. To look into the reasons for substantial defaults in the payment tothe depositors debenture holders shareholders (in case of non-payment of declareddividends) and creditors.

3.3 The Audit and Risk Management Committee inter alia has reviewedthe financial statements including Auditors' Report for the year ended March 31 2017and has recommended its adoption. In addition the Audit and Risk Management Committee hasalso reviewed the unaudited quarterly results for quarter ended June 30 2016 quarterlyand six months ended September 30 2016 and quarterly and nine months ended December 312016 (which were subjected to a limited review by the Statutory Auditors of the Company)and the audited financial results for the year ended March 31 2017.

3.4 During the financial year under review 10 meetings of the Auditand Risk Management Committee were held i.e. on April 28 2016 May 12 2016 May 252016 June 8 2016 July 8 2016 July 14 2016 July 25 2016October 27 2016 January21 2017 and March 27 2017. The details of attendance by members of the Audit and RiskManagement Committee at such meetings are as stated below. (These details should be readwith the information on appointment to and cessation of membership in the Audit and RiskManagement Committee set out above).

Name of the director No. of meetings entitled Meetings attended
Mr V K Viswanathan1 3 3
(Chairperson)
Dr (Mrs) Indu Shahani 10 9
Mr Vinod Rao2 7 7
Mr D. Sivanandhan 10 9
Mr Rajeev Gupta 10 7
Mr Mahendra Kumar Sharma3 8 8
Mr Ravi Rajagopal4 7 5
Mr Nicholas Bodo Blazquez5 7 4
Mr Sudhakar Rao6 2 1

1 Appointed as Member and as Chairman of the Committee witheffect from October 17 2016 and January 1 2017 respectively.

2 Appointed as member of the Committee with effect from May 262016

3 Ceased to be a Member of the Committee with effect from January1 2017

4 Ceased to be a Member of the Committee with effect from October13 2016 consequent upon his resignation to the directorship.

5 Ceased to be a Member of the Committee with effect from January22 2017 consequent upon his resignation to the directorship.

6 Ceased to be a Member of the Committee with effect from May 192016 consequent upon his resignation to the directorship.

4. Nomination and Remuneration Committee

4.1 The Nomination and Remuneration Committee (NRC) constituted by theCompany comprises at present the following Directors:

Dr (Mrs) Indu Shahani Non-Executive
(chairperson) Independent Director
Mr D. Sivanandhan Non-Executive
Independent Director
Mr John Thomas Kennedy1 Non-Executive Director

1 Appointed as member of the NRC with effect from October 272016

4.2 In addition during the financial year Dr Nicholas Bodo Blazquezhas ceased to be a member of the NRC with effect from January 22 2017.

4.3 Keeping in view of the provisions of Section 178 of the CompaniesAct and the provisions of the SEBI (LODR) Regulations brief description of the terms ofreference of the NRC are given below: a. Assist the Board of Directors of the Company to:i. determine review and propose compensation principles and policy of the Company ii.assess and review compensation plans recommended by the management; iii. recommend thecompensation packages of the Company's Executive Directors.

b. Identify persons who are qualified to become directors and who maybe appointed in senior management in accordance with the criteria laid down recommend tothe Board of Directors their appointment and removal and shall carry out evaluation ofevery director's performance. c. Approve and recommend matters relating tocompensation by way of salary perquisites benefits etc. to the Managing/Whole Time/Executive Directors of the Company. d. Formulate the criteria for determiningqualifications positive attributes and independence of a director and recommend to theBoard of Directors a policy relating to the remuneration for the directors includingIndependent directors key managerial personnel and other employees.

The policy shall inter alia cover termination payments to theExecutive Committee members and other Senior Executives and oversight of the same by theCommittee.

The remuneration policy shall set guidelines for the ExecutiveCommittee/ Managing Director to approve remuneration to the Managing Committee members andtheir direct reports and other executives. e. Review and recommend to the Board ofDirectors for approval any mandatory disclosures of the Management compensation. f. Reviewand reassess the adequacy of the charter and perform annual self-evaluation of theperformance of the Committee. g. Carry out any other acts and deeds as may be delegated bythe Board of Directors and deal with such other matters as may be prescribed under theCompanies Act the SEBI (LODR) Regulations and other statutory enactments. h. Provideguidance to the Human Resources Department to set up policy and procedure for successionplanning of Key Managerial Personnel and other senior management of the Company. i.Approve any share incentive or other plans for the employees of the Company.

4.4 During the financial year under review four meetings were heldi.e. on April 28 2016 June 8 2016 July 26 2016 and September 26 2016. The detailsof attendance by members of the Committee at such meetings are as stated below.(Thesedetails should be read with the information on appointment to and cessation of membershipin the NRC set out above.)

Name of the director No. of Meetings Meetings attended
Dr (Mrs) Indu Shahani 4 4
MrJohn Thomas Kennedy1 NA NA
Mr D. Sivanandhan 4 4
Dr Nicholas Bodo Balzquez2 4 1

1 Appointed as member of the NRC with effect from October 272016 2 Ceased to be a member of the NRC due to resignation to the directorshipwith effect from January 22 2017.

4.5 Remuneration of directors

Policy: The policy on Directors/senior appointments sets out theguidelines for the executive committee members/Managing Director/Key Managerial Personnelbased on the terms of reference of the committee. The said policy is available on theCompany's website www.diageoindia.com .

The details of remuneration paid/ payable to the directors during thefinancial year April 1 2016 to March 31 2017 are given below.

A. Managing Director: Mr Anand Kripalu i. Mr Anand Kripalu wasappointed as Chief Executive Officer with effect from May 1 2014 and as Managing Directorand Chief Executive Officer of the Company for a period of five years with effect fromAugust 14 2014. The terms and conditions of appointment and remuneration of Anand Kripaluwere as set out in the resolution approved by the shareholders at the AGM held onSeptember 30 2014 and as per the applicable rules of the Company. The remuneration wasrevised at the AGM held on November 24 2015 with effect from July 1 2015. There is noseverance fee and the notice period is six months. The performance criteria was asdetermined by the Nomination and Remuneration Committee.

During the year the remuneration was revised at the Board meeting heldon October 27 2016 which is within the overall limit approved by the shareholders of theCompany at their meeting as mentioned above. The remuneration paid to Mr Anand Kripalu asManaging Director and Chief Executive Officer during the year ended March 31 2017 isgiven in Annexure 4 to the Directors Report.

B. Non - Executive Directors i. Sitting Fees have been paid toNon-Executive Directors for attending Board/ Committee Meetings as specified in the tablebelow (which table should be read with information regarding the appointmentre-appointment resignation or retirement of such directors provided in the precedingsections of this Corporate Governance Report). They are also entitled to reimbursement ofactual travel expenses boarding and lodging conveyance and incidental expenses incurredfor attending such meetings in accordance with the Board approved policies for suchreimbursements. Other than the sitting fees and reimbursement of expenses no otherremuneration was paid. No securities/ convertible instruments were issued or allotted toany of the non- executive directors during the financial year.

Name of the Non-Executive Sitting fees
Director (`)
Mr Mahendra Kumar Sharma 1400000
Mr V K Viswanathan 450000
Dr Nicholas Bodo Blazquez 250000
Mr Sudhakar Rao 175000
Mr D. Sivanandhan 1600000
Mr Ravi Rajagopal 750000
Mr Rajeev Gupta 1050000
Dr (Mrs) Indu Shahani 1400000

ii. Non-Executive Directors are also eligible for commission every yearnot exceeding one per cent of the net profits of the Company as approved by theshareholders at the AGM held on September 30 2014. Such commission are determined basedon the recommendation of the Nomination and Remuneration Committee and as approved by theBoard of Directors. iii. Details of commission to the Non- Executive Directors for theFinancial Year 2016-17 is given below:

Sl. Name of the Directors Amount
No. (in `)
1 Mr Mahendrakumar Sharma 4651745
2 Mr D Sivanandhan 3872485
3 Mr Sudhakar Rao 523203
4 Mr Rajeev Gupta 3300000
5 Dr Indu Shahani 3872485
6 Mr Ravi Rajagopal 1853525
7 Mr V K Viswanathan 1565503
8 Dr Nicholas Bodo Blazquez 1908281

C. Particulars of Equity Shares of the Company currently held byDirectors As on the date of this Report Mr V K Viswanathan is holding 153 Equity shares inthe Company and apart from that none of the other Directors are holding any Equity Sharesin the Company.

D. Performance Evaluation of Independent Directors. Pursuant to theprovisions of the CompaniesAct and Regulation 34(3) read with Schedule V(C)(4) (d) of theSEBI (LODR) Regulations the Committee has prescribed performance evaluation criteria forindependent directors as well as for the directors the committee and the Board.

5. Stakeholders' Relationship Committee

5.1 The Stakeholders' Relationship Committee (SRC) constituted bythe Company and is presently comprised as follows :

Mr D. Sivanandhan Non-Executive
(Chairperson) Independent Director
Dr (Mrs) Indu Shahani Non-Executive
Independent Director
Mr John Thomas Kennedy1 Non-Executive
Director

1 Appointed as member of the SRC with effect from October 272016

5.2 In additionduring the financial year Mr Ravi Rajagopal has ceasedto be a member of the SRC with effect from October 13 2016.

5.3 Keeping in view the provisions of section 178 of the Companies Actand the provisions of the SEBI (LODR) Regulations the terms of reference of theStakeholders Relationship Committee are as follows: a. Review the redressal ofshareholders' debenture holders' and depositors' or any other securityholders' grievances/ complaints like transfer of shares non-receipt of balancesheet non-receipt of declared dividends non- receipt of interest warrants etc. andensure cordial relation with the Stakeholders. b. Review the adherence to servicestandards relating to the various services rendered by the Company and Company'sRegistrars & Transfer Agents. c. Review the status of the litigations complaints /suits filed by or against the Company relating to the shares/ fixed deposits debenturesor any other securities of the Company before any Courts / other appropriate authoritiesand in particular where directors are implicated or could be made liable. d. Review theimpact of enactments/ amendments made by the Ministry of Corporate Affairs/ Securities andExchange Board of India and other regulatory authorities on matters concerning theStakeholders in general. e. Review matters relating to transfer of unclaimed and unpaiddividend matured deposits interest accrued on the matured deposits debentures etc. tothe

Investor Education and Protection Fund as specified under the CompaniesAct. f. Review the status of claims received for unclaimed shares and dividend onunclaimed shares. g. Review the initiatives taken to reduce quantum of unclaimed dividends/ unclaimed deposits. h. Act on such further terms of reference as may be considerednecessary and specified by the Board in writing from time to time. i. Review servicestandards and investor service initiatives undertaken by the Company.

5.4 Mr V. Ramachandran Company Secretary is the compliance officer ofthe Company.

5.5 During the financial year under review one meeting was held on May26 2016.

5.6 The details of attendance by members of the Committee are asbelow.(These details should be read with the information on appointment to and cessationof membership in the Stakeholders' Relationship Committee set out above.)

Name of the Director No. of Meetings Meetings attended
Mr D Sivanandhan (Chairman) 1 1
Mr John Thomas Kennedy NA NA
Dr (Mrs) Indu Shahani 1 1

5.7 The Company/Company's Registrars received 40 complaints duringthe financial year all of which were resolved to the satisfaction ofshareholders/investors.

Sl. No. Complaints relating to No. of Complaints received No. of Complaints resolved
1 Non-receipt of refund order / allotment letter Nil Nil
2. Non-receipt of Dividend/Interest on Shares/ Debentures/ Fixed Depos- its/maturity amount on debentures 3 3
3 Non-receipt of share certificates 36 36
4 Non-receipt of Annual Report/ Rights forms/ Bonus shares/interest on delayed refund/ Dividend and Interest 1 1
5 others Nil Nil
Total 40 40

The number of complaints received during each of the quarters of thefinancial year 2016-17 were 17 10 10 and 3.

In addition to the above there are a few shareholder litigations wherethe Company has been made a party to such disputes.

5.8 Dividend Distribution Policy

Pursuant to Regulation 43A of SEBI (LODR) Regulations 2015 the Companyhas framed a Dividend Distribution Policy which lays out the parameters to be consideredwhile declaring dividend. The said policy is available on the website of the Companywww.diageoindia.com .

6. Corporate Social Responsibility Committee

6.1 The Corporate Social Responsibility (CSR) Committee constituted bythe Company is presently comprised as follows:

Dr (Mrs) Indu Shahani Non-Executive Independent
(Chairperson) Director
Mr D. Sivanandhan Non-Executive Independent
Director
Mr Anand Kripalu Managing Director and Chief
Executive Officer

6.2 During the financial year under review one meeting was held on May26 2016. The details of attendance by members of the CSR Committee are as below. (Thesedetails should be read with the information on appointment to and cessation of membershipin the CSR Committee set out above).

Name of the director No. of meetings Meetings attended
Mr D. Sivanandhan 1 1
Dr (Mrs) Indu Shahani 1 1
Mr Anand Kripalu 1 1

6.3 The CSR Report of the Company for the year ended March 31 2017 hasbeen approved by the board and is provided in Annexure 7 as part of the Board Report. Thecopy of your Company's CSR policy is available on the Company's website atwww.diageoindia.com.

7. General Committee

7.1 The Company also has a Committee of Directors with authoritydelegated by the Board of Directors from time to time interalia to approve transfer andtransmission of shares issue of new share certificates on account of certificates lostdefaced etc. dealing with matters relating to post amalgamation of companies and forother routine operations such as issue of power of attorney operation of bank accountsetc.

7.2 The Committee is presently comprised as follows:

Mr D. Sivanandhan Non-Executive
(Chairman) Independent Director
Dr (Mrs) InduShahani Non-Executive
Independent Director
Mr John Thomas Kennedy1 Non-executive Director
Mr Anand Kripalu Managing Director and Chief
Executive Officer

1 Appointed as member of the Committee with effect from October27 2016

7.3 In addition Mr Sudhakar Rao who was Chairman of the Committee ofDirectors and Mr Ravi Rajagopal who was a member of the Committee ceased to be Chairman /member of the Committee of Directors respectively following their resignation on May 192016 and October 13 2016.

No meetings were held by the committee during the financial year.

8. General Meetings

8.1 The details of the last three AGMs held are furnished below:

Financial year ended Date Time Venue
March 31 2016 July14 2016 4.00 p.m. The Capitol Hotel No. 3 Raj Bhavan Road
Bengaluru – 560 001
March 312015 November 24 2015 2.30 p.m. Level 1 UB Tower #24 Vittal Mallya Road
Bengaluru – 560 001
March 31 2014 September 302014 2.30 p.m. Level 1 UB Tower #24 Vittal Mallya Road
Bengaluru– 560001

8.2 The Special Resolutions passed by the shareholders at the pastthree AGMs are summarized below:

AGM held on Subject matter of the Special Resolution
July 14 2016 No Special Resolution was passed.
November 24 2015 (i) Revision in the terms of remuneration payable to Mr Anand Kripalu as Managing Director and Chief Executive officer.
September 30 2014 (i) Appointment of and remuneration payable to Mr Anand Kripalu as Managing Director and chief executive officer
(ii) Revision in terms of remuneration payable to Mr P.A. Murali executive Director
(iii) Approval of the borrowing limits
(iv) Payment of Remuneration to Non-Executive Directors

8.3 All the special resolutions set out in the AGM Notices as abovewere passed by the Shareholders with the requisite majority.

9. Postal Ballot & Extraordinary General Meeting

9.1 The company has not passed any resolution through postal ballotwhich were required to be passed through postal ballot as per the provisions of the actand the rules framed thereunder.

9.2 During the year no Extraordinary General Meetings were held.

9.3 As on the date of this report no special resolution(s) is/ areproposed to be passed through postal ballot.

10. Disclosures

10.1 The related party transaction sentered in to by the Company duringthe financial year ended March 31 2017 have been disclosed in the Notes to Accounts andalso in Form AOC-2 which forms part of Directors' Report.

10.2 During the financial year ended March 31 2017 the Company hascomplied with the statutory requirements comprised in the SEBI (LODR) Regulations/Guidelines

/ Rules of the Stock Exchanges / SEBI/ other statutory authorities andthere have been no other instances of material non- compliance by the Company during suchfinancial year nor have any penalties strictures been imposed by Stock Exchanges or SEBIor any other statutory authority on any matter related to capital markets. Please refer toSecretarial Audit Report in Annexure 3.

10.4 Code of Conduct a. Your Company believes that good governancepracticed with in the Company fosters the confidence and trust of all stakeholders. YourCompany has a Compliance & Ethics team which guides the employees on matters ofcompliance. Your Company is committed to conducting its business in an ethical manner.This code is reviewed by the Board from time to time. b. As stated in the Board'sreport your Company has a well-established vigil mechanism in place which is managed bythe Compliance & Ethics team. ‘SpeakUp' is a confidential service availableto employees to make a report when they believe there to be a breach of the Code policiesor applicable law. ‘SpeakUp' is managed by an external agency independent fromthe Company with staff who are trained to deal with the call and translators who areimmediately available to assist if required. Access to the Chairman of the Audit Committeeis made available in appropriate and exceptional cases as required under the CompaniesAct and the SEBI (LODR) Regulations. All complaints are investigated by the Compliance andEthics team and appropriate action taken in accordance with your Company's policies.c. In compliance with SEBI (LODR) Regulations the Company has adopted a Code of BusinessConduct and Ethics (Code) for its Board members and Senior Management Personnel a copy ofwhich is available on the Company's website www.diageoindia. com. All Board membersand senior management personnel have afirmed compliance with the code for the year endedMarch 31 2017 and a declaration to this effect signed by the MD & CEO forms part ofthis report. Pursuant to the requirements of the SEBI (LODR) Regulations it is afirmedthat no person who has sought access to the Audit Committee has been denied such access.d. Pursuant to the requirements of the SEBI (Prohibition of Insider Trading) Regulations2015 the Company has adopted a Code of Conduct for Prevention of Insider Tradingapplicable to all Directors and designated employees of the Company.

e. The Company has complied with all mandatory requirements of SEBI(LODR) Regulationsand has also adopted the non-mandatory requirements of the abovementioned regulations to the extent shown in the subsequent sections of this CorporateGovernance Report.

11. Means of Communication

11.1 The quarterly results are sent to all the Stock Exchanges wherethe shares of the Company a relisted. The results are normally published in "BusinessStandard"(English Daily) and "Kannada Prabha" (Kannada Daily). The resultsare displayed on the Company's website www.diageoindia.com. Press Releases are alsoissued which are also displayed on the Company's website. In addition presentationsmade to analysts or investors are also made available on the Company's website.

11.2 The required disclosures to the extent applicable includingresults were also sent to the Stock Exchanges.

11.3 The Company has designated an exclusive email address i.e.uslinvestor@unitedspirits.in to enable investors to post their grievances and monitorredressal.

12. Management Discussion and Analysis Report

The Management Discussion & Analysis Report is appended to andforms an integral part of the Directors' Report.

13. General Shareholder Information
A) Corporate Identification Number L01551KA1999PLC024991
B) AGM Date Timeand Venue Wednesday August 30 2017 at 4.00 p.m. at The Capitol No. 3 Raj Bhavan
Road Bengaluru–560001
C) Financial year April 1 to March 31
Tentative Board Meeting calendar:
First Quarterly Results (FY 2017-18) July 23 2017
Second Quarterly Results October 26 2017
Third Quarterly Results January 25 2018
Audited yearly Financial Results May 24 2018
In addition Board may also
meet on other dates for
transactingotherurgentbusinessorduetoany
specific requirements
D) Date of Book Closure Book Closure Date – August 24 2017 to August 30 2017
(both days inclusive)
E) Dividend payment date NA
F) Listing on Stock Exchanges The shares of the Company are listed on the following Stock Exchanges:
BSE Limited
Regular Office & Corporate Relations Dept)
Phiroze Jeejeebhoy Towers Dalal Street Mumbai - 400 001
National Stock Exchange of India Limited
Exchange Plaza C-1 Block G Bandra Kurla Complex
Bandra (East) Mumbai - 400 051.

The listing fees dues as on date has been paid to the respective stock exchanges.

G) Stock Code
BSE Demat 532432 Physical 32432
NSE SYMBOL -MCDOWELL-N
H) ISIN NO. INE854D01016
I) Market price data (As per Annexure A)
J) Stock performance in comparison to BSE (As per Annexure B)
Sensex and NSE Nifty (As per Annexure B)

 

K) Registrar and Transfer Agents Integrated Registry Management Services Private Limited
(Formerly known as Integrated Enterprises (India)Limited)
30 Ramana Residency 4th cross Sampige Road
Malleswaram Bengaluru - 560003
Tel. Nos.(080) 23460815-818 Fax No.(080)23460819
L) Share Transfer System The power to consider and approve share transfers/ transmission/
transposition/ consolidation/subdivisionetc. has been delegated
to a Committee of Directors as indicated in para 7.1 of this report. The
requirements under the SEBI LODR Regulations 2015/statutory regulations
in this regard are being followed.
M) Distribution of Shareholding As per Annexure C

 

N) Dematerialisation of shares (as on march 31 2017) Depositories Shares %
NSDL 136690643 94.06
CDSL 6851079 4.71
Total 143541722 98.77

 

O) Outstanding GDRs/ ADRs/ Warrants or other Convertible Instruments any During the year the agreement with Deutsche Bank Trust Company Americas Depository for global depository shares (GDSs) was terminated by virtue of which the GDSs have been cancelled and the shares held by the GDS holders had been converted to underlying shares. There are no outstanding GDS as on March 31 2017. There is no change in the equity share capital of the Company during the year.

 

P) Plant locations 1. Alwar (Rajasthan)
2. Asansol (West Bengal)
3. Aurangabad (Maharashtra)
4. Baddi (Himachal Pradesh)
5. Baramati (Maharashtra)
6. Bhadrakali (West Bengal)
7. Bhopal-I (Madhya Pradesh)
8. Bhopal-II (Madhya Pradesh)
9. Cherthala (Kerala)
10. Gopalpur-On-Sea (Orissa)
11. Gulbarga (Karnataka)
12. Hathidah (Bihar)
13. Hospet (Karnataka)
14. Hyderabad I (Nacharam Telangana)
15. Hyderabad II (Malkajgiri Telangana)
16. Kumbalgodu (Karnataka)
17. Meerut (Uttar Pradesh)
18. Nasik-I (Maharashtra)
19. Nasik-II (Maharashtra)
20. Palakkad (Kerala)
21. Palwal (Haryana)
22. Pathankot (Punjab)
23. Ponda (Goa)
24. Rosa (Uttar Pradesh)
25. Serampore (West Bengal)
26. Udaipur (Rajasthan)
27. Zuari Nagar (Goa)

 

Q) Address for correspondence Shareholder correspondence should be addressed to the Company's
Registrars and Transfer agents:
Integrated Registry Management Services Private Ltd
(Formerly known as Integrated Enterprises (India) Limited)
30 Ramana Residency 4th Cross Sampige Road Malleswaram
Bengaluru 560 003. Tel. Nos. (080) 2346 0815-818 Fax No.(080) 2346
0819 Email: bglsta@integratedindia.in
Investors may also write or contact Mr V. Ramachandran Company
Secretary or Mr B.L. Akshara General Manager–Secretarial at the
Registered Office of the Company at UB Tower #24 Vittal Mallya Road
Bengaluru 560 001 Tel. Nos. (080) 3985 6500 / 2221 0705 Direct No. (080)
3985 6905 Fax no. (080) 3985 6862
R) Email for investor grievances In compliance with the provisions of regulation 46(2)(j) of the SEBI (LODR)
Regulations an exclusive email address uslinvestor@unitedspirits.in has
been designated for registering Investor complaints which is available on
the Company's website www.diageoindia.com

13.1 Pursuant to Part F of Schedule V of the SEBI (LODR)Regulations an Unclaimed Suspense Account was opened with Stock Holding Corporation ofIndia Limited on February 14 2013 and the following unclaimed shares were transferred tothe Demat account titled United Spirits Limited Unclaimed Suspense Account" after theCompany's Registrars & Transfer Agents sent three reminders to all the shareholders whose share certificates were returned undelivered and remained unclaimed. Duringthe year your Company has released shares from the said suspense account upon receipt ofrequests from the shareholders and after checking veracity of such shareholder'sclaims. The details of such release of shares are given below.

Particulars No. of shareholders No. of equity shares held
Aggregate number of shareholders and the outstanding shares in the Unclaimed Suspense Account lying as on April 01 2016 5478 500060
Number of shareholders who approached issues for transfer of shares from Unclaimed Suspense Account during the year 35 15154
Number of shareholders to whom shares were transferred from Unclaimed Suspense Account during the year 35 15154
Aggregate number of shareholders and the outstanding shares in the Unclaimed Suspense Account lying as on Mach 31 2017 5443 484906

13.2 Voting rights on the above unclaimed shares shall remain frozenuntil the rightful owner claims the shares.

14. Discretionary Requirements

Pursuant To Regulation 27(1) and Part E of Schedule II of SEBI(LODR) Regulations Your Company also complied with the following discretionaryrequirement.

14.1 Shareholder Rights

The Company's quarterly results are published in English andKannada Newspapers. The results are uploaded on the Company's websitewww.diageoindia.com. Hence the same were not sent to the shareholders.

14.2 Audit qualifications

There are no qualifications in the Audit Report of the StatutoryAuditors and the Secretarial Auditor for the year ended March 31 2017.

14.3 Separate posts of Chairman and CEO

The Company has appointed separate persons to the posts of Chairman andof MD & CEO.

14.4 Reporting of Internal Auditor

The internal auditor reports directly to the Audit Committee.

ANNEXURE A: MARKET PRICE DATA

United spirits limited - Monthly BSE

Month High Price Low Price Close Price Volume
(`) (`) (`)
Apr-16 2573.20 2232.00 2374.15 559430
May-16 2729.40 2350.00 2468.30 1247080
Jun-16 2536.20 2325.25 2484.20 390172
Jul-16 2702.65 2351.05 2453.60 550440
Aug-16 2473.95 2120.00 2317.60 1369084
Sep-16 2470.00 2230.00 2462.90 707695
Oct-16 2598.00 2240.10 2268.55 618948
Nov-16 2276.00 1775.05 1922.75 835066
Dec-16 1979.00 1818.60 1940.75 323415
Jan-17 2329.30 1882.00 2177.45 1433222
Feb-17 2428.95 2133.00 2342.55 770765
Mar-17 2375.00 2116.00 2173.45 570962

 

United Spirits Limited-MonthlyNSE

Month High Price Low Price Close Volume
(`) (`) Price (`)
Apr-16 2573.70 2230.00 2376.00 6438406
May-16 2729.00 2350.10 2470.10 9746320
Jun-16 2537.00 2325.20 2500.15 4226506
Jul-16 2698.70 2351.00 2454.30 6473557
Aug-16 2472.80 2118.00 2313.05 9875758
Sep-16 2478.00 2150.00 2466.45 7214886
Oct-16 2600.00 2240.10 2266.80 5663573
Nov-16 2287.00 1773.45 1918.45 8011977
Dec-16 1981.80 1819.95 1942.80 4450600
Jan-17 2328.10 1894.95 2178.50 11281910
Feb-17 2427.70 2130.80 2345.10 7091259
Mar-17 2377.20 2114.20 2174.70 6751255

ANNEXURE C: DISTRIBUTION OF HOLDINGS (as on March 31 2017)

Shareholding of nominal value

Value Wise Shareholders

Share amount

` Number % to ` % to
Total total
Upto - 5000 93448 96.88 60507280 4.16
5001 - 10000 1360 1.41 10156920 0.70
10001 - 20000 649 0.67 9325880 0.64
20001 - 30000 250 0.26 6368800 0.44
30001 - 40000 106 0.11 3742030 0.26
40001 - 50000 90 0.09 4151730 0.29
50001 - 100000 200 0.21 13984300 0.96
100001 and above 356 0.37 1345040490 92.55
Total 96459 100 1453277430 100.00

 

Category Wise
Category No. Of Shares % of Equity Capital
Promoter Group 84984429 58.48
Resident body 7681873 5.29
Corporate (including clearing members)
Banks/FI/FII/ MF/UTI/ 41032038 28.23
Trust/Central/State Government & Insurance Companies
NRI / OCB / FCB/ 1099570 0.76
Foreign Nationals
Venture Capital 113283 0.08
Resident Individuals 10416550 7.17
Total 145327743 100

#CGEnd#

#MDStart#

MANAGEMENT DISCUSSION AND ANALYSIS

ECONOMIC SCENARIO

Global economy: After a lackluster out turn in 2016 economicactivity is projected to pick up pace in 2017 and 2018 especially in emerging market anddeveloping economies. However there is a wide dispersion of possible outcomes around theprojections given uncertainty surrounding the policy stance of the incoming U.S.administration and its global rami_cations. The global economy remained on a subduedgrowth path estimated to growth at 3.1% in 2016 against 3.2% in 2015. With estimatedgrowth of 6.3% in financial year (FY) 2016-17 (against 6.7% in the previous year) theemerging and developing Asian countries were the key contributors of the global growthled by India and China.

Indian economy: Propelled by the central government'sdemonetization reform market interest rates and yields on g-secs are expected to be lowerin FY18 as compared to FY17 which is likely to provide a boost to the Indian economy.With fiscal gains resulting from demonetisation and implementation of GST also gettingrealized India is likely to be the fastest growing major economy in the world duringFY18. GDP is expected to grow to in the range of 6.75% to 7.50% against the 7.1% growthregistered in FY17. (Source: Economic Survey 2016-17 dated Jan 17)

INDUSTRY OVERVIEW

Driven by the rapid increase in the urban populationthe Indian spiritsis on a high. Further boosting the market growth is the increasing disposable income andgrowing preference for whiskies coupled with changing demographics. With over half thecountry's population (54%) above 25 years of age and the estimated median age of thecountry's population pegged at 28 years as of 2016 the growth metrics for theindustry are quite favourable. A change in outlook towards social consumption of alcoholimprovement in life styles increasing aspirations growing prominence of ‘pub andcocktail culture' in urban cities and emergence of novel Food & Beverage formatsis further pushing demand for alcoholic beverages in the country. The per capitaconsumption of alcohol however was just above 2 litres of pure alcohol (lpa)/head in2016. The Total Beverage Alcohol (TBA) market in India is pegged at ` 378347 millions ofthis Western style spirits accounts for over 52%

GLOBAL AND INDIAN SPIRITS MARKET OVERVIEW

The year gone by was challenging for the Alcobev industry. Industrygrowth was pulled down by several factors during the year under review and as a resultliquor consumption remained by and large fiat. Consumption of Whisky was estimated to growat 1.15% for FY17 while Spirits remained fiat. Bihar the fourth largest state bypopulation went dry in April impacting the overall growth for the year by ~1.5%. Thesupply in Punjab was_disrupted for a month due to procedural technical issues. Significantrise in tax had put the burden of overall_cost on states like Andhra PradeshTelangana_Karnataka and Maharashtra.

Demonetisation impacted businesses by knocking off about 15%-20% ofsales in_ November and December impacting the overall year by another 1.5%. With manymore police checksfitaking place there has also been increased clampdown ondrink-driving. The market has also been severely affected by the Apex Court's rulingbanning liquor vendors within 500 metres of a state or national highway which hascaused_significant disruption as many license holders simply stopped buying stocks. Due tothis some believe that_up to 15% of retail outlets will be lost forever although mostexpect that over time this supply will be replaced by alternatives.

India: India is one of the largest markets for spiritsglobally. Approximately 6% of the global alcohol beverage growth is driven by our country.Going ahead almost 11% of the global spirits growth is expected to come from India.

Despite being a country with a population of about 1.3 bn of whichabout 58% lies in the age group of 25 years or above India's per-capita consumptionof alcoholic beverages stands at approximately 4 litres per annum which is quite lowcompared to various other developing countries where per capita consumption of alcoholexceeds 10 litre per annum.

Due to rising income levels the pace of growth of consumption inTier-2/3/4 cities as well as rural areas could outpace that in urban cities goingforward. Moreover with the rise in disposable income consumers would tend to upgradetheir preferences resulting in higher demand for prestige premium and luxury segments.

Strong premiumisation trend: The Alcobev industry in India iswitnessing significant changes influenced by western culture; thus a strong trend towardspremiumisation is clearly visible. For the industry as a whole the premium and abovesegment is expected to grow at a CAGR of 14% over 2016-2021 whereas the prestige segmentis estimated to grow at 12% over the same period. Following the industry footprints yourCompany is also strategically focusing on Prestige and above brands. Your Company isconstantly working on renovation and innovation of its brands. To emphasize more on thesame your Company has chosen purpose-led marketing platforms and occasion driven specialpacks.

REGULATORY SCENARIO IN INDIAN MARKET

In India the alcohol industry works in a highly regulated environmentunder both central and state governments. Additionally national laws and regulatorybodies such as the Food Safety and Standards Authority of India (FSSAI) alsosignificantly impact the Alcobev industry. A spate of recent regulations has furthertightened the regulatory controls on the industry. Some of the recent regulatory changesin the industry include –

1) Reduction in distance limit for liquor vendors to 220 meters from500 meters in areas with population up to 20000;

2) Exemption to hill states of Sikkim and Meghalaya; and

3) Permission to liquor shops whose licenses had not expired by April1 2017 to continue until their permits expire or until September 30 2017.

As a result nearly a third of liquor outlets will be impacted andmigration of these could take time. The resultant disruption will impact the revenues ofliquor firms. This ruling will lead to short-term disruptions as liquor vendors relocatealthough it is unlikely to significantly impact medium to long term growth prospects forthe industry.

? Goods and Services tax (GST):

Under the GST regime liquor is excluded from the GST net. Undenaturedethyl alcohol which is a key ingredient for the spirits industry has been kept out ofGST. GST rate on molasses has increased by 10% to 18% whereas the rate on new packagingmaterials has increased by 6% to 18%. The general tax on services has increased by 3% to18%. As a result of this new regime the alcobev manufacturers will not get input crediton all input taxes in the supply chain. This is likely to have an unfavourable impact onmargins.

Your Company will continue to work with the central government tomitigate this impact and will approach the state governments for appropriate priceincreases.

? Price control over material:

Despite the rising cost of ethanol one of the major raw materials usedby the industry aggressive productivity-led initiatives enabled the Company to save `2000 million in material costs during the year. This compared quite favourably with the `1400 million savings secured during FY16. Integration with the Diageo supply chain is alsocreating some avenues for better pricing efficiencies in the system which is alsoexpected to gain from the Government of India's efforts to source ethanol fromlow-cost alternative sources such as bio-waste and feedstock (wheat straw corn strawrice straw etc). Realisation of these efforts would help improve availability of ethanoland stabilize prices.

BUSINESS ANALYSIS

Company overview

Founded in 1826 United Spirits Limited (USL/your Company) isIndia's largest spirit company involved in the manufacture sale and distribution ofbeverage alcohol. Your Company produces and sells around 90mn cases of Scotch whisky IMFLwhisky brandy rum vodka gin and wine.

The Company's portfolio includes brands such as McDowell'sNo.1 Royal Challenge Signature and Antiquity among others. Your Company also importsmanufactures and sells Diageo's iconic brands such as Johnnie Walker VAT 69 Black& White Smirno_ and Ciroc in India.

Your Company is a subsidiary of Diageo plc - a global leader inbeverage alcohol with an outstanding portfolio of brands across spirits beer and winecategories. Pursuant to its acquisitions in 2013 and 2014 Diageo plc has a 54.8%shareholding in your Company making India one of its largest markets.

Strengths

? Your Company has 18 brands in its portfolio which sell more than amillion cases every year of which 4 brands sell more than 10 million cases each annually.The Company exports to over 37 countries across the globe.

? With its 60 manufacturing facilities spread across states and unionterritories in Indian and also its presence through franchisee partners in other parts ofcountries. Your Company not only ensures faster turnaround of products but also minimizesrisks related to local states' policy changes.

? The Company's product portfolio caters to all types of customerneeds. It has a wide range of products across whisky vodka and rum and caters to theentire consumer spectrum across the social strata with its luxury premium prestige andpopular spirits categories.

? The Company has long-term association with most of the raw materialsuppliers which has enabled uninterrupted production and smooth supplies of key inputs.Similarly strong distribution ensures continuous supplies to all key markets as well asreach to all of the 81000 retail outlets.

? The Company has an in-house Technical Centre for research on newproducts analytics and sensory sciences process R&D special spirits and _avourmanagement. It also employs highly qualified and experienced scientists who workconsistently and with dedication towards innovative product and process development.

? Over 5000 strong work force is a key to its success with employeespartnering it in realising the vision of being the best performing most trusted andrespected consumer product Company in India.

Business performance

Post 2014 under the new leadership of Diageo your Company has been ona transformational journey to improve its operations. The Company has set out a strategicroad map which includes its five strategic pillars to steer its future growth trajectory.These are:

1. Strengthen and accelerate core brands

Transformation of its key brands to win greater market share is a majoragenda for the Company. The main beneficiaries of this approach are Signature McDowellsRoyal Challenge Black Dog among others. From renovating brands diversification withinthe geographies and enhancing the customer reach your Company has been making significantstrides in its journey of transformation. Your Company has upgraded three of its keybrands viz. (1) McDowell's No. 1 whiskey (2) Royal Challenge whiskey and (3)Signature whiskey and the Company's innovation pipeline during the year has creatednew offering(s) in the segment with the launch of McDowell's No.1 "Silk"Royal Challenge "Bolt" and a new variant of Captain Morgan which will helpattract new consumers and drive future growth.

It has been the Company's endeavour to strengthen and accelerateits core brands through continued investment to win across each of the 3 India's -A_uent Middle and Aspiring. Renovation and rejuvenation of the existing brands is anotherkey aspect of this strategy which also involves innovation and introduction of new tomarket brands.

2. Evolve route to consumer

The Company's focus in this area is on leveraging outlet as amedia to build brand imagery in the luxury premium core and prestige core categoriesespecially keeping in view the prohibition on liquor advertising in India.Consumer-winning activations are used to create demand with trade emerging as theambassador for the Company's business in these categories. In the popular categorythe Company leverages scale to promote the route to consumer. The thrust on this front ison creation of a `sell-out' culture with 20% of the country's alcobev storesbeing converted into `Perfect Stores'.

3. Drive out costs to invest in growth

To mitigate pricing shortfall and improve margins the Companycontinues to strengthen its productivity programme which was launched in FY15.Procurement efficiencies are continuously boosted and network optimization is also enabledto enhance productivity.

4. Corporate citizenship

As a responsible corporate citizen the Company continues to influencepublic policy through innovative initiatives along with programme activations to ensureroad safety and empower women.

5. Creating a future-ready organisation

To create a fit-for-purpose organization the Company is going in forright sizing while bringing in new capabilities and creating a performance-led culture.Targeted improvement interventions to measure employee engagement are also undertaken on aregular basis. Having established a practice of following highest compliance andgovernance standards the Company has also played leadership role in shaping theregulatory landscape in the industry. Your Company has added new capabilities in allbusiness aspects and has improved systems and key processes thereby right sizing theCompany for future growth.

Operating model changes through Franchising

During the year under review in line with the Company's approachto selectively participate in the popular segment the Company has entered into agreementsto franchise selected mainly Popular segment brands in Andhra Pradesh Goa and has movedto a complete franchise agreement for all your Company brands in Kerala effective 1January 2017.

The Company has entered into additional agreements to franchise popularsegment brands in Union Territory of Puducherry Union Territory of Andaman and NicobarChandigarh and Rajasthan effective April 1 2017 in Madhya Pradesh Himachal PradeshJammu and Kashmir and Delhi effective 1 May 2017 and in Sikkim and Uttar Pradesh effectivefrom June 1 2017.

The individual agreements are for between 3 to 5 years. The franchiseeswill be responsible for manufacturing and distribution of the franchised brands in theirrespective states on payment of an agreed royalty fee which will be accounted as part ofnet sales.

These changes will allow your Company to further improve it'soperating model and focus the business on the biggest profitable growth opportunities.

Volume and net sales for these franchised brands accounted for 10.3million cases and approximately ` 6400 million net sales in the full year ended March 312017.

Business Review - Revenue and revenue mix

The Company's growth in the past few years has been encouragingand was supported by a strategic revenue mix up gradation and strengthening of brands.With the Diageo brand portfolio integration your Company is today a market leader byvolume and value and it also holds a place of pride in the Indian alcobev industry withan outstanding portfolio of reputed brands across key categories and multiple pricepoints.

The Company has successfully improved both top line and operatingprofit in a highly regulated and competitive environment while further strengthening itscore brands to leadership position across all segments. The company's performance inthe popular segment reflects its prioritized geographical participation strategy whileits double digit net sales growth in the "Prestige and Above" segment clearlyendorses the success of its premiumisation strategy.

During the year the Company has achieved a sales volume of 90mn casesand net sales of ` 85480 million in the financial year ended March 31 2017. Overallvolume declined 3% and net sales were up 4% impacted primarily by Bihar prohibition andone off impact of operating model changes. Excluding the one-o_ impact volumes were up 1%with net sales up 8% despite a subdued economic environment mainly impacted bydemonetisation and the run up to the highway ban.

The Prestige & Above segment represents 41% of total volumes and58% of total net sales up 4 ppts and 5 ppts respectively compared to last year. ThePrestige and Above segment net sales were up 13% with 5ppts positive price/mix. Positiveprice/ mix was driven by selective price increases in certain states and continued focuson premiumisation and brand renovation in the segment. Signature volume grew by 26% andgrew net sales by 29% supported by successful renovation. McDowell's No 1. whiskyvariants (excluding Platinum) volume grew by 7% and net sales grew by 8%.Royal Challengevolume grew by 15% and net sales grew by 16%. The scotch portfolio in the premium andluxury segment grew volume by 29% and net sales by 32% driven mainly by Johnnie WalkerBlack Dog Black & White and VAT 69.

The Popular segment represents 59% of total volumes and 42% of totalnet sales down 4ppts and 5ppts respectively compared to last year. The total Popularsegment witnessed a decline of 10% in volumes and 9% in revenue during the year impactedby Bihar prohibition and one off impact of operating model changes. Excluding the Biharprohibition and one off impact of the operating model changes the popular segmentdeclined volume 3% and net sales 2% in the full year. Priority states volume was fiat andnet sales grew 1% in the full year driven by Hayward's Bagpiper and Director'sSpecial.

Net Debt

During the year the company utilized its cash from operations to repayits loans which has led to a reduction in net debt. This reduction in debt value togetherwith renegotiation of borrowings and favourable mix of debt instruments reduced the totalinterest cost in the full year. Significant improvement in your Company's overallfinancial flexibility corporate governance and compliance framework has led to furtherimprovement in our credit rating. During the year ICRA Limited upgraded the Long TermRating from "A+" to "AA" with positive outlook while the Short TermRating was reafirmed at "A1+" which is the highest rating. These improvedratings will enable the Company to access more economical sources of debt leading to lowerinterest cost and increased shareholder value.

OUTLOOK

Your Company is the market leader in terms of value (with a marketshare of 44%) and the market dynamics are highly attractive given the foray of globalplayers in the Indian market and a visible shift to premiumisation as well as the shiftto the franchisee model in some states. Your Company enjoys a strong portfolio of brands(supported further by Diageo's brands) and a focused strategy towards profitabilityby new management could lead to meaningful gains on the margin front from the currentlevels. Better pricing strong cost optimization focus and a more rational competitivelandscape (focus on profits vs volume) should lead to an overall higher industry profitpool. Strategic initiatives such as moving selectively to asset light/franchisee model andmonetizing non-core assets would further help boost medium-term returns. GST-relatedconcerns however will likely continue to weigh on the stock performance over the shortterm. (Source: JP Morgan's Report dated 03.04.17)

RISKS & CONCERNS OPPORTUNITIES & THREATS Risks & Concerns? The industry operates in a tightly regulated environment. Regulations pertaining topricing licensing setting up or expansion of new facilities/ existing brewing /distilling and bottling capacities manufacturing processes marketing sales &advertising and distribution pose a challenge. Any adverse rulings for any of the businessprocesses can lead to disruptions. ? The Company operates in a scenario where thereare regulatory barriers for offsetting cost inflation through pricing. The Company has torepresent to state governments to get price increase even to merely offset inflationwhich may take several years in some cases. ? Recent regulations from the apexcourt for the distance limit in highways and licensing requirements require the industryto change its distribution reach. ? Along with Central Government regulationsevery state government has its own rules and regulations tax rates and duties forinter-state movement of liquor. ? Banning of alcohol in certain states of India isalso a matter of concern impacting industry growth whilst not delivering the statedobjectives of public health. ? The Company has taken steps to mitigate risks due todrinking and driving through its ‘Responsible Drinking' initiatives ashighlighted in the CSR Report appearing in Annexure 7 of the Directors' Reportshowcasing the corporate social responsibility initiatives of the Company.

Opportunities

? Fixed fee-based franchise model in specific states is likely to aidin margin expansion as it may reduce your Company's exposure in low-margin states.

? The Company has strategically revamped its key brands and introducedthem in ‘Prestige and Above' segment thus making it well placed to tap theemerging opportunities.

? Favourable volume mix combined with changing consumer preferencestowards premium brands will keep long-term revenue growth healthy.

? Strengthened governance structure and business synergies and strongexecution of Diageo shall also aid your Company's in achieving new scales.

? India's favourable demography and changing life styles arefavourable for alcohol consumption.

Threats

? Stricter norms on distribution channels by regulators will requiredistribution channels to be reorganised.

? Increasing competition by foreign players especially in premiumsegment

? Your Company's significant share of volume is from the states;since states control pricing the Company is exposed to pricing changes by stategovernment.

? Rising prices and improved quality and packaging of Indian MadeIndian Liquor (IMIL) has led to increase in consumption of IMIL.

INTERNAL CONTROL SYSTEMS

The Company's internal control systems are commensurate with thesize and industry in which it operates. Your Company has well-defined and adequatelydocumented systems policies procedures and guidelines that have been reviewed by theBoard and external parties. The Company strictly follows the laws rules and statues ofthe land. It ensures stringent compliance at all levels and across all divisions anddepartments for safeguarding its assets prevention and detection of fraud and errorscompleteness of accounting records and timely preparation of financial statements.Statutory Auditors have also confirmed the same in their audit report on the FinancialStatements for the year.

MANAGEMENT AND BOARD

Pursuant to the acquisition of shares of the Company by Diageoplc's subsidiary Relay BV in 2013 and 2014 the Company is a direct subsidiary ofRelay BV and an indirect subsidiary of Diageo plc. Details on the changes in the Board andsenior management are provided in the Corporate Governance Report.

HUMAN RESOURCES

Your Company believes that its people are its most important asset andthus continuously strives to scale up its employee engagement through well-structuredsystems and a visionary HR philosophy. Now a family of over 5000+ (including permanentemployees at plants) the Company is focusing on in its diversity and inclusion agendawith special emphasis on the induction and retention of more women in the workforce. YourCompany is committed to nurturing an open environment which allows for easy assimilationof ideas and enriches the organisation's collective knowledge pool.

The Company aspires to evolve into a future-ready organization centredon promoting a collaborative and cohesive culture. In the process it has undergone arigorous restructuring exercise with its sights set on making it an even more functionalorganization. The year witnessed integration of all hierarchical levels from 18 Levels to6 Levels in order to align it to the Diageo's Global blueprint. This shallfacilitate the organisation to become much more agile faster and accountable thusenabling faster decision-making.

During the year the Company delivered 5965 mandays of training to itsemployees. The Company continuously invests in role-based training and upskilling of itsemployees at all levels to ensure that they remain at the forefront of skill-setupgradation in the industry. The Company has always believed in nurturing the people toelevate them to higher leadership roles. Performance appraisals take place every sixmonths giving every employee sufficient time to meet his/ her role requirements. TheCompany maintains cordial relationship with its employees at all its manufacturing units.

FORWARD LOOKING STATEMENTS / CAUTIONARY STATEMENT

This Report contains forward-looking statements that involve risks anduncertainties. Your Company undertakes no obligation to publicly update or revise anyforward-looking statements whether as a result of new information future events orotherwise. Actual results performances or achievements could differ materially from thoseexpressed or implied in such forward looking statements. Readers are cautioned not toplace undue reliance on these forward-looking statements. This Report should be read inconjunction with the financial statements included herein and the notes thereto.

ANNEXURE 1

Details of Subsidiaries Associates and Joint Ventures

Form AOC 1

(Pursuant to the provisions of Section 129(3) of the Act read withRule 5 of Companies (Accounts) Rules2014) Statement containing as on March 31 2017salient features of the financial statement of subsidiaries/associate companies/jointventures

Part A: Subsidiaries

Sl. No. Name of the Subsidiary Financial year ended Curr ency Closing exch rate Average exch rate Share capital Reserves & surplus Total assets Total liabilities Invest- ments Turn over Profit/ (loss) before taxation Provision for taxation Profit/ (loss) after taxation Proposed dividend % of share holding Country
1 Asian Opportunities & Investments Limited (AOIL) 31-03-17 USD 65.072 65.87 331 (1008) 31 713 - - 357 - 357 - 100 Mauritius
2 United Spirits Nepal Private Limited 31-03-17 ` 0.62 5 78 337 254 - 750 70 34 49 82.47 Nepal
3 Palmer Investment Group Limited (PIG) 31-03-17 USD 65.072 65.87 994 (1057) 1 81 - - (2) - (2) - 100 British Virgin Islands
4 Tern Distilleries Private Limited (Tern) 31-03-17 ` 1 1027 (718) 328 19 - 1 (56) - (56) - 100 India
5 Shaw Wallace Overseas Limited (SWOL) 31-03-17 GBP 81.34 81.29 34 (11) 20 2 - - 1 - 1 - 100 U.K.
6 UB Sports Management Overseas Limited ( Formerly known as JIHL Nominees Limited (JIHL) 31-03-17 USD 65.072 65.87 - 12 15 3 - (3) - (3) - 100 Jersey Islands
7 Montrose International 31-03-17 USD 65.072 65.87 33 (2) - - (2) - (2) - 100 Panama
S.A (MI) - -
8 USL Holdings Limited (UHL) 31-03-17 USD 65.072 65.87 33 (55316) 627 55283 - (304) - (304) - 100 British Virgin Islands
9 USL Holdings (UK) Limited (UHUKL) 31-03-17 GBP 81.34 81.29 - (55404) 318 55722 - - (7102) - (7102) - 100 U.K.
10 United Spirits (UK) 31-03-17 GBP 81.34 81.29 - (21364) 269 21633 - - (41) - (41) - 100 U.K.
Limited (USUKL)
11 United Spirits (Great 31-03-17 GBP 81.34 81.29 - (21344) 132 21553 - - (41) - (41) - 100 U.K.
Britain) Limited (USGBL)
12 Four Seasons Wines 31-03-17 ` 1 663 (1216) 556 1109 - 201 (184) - (184) - 100 India
Limited (FSWL)
13 McDowell & Co. 31-03-17 GBP 81.34 81.29 149 (105) 150 1135 766 - (110) - (110) - 100 Scotland
(Scotland) Limited (MSL)
14 Royal Challengers Sports Private Limited 31-03-17 ` 1 - (320) 4675 4995 - 1621 32 32 - 100 India
-
15 Liquidity Inc. 31-03-17 USD 65.07 65.87 - (290) 72 274 - - (8) - (8) - 51 USA
16 United Spirits (Shanghai) Trading Company Limited 31-03-17 RMB 9.4 9.4 52 (62) 2 17 - - (4) - (4) - 100 China
17 Sovereign Distilleries Limited 31-03-17 ` 1 4851 (4472) 560 180 - - -193 - (193) - 100 India
18 Pioneer Distilleries Limited 31-03-17 ` 1 134 (583) 4633 5082 - 1132 (435) (134) (301) - 75 India
19 United Spirits Singapore Trading Pte Ltd (Formerly known as Whyte and Mackay Singapore Pte Ltd ) 31-03-17 USD 65.072 65.87 - =5 58 54 - 960 15 - 15 - 100 Singapore

Notes:

Closing exchange rate is applied for share capital reserves andsurplus total assets total liabilities and investments.

Average exchange rate is applied for turnover profit / (loss) beforetaxation profit / (loss) after taxation and proposed dividend. All amounts are inmillion `.

Namesof subsidiaries whichare yet to commenceoperations:Nil.

1. During the year SW Finance Company Ltd through a Scheme ofAmalgamation merged with United Spirits Limited (USL).

2. Bouvet Ladubay and Chapin Landias Subsidiaries of USL ceased to bethe subsidiaries of USL during the year.

Part B: Associates and Joint Ventures

Sl. Name of Associates/ Joint Ventures Wine Society of India Pvt Ltd
No
1 Latest audited Balance Sheet Date 31 March 2016
2 Shares of Associates/ Joint Ventures held by the Company on the year end
(Number). 324812
Amount of Investment in Associates/Joint Venture ` 31817712
Extent of holding % 33.32
3 Description of how there is significant influence The shareholding in Wine society of India Private Limited ## is more than 20% due to which there is a significant influence
4 Reason why the associate/ joint venture is not consolidated The investment in associate is accounted as per Ind AS
5 Net worth attributable to Shareholding as per latest audited Balance sheet NIL. The loss in the associates exceeds the carrying value of the investment.
6 Profit/ Loss for the year
i. Considered in Consolidation NiL
ii. Not considered in Consolidation ` 39366881

# Winding up petition filed and the company is in the process ofliquidation

1. Names of associates or joint ventures which are yet to commenceoperations : NiL

2. Names of associates or joint ventures which have been liquidated orsold during the year. : NiL

By Authority of the Board

Mahendra Kumar Sharma Anand Kripalu
Chairman Managing Director and Chief Executive Officer
Sanjeev Churiwala V. Ramachandran
Executive Director and Chief Company Secretary
Financial Officer
Bengaluru
July 23 2017

ANNEXURE 2

Related Party Transactions

FORM AOC 2

(Pursuant to section 134(3)(h) of the Act and rule 8(2) of theCompanies (Accounts) Rules 2014)

Form for disclosure of particulars of contracts/arrangements enteredinto by the Company with related parties referred to in Section 188(1) of the CompaniesAct including certain arm's length transactions under the third proviso thereto. a)Details of Contracts or transactions not at arm's length basis: There were nocontracts or arrangements or transactions entered into during the year ended March 312017 which were not at arm's length basis b) Details of Contracts or transactions atarm's length basis: The details of material contracts or arrangement or transactionsat arm's length basis for the year ended March 312017 are as follows : i) Agreementwith Related Parties entered during the year 2016-17

Sl. No. Name of the related Party Nature of Contract Nature of Relationship Date on which Resolution was passed Duration of Contract Salient Terms (Transaction value) Justification Amount Paid as Advance if any
1 Pioneer Distilleries Limited Salary recharge- Expense / (Income) Subsidiary 28-April-2016 Perpetual Based on Transfer Pricing Guidelines ` 3 million Salary recharge with respect to employees deputed to related Party Nil
2 Diageo Great Britain Limited Expenses reimbursed Promoter/ Promoter Group 28-April-2016 August 2015 to July 2017 Based on Transfer Pricing Guidelines ` 9 million Non-Salary expensesrecharge of Prabhaharan Viswanathan Nil
3 United Spirits Singapore Pte Limited Sale of goods Subsidiary 12-May-2016 Arm's length transaction ` 976 million Sale of IMFL Nil
4 Diageo Vietnam Limited Salary recharge- Expense / (Income) Promoter/ Promoter Group 02-Nov-2015 1 April 2016 to 31October 2016 Based on Transfer Pricing Guidelines ` 3.9 million Salary recharge of Shivam Mishra Nil
5 Guiness Nigeria Limited Sale of goods Promoter/ Promoter Group 17- Mar- 2016 Perpetual Arm's length transaction ` 24 million Sale of raw material and HBS Nil
6 Diageo Great Britain Limited Expenses reimbursed Promoter/ Promoter Group 17-Mar-2016 One time Arm's length transaction ` 2.5 million World Class Participation Fees Nil
7 Diageo Brands B V Marketing Expenses/ (Income) Promoter/ Promoter Group 08-Jun-2016 One Time ` 1 million Received towards ‘Love Scotch' marketing Campaign Nil
8 Pioneer Distilleries Limited Purchase of goods Subsidiary 08-Jun-2016 September 2016 to March 2019 PartofTie-up manufacture agreement ` 5707 million PartofTie-up manufacture agreement Nil
9 - Diageo India Private Limited Salary recharge- Expense / (Income) Promoter/ Promoter Group 14-Jul-2016 01 July 2014 to 30 September 2017 Based on Transfer Pricing Guidelines Salary recharge of International assignees Nil
10 Pioneer Distilleries Limited Purchase of goods Subsidiary NA Perpetual ` 520 million Purchase of material Nil
11 Diageo plc Shared Service Promoter/ Promoter Group 14-Jul-2016 Perpetual Arm's length transaction No value involved Implementation of Whistle Blower Mechanism through third party vendor of Diageo. Nil
12 Diageo Great Britain Limited Expenses Recharge Promoter/ Promoter Group 27-Jan-2016 One time Arm's length transaction ` 1 million Anti-Counterfeit Project through Diageo Tech Venture. Nil
13 Diageo India Private Limited Assignment of Receivables Promoter/ Promoter Group 26-Jul-2016 One time ` 3 million Diageo India Pvt Ltd. has assigned the receivables from Jharkhand State Beverages Corporation to the Company. Nil
14 Diageo NorthAmerica Inc. Salary recharge- Expense / (Income) Promoter/ Promoter Group 02-Nov-2015 Perpetual Based on Transfer Pricing Guidelines ` 31.0 million Salary Recharge of Mr William McDowell Nil
15 Diageo Scotland Limited Expenses Recharge Promoter/ Promoter Group 27-Oct-2016 1-Spet-2015 to 28-Feb-2017 Based on Transfer Pricing Guidelines ` 0.74milion Non-Salary costs Recharge of MrEamonn Anthony Power was approved in ACM on 2-Nov- 2015 to recharge from Diageo Ireland which is amended to Diageo Scotland now. Nil
16 Four Seasons Wines Limited Salary recharge- Expense / (Income) Subsidiary 17-Mar-2016 27-Oct-2016 1-April-2016 to 31-Mar-2017 Based on Transfer Pricing Guidelines ` 62.83 Salary recharge with respect to employees deputed to/by related Party Nil
17 Sovereign Distilleries Limited Salary recharge- Expense / (Income) Subsidiary 27-Oct-2016 1-April-2016 to 31-Mar-2017 Based on Transfer Pricing Guidelines ` 2 million Salary recharge with respect to employees deputed to/by related Party Nil
18 Four Seasons Wines Limited Purchase of goods Subsidiary 27-Oct-2016 1-April-2016 to 31-Mar-2017 Based on Transfer Pricing Guidelines ` 84 million Purchase of Wine and re-sale. Nil
19 Diageo Scotland Limited Promoter/ Promoter Group 21-Jan-2017 One time Based on Transfer Pricing Guidelines ` 41 million The funding for Captain Morgan was approved as to receive from DGBL on 27-10-2016 is now amended as to be received from DSL Nil
20 Diageo Scotland Limited Royalty Expenses Promoter/ Promoter Group 09-Jan-15 Financial Year 2017 to 2021 Arm's length transaction ` 3 million Extension of Captain Morgan Brand in India Nil
21 Diageo Singapore Supply Pte. Limited Purchase of Goods Promoter/ Promoter Group 15-Jun-15 Perpetual Based on Transfer Pricing Guidelines ` 14 million Purchase of materials Nil
22 Four Seasons Wines Limited Sharing office space Subsidiary 21-Jan-17 22 Months (Till Dec 2016) Arm's length transaction ` 4 million Share of office space in Embassy Heights Nil
23 Diageo Scotland Limited Salary and Expenses Recharge Promoter/ Promoter Group 02-Nov-2015 27-Mar-2017 1-Aug-2015 to 31-Jul-2016 1-Aug-2016 to 30-Jun-2017 Based on Transfer Pricing Guidelines ` 31 million Recharge of salary non-salary and administration costs of Mr Ajay Baliga and Ms. Sushma D'Souza was approved on 27-Oct-2016 as to be done by Diageo Plc is amended to be recharged by DSL Nil
24 Diageo plc Recharge of expenses Promoter/ Promoter Group 27-Mar-17 One time Based on Transfer Pricing Guidelines ` 75 million Amount paid under Settlement with United Mohun Bagan Limited Nil
25 United Spirits Nepal Private Limited Sale of goods Subsidiary NA 04-Mar-2011 to 04-Mar-2021 Based on Transfer Pricing Guidelines ` 272 million Sale of goods for manufacturing of brands Nil
26 Pioneer Distilleries Limited Sale of goods Subsidiary 02-Sep-13 02-Sep-2013 to 01-Sep-2016 PartofTie-up manufacture agreement ` 21 million PartofTie-up manufacture agreement Nil
27 Diageo Brands BV Purchase of goods Promoter/ Promoter Group 09-Jan-15 Perpetual Arm's length transaction ` 2060 million Licence to manufacture and/ or sale of Diageo brands Nil
28 United Spirits Nepal Private Limited Income from brand franchise Subsidiary NA 04-Mar-2011 to 04-Mar-2021 Based on Transfer Pricing Guidelines ` 272 million Roalty and brand development fee payable by United Spirits Nepal Private Limited to the Company being the brand owner Nil
29 Four Seasons Wines Limited Brand fee Subsidiary NA 1-Jul-2015 to 30-Jun-2018 Arm's length transaction ` 3 million For sale and manufacture of brands owned by the Company Nil

 

30 Diageo NorthAmerica Inc. Royalty expense Promoter/ Promoter Group 09-Jan-15 Perpetual Distribution in bottled in origin product in India ` 77 million License to manufacture and/ or sale of Diageo brands Nil
31 United Spirits Singapore Pte Limited Advertisement and sales promotion expenses/ (Income) Subsidiary NA NA Arm's length transaction ` 8 million Income from sales promotion made Nil
32 Diageo Australia Limited Salary recharge expense Promoter/ Promoter Group 02-Nov-15 01-Jul-2014 to 30-Jun-2017 Based on Transfer Pricing Guidelines ` 272 million Salary recharge of Prabhaharan Viswanathan Nil
33 Pioneer Distilleries Limited Guarantee commission income Subsidiary 02-Nov-15 Three years Based on Transfer Pricing Guidelines ` 3 million Commission received Nil
34 Four Seasons Wines Limited Finance (including loans and advances equity contributions in cash or in kind and Exchange gain / (loss)) Subsidiary 13-Nov-14 Perpetual Arm's length transaction ` 89 million Funding for working capital loan Nil
35 Four Seasons Wines Limited Interest income Subsidiary 13-Nov-14 NA Arm's length transaction ` 7 million Interest Income on working capital loan Nil
36 Pioneer Distilleries Limited Interest income Subsidiary 13-Nov-14 NA Arm's length transaction ` 14 million Interest Income on working capital loan Nil
37 Royal Challengers Sports Private Limited Interest income Subsidiary 13-Nov-14 NA ` 27 million Interest Income on working capital loan Nil
38 Royal Challengers Sports Private Limited Finance (including loans and advances equity contributions in cash or in kind and Exchange gain / (loss)) Subsidiary 13-Nov-14 NA ` 835 million Funding for working capital loan Nil
39 Sovereign Distilleries Limited Finance (including loans and advances equity contributions in cash or in kind and Exchange gain / (loss)) Subsidiary 13-Nov-14 NA ` 5 million Funding for working capital loan Nil

 

40 Tern Distilleries Private Limited Finance (including loans and advances equity contributions in cash or in kind and Exchange gain / (loss)) Subsidiary 13-Nov-14 NA ` 9 million Funding for working capital loan Nil
41 Mc Dowell & Co (Scotland) Limited Interest income Subsidiary 28-Sep-07 NA Arm's length transaction ` 2 million Interest Income on working capital loan Nil
42 Diageo Great Britain Limited Salary recharge- Expense / (Income) Promoter/ Promoter Group 02-Nov-15 01-Jul-2015 to 30-06-2017 Based on Transfer Pricing Guidelines ` 10 million Salary recharge of Rhiju Bhowmick and reimbursement of employee benefits of Tracey Barnes Nil
43 Diageo Scotland Limited Salary recharge- Expense / (Income) Promoter/ Promoter Group 02-Nov-15 01-08-2015 to 31-Jul-2017 Based on Transfer Pricing Guidelines ` 35 million Salary recharge of Kedar Ulman Nil
44 Diageo Plc. Salary recharge- Expense / (Income) Promoter/ Promoter Group 02-Nov-15 01-Jan-2016 to 01-Jun-2018 Based on Transfer Pricing Guidelines ` 2.5 million Non-Salary expenses recharge of Richard Kugler Nil
45 Diageo Plc. Salary recharge- Expense / (Income) Promoter/ Promoter Group 02-Nov-15 From 15-Jul- 2015 till end of employee assignment Based on Transfer Pricing Guidelines ` 24 million Salary recharge of Vineet Chabbra Nil
46 Diageo Plc. Salary recharge- Expense / (Income) Promoter/ Promoter Group 02-Nov-15 From 01-02- 2016 till the end of employee assignment Based on Transfer Pricing Guidelines ` 0.3 million Salary recharge of Niraj Nil
47 Guiness Nigeria Limited Expenses reimbursement received Promoter/ Promoter Group NA One time Arm's length transaction ` 5 million Expenses reimbursed to the Company Nil
48 Pioneer Distilleries Limited Guarantee commission given Subsidiary 02-Nov-15 Three years Based on Transfer Pricing Guidelines ` 1000 million Commission on gurantee given Nil

(ii) Details of loans advances and investments by the Company in itssubsidiary and Associate Companies (as required under Regulation 34(3) and 53(f) of SEBI(LODR) Regulations 2015 read with Schedule V Para A2 have been disclosed in Notes to theAudited Financial Statements for the year ended March 31 2017.

By Authority of the Board

Mahendra Kumar Sharma Anand Kripalu
Chairman Managing Director and Chief Executive Officer
Sanjeev Churiwala V. Ramachandran
Executive Director and Chief Company Secretary
Financial Officer
Bengaluru
July 23 2017

#MDEnd#

ANNEXURE 3

#SARStart#

FORM NO. MR-3 SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED ON MARCH 31 2017

[Pursuant to Section 204(1) of the Companies Act 2013 and Rule No. 9of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014] ToThe Members United Spirits Limited Bengaluru

I have conducted the secretarial audit of the compliance of applicablestatutory provisions and the adherence to good corporate practices by United SpiritsLimited (CIN: L01551KA1999PLC024991) (hereinafter called the Company). Secretarial Auditwas conducted in a manner that provided me a reasonable basis for evaluating the corporateconducts/ statutory compliances and expressing my opinion thereon.

Based on my verification of the Company's books minute booksforms and returns filed and other records maintained by the company and also theinformation provided by the Company its officers agents and authorized representativesduring the conduct of secretarial audit I hereby report that in my opinion the companyhas during the audit period covering the financial year ended on March 31 2017 compliedwith the statutory provisions listed hereunder and also that the company has proper Boardprocesses and compliance mechanism in place to the extent in the manner and subject tothe reporting made hereinafter.

I have examined the books papers minute books forms and returnsfiled and other records maintained by United Spirits Limited ("the Company") forthe financial year ended on March 31 2017 according to the provisions of:

i. The Companies Act 2013 (the Act) and the rules made thereunder;ii. The Securities Contracts (Regulation) Act 1956 (‘SCRA') and the rules madethereunder; iii. The Depositories Act 1996 and the Regulations and Bye-Laws framedthereunder; iv. Foreign Exchange Management Act 1999 and the Rules and Regulations madethereunder to the extent of Foreign Direct Investment Overseas Direct Investment andExternal Commercial Borrowings; v. The following Regulations and Guidelines prescribedunder the Securities and Exchange Board of India Act 1992 (‘SEBI'); (a) TheSecurities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)Regulations 2011; (b) The Securities and Exchange Board of India (Prohibition of InsiderTrading) Regulations 2015; (c) The Securities and Exchange Board of India (Issue ofCapital and Disclosure Requirements) Regulations 2009 (No instances for compliancerequirements during the year); (d) The Securities and Exchange Board of India (Share BasedEmployee Benefits) Regulations 2014 (No instances for compliance requirements during theyear); (e) The Securities and Exchange Board of India (Issue and Listing of DebtSecurities) Regulations 2008 (No instances for compliance requirements during the year);(f) The Securities and Exchange Board of India (Registrars to an Issue and Share TransferAgents) Regulations 1993 regarding the Companies Act and dealing with client; (g) TheSecurities and Exchange Board of India (Delisting of Equity Shares) Regulations 2009 (Noinstances for compliance requirements during the year); (h) The Securities and ExchangeBoard of India (Buyback of Securities) Regulations 1998 (No instances for compliancerequirements during the year); and (i) The Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015; vi. Various State Excise Lawsrelating to alcohol and related industry; vii. Legal Metrology Act 2009 and Rulesthereunder; viii. Food Safety and Standards Act 2006 and Rules and Regulations madethereunder; ix. The Environment (Protection) Act 1986 and Rules thereunder; x. The Water(Prevention & Control of Pollution) Act 1974; xi. The Air (Prevention & Controlof Pollution) Act 1981; xii. The Factories Act 1948 and Rules thereunder; xiii. Allother Labour Employee and Industrial Laws to the extent applicable to the Company.

I have also examined compliance with the applicable clauses ofSecretarial Standards issued by the Institute of Company Secretaries of India.

During the period under review the Company has complied with theprovisions of the Act Rules Regulations Guidelines etc as mentioned above whereverapplicable.

I further report that

The Board of Directors of the Company is duly constituted with properbalance of Executive Directors Non-Executive Directors and Independent Directors. Thechanges in the composition of the Board of Directors that took place during the periodunder review were carried out in compliance with the provisions of the Act.

Adequate notices were given to all Directors to schedule the Boardmeetings agenda and detailed note on agenda were sent at least seven days in advance andwherever sent at shorter period the requisite consent from the directors was obtained anda system exists for seeking and obtaining further information and clarifications on theagenda items before the meeting and for meaningful participation at the meeting.

The Company has responded to notices received by various authoritiesincluding show cause notices received from the Ministry of Corporate Affairs for variousalleged non compliances during the previous years. The Company has not received anyfurther replies from the Ministry of Corporate Affairs to these responses. The Company hasalso not received any responses on its reconsideration application for approval of excessof managerial remuneration. The Company has initiated proceedings for excess remunerationpaid to former Executive Director and Chief Financial Officer. One notice of beneficialinterest which was sent to former o_cial of the Company was received by the Company withthe delay and accordingly there was an unavoidable delay in _ling the Form MGT 6 beyond300 days for which the Company had made an application for condonation of delay.

All decisions are carried through majority and recorded in the minutesand unless stated otherwise has been unanimous. Decision has been taken by majority inall Board meetings during the year.

I further report that there are adequate systems and processes in thecompany commensurate with size and operations of the company to monitor and ensurecompliance with applicable laws rules regulations and guidelines.

I further report that during the audit period the Company has followingspecific actions but these are not material and do not have any major bearing on theCompany's affairs in pursuance of the above referred laws rules regulationsguidelines and standards:

1. Due to termination of agreement with Deutsche Bank Trust CompanyAmericas Depository for global depository shares (GDSs) the GDSs (constituting about0.5% of the paid up equity share capital) have been cancelled and have resulted inunderlying shares. However the number of shares issued subscribed and paid up and alsolisted in stock exchanges remains unchanged at 145327743 equity shares of ` 10 each.

2. The Company has entered in to an agreement for the sale of itsentire holding of 67716 equity shares in United Spirits Nepal Private Limited(constituting 82.46% of the paid up equity share capital of United Spirits Nepal PrivateLimited) and the sale transaction is pending for various regulatory clearances.

SUDHIR VISHNUPANT HULYALKAR
Company Secretary in Practice
Place : Bengaluru FCS No.: 6040
Date : 23 July 2017 C. P. No. : 6137

#SAREnd#

FORM MGT-9

EXTRACT OF ANNUAL RETURN

as on the financial year ended on March 31 2017

[Pursuant to Section 92(3) of the Companies Act 2013 and Rule 12(1) of the Companies

(Management and Administration) Rules 2014]

I. Registration and Other Details:
Particulars Details
CIN L01551KA1999PLC024991
Registration date 31/03/1999
Name of the Company United Spirits Limited
Category/Sub-Category of the Company Company Limited by Shares
Indian Non Govt Company
Address of the Registered office and contact details ‘UB TOWER'
# 24 VITTAL MALLYA ROAD Bengaluru
Karnataka-560001 Phone: +91 80 39856500
E-mail: uslinvestor@unitedspirits.in
Website: www.diageoindia.com
Whether listed company Yes / No Yes
Name Address and Contact details of Registrar and Integrated Registry Management Services Private Limited
Transfer Agent if any (Formerly known as Integrated Enterprises (India) Limited)
No. 30 Ramana Residency 4thcross Sampige Road
Malleswaram Bengalore-560003
Tel: (080)23460815-818
Fax: (080)23460819

II. Principal Business Activities of the Company:

All the business activities contributing 10 % or more of the totalturnover of the company shall be stated:-

SI. No. Name and Description of main products / services NIC Code of the Product/ service % to total turnover of the company
1 Distilling rectifying and blending of spirits; ethyl alcohol 1551 99.98
production from fermented material
Total 99.98

III. Particulars of Holding Subsidiary and Associate Companies:

Sl. No. Name of the Company Address of the Company CIN/GLN Holding/ Subsidiary / Associate % of Shares held Applicable Section
1 Relay BV Molenwerf – 10-12 1014 BG NA Holding 54.78 2(46)
Amsterdam Netherlands. Company
2 Asian Opportunities IFS Court Twenty Eight 22752/5112 Subsidiary 100 2(87)
& Investments Cybercity Ebene Mauritius Company
Limited (AOIL)
3 United Spirits Nepal Kamaladi Kathmandu(Nepal) 124/39 Subsidiary 82.46 2(87)
Private Limited Company

 

Sl. No. Name of the Company Address of the Company CIN/GLN Holding/ Subsidiary / Associate % of Shares held Applicable Section
4 Palmer Investment Sea Meadow House 447034 Subsidiary 100 2(87)
Group Limited (PIG) Blackburne Highway P.O. Company
Box 116 Road Town Tortola
British Virgin Islands
5 Tern Distilleries Roxana Towers Ground Floor U15532TG1999PTC031318 Subsidiary 100 2(87)
Private Limited (Tern) M.No.7-1-24/1/RT/G1&G2 Company
Greenlands Begumpet
Hyderabad Hyderabad TG
500016 IN
6 Shaw Wallace Overseas Limited (SWOL) Lakeside Drive Park Royal London England NW10 7HQ 283393 Subsidiary Company 100 2(87)
7 UB Sports Management Overseas Limited (Formerly known as JIHL Nominees Limited(JIHL) Ordnance House31 Pier Road St Helier JE4 8PW 61000 Subsidiary Company 100 2(87)
8 Montrose International S.A (MI) Edi_cioVallarino Penthouse Calle 52 Y ElviraMendez Ciudad De Panama R.P 3147 Subsidiary Company 100 2(87)
9 USL Holdings Limited (UHL) Sea Meadow House PO Box 116 Road Town Tortola VG1110 British Virgin Islands 1385373 ( BVI ) Subsidiary Company 100 2(87)
10 USL Holdings (UK) Lakeside Drive Park Royal 6127302 Subsidiary 100 2(87)
Limited (UHUKL) London England NW10 7HQ Company
11 United Spirits (UK) Limited (USUKL) Lakeside Drive Park Royal London England NW10 7HQ 6127303 Subsidiary Company 100 2(87)
12 United Spirits (Great Britain) Limited (USGBL) Lakeside Drive ParkRoyal LondonEngland NW107HQ 6127260 Subsidiary Company 100 2(87)
13 Four Seasons Wines Limited (FSWL) UB Tower#24Vittal Mallya Road Bengaluru Karnataka-560001 U15549KA2006PLC039931 Subsidiary Company 100 2(87)
14 Pioneer Distilleries Limited Roxana Towers Ground Floor M.No.7-1-24/1/RT/ G1&G2Greenlands Begumpet Hyderabad- TG 500016 IN L24116TG1992PLC055108 Subsidiary Company 75 2(87)
15 McDowell & Co (Scotland) Limited EdinburghPark 5Lochside Way Edinburgh Scotland EH12 9DT SC 145242 Subsidiary Company 100 2(87)
16 Sovereign Distilleries Limited Roxana TowersGround Floor M.No.7-1-24/1/RT/G1&G2 Greenlands Begumpet Hyderabad TG 500016 IN U15511TG2001PLC036282 Subsidiary Company 100 2(87)

 

Sl. No. Name of the Company Address of the Company CIN/GLN Holding/ Subsidiary / Associate % of Shares held Applicable Section
17 Liquidity Inc. 2711 Centerville Road Suite 400 Wilmington Delaware 19808 - Subsidiary Company 51 2(87)
18 United Spirits (Shanghai) Trading Company Limited Unit 215 Xinxing Building No. 8 JiaFengRoadWaiGaoQiaoFree Trade Zone ShanghaiChina (S.W.Z.H.D.Z.Z. [2007] No. 1153 Subsidiary Company 100 2(87)
19 Royal Challengers Sports Private Limited ‘UB Tower' # 24 Vittal Mallya Road Bengaluru Karnataka-560001 U92400KA2008PTC045565 Subsidiary Company 100 2(87)
20 United Spirits Singapore Trading Pte Ltd (Formerly known as Whyte and Mackay Singapore Pte Ltd) 9 Battery Road #15-01 Straits Trading Building Singapore 049910 201216632N Subsidiary Company 100 2(87)
21 Wine Society of India Pvt. Ltd* 005 CNB Square Sangam Cinema Complex 127 Andheri Kurla Road Andheri (E) Mumbai - 400059. U51228MH2006PTC162593 Associate Company 33.33 2(6)

*in the process of being wound up

IV Shareholding Pattern (Equity Share capital Break up as % to totalEquity)

ANNEXURE 5

Employee Details

Details of Ratio of Remuneration of Director

[Section 197(12) r/w Rule 5 of Companies (Appointment and Remuneration of

Managerial Personnel) Rules 2014]

(i) the ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year; Name of the Director Designation Ratio to the Median Percentage Increase
Anand Kripalu Managing Director& CEO 339:1 8%
Sanjeev Churiwala CFO 107:1 145%
V Ramachandran Company Secretary 44:1 75%
Mahendra Kumar Independent 16:1 86%
(ii) (ii) the percentage increase in remuneration of each director Sharma Non-Executive Chairman
V K Viswanathan Independent 6:1 Not Applicable*
Chief Financial Officer Chief Non-Executive Director
Executive Officer Company D Sivanandhan Independent 14:1 94%
Secretary or Manager if any in the financial year;
Non-Executive Director
Indu Shahani Independent 14:1 94%
Non-Executive Director
Rajeev Gupta Independent 12:1 65%
Non-Executive Director
Nicholas Bodo Non-Executive Director 6:1 Not Applicable*
Blazquez
Sudhakar Rao Independent 2:1 73%
Non-Executive Director
Ravi Rajagopal Non-Executive Director 7:1 7%

 

* For non executive Directors change in percentage denotes change in Commission only and for the period of their Directorship during the year.
(iii) the percentage increase in the median remuneration of employees in the financial year; The average increase in remuneration last year was 6.3% across the company. However due to substantial number of employee exits during the year the comparable median remuneration shifted downwards and hence it is not comparable with the previous year
(iv) the number of permanent employees on the rolls of company; The Company had a permanent headcount of 5048 on the rolls as of 31 March 2017
(v) average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration; The increase made in average salaries of employees other than the managerial personnel in the current financial year compared to the last financial year was 3% while the total increase in the managerial remuneration was 16.4%. The increase in salaries of Key Managerial Personnel does not includes performance based pay which varies from year to year based on business performance. The remuneration to Managerial Personnel is not comparable since the variable pay was for part of the year in FY 2015-16 and is for full year for FY2016-17. The annual average salary increase is based on company's market competitiveness as against its peer basket companies.
(vi) Afirmation that the remuneration is as per the remuneration policy of the Company. The remuneration paid is as per the remuneration and reward policy of the Company

 

By Authority of the Board
Mahendra Kumar Sharma Anand Kripalu
Chairman Managing Director and Chief Executive Officer

Bengaluru

July 23 2017

Particulars of Employees

A. Information as required under Rule5(3) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 and forming part of theDirector's Report for the Financial Year ended March 31 2017.

Sl. EMP NAME Age No. of Grand Designation & nature of duties Qualification Experience Date of Particulars of previous
No. (as on 31 Shares Total employment employment
Mar ' 17) held (Amount
in `)
1 Abanti Sankaranarayanan 48 0 38633579 Chief Strategy & Corporate Affairs Officer PGDBA 25 1-May-15 Managing Director - India Diageo India Pvt Ltd
2 Abhay Kewadkar 56 0 13940531 Senior Vice President and Business Head- Wines B.TECH (CHEM) 34 23-Aug-06 Vice President & Wine Maker - Grover Vineyards Ltd
3 Abhishek Shahabadi 39 0 10599185 Assistant Vice President - Brand Marketing B.Com. PGDM-C 17 23-Feb-06 Group Head Madison Commu- nications
4 Ajay B Baliga 58 164 40421643 Executive Vice President - Manufac- B.TECH (CHEM 36 3-Nov-08 Allied Blenders & Distillers Pvt Ltd
turing Projects & Quality Control ENGG) SVP - Business Development & Mfg
5 Amarpreet Singh Anand 40 0 20866424 Vice President and Chief Innovation Officer PGDM 16 2-Feb-15 Mondelez International Ltd
6 Amrit Kiran Singh 59 0 26270000 Chief Advisor - Corporate Relations & Public Policy B.TECH MBA 35 15-Jan-15 -
7 Amrit Thomas 51 0 71466571 President & Chief Marketing Officer B.TECH PGDM 25 12-Jun-07 Category Head - Beverages Hll
8 Anand Kripalu 59 0 127843692 Managing Director & Chief Execu- tive Officer B.Tech PGDM 32 1-May-14 Managing Director Cadbury India Ltd
9 Arun Goyal 47 0 11780798 Assistant Vice President - Manu- facturing BE M Tech 20 21-Feb-11 Head-Project Engineer Sika India Pvt Ltd
10 Deepak Kumar Katty 53 0 13568765 Divisional Vice President - Sales Effectiveness MBA 28 28-Oct-14 Pernod Ricard
11 G Pulla Reddy 45 0 12517446 Vice President- Manufacturing Operations (TMU) B.Tech.;M.Tech. 22 15-Sep-97 Bhor Industries Limited
12 Keshava Babu C S 45 0 11068826 Assistant Vice President - Quality BE 23 3-Nov-11 Motorola India Private Ltd Head Quality Assurance
13 Lal Rangwani 51 350 12591905 Vice President and Sales Head B.Com M.Com 30 7-Aug-87 Herbertsons TSE
(West) PGDBM
14 Mamta Sundara 40 0 24829885 EVP and General Counsel LLB 14 15-Feb-15 Senior Counsel - India Projects
Diageo India Pvt Ltd
15 Mathew Xavier 53 0 31369465 EVP and Chief Operating Officer PGDM / B.COM 28 10-Nov-03 VP MARKETING ERSTWHILE SWDL
(South)
16 Michelle D Souza 49 0 11858376 Vice President- Corporate Commu- B.Com 26 8-Sep-14 Head Communication - DIPL
nications
17 Narayanan Subramanyam 52 0 14461801 Senior Vice President- Information Technology B.A MBA 30 24-Oct-13 IT Director Global End User Ser- vices Hindustan Unilever Ltd.
18 Nischal Hindia 40 0 21796204 Vice President and Senior Counsel LLB 16 1-May-15 Legal Director - India Diageo India Pvt Ltd
19 Nitesh Chhapru 38 0 11593092 Vice President and Portfolio Head MBA 12 1-Jan-14 Founder Director The Brahma
Innovation Company
20 Pankaj Gupta 46 0 31516517 Chief Supply Chain Officer BE chem IIT Varanasi 25 1-Jul-15 Sr Expert Asia Operations _ Mckinsey & Co
21 Paramjit Singh Gill 55 0 67084969 President - All India Operations B.SC M.PHIL DIP IN LABOUR LAW CHARTERED MARK 34 1-Jul-92 EVP UNITED NATIONAL BREWERIES (SA) (PTY) LIMITED CENTURION
22 Pothen Jacob 46 0 10832130 Senior General Manager - Organization Effectiveness Bachelor of Engi- neering: Mechan- ical Engineering Master in Business Administration Grifith University Australia 23 21-Mar-16 Director Compensation and Benefits – India and APAC Sapient (Publicis Groupe)
23 Prashanth M S 44 0 18057854 Vice President and Customer Marketing Head BSC MMS 16 18-Aug-14 Sales Director Reckitt Benckiser
24 Prathmesh Mishra 47 0 35046634 EVP and Chief Operating Officer (West & CSD) PGDM BA 19 18-Jun-14 Pernod Ricard
25 Ramachandran V 55 10 16419113 EVP and Company Secretary B.com(Hons) ACA ACS 29 24-Apr-15 Company Secretary- Wipro ltd
26 Rohini Seth 47 0 22707166 Vice President- National HR Operations BA MA in HR 23 29-Jun-15 Reckitt Benkiser as HR Head
27 S V S V Sastry 55 0 14481649 Vice President and Sales Head (South) B.Sc. 31 14-Jun-12 ABD Pvt. Ltd VP South RPC
28 Sandeep Kumar Singal 53 0 19640039 EVP and Chief Operating Officer (East) B.tech M.B.A 18 14-Oct-15 Head- Branded Retail & Alternate Channels tata tele services ltd
29 Sanjeev Churiwala 47 0 40414620 Executive Director & Chief Financial Officer ACA ACS ACWA& Executive MBA from London Business School. 23 16-Nov-15 AMBUJA Cements
30 Sanjeev Ganesh 41 0 13863429 EVP- Procurement B.Tech MBA 12 1-Apr-10 Managing Consultant Aqua Man- agement Consulting Group
31 Shankar Ramanathan 49 0 11917041 Vice President- Engineering & Projects B.E. MS 22 16-Feb-15 Director Capex and Engineering - Pepsi Co.
32 Shelley Sengupta 41 0 10910719 Vice President- Consumer Planning & Insights B.Com. PG Diploma 15 30-Nov-07 Head of Qualitative Research Division South Synovate India
33 Shovan Ganguli 56 0 17414073 Senior Vice President- R&D Ph.d - Organic 26 25-Feb-13 Hindustan Unilever Limited Plat-
Chemistry form director-bioscience
nutrition health
34 Siddharth Rastogi 40 0 15088122 Vice President and Sales Head (North) __ BE (Hons) PGDBM 16 23-Jun-14 Commercial Director - Diageo India Pvt. Ltd. Supply Chain Planning & Head - India Procurement
35 Sridhar B 43 0 11736724 Vice President and Chief Digital B.COM PGDBA 13 20-Feb-09 Director Marketing Sulekha Com
Officer
36 Steve Correa 52 0 30218236 Chief Human Resources Officer B.Com MBA LLB 27 5-Sep-14 Chief Human Resource Officer Reliance Jio Infocomm Limited
37 Subroto Geed 42 0 18557349 Senior Vice President and Portfolio Head PGDISM 18 21-Sep-15 Nicholas Piramal India Ltd
38 Vikram Jain 42 0 11134591 Assistant Vice President - Sales B.Com MBA 12 19-Jan-09 Senior Manager Pernod Ricard
39 Vineet Kumar Kapila 56 0 48289540 EVP and Chief Operating Officer (North) B.Com PDGM 32 5-Dec-12 President & CEO- Spencers Retail

B. Employed for the part of the year

Sl. No. EMP NAME Age (as on 31 Total (Amount Designation & nature of duties Qualification Experience Date of employment Particulars of previous employment
Mar ' 17) in `)
1 Alokesh Banerjee 51 11847508 AVP - Sales M TECH MBA 15 22-Nov-04 Chief - Marketing Lafarge India
2 Ajay Goel 41 12589189 EVP and Financial Controller B.Com FCA ACS 18 18-Apr-16 CFO Supply Chain - GE India
3 Arup Halder 57 9649093 Dy General Manager - Mis Sales B.Com. Diploma 33 11-Aug-81 Executive Lupin Laboratories Ltd.
4 Arvind Jain 55 26060622 Divisional Vice President - Sales PGDM 33 15-Feb-16 Area Manager-Titan Watches Ltd.

5

Avinaash Mundra

46

8003157

Vice President - Internal Audit

Certification in Forensic Account- ing & fraud detec- tion techniques ICAI March 2009 Associate Char- tered Accountant Institute of Char- tered Accountants of India May 1996

20

12-Apr-83

Nissan Motor Co. Regional Head – Inter- nal Audit for Africa ME India

6

Baskaran Thiagarajan

46

5228724

Vice President - Manufacturing (TMU)

Bachelor of Engineering in Mechanical EngineeringTHIAG- ARAJAR COLLEGE OF ENGINEERING Madurai Tamil Nadu India

25

7-Mar-91

Heading India operations - Manufacturing AVERY DENNISON INDIA (P) LTD.

7 Biju V John 50 6933557 Sr. General Manager - HR B.Sc.Diploma MBA MSW 27 4-Nov-09 General Manager HR Manipal Health System Ltd.
8 Debashish Shyam 49 13893150 Senior Vice President and Head of Emerging Markets & Franchise BSC PGDBM 26 12-Jan-17 Head - Marketing & Alliances (Internet Services) Bharti Infotel Ltd New Delhi
9 Dharmarajan S 59 9215953 Divisional Vice President - Finance & Accounts B.COM ACA LLB 33 19-Apr-10 Consultant N M Raiji & Co Bombay
10 Feroze G Merchant 44 11659961 Assistant Vice President - Luxury & Banquets B.COM PGDBA 20 22-Mar-16 Senior Officer Tata Iron & Steel Company Ltd
11 G R Khera 59 10261966 Sr General Manager - Sales B.Com. 35 4-Jan-96 SALES REPRESENTATIVESwastik House Hold & Industrial Products
12 Gopal Singh Rana 38 2973463 Senior General Manager - Finance Regulatory Diploma in business finance Institute of Char- tered Accountants of India India 15 2-Sep-91 Director PriceWaterhouseCoopers Private Limited India
13 Javareh Daroga 43 4855186 National CP&A Lead PGDIB 20 1-Apr-15 Bilcare limited
14 K Vijay Kumar 52 14569737 Assistant Vice President - Manufacturing B.Sc.;DIFAT;PGDBM 19 10-Jan-94 Manager Technical Services Udv India Ltd
15 Lalit Kumar Gupta 57 25686702 Senior Vice President and Senior Counsel B.SC LLB DLL 34 21-Jul-89 JOINT MANAGER - LEGAL SHRIRAM FOODS AND FERTILIZERS
16 Lokesh Saran 42 7354366 Senior General Manager - Sales BE Electrical MBA 18 Zonal Head-North and CSD Head-India Allied Blenders & Distillers Pvt. Ltd.
17 Muthuraman Ramanathan 51 13861047 Vice President- Manufacturing Operations B.E (Hons.) Mechanical 31 1-Jul-87 General Manager - Dina Foods Ltd.
18 Navdeep Singh Mehram 40 5088312 Lead Sustainability Development M.B.A(HR) M.B.A(international Business)Certified SA8000 Auditor 14 1-Jul-15 Essar Group Foundation
19 Nilanka Chatterjee 52 7147337 Senior General Manager - Training & Development BBA;MBA 27 17-Nov-80 Ispat Industries Ltd. Mumbai
20 R Swaminathan 57 12861354 Audit Data Analytics & Reporting MSc 32 10-Feb-89 Corp. Vice President - Internal Audit
United Breweries(Holdings) Ltd
21 Rajiv Garg 58 6778291 Assistant Vice President - Manufacturing M.Sc PG Diploma 33 5-Jul-95 Pilkhani Distillery & Chemical works ( A
unit of Upper Doab Sugar Mills)
22 Rajiv Gupta 38 3189874 Vice President & Head - Internal Audit B.Com / ICAI - Char- tered Accountant from ICAI (First Attempt) 15 1-Apr-92 National Head - Internal Controls India & South West Asia The Coca Cola Company Gurgaon/Bengaluru
23 Ranesh Sinha 51 7477063 AVP - Manufacturing B.Tech (Mechanical) 27 20-Sep-04 Head Manufacturing Capability & Lean Excellence S C Johnson Products (P) Ltd
24 S R Dubey 54 14527350 Senior GM - PMO Lead 29 17-Feb-04 Shawallace & Co. Ltd Deputy General
Manager – CSD All India
25 S Sowmiyanarayan 50 6916299 Assistant Vice President - Financial BA-EconomicsBho- pal University 22 15-Nov-79 Ashok Leyland - Accounts Executive
Accounting B.Com.;PG Diploma - Other
26 S.N. Prasad 59 10722211 Sr. Vice President B.Com. 33 7-Nov-86 Comp Secretary & Internal Auditor Nutrine Confectionary Ltd
27 S. Satish 57 15999384 Assistant Vice President - P & C B.Com.-Commerce 36 19-Nov-02 Accounts Officer BPL Sanyo Ltd
28 S. Suryanarayanan 57 17478567 Assistant Vice President - Engineering B.Tech.Other;Un- dergraduation 34 15-Jun-11 Purchase Officer Sundaram - Clayton Ltd Hosur
29 Sabharwal M K 59 6941901 Assistant Vice President - Sales B.Com. 35 1-Apr-99 Sales representative Shinger Cosmetics (P) Ltd.
30 Sandeep khurd 49 5971649 Dy General Manager - Sales B.Com.;Diploma 25 18-Apr-11 Vadilal Enterprises Ltd
31 Shyjinth P K 48 9477251 General Manager - Marketing Bachelors in Social & Legal Science MBA 22 1-Jun-98 State Head Sales Maharastra - Shaw Wallace & Co. Ltd.
32 Sreenath K V 61 6200170 Assistant Vice President-Corporate BCOM 42 15-Jun-98 Steno-Accounts/Clerk-Bombay Paints &
Allied Products Ltd
33 Surender Singh Rathore 38 3345943 Senior General Manager - Accounting B.Com / ICAI 7 19-Oct-15 Whirlpool of India
& Reporting
34 T Sambandasamy 59 5960852 DVP - Corporate Relations BBA;MBA;PG Diploma - OtherUn- dergraduation 30 16-Jan-17 Shaw Wallace & Co Ltd
35 Tarun Behl 40 5062260 Senior General Manager - Manufacturing BE 19 12-Dec-16 Not applicable – Joined as Fresher
36 V. Murali 55 27183942 Assistant Vice President - Manufacturing MEPGDBA 27 12-Apr-91 McDowell&Co. Ltd./Carew Phipson Ltd.
37 Vineet Chhabra 52 16563120 Chief Operating Officer - Emerging Markets B.COM CA 24 4-Oct-90 CEO - Global Green
38 Vivek Prakash 57 28657551 Chief Operating Officer - CSD B.COM LLB MBA 35 18-Dec-06 Dy General Manager - Shaw Wallace & Co. Ltd
39 Vinay Nautiyal 57 8013414 DGM - Sales BA-HistoryGarhwal UniversityDEHRA- DUN 32 6-May-14 Pradeshik Co-operative Dairy Federation Ltd
40 William McDowell 62 20960179 Production Manager Bachelaor degree in Agricultural business & management 19 12-Dec-16 Quality & Governance Director Asia Pacific Diageo
41 Wilma Fernandes Olinda 53 7362765 BII Bulk Planner - Imports 19 1-Jul-15 Diageo India Pvt. ltd.

Note:

1. None of the employees are related to the directors of theCompany. None of the employees listed in B above hold any shares in the Company.

2. Since employees listed above includes the names of top 10employees in terms of remuneration drawn the list of such names is again not repeated inabove table pursuant to sub rule 2 of Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014

ANNEXURE 6

Risk Management

Your Company's ambition is to create the best performing mosttrusted and respected consumer Products Company in India. Risk management lies at theheart of this ambition. To be best performing we need to take well managed risks. To bemost trusted and respected we need to avoid harm to our reputation and build a resilientsustainable business in an increasingly volatile external environment.

Our risk management objectives are to:

Maximise the benefit from new opportunities challenges and initiatives

Avoid damage to our reputation

Take appropriate risk for appropriate return

Prioritise effectively between different risks

Demonstrate good corporate governance by managing our risks effectively

Risk Management at your Company addresses all aspects of riskincluding strategic financial operational reputational compliance fraud or otherrisks.

Our approach:

Our methodology for assessing risk is straightforward and is designedto promote an insightful discussion that results in effectivemitigation planning andpositive business performance outcomes. We assign clear accountability for managing ourrisks in the right way. In F-17 we have moved from regional structure to functionalstructure where each functions manage their risk directly and then report on their risk toExecutive risk committee. Your Company's Executive risk management committee reviewsthe effectiveness of risk management at functional level and also reviews impact of risks mitigation plans at Company level to minimise the adverse impact of these risks thusenabling the Company to leverage market opportunities effectively and enhance its longterm competitive advantage. The board exercises independent review through Audit Riskcommittee.

Key components of risk management framework:

??Our risk management framework is implemented at various levelsacross enterprise

? Risks are identified through insightful discussion by functionaldirectors considering both internal and external sources.

??Every risk is assigned to risk owner responsible for establishingmitigation plan.

? Each risk are subject to specific review by Risk managementcommittee on quarterly basis

Risk categories:

Following are the broad categories of risks considered in our riskmanagement framework:

Strategy Risks which impacts the Company's planned strategies andthe risks to the successful execution of strategies. These are called out from the choiceswe make on markets product mix and resources that will impact our competitive advantagein the medium and long term. Potential risks to the long term scalability andsustainability of the organisation are also analysed and mitigated.

Operational Risks arising out of unexpected developments resulting frominternal processes systems or from external events that are linked to actual running ofbusiness are covered in this category – for example virus attacks or breach of cybersecurity

Legal & Compliance Risks arising out ofnon- compliance to variouslegal and compliance policies or non-conformance with laws regulations which poses threatto financial organisational or reputational standing of are classified under legal andcompliance risk.

Financial Risk which impacts the Company's financial strength& control environment are classified under financial risk for example Internal controlweakness

Risk management highlights for the year

During the year the your Company's Executive committee and Boardfocused on principal risks fall in to several categories including increasingly volatileexternal environment political changes risk posed by critical industry development leadership succession planning business disruptions due to cyber-attacks.

??Cyber security – Cyber security is the protection ofinformation systems from the theft or damage to the hardware the software and to theinformation on them as well as disruption to the service they provide to the business.During the year we had set mandatory security training for all employees with new joinersautomatically enrolled enhanced technical measures to block phishing attacks &strengthened response capability to tackle serious attacks and breaches.

?? Regulatory changes– Changes in the governmentalregulations and unfavourable political conditions shall cascade to loss/ decline in sale.Though these risk are uncontrollable at company end we have made detailed action pointsto address the risk by partnering with Industry forum and engaging with Government.

?? Financial risk – The Company maintains a system ofinternal control framework which has been designed to provide assurance regardingreliability of financial control compliance with applicable laws and regulationseffectiveness of operations. The Company's internal financial framework is based on"three lines of defence model". Robust and continuous internal monitoringmechanisms ensure timely identification of risks and issues. The effectiveness of ourinternal control are tested by independent auditor through rigours testing procedures.

The above risks are covered in detail in the section on managementdiscussion and analysis forming part of this report

#CSRStart#

ANNEXURE 7

Corporate Social Responsibility (CSR)

THE ANNUAL REPORT ON CSR ACTIVITIES

Outline of the Company's CSR policy.

CSR Strategy of the Company supports our ambition to become the bestperforming most trusted and respected consumer Products Company in India. YourCompany's recognizes that its business activities directly affects the lives ofpeople around our plants and in the markets that we operate in. We believe that thecommunities in which we operate should benefit from our presence. We are aware of theimportance of being responsible about our brands and the way we develop produce and sellthem. As the world's leading premium drinks business we want to be at the forefrontof industry efforts to promote responsible drinking and reduce the harmful use of alcohol.Our Sustainability & Responsibility Strategy integrates social responsibility into ourcore business to create value for society and our shareholders._All our programs arecovered under the following fields: a) Alcoholin Society b) Community Development

The Company's CSR Policy is available at www.diageoindia.com

1. The composition of the CSR Committee: The composition of the CSRCommittee is as stated in the Corporate Governance Report.

2. Average net profit of the Company for the last three financialyears.

` in Million

Particulars FY15-16 FY14-15 FY13-14
Profits/(loss) for CSR Computation 4094.62 (460) (33011)

3. Prescribed CSR Expenditure (two per cent. of the amount as in item 3above) Nil

4. Details of CSR spent during the financial year. a. As the averagenet profit of the last three years has resulted in a loss there was no mandatoryrequirement to spend on CSR activities during the financial year. b. Amount unspent ifany: - Not applicable. c. Manner in which the amount spent during the financial year isdetailed below:

(1) (2) (3) (4) (5) (6) (7) (8)
S. No CSR projector activity identified Sector in which the project is Covered Projects or programs (1) Local area or other (2) Specify the State and district where projects or programs was undertaken Amount out- lay (budget) project or program Wise (` ) Amount spent on the projects or Programs Subheads: (1) Direct expen- diture on projects or Programs. (2) Overheads: (`) Cumulative expendi- ture up to the report- ing period (`) Amount spent: Directorthrough implementing agency*
1 Partnership with NDTV for a High visi- bility program ‘Road to Safety' which has consumer outreach to create awareness about road safety drink driving & un- deragedrinking Schedule VII (ii) under "promoting education". Promotion of Road Safety through CSR: (i) (a) Promotions of Edu- cation "Educating the Masses and Promotion of Road Safetyaware- ness in all facets of road usage National level tele- cast on NDTV 24 X7 and NDTV India 205 Lakhs 205 Lakhs 205 Lakhs Directly through Mind Share
2 Capacity building training on defensive driving and hazards of driving under the influence of alcohol with IRTE (Institute of Road Tra_c Edu- cation) and MORTH (Ministry of Road Transport and High- ways) (b) For drivers training etc. Schedule VII (ii) un- der "vocational skills" Training held across 15 states Delhi Pondicherry Haryana Punjab RajasthanWest Bengal Bihar Madhya Pradesh Maharashtra Uttar Pradesh Assam Chhattisgarh Odisha Telangana Himachal Pradesh 83 Lakhs 83 Lakhs 83 Lakhs I m p l the m e n t the d through Institute of Road Tra_c Education
3 University Partner- ship Programs on Road Safety Aware- ness amongst young students. Schedule VII (ii) under "promoting education". Promotion of Road Safety through CSR New Delhi Mumbai Bengaluru Goa 10 Lakhs 10 Lakhs 10 Lakhs Direct and through partner- ship
4 Curbing Underage Drinking- Cool Teens program Schedule VII (ii) under "promoting education". Maharashtra Karnatka Delhi NCR Punjab Rajasthan 35 Lakhs 35 Lakhs 35 Lakhs Direct and through partner- ship
5 Road Safety Aware- ness campaign amongst driver in partnership with Essar Oil Ltd. Schedule VII (ii) under "promoting education". Promotion of Road Safety through CSR: (i) (a) Promotions of Edu- cation "Educating the Masses and Promotion of Road Safety aware- ness in all facets of road usage Maharashtra Telangana 5 Lakhs 5 Lakhs 5 Lakhs Direct in partnership with Essar Oil
6 Security Health & Empowerment (SHE) Programs Schedule VII : Promot- ing gender equality and empowering women. ‘promoting healthcare including preventive healthcare' and sanita- tion including contribu- tion to the Swach Bharat Kosh set-up by the Cen- tral Government for the promotion of sanitation 15 villages around our bottling plants in Rajasthan MP Odisha UP and Pondicherry 195 Lakhs 192 Lakhs 192 Lakhs Through NGO Partners
7 Young Women Social Entrepreneurship de- velopment programs in partnership with British Council Schedule VII : Promot- ing gender equality and empowering women Maharashtra Assam Telangana 20 Lakhs 15 Lakhs 15 Lakhs Through NGO partners
8 Supporting Educa- tion with transport and Computer lab facility for Tribal chil- dren Schedule VII (ii) under "promoting education". Chhattisgarh 42 Lakhs 38 Lakhs 38 Lakhs Directly
9 Promoting Sports by supporting Karnataka Olympic Association TOTAL Schedule VII (vii) pro- motion of sports ( Rural National Paralympic and Olympic) Karnataka 100 Lakhs 695 Lakhs 100 Lakhs 683 Lakhs 100 Lakhs 683 lakhs Karnataka Olympic Association

5. In case the Company has failed to spend the two per cent of theaverage net profit of the last three financial years or any part thereof the Companyshall provide the reasons for not spending the amount in its Board report: Not applicable.

6. Responsibility statement of the CSR committee.

We hereby declare that implementation and monitoring of CSR activitiesis in compliance with CSR objectives and Policy of the Company. Though during the yearthere was no requirement to spend due to the average net profit of the last three yearshaving resulted in loss Company has still met its social objectives bys pending on CSRActivities.

Dr (Ms) Indu Shahani Mr Anand Kripalu
Chairperson of CSR Committee Managing Director and Chief Executive Officer

Bengaluru

July 21 2017

#CSREnd#

ANNEXURE 8

Energy Conservation Technology Absorption & Foreign Exchange

Details of Conservation of Energy Technology Absorption ForeignExchange Earning and Outflow

(Section 134(3)(m) of the Companies Act 2013 read with Rule 8 of theCompanies (Accounts) Rules 2014)

A) Conservation of Energy

With reference to energy conservation steps taken by the Company atits various manufacturing units were as under:

? In two of the manufacturing operations solar power installationcompleted which will contribute to 10% of respective factory power consumption and alsoplan to expand to other units depending on feasibility. ? Fuel change from coal tobiomass _ring completed in 7 out of 8 distillery manufacturing plants to reduce carbonemissions. Feasibility study in progress for another distillery ? Treated e_uentrecycle through Reverse Osmosis plant is in operation at four manufacturing plants andplanning to extend at 2 plants.

B) Technology Absorption

? Adopted and implemented technology to achieve Zero LiquidDischarge at own operating distilleries as per statutory norm. One plant being operatedon Bio Composting basis as per consent is in the process of adopting Zero liquiddischarge ? Implemented at one unit ‘Bio Gas Engines' for utilizingMethane Gas produced in anaerobic Digester and generating captive power for runningdistillery.

(C) Foreign Exchange earnings and Outgo-
(` In Millions)
Foreign exchange earned in terms of actual inflows during the year 1398
Foreign exchange outgo in terms of actual outflows during the year 2746

ANNEXURE 9

Business Responsibility Report

Environment Society and Governance lie at the heart of our businessethics and philosophy. Pursuant to Regulation 34(2)(f ) of SEBI (Listing Obligations andDisclosure Requirement) Regulations 2015 we provide below our Business ResponsibilityReport describing the initiatives taken by the Company (‘USL") from anenvironmental social and governance perspective during the financial year ended March 312017.

On each of the nine Principles governing this Business ResponsibilityReport USL has been at the forefront to follow the same in letter and spirit. Ourinitiatives in this regard for each of the Principles are highlighted below in theprescribed format.

SECTION A: GENERAL INFORMATION ABOUT THE COMPANY

1. Corporate Identity Number (CIN) of the Company -L01551KA1999PLC024991

2. Name of the Company – UNITED SPIRITS LIMITED

3. Registered address – ‘UB TOWER' #24 VITTALMALLYA ROAD Bengaluru – 560 001

4. Website – www.diageoindia.com

5. E-mail id – uslinvestor@unitedspirits.in

6. Financial Year reported – April 01 2016 to March 312017

7. Sector(s) that the Company is engaged in (industrial activitycode-wise) – Manufacturing (Main Activity Group Code –C)

8. List three key products/services that the Companymanufactures/provides (as in balance sheet)–Alcoholic Beverages Extra NeutralAlcohol Indian Made Foreign Liquor

9. Total number of locations where business activity is under takenby the Company-27 (a) Number of International Locations (Provide details of major5) - Nil (b) Number of National Locations – 27 10. Markets served bythe Company – Local/State/National/International – All the three.

SECTION B: FINANCIAL DETAILS OF THE COMPANY

1. Paid up Capital (INR) – ` 1453277430

2. Total Turnover (INR) – ` 257560 million (Gross)

3. Total profit after taxes (INR) – ` 1699 million

4. Total Spending on Corporate Social Responsibility (CSR) –Since average profits of the last three years are negative the Company is not required tospend any amount on CSR. However the Company has still spent ` 68.3 million whichas percentage of profit after tax for the year ended March 31 2017 is 4%.

5. List of activities in which expenditure in 4 above has beenincurred:-

(a) As given in Annexure 7 of CSR Report which is forming part ofReport of Directors

SECTION C: OTHER DETAILS

1. Does the Company have any Subsidiary Company/ Companies?

Yes.

2. Do the Subsidiary Company/Companies participate in the BRInitiatives of the parent company? If yes then indicate the number of such subsidiarycompany(s)?

Pioneer Distilleries Limited.

3. Do any other entity/entities (e.g. suppliers distributors etc.)that the Company does business with participate in the BR initiatives of the Company? Ifyes then indicate the percentage of such entity/entities? [Less than 30% 30-60% Morethan 60%] – Not Applicable.

SECTION D: BR INFORMATION

1. Details of Director / Directors responsible for BR – Thelist of Directors along with details are given below:

(a) Details of the Director / Director responsible forimplementation of the BR policy / policies as on March 31 2017.

Sl. No. Name of the Director DIN Designation
1. Mr Mahendra Kumar Sharma 00327684 Non-Executive Independent Director – Chairman
2. Mr V K Viswanathan 01782934 Non-Executive Independent Director
3. Mr Randall Ingber 07529943 Non-Executive Director
4. Mr Anand Kripalu 00118324 Managing Director and Chief Executive Officer
5. Mr Vinod Rao 01788921 Non-Executive Director
6. Mr D Sivanandhan 03607203 Non-Executive Independent Director
7 Mr John Thomas Kennedy 07529946 Non-Executive Director
8. Dr (Mrs) Indu Shahani 00112289 Non-Executive Independent Director
9. Mr Rajeev Gupta 00241501 Non-Executive Independent Director

(b) Details of the BR head :

Overall review of BR is with the Board of Directors and theimplementation with the Management.

2. Principle-wise (as per NVGs) BR Policy/policies (a) Detailsof compliance (Reply in Y/N)

No. Questions P1 P2 P3 P4 P5 P6 P7 P8 P9
1 Do you have a policy/ policies forCode of Business Conduct and Ethics Y Y Y Y Y Y Y Y Y
2 Has the policy being formulated in consultation with the r the l e v a n t stakeholders? Y Y Y Y Y Y Y Y Y
3 Does the policy conform to any national / international standards? If yes specify? (50 words)

The Code of Business Conduct & Ethics (CoBCE) is the key policy governing the compliance and ethics framework of the Company. In addition to Co BCE it is mandatory for all employees to undergo training in Co BCE and a compliance certification program anchored by policies and procedures prescribed as per the global standards covering are as such asanti-bribery & corruption including guidelines on gifting & entertainment anti-money laundering and prevention of sexual harassment at workplace in addition to the Employee Alcohol Policy as a part of its commitment to responsible drinking.

4 Has the policy being approved by the Board? Is yes has it been signed by MD/ owner/ CEO/ appropriate Board Director? Y Y Y Y Y Y Y Y Y
5 Does the company have a specified committee of the Board/ Director/ O_cial to over see the implementation of the policy? Y Y Y Y Y Y Y Y Y
6 Indicate the link for the policy to be viewed online?

http://diageoindia.com/Investor_downloads/780678726Code%20of%20 Business%20Conduct.pdf

 

No. Questions P1 P2 P3 P4 P5 P6 P7 P8 P9
7 Has the policy been formally communicated to all relevant internal and external stakeholders? Y Y Y Y Y Y Y Y Y
8 Does the Company have in-house structure to implement the policy/ policies. Y Y Y Y Y Y Y Y Y
9 Does the Company have a grievance redressal mechanism related to the policy/ policies to address stakeholders' grievances related to the policy/ policies? Y Y Y Y Y Y Y Y Y
10 Has the Company carried out independent audit/ evaluation of the working of this policy by an internal or external agency? Y Y Y Y Y Y Y Y Y

(b) If answer to the question at serial number 1 against any principleis ‘No' please explain why: (Tickupto 2 options)–NOT APPLICABLE

No. Questions P1 P2 P3 P4 P5 P6 P7 P8 P9
1 The Company has not understood the Principles
2 The Company is not at a stage where it finds itself in a position to formulate and implement the policies on specified principles
3 The Company does not have financial or manpower resources available for the task
4 It is planned to be done within next 6 months
5 It is planned to be done within the next 1 year
6 Any other reason (please specify)

3. Governance related to BR :

(a) Indicate the frequency with which the Board of DirectorsCommittee of the Board or CEO to assess the BR performance of the Company. Within 3months 3-6 months Annually More than 1 year Annual.

(b) Does the Company publish a BR or a Sustainability Report? Whatis the hyperlink for viewing this report? How frequently it is published? Publishedannually as part of the Annual Report. Hyperlink is www.unitedspirits.in.

Principle 1 : Company's efforts in the area of EthicsTransparency and Accountability

1. Does the policy relating to ethics bribery and corruptioncover only the Company? Yes/ No. Does it extend to the Group/Joint Ventures/ Suppliers/Contractors/NGOs /Others?

The Code of Business Conduct & Ethics (Co BCE) is the key policygoverning the compliance and ethics frame work of the Company. All the employees arerequired to under go mandatory training within 30 days of joining the employment and ayearly refresher training along with a compliance certification program for evaluationof the knowledge and understanding of Co BCE on an annual basis. In addition face to faceand functional training is also provided by the members of the compliance and ethicsfunction on a regular basis.

In addition to Co BCE the compliance program is also anchored bypolicies and procedures prescribed as per the global standards covering areas such asanti-bribery & corruption including guidelines on gifting & entertainmentanti-money laundering and prevention of sexual harassment at workplace in addition to theEmployee Alcohol Policy as a part of its commitment to responsible drinking.

During the year revised Co BCE has been rolled out to subsidiaries ofthe Company also namely Pioneer Distilleries Limited Sovereign Distilleries LimitedTern Distilleries Private Limited and Four Seasons Wines Limited through adoption of thepolicy by the respective Boards and provision of training to the employees of therespective subsidiaries.

The Company has a whistle blower/ vigil mechanism Speakup operated bya third party agency. Employees are encouraged to raise their compliance concerns throughthis mechanism apart from other internal reporting channels viz. Line Manager orrepresentatives of HR Legal Compliance & Ethics function etc. Confidentiality andanonymity is guaranteed to all reporters. Company has a structured Breach ManagementStandard in place for timely and conclusive resolution of issues raised through thewhistle blower mechanism. Access is also provided to the Chairman of the Audit Committeein appropriate and exceptional cases.

2. How many stakeholder complaints have been received in thepast financial year and what percentage was satisfactorily resolved by the management? Ifso provide details thereof in about 50 words or so.

During the year 115 cases were logged in Speakup which included 38cases in the nature of HR grievances. Out of the above 99% cases are closed with 1/4thbeing substantiated. Decisions on the reported breaches are determined and monitored by acompliance committee ing key members of the leadership team by ensuring that there is acollective and a fair decision making process and consistent action in resolving thebreaches. Quality of investigation and remedial actions are monitored by the Global Risk& Compliance team.

As a part of the governance framework details of significant breachesare tabled before the audit committee for its review on a quarterly basis. Regular updates are also provided to the senior leadership team on various aspects of the complianceprogram not only to sett one at the top but also as a part of management'scommitment to continuous improvement in integrating compliance with the business.

Principle 2 : Company's efforts to provide goods and services thatare safe and contribute to sustainability throughout their life cycle.

1. List up to 3 of your products or services whose design hasincorporated social or environmental concerns risks and/or opportunities. We havebeen conscious of social and environmental concerns and our processes and practicesreflect our concern for the environment as can be seen from the details provided in theparagraphs below.

2. For each such product provide the following details in respectof resource use (energy water raw material etc.) per unit of product(optional): (a) Reductionduring sourcing/production/ distribution achieved since the previous year throughout thevalue chain?

We give below the list of projects and achievements during the year

Validated

Project Type Project Type Project Description

COST in INR

Benefits (m3)

Bhopal Dam Construction of two new check dam for water storage purposes (Amla&Sarvar) 20490 18.33
Alwar Desilting Rehabilitation of silted water holding ponds vis desilting (dredging) and community maintenance pondsHand pumps Rehabilitation of silted water holding ponds vis desilting 18774 32.67
Udaipur Desilting (dredging) and community maintenance ponds Rehabilitation of silted water holding ponds vis desilting 11438 45.27
Rosa Desilting (dredging) and community maintenance ponds 20936 35.48
_ _ Total Water for Productive Use 71638 131.75

Your Company initiatives in 2017 to reduce packaging materials includefurther light weighting of glass bottles by 5-10% on most leading brand bottles per designfeasibility _lm down-gauging in Tetra as well as pack resizing by nearly 10% reductionin carton weight by replacing older 5 Plyto 3 Ply RCT based paper liners. Your Company hasinitiated removal of plastic based components in its print material in anticipation offuture waste management rules. In addition your Company uses recycled bottles across mostpopular & prestige brands resulting in a lower carbon footprint. (b) Reductionduring usage by consumers (energy water) has been achieved since the previous year? Indirectbenefits have accrued to customers from the steps taken above.

3. Does the company have procedures in place for sustainablesourcing (including transportation)?

(a) If yes what percentage of your inputs was sourced sustainably?Also provide details thereof in about 50 words or so.

Your Company has initiated processes addressing the need forsustainable sourcing. In line with Diageo's global statement of intent on sustainableprocurement your Company is shortly issuing its own guideline on Partnering withSuppliers covering engaging with vendors on ethical business practices protection ofhuman rights health and safety standards as well as reduction of environmental impact.

Additionally your Company has implemented the roll out of Sedex acrossits vendor base in a phased manner a global collaborative platform for sharing ofresponsible sourcing data.

4. Has the company taken any steps to procure goods and servicesfrom local & small producers including communities surrounding their place of work?

Your Company has identified certain categories of spend amenable tosourcing from MSME vendors like corrugated boxes or recycled bottles and almostexclusively sources such categories from sources proximal to our manufacturing locations.In addition agri-commodities like grapes broken rice & maize etc are sourced fromlocal communities & cooperatives.

(a) If yes what steps have been taken to improve their capacity andcapability of local and small vendors?

In order to ensure such parties meet our specification requirementsyour Company teams routinely conduct audits identify process gaps and educate vendors onperformance improvement and best practices.

In line with the tenets of Principle 2 that businesses should raise theconsumer's awareness of their rights through education product labellingappropriate and helpful marketing communication etc. and to provide full details ofcontents and composition and to promote feusage and disposal of their products andservices your Company ensures that its product labels comply to all statutoryrequirements per legal metrology food & safety standard setc. Apart from thiscustomers are also made a ware of mandatory requirements of individual states or marketsincluding but not limited to a detailed ingredient list clearly published manufacturing& licensing details customer care contact details as well as mandatory warnings asapplicable for alcobev industry.

With regard to regular review to improve upon the process of newtechnology development deployment and commercialization incorporating social ethicaland environmental considerations USL ensures minimization of our resource usagefootprint by working collaboratively with our suppliers along the following dimensions:

- Product specification optimization: including but not limited tolight-weighting of containers gauge reduction of metal components weight optimization ofprint material etc. deploying available / new-age technologies & manufacturingcapabilities with our suppliers.

- Feature optimization: In select cases we have removed surpluspackaging components to reduce overall material use.

- Rationalization: your Company is working towards rationalization ofour material components for both economies of scale as well as maximizing utilizationacross our requirements especially for recycled products like returnable bottles.

In addition to above mentioned optimization drives your Company hasled in recycling through utilization of returnable glass bottles across a significant partof our popular brand. In addition your Company collaborates with supply partners likeTetrapak to facilitate recycling & utilization of laminates as well as glasssuppliers for re-use of broken cullets.

Your Company is additionally working towards compliance on anticipatedfuture requirements like proposed plastic waste management rules and extended supplierresponsibilities thereupon.

5. Does the company have a mechanism to recycle products and waste?If yes what is the percentage of recycling of products and waste (separately as <5%5-10% >10%). Also provide details thereof in about 50 words or so.

More than 90% of waste water generated in factories post treatmentrecycled back for use. Also more than 90% of the solid waste generated in themanufacturing locations are recycled through authorized recyclers. We source significantproportion of sustainable packing for the product packaging with at least >20%recycled content and plan to increase further in future

Principle 3 : Company's efforts to promote the wellbeing of allemployees

1. Please indicate the Total number of employees.

We have 5048 employees including Executive permanent workmen andstaff.

2. Please indicate the Total number of employees hired ontemporary/contractual/casual basis. We have hired 4591 contract or temporary employeesand retainers/ consultants.

3. Please indicate the Number of permanent women employees. Wehave 486 permanent women employees.

4. Please indicate the Number of permanent employees withdisabilities NIL

5. Do you have an employee association that is recognized bymanagement? Yes.

6. What percentage of your permanent employees\ is members of thisrecognized employee association?

46% of our permanent employees are members of this recognized employeeassociation.

7. Please indicate the Number of complaints relating to childlabour forced labour involuntary labour sexual harassment in the last financial yearand pending as on the end of the financial year.

During the financial year 2016-17 no complaints were reported

8. What percentage of your under mentioned employees were givensafety and skill up-gradation training in the last year?

(a) Permanent Employees : 95% (b) Permanent Women Employees : 95%

(c) Casual/Temporary/Contractual Employees : 95% (d) Employees withDisabilities : NA

Principle 4: Company's efforts to respect the interests of and beresponsive towards all stakeholders especially those who are disadvantaged vulnerableand marginalized.

1. Has the company mapped its internal and external stakeholders?Yes/No Yes.

2. Out of the above has the company identified the disadvantagedvulnerable & marginalized stakeholders? Yes.

3. Are there any special initiatives taken by the company to engagewith the disadvantaged vulnerable and marginalized stakeholders. If so provide detailsthereof in about 50 words or so.

Your Company has launched Project S.H.E (Security-Heath-Education).Itis a grass roots level community programme designed to improve the lives of people in thecommunities around its plants with particular emphasis on empowering women. In the firstyear of the program five manufacturing site locations have been identified to roll outthe program. For FY 2016-17 total water replenished is 305 K m3 which is an integratedprogram under SHE which reaches out to more than 40000 beneficiaries at 6 bottling plantlocations covering 15 villages.

The program targets to touch over 40000 people in the 13 directintervention villages in the five plan locations.The program will focus on:

Security: improving access and availability of drinking water &basic sanitation through water conservation.

Health: Community preventive care and healthcare for women/youngmothers & adolescent girls

Education: job-oriented skills and entrepreneurship training for women.

Your Company as part of their CSR activities has taken up two verycrucial initiatives relating to road safety - the dangers of drinking and driving &Importance of having a ‘sober designated driver'. We have a robust program whichhelps create awareness on road safety from university students to commercial drivers.

Principle 5: Company's efforts to promote human rights

1. Does the policy of the company on human rights cover only thecompany or extend to the Group / Joint Ventures / Suppliers / Contractors / NGOs / Others?

The Code of Business Conduct & Ethics (CoBCE) is the key policygoverning the compliance and ethics framework of the Company and extends to the Group /Joint Ventures / Suppliers / Contractors / NGOs. _ _ Additionally during the year revisedCo BCE has been rolled out to other USL subsidiaries namely Pioneer DistilleriesLimited Sovereign Distilleries Limited TERN Distilleries Private Limited and FourSeasons Wines Limited through adoption of the policy by thefirespective Boards andtraining to the employees of the respective subsidiaries.__

2. How many stakeholder complaints have been received in the pastfinancial year and what percent was satisfactorily resolved by the management?

During the year 115 cases were logged in Speakup (our whistle blowerportal) which included 38 cases in the nature of HR grievances and only one-fourth beingsubstantiated. Out of the above 99% cases have been closed and satisfactorily resolved.__

Principle 6: Company's efforts towards environment protection.

1. Does the policy related to Principle 6 cover only the companyor extends to the Group/Joint Ventures/Suppliers/Contractors/NGOs/ others. The Policyis applicable to Group companies of your Company.

2. Does the company have strategies/ initiatives to addressglobal environmental issues such as climate change global warming etc? Y/N. If yesplease give hyperlink for webpage etc.

Yes your Company's sustainability strategies targets 2020baseline reporting year as 2007 as explained below for each of the parameters.

Water: ? Reduce water use through a 50% improvement in wateruse efficiency ? Return 100% of waste water from our operations to the environmentsafely. ? Replenish the amount of water used in our final product in water stressedareas.

Carbon: ? Reduce absolute greenhouse gas emissions fromdirect operations by 50%

Waste: ? Achieve zero waste to landfill

3. Does the company identify and assess potential environmentalrisks? Y/N

Yes the Company have any project related to Clean DevelopmentMechanism(CDM)? If soprovided etailsthere of in about 50 words or so. Also if Yeswhether any environmental compliance report isfiled?

Your Company is committed to Carbon footprint reduction. USL hasreduced carbon emission by 65% with respect to 2007 baseline through implementation ofmultiple projects to meet the heat demand of operation through renewable fuel and in-housepower generation. Your Company developed a strategy to generate 10% of total power demandthrough renewable energy and implemented in two plants during F17

Your Company's sustainability performance details are included andreported in Diageo's sustainability and Responsibility reporting basis verificationof data through PwC

4. Has the company undertaken any other initiatives on –clean technology energy efficiency renewable energy etc? Y/N. If yes please givehyperlink for web page etc.

Yes Your Company has invested in multiple projects over last few yearsand ensured significant reduction in emissions through clean technologyhttp://www.diageo.com/en-row/csr/casestudies/Pages/moving-fast-to-displace-fossil-fuels.aspx

5. Are the Emissions/Waste generated by the company within thepermissible limits given by CPCB/SPCB for the financial year being reported? Yes.

6. Number of show cause/ legal notices received from CPCB/SPCBwhich are pending (i.e. not resolved to satisfaction) as on end of Financial Year.

Notices received in the financial years are responded properly andresolved to satisfaction level.

Principle 7 : Company's efforts to responsibly engage whileinfluencing public and regulatory policy.

1. Is your company a member of any trade and chamber or association?If Yes Name only those major ones that your business deals with:

(a) International Spirits and Wines Association of India (ISWAI) (b)Confederation Of Indian Alcoholic Beverage Companies_(CIABC)

2. Have you advocated/lobbied through above associations for theadvancement or improvement of public good? Yes/No; if yes specify the broad areas ( dropbox: Governance and Administration Economic Reforms Inclusive Development PoliciesEnergy security Water Food Security Sustainable Business Principles Others)

Yes. USL Diageo is a founding signatory of the Beer Wine and SpiritsProducers' Global Commitments an ambitious set of targets aimed at making measurableprogress in the following five areas which we have advocated through the associations: ?Reducing underage drinking ? Strengthening and expanding marketing codes ofpractice ? Providing consumer information and responsible product innovation ? Preventingdrinking and driving ? Enlisting the support of retailers to reduce harmfuldrinking

Principle 8 : Company's efforts to support inclusive growth andequitable development

1. Does the company have specified programmes/ initiatives/projects in pursuit of the policy related to Principle 8? If yes details thereof.

Your Company's priorities in India aim to enrich livescommunities and the environment through good business encompassing 3 key areas: Tackling alcohol misuse and promoting Responsible Drinking focusing on drunk driving;underage drinking and industry collaboration ?? ?Empowering women focusing on educationand skills ?? ?Benefiting the communities around our plants focusing on sanitation andhealth including Water.

Key campaigns / wins / achievements / leadership in Tackling alcoholmisuse and promoting Responsible Drinking are given below-

(a) Diageo and United Spirits: ‘Road to Safety'

Realizing that consumer goods companies like Diageo and your Companycan succeed only when they fulfil their responsibilities to society and the communitiesand when they are committed to the safety and well-being of their consumers the companymakes full use of its knowledge of consumer insights by designing suitable programmes thatare aimed at creating awareness changing attitudes and shifting behaviour.

(b) The need of the hour: ‘Road Safety in India'

The alarming incidence of road accidents is a matter of seriousconcern. India alone accounts for more than 12 per cent of the worldwide annual average of1.24 million global road fatalities. Diageo and United Spirits' "Road toSafety" programme focuses on preventing drink driving underage drinking andexcessive drinking in India. There are two big programmes under this campaign. The firstis a national programme spanning 45 cities across 20 Indian states in partnership with theInstitute of Road Tra_c Education (IRTE) and the Ministry of Road Transport &Highways. The second ‘Diageo-NDTV Road to Safety' is a partnership with NDTV toeducate and inspire citizens to action by highlighting critical issues including lack ofsafety awareness public apathy towards accident victims and a widening gap betweenlegislation and enforcement.

(c) Key community programmes

(i) Women Empowerment:

Our values our reputation and our purpose are important drivers ofour commercial success. In this context our Women's Empowerment program is aninvestment in our business. It will help us to grow the economies in which we operate andto develop skills in the hospitality sector that are critical for our continued success.Those programmes are summarized below.

India our bottling plants and distilleries are mostly situated insemi-urban and rural areas where communities often lack basic infrastructure necessaryfor dignified living. We have consciously decided to take an integrated approach by notjust improving water efficiencies in our operations but also in our communities byproviding access to clean drinking water sanitation healthcare facilities education andemployable skills to bridge the developmental gap. To ensure that we create shared valuethrough our efforts we collaborate with community their local elected institutions(Panchayats) government NGOs and other community based organizations creating deeper andwider impact. In Alwar Rajasthan we have our distilling and bottling plant surrounded by3 key villages from where most of our workforce comes from. This unit scores very high ondiversity safety and performance amongst the peer units. Our integrated approach forholistic development in these three villages has won us great relationship trust andreputation with the key stakeholders. We have set up institutional mechanisms by firstsetting up Water Sanitation and Health (WASH) committee mostly represented by women inthese villages. These WASH committees mobilize larger community members to participate inidentifying and solving challenges such as water sanitation and livelihood. The WASHCommittees are technically supported by our NGO partner who have mainstreamed thesecommittee in the formal village development committees under Panchayat. Additionalcapacity of 125000 Cub Meter (equal to fill more than 50 Olympic size swimming pools) wasis generated through Rain water harvesting structures pond desilting and better watermanagement practices. Earlier women had to walk the distance to fetch water now thesevillages have 100% piped water facility at home. With piped water availability thevillage committed to become 100% ‘open defecation free' which they achieved andgot rewarded by the government. The additional water stored in these ponds was then usedfor _sheries for which the panchayat earns money by subletting that facility tocontractors.

1. In sanitation the women had limited or expensive access to sanitarynapkins. A self-help group (SHG) of 20 women was trained and supported to set up a microenterprise to produce low cost sanitary napkins. They are producing and marketing it tomore than 20 villages by not only earning but improving sanitation for more than 5000women.

2. Through our efforts where we are empowering guiding mentoring andhandholding the communities around our units have learnt to solve their issues andchallenges through collaboration in more sustainable way which is driving value for ourbusiness our communities and our partners.

Project SHE:

Benefited over 40000 people in the villages of which 45% are women

Established resource centres and water sanitation and health (WASH)committees in 12 villages to oversee water resource management.

Constructed 104 soak pits rainwater harvesting structures drainagesystems and repaired 51 hand pumps.

Constructed toilet blocks in schools

Trained villagers on groundwater management

Installed 3 RO water purification systems in schools.

Built 58 community & SMART toilets

Conducted health and hygiene programmes to spread awareness onreproductive health menstrual and personal hygiene

Imparted employable skill training to community women

The Young Women Social Entrepreneurship Programme trains mastertrainers in social entrepreneurship skills equipping them to train others insetting upsmall businesses. The training focuses on practical businesss kills such as managementfinances communications leadership marketing and fundraising. In Phases I and 2 acritical mass of 60 master trainers have been trained across 30 cities / locations inIndia. They in turn have conducted training workshops across the country to a further 4000women in India promoting social entrepreneurship amongst the women. We have been workingwith the relevant ministries and Ms Maneka Gandhi Union Cabinet Minister for Women &Child Welfare and the UK High Commissioner to India Sir James Bevan were gracious enoughto evangelize those programmes.

(ii) WASH: Water Safety Health Education

We have a grass-roots program to build thriving communities aroundour plants. Your Company's bottling plants are mostly situated in semi- urban areaswith its distilleries mostly situated in rural areas. These communities lack basicinfrastructure necessary for a dignified living. We are investing in programmes to benefit18000 women and 22000 men in and around five key plants to develop safety health andeducation through: ? Safe access to water ? Healthcare ? Employableskills training

For FY 2016-17 total water replenished is 305 K m3 which is anintegrated program under SHE which reaches out to more than 40000 beneficiaries at 6bottling plant locations covering 15 villages.

2. Are the programmes/projects undertaken through in-houseteam/own foundation/external NGO/government structures/any other organization? Theprograms are undertaken through reputed NGO partners and relevant organizations. We lookat government partnerships in all our programs.

3. Have you done any impact assessment of your initiative?

Yes all our programs have strong measurement metrics built intothem.

4. What is your Company's direct contribution to communitydevelopment projects- Amount in INR and the details of the projects undertaken.

Amount spent on various areas are summarized below- ? Roadto Safety- ` 40 million ? Women Empowerment program: ` 14.5 Million ?Underage Drinking: ` 5 Million ? Community empowerment program : ` 15 Million

5. Have you taken steps to ensure that this communitydevelopment initiative is successfully adopted by the community? Please explain in 50words or so. Extensive community outreach has been built in our programs. We havecreated strong Self Help Groups (SHG) and WASH (Water Sanitation and Hygiene) committeesto ensure engagement involvement and adoption by the community.

A common thread across locations has been the many effective meetingsof the WASH (Water Sanitation and Hygiene) committees to understand the counteractingforces by assessing cultural backgrounds of the users of the water and sanitationfacilities planned under S.H.E to: ? Raise ownership ? Increase potential ofsuccess ? Mitigate risks ? Diminish failure (e.g. to ensure that systems arenot used to sabotage/ vandalise)

Principle 9: Company's efforts to engage with and provide value totheir customers and consumers in a responsible manner

1. What percentage of customer complaints/consumer cases are pendingas on the end of financial year.

0% pending. In this financial year we received 68 complaints and allhave been addressed and closed. 6 Consumer cases were registered with the respectiveForums out of which 2 are closed and 4 are still pending.

2. Does the Company display product information on the productlabel over and above what is mandated as per local laws? Yes/ No/N.A. /Remarks(additional information) Yes. Generally we have front and back label for few brandsand few have a single label.

Back Label – We print following mandatory details

1. Branding

2. MRP

3. Manufacturing unit address

4. Reg. office address

5. FSSAI License number

6. Customer care phone number and Mail ID.

7. Ingredients

8. Quantity and strength declarations

9. Batch number and date of manufacturing 10. Bar code 11. Excisemandates as per state excise regulation. 12. Country of Origin.

Front label – We include:

1. Branding

2. Brand Claim / Brand Story

3. Brand Assets

3. Is there any case filed by any stakeholder against the companyregarding unfair trade practices irresponsible advertising and/or anti-competitivebehaviour during the last five years and pending as on end of financial year. If soprovide details thereof in about 50 words or so.

Nil

4. Did your Company carry out any consumer survey/ consumersatisfaction trends?

Your Company conducts various researches to make sure the best in classoffer goes in the market; and also there is a regular survey in place to track consumerfeedback on brand metrics. We use Neurotool to evaluate blendspackscommunication for ourcore brands; we have Brand track to monitor brand equity Quality awareness penetrationat regular intervals.

There is another study currently running which is about ‘Qualityat shelf display' – this is a qualitative survey to understand consumeracceptability of our brands from both retailer and consumers perspective.