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United Breweries Ltd.

BSE: 532478 Sector: Consumer
NSE: UBL ISIN Code: INE686F01025
BSE 00:00 | 30 Jun 1458.10 23.05
(1.61%)
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NSE 00:00 | 30 Jun 1452.80 18.40
(1.28%)
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OPEN 1445.90
PREVIOUS CLOSE 1435.05
VOLUME 6732
52-Week high 1793.65
52-Week low 1274.60
P/E 105.58
Mkt Cap.(Rs cr) 38,552
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1445.90
CLOSE 1435.05
VOLUME 6732
52-Week high 1793.65
52-Week low 1274.60
P/E 105.58
Mkt Cap.(Rs cr) 38,552
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

United Breweries Ltd. (UBL) - Director Report

Company director report

Your Company's Directors have pleasure in presenting this Annual Reporton the business and operations of the Company and the audited accounts of United BreweriesLimited ('UBL' or 'your Company' or 'the Company') for the financial year ended March 312021 ('the year under review' 'the year' or 'FY21').

FINANCIAL SUMMARY

Financial performance for the year ended March 31 2021 is summarizedbelow:

(Amount in Rupees Million)

STANDALONE FINANCIAL RESULTS

Year ended March 31

2021 2020
Gross Turnover 101834 146465
Net Turnover 42407 65046
Other Income 502 91
EBITDA 4298 8835
Exceptional Items (72) -
Depreciation and amortization (2319) (2850)
EBIT 1907 5985
Interest (227) (311)
Profit before Taxation 1680 5674
Provision for Taxation (551) (1402)
Profit after Tax available for appropriation 1129 4272
Appropriations:
Dividend on Equity Shares (including taxes thereon) (661) (796)
Transfer to the General Reserve (113) (427)
Other Comprehensive Income/(Loss) 149 (115)
Balance your Directors propose to carry to the Balance Sheet 504 2934

The financial statements for the year ended March 31 2021 have beenprepared under Indian Accounting Standards ("Ind AS") pursuant to notificationby the Ministry of Corporate Affairs under the Companies (Indian Accounting Standards)Rules 2015 as amended.

From March 2020 India saw a rapid spread of COVID and as a consequenceIndustry slowed down and effectively stopped functioning till first week of May 2020.Business opened up gradually only over the next few months with different levels ofrestrictions in off and on trade channels. Particularly on trade restrictions were liftedgradually only by October onwards. A number of States introduced higher COVID relatedexcise taxation which were in most cases fully or partly rolled back in the course of thefinancial year. These factors combined had adverse impact on despatches sales performanceas well as margins. In a year where industry remained sluggish due to COVID and othereconomic factors your Company achieved a Net turnover of Rs. 42407 Million. Being anexceptional year like to like comparison of financial numbers is less meaningful. TheGross turnover of UBL stood at Rs.101834 Million. Interest cost was contained witheffective working capital management. EBITDA for the year under review stood at Rs. 4298Million as compared to Rs. 8835 Million in the previous year. Increased input cost andincrease in price of beer to consumers due to increases in duties and COVID inducedreduction in volumes not only dampened the demand but were also instrumental in puttingpressure on margins.

Profit before Taxation for the year stood at Rs.1680 Million. Profitafter Taxation stood at Rs.1129 Million.

DIVIDEND

We take pleasure in proposing a dividend of Re.0.50 per Equity Share ofRe.1/- each for the year ended March 312021. The dividend declared for the previous yearwas Rs. 2.50/- per Equity Share of Re.1/- each. The total dividend is Rs.132 Millionwhich amounts to about 11.7% of the Profit after Tax.

RESERVES

UBL proposes to transfer Rs.113 Million to the General Reserve.

CAPITAL

The Authorized Share Capital of the Company stands at Rs.9990 Millioncomprising Equity Share Capital of Rs.4130 Million and Preference Share Capital ofRs.5860 Million. The Issued Subscribed and Paid-up Equity Share Capital of the Companyas on March 31 2021 remains unchanged at Rs.264.4 Million comprising 264405149 EquityShares of Re.1/- each.

MANAGEMENT DISCUSSION AND ANALYSIS

Management Summary

The financial year 20/21 has seen unprecedented circumstances due tothe impact of COVID. This resulted in adverse circumstances for the Company due to lockdowns introduction by various States of COVID related additional taxation and prolongedclosure of trade channels including various restrictions on opening hours. Throughout theyear management focus has been on health & safety of employees and stakeholders theintroduction of socially distanced safe ways of working reviving demand & keepingconsumers engaged while reducing costs and preserving cash. The Company would like toconvey its heartfelt appreciation to its employees and stakeholders for showing resilienceand dedication under the challenging circumstances. The Company has also activelysupported the communities in which we operate through dedicated COVID relief and on-goingCSR programmes.

In an extremely challenging year we continued to engage our consumersboth at home and away from home we renewed our portfolio to provide a wider choice setand re-energized both our internal and external stakeholders by continuous engagement andinspiration. The 'Ghar pe Kingfisher' campaign the expansion of our geographic footprintwith Amstel Ultra WitBier Heineken 0.0 etc. and the integration with our partnerecosystem via the "Back to the Bars" program are cases in point. Our focus onour people was of paramount importance; not only were we able to operate within thestrictest safety guidelines but were also able to keep the channels of communicationseamless so that we could re-energize everyone and keep the good times going in anunprecedented period of difficulty.

During the financial year the Company witnessed strong progressivedemand recovery quarter by quarter. The various measures taken by management resulted inrecovery of market shares in the second half of the year improved underlyingprofitability and strong free operating cash flow results. With the onset of a secondCOVID wave at the start of financial year 21/22 the beer industry is again negativelyimpacted and the outlook is volatile. The Company continues to put health & safetyfirst and actively manages costs and cash flows. Although the trajectory of COVID isunknown confidence is derived from the trends after the first COVID wave wherebyconsumer behavior towards beer consumption remained intact.

While the Company navigates the near term challenging circumstancesthe strategy is to remain focused on increasing category penetration building a strongbrand portfolio managing costs and cash ensuring further improvements on sustainabilitywhile fostering a highly engaged workforce that is supported by best in class processes.

Industry Overview

Unlike other emerging economies beer Industry in India continues toremain quite traditional and is controlled by State Governments. It remains highlyregulated with high taxation restrictions on cross border movements constraints onproduction retailing and other barriers. In many parts of the country wholesale and/orretail distribution is controlled by State Government monopolies. Also in over 60% of themarkets State Governments directly dictate the price at which beer can be sold. TheseState controlled regulations are in addition to all other Central legislations that governany other Industry.

Beer has become one of the most popular alcoholic beverages in thecountry over the past two decades. Beer industry has registered a robust growth during thelast one and half decades. From a total industry consumption of about 100 Million cases in2005 the industry consumption crossed 300 Million cases per annum in 2019 prior to theimpact of COVID. Three leading players contribute over 85% of the total industry saleswith our Company maintaining its leadership in the Indian beer market. Beer comprisesabout 12% of the total alcohol consumed in India. While the alcohol beverages industry inIndia has been dominated by spirits beer is emerging as the preferred alcoholic beveragefor young Indians.

Compared to the global average per capita consumption of about 30litres the per capita consumption in India still hovers around 2 litres. However thescope for growth in India continues to remain positive given the climate youngdemographics and increasing disposable income.

Due to COVID retail was completely shut from March 23 2020 causing aconsiderable drop in sales for beer. Till first week of May 2020 dispatches could not bemade due to lockdown. The initial months of the new financial year remained verychallenging as retail reopened gradually in many states in India only after the 1stweek of May. Demand was also negatively impacted due to increased taxation and otherregulatory and logistical impediments. Generally high-end consumer prices due tostatutory levies inhibited the sales during the year.

On basis of alcohol content beer in India can be categorized intoStrong and Mild Beers. Strong beer which has an alcohol content between 6% and 8%dominates the beer market accounting for over 80% of the total beer consumed in India. TheSuper Premium beer segment within both the Strong and Mild beer categories has beengrowing faster than the overall beer industry. Industry volumes grew at a CAGR of about 7%during 2015 to 2020. However during 2020-21 the Indian beer market shrunk for forcemajeure reasons of COVID.

The Industry has evolved from manufacturing standard beers such asstrong and lager beer to flavoured and variety beers in line with trends in otherdeveloped countries. A plethora of beer brands are available in India to address thepalate of various consumer segments. Majority of beer market growth is driven by youngconsumers who consider beer a trendy drink compared to traditional spirits.

Brew pubs have emerged in large cities such as Bengaluru Pune andGurgaon over the last few years. These outlets have introduced consumers to new types ofbeers for example 'wheat beer'. Our competitors too have introduced brands from theirinternational portfolio. UBL has been successful in addressing these new consumer trendsand has introduced its own 'Kingfisher Witbier' thereby continuing to strengthen itsposition in the market.

Sales and Marketing

During FY21 UBL sales volume declined 38% due to COVID induceddepressed market conditions. UBL continues to satisfy its customers with a wide range ofquality products and innovative strategies with the ultimate objective of remaining at thefore-front of the highly competitive Indian beer market.

In 2020 the unprecedented extended periods of lockdown in India due toCOVID led our flagship brand Kingfisher to engage with consumers through interactiveengagement in the digital medium. We ensured that the brand remained the primarypreference among a shared beer audience. The messaging to encourage in-home consumption -'Ghar pe Kingfisher' - was driven through a series of highly enjoyable and integratedcommunication pieces. We received multiple industry awards and accolades for the consumerconnect we were able to create. The special AR-filter and AI-powered "Build Your OwnBeat" campaign; and the "Kingfisher Bird Game"- where one needed to confinethe bird within the walls of the home to drive the 'stay at home' message are cases inpoint.

Staying agile in rapidly evolving times Kingfisher launched a campaignwhen bars started opening up to help them recover from the lockdown. We focused on threeparameters - standing in solidarity with our trade partners; helping them createappropriate 'social distancing' and safety protocols in their establishments; and indriving footfalls as the lockdown eased. We provided safety equipment including sneezeguards sanitization stands masks and gloves and sanitizers to more than 5000 outlets.Footfalls to outlets were driven through targeted digital campaigns. NRAI & INCArecognized UBL's effort with the 'Back to the Bars' campaign and felicitated us with anaward.

The 2020 IPL presented a huge opportunity for brands to show consumersthey were an authentic part of their real-time experiences during the lockdown andKingfisher contextualized and integrated it's highly successful "Kya Plan Hai"proposition with a backdrop of one's home through a multitude of communicationtouchpoints. A series of short digital-first video modules were effectively utilized tobuild consumption occasions for the brand. We also launched 'Home Packs' in the marketenabling consumer to stock up and enjoy responsibly in the safety of their homes.

The iconic Kingfisher Calendar continues to maintain its aspirationalvalue this time conceptualized and creatively manifested in the brand's own country shotagainst the magical and scenic backdrop of Kerala. The brand drove buzz around thisproperty and leveraged it on digital platforms in a large way socializing it activelywith its digital savvy patrons.

Tapping into the highly-engaged football cohort Kingfisher created aunique campaign with FC Goa wherein it leveraged the reach of digital media. Fans wereasked to cheer for their favourite team and lucky winners were given a chance to havetheir images on hoardings across Goa. This 'spectacular' opportunity saw high engagementand recall.

Ultra Witbier UBL's foray into the craft & variety segmentlaunched in December 2019 in two markets further expanded its presence into four newmarkets during the year. Despite the COVID-induced impediments Ultra Witbier has createdan enviable fan following among category consumers. The brand focused on driving awarenessthrough product differentiation and occasion-led communication engaging with the consumerthrough topical campaigns apropos to brand tenets. On-ground at point-of-sale the brandfocused on driving clutter-breaking visibility and product trials.

Kingfisher Ultra our premium segment offering launched its TVCfeaturing brand ambassador Farhan Akhtar on Digital and OTTs in March. Farhan Akhtar'sversatility suave demeanor and sophistication resonated with Ultra's brand ethos andvalues.

On-ground Ultra continued its association with two prestigious Derbyevents in Bombay and Bangalore. The events were closed-door & limited capacity onesgiven COVID guidelines. However impact was ensured through broad-reaching live-streamfeatures on Facebook and YouTube and through our digital partners.

Music festivals at the end of 2020 the ubiquitous backdrops ofyear-end celebrations were cancelled or permitted only for limited audiences. KingfisherUltra continued its association with the Satellite beachside music festival and providedits patrons with a safe and premium branded experience very central to the brand'sexperiential leg. The 4-day festival in Goa connected both on-ground and digitally with4000+ consumers.

Kingfisher Ultra revived its music IP Soul Flyp with a series of 10metro city-based music events. Keeping in mind the prevailing situation all events werelimited capacity events with adherence to COVID appropriate behaviour.

Kingfisher Storm a smooth strong beer with bold blue packagingcontinued engagement with young consumers with the well-received WOOFER campaign. Thebrand also extended its footprint entering the Northern markets of Delhi & Rajasthan.In spite of the challenges during this year Kingfisher Storm was back in off-trade retailoutlets with impactful instore promotions & visibility initiatives.

Heineken one of the flagship brands in the portfolio aimed to garnertraction by amplifying its association with the UEFA Champions League Football via #TheKickoff Campaign to celebrate the return of the pandemic-deferred tournamentcommemorating this with an 8-hour live-streamed virtual festival with the world's biggesthouse music community - Defected Records - drawing attention from aficionados due to thebrand's aspirational value and the talent it is associated with. This online eventfeatured DJs from across the world in unique locations headlined by global star IdrisElba & supported by the likes of Bob Sinclair and Purple Disco Machine.

Heineken went live with its first ingredient-centric campaign topropagate the message of purity and quality indexing on the presence of pure malt in itsbrew. On-ground the brand sponsored Krank & Sisterhood events under its 'Live YourMusic' vertical co-creating limited capacity events with partner-outlets driving brandrecall through platform associations and placement in a difficult year. The events wereamplified through digital channels. All events adhered to social distancing norms underthe #SocialiseResponsibly initiative.

Heineken partnered with INCA & NRAI to reunite all stakeholders ofthe F&B community to recognize the heroes who supported the industry during thepandemic celebrating the human spirit and discussing best practices for a better futurein the new normal.

Owned social media channels with broad reach capacity acted as theplatform for Heineken to broadcast its stance on 'Back to the Bars' behaviour. The globalcampaign was repurposed to help bars during their re-opening by encouraging consumers to#SocialiseResponsibly while providing awareness and visibility to help drive traffic tooutlets.

Amstel International Strong Beer continued its footprint expansiondespite the operational challenges of navigating through a difficult year. HaryanaTelangana & Maharashtra were added to the list of Amstel markets post the gradualunlock of last year.

In a year which posed significant challenges to the country ourorganization focused on keeping our employees safe in the face of the raging pandemic andcontinued to engage with our consumers in a meaningful manner.

Supply Chain

Manufacturing expenses for the FY21 amounted to Rs.20363 Millionrepresenting 48% of net sales as against Rs.31603 Million in the previous financialyear which constituted 49% of net sales. UBL has focused primarily on following COVIDsafety guidelines at all our breweries prescribed by Ministry of Home Affairs and localadministrations. Delivering volumes as per market demand post national lockdown coupledwith tight cost control measures expanding footprint for premium brands and cost-savinginitiatives which have helped us achieve this in an environment impacted by uncertaintylockdowns and disrupted supply chains for bottles and commodities.

Capacity expansion was carried out in our breweries in TelanganaKarnataka & Rajasthan. Our Telangana Brewery (UBGD) post expansion is the largestbrewery in India with capacity of 3 mio HL/annum. Karnataka Brewery (UB Chamundi) is thelargest Brewery (2.0 Million HL) in the state. Expansion of our Unit in Rajasthan withaddition of Heineken footprint provides a hub for supply of premium brands in North India.

In our quest for sustainability our total renewable energy usage forFY21 stood at 79.6%. UBL's own units consumed 30.0% electricity generated from renewablesources. To supplement this 96% of thermal energy came from use of renewable sources. Therenewable energy usage is equivalent to carbon footprint of 25304 tons of CO2which is equivalent to 1.24 Million trees.

Bottles remain our biggest cost element. Due to constrained domesticcapacity prior to start of 2020-21 imports were planned to bridge the gap and cover peakrequirement. Volume drop due to COVID resulted in reduction of about 100000 metric tonsequivalent of Glass buying 38% which was mitigated by proportionately reducing contractedvolumes with all suppliers without any financial impact. Volume drop in CANs by 47% wasmitigated by extending hedge coverage into 2021-22 without any penalty on similar terms& conditions. Strategic long-term contracts are in place for new glass & canswhich secures our requirement for coming year.

Recycled bottle collection continues to remain key focus area. Oldbottle returns were impacted on account of COVID during 2020-21 due to disturbance in theold return supply chain & loss of bottles in few states due to higher cullet prices.

Value Engineering related to lower gauge cans light weight ends andadditional source from Ceylon Cans-Sri Lanka established during the year.

Barley-malt the basic raw material in the manufacture of beer hasseen lower prices due to pandemic which lead to reduced demand from brewing as well ascattle feed sector. The prices of the competitive crops grown in the barley area howeverwere trading at all time high prices. This led to a significant drop in barley acreagesand farmers shifted their acreages towards those rewarding competitive crops.

We were also able to get the extension of delayed shipments on ourimported malt contracts from Australia as well as Europe without any penalty.

In order to make inputs/raw material requirement simplistic acrossbreweries use of rice flakes was replaced with broken rice. Freight negotiations wererouted through auction to contain price push in line with diesel prices.

Research and Development

UBL's Research and Development function continues to support its growthstrategy with a focus on new capabilities development of new products enhancement ofexisting products productivity improvement and cost reduction.

Human Resources

Human Resources (HR) develops UBL's most important asset - our people -by engaging and empowering them. At UBL we recognize that the long-term success andsustainable growth of our organisation depends on our capacity to attract retain anddevelop our employees. We are committed to provide our employees all over the country witha safe and healthy work environment and extend our support to ensure a balance of personaland professional life. The organisation fosters an open and transparent culture whichdrives ownership and nurtures entrepreneurial spirit amongst the employees. The Companybelieves in celebrating milestones both big and small and encourages its people toconnect communicate and collaborate through various forums.

UBL has an inclusive culture and takes pride in being an equalopportunity employer. We encourage all forms of Diversity and believe that it adds tobuilding a more engaged workforce thereby contributing to our business performance.Besides the mandated policies to develop a conducive work environment we have a Diversityand Inclusion Council that plays an active role in creating various platformsopportunities and transparency.

Learning is ingrained in the UBL culture and employees are constantlyencouraged and given ample opportunities to upgrade their knowledge and skill. We followan integrated learning approach where on-the-job is the principal source of learning. Thelearning initiatives are also curated to build the talent and leadership pipeline toenhance organisational capability to compete and win in the market. Apart from ouressential programmes tailor made customised programmes are also offered to address thespecific needs expressed by businesses aimed at building specific capabilities at variouslevels of the organisation. The UBL Competency Framework helps in assessing the currentand future talent capability. It also helps in highlighting the specific strengths to befurther developed and flag critical skills for mitigation.

The organisation believes in ethical governance and abides by therobust policies laid down under Code of Business Conduct. The guidelines laid down in theCode help our employees in handling dilemmas and difficult ethical situations related tothe business. Our employees and vendors can report any violation of the code via an onlineplatform named Speak-Up. The platform is managed by a third party to ensure that theidentity of the whistle blower is protected.

UBL uses technology effectively in all stages of employee life cyclefrom hire to retire. Instrumenting such technology has resulted in standardized automatedprocesses improved productivity and enhanced employee experience.

The inputs from our annual employee engagement survey help us incontinuously improving our people practices policies and programs and stay in touch withthe expectations of our employees.

Industrial Relations continue to be harmonious and peaceful at alllevels and at all locations of the Company. Timely Long-Term Settlements are done toensure continuity in healthy industrial relations.

All the wage agreements have been renewed in a timely manner and arevalid and subsisting. Workers and unions support implementation of reforms that impactquality cost and improvements in productivity across all locations which is commendable.

UBL has 3070 employees on its rolls across all locations. The Companyhas not offered any stock options to the employees during the year under review.

Total employee benefit expenses for the year stood at Rs. 4823Million as compared to Rs. 4998 Million in the previous year. This constituted 4.7% ofrevenue from operations. Your Directors place on record their sincere appreciation to allemployees for their contribution towards the continuous success of the organization.

Significant changes in Key Financial Ratios

Following are the Key Financial Ratios where variance of more than 25%is noticed as compared to the previous financial year:

Interest Coverage Ratio: EBITDA is 28 times of interest in 2019-20 hascome down to 19 times in 2020-21 on account of EBITDA degrowth by 49% while interestcosts came down by 27%.

Debt Equity Ratio: Net debt at year end March 312021 is zero against6% of Shareholder funds as on March 312020.

Net Profit Ratio: Net profit ratio decreased from 2.92% in 2019-20 to1.11% in 2020-21 primarily on account of reduction in volumes.

Return on Net worth: Return on Net worth decreased from 12% in 2019-20to 3% in 2020-21.

Impact of COVID

The entire world today is reeling under the threat of the unprecedentedCOVID pandemic. This had a huge and significant impact on the global businesses all overthe world across sectors and economy including India. COVID has impacted businessesglobally by disrupting supply chain travel production consumption and servicesthreatening operations and financial markets. Companies find themselves navigating a newreality addressing issues from crisis response and business continuity to valuations andfinancial stress.

As a fall out various state governments have imposed measures whichincluded tax increases negatively impacting the industry. Majority of these tax increaseswere partly or fully rolled back during the financial year. The nationwide lockdownimplemented in March 2020 led to complete closure of all outlets till May 04 2020.On-trade sale was progressively closed in weeks leading up to March 23 2020. State byState decisions led to on trade resuming operations from September & October 2020onwards.

The ripple effect of lockdown will have a key impact on India's economyas all business sectors get affected resulting in low revenue generation due to aneventual halt / slump on the sale of products and / or services. UBL is not an exceptionto this scenario. Given such a scenario companies will have to operate differently toeffectively manage the crisis. COVID has changed the way we live work and use technology.

Beer companies reeled under pressure as the lockdown came at the onsetof summer which comprises the bulk of sales. All these were a dampener next to partial orfull closure of bars & shops in an environment of overall lower economic growth andreduced consumer confidence.

CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY

UBL firmly believes in growing the business in a socially andenvironmentally responsible way while meeting the interests of all its stakeholders. OurCompany is committed to improving the lives of the community it works with and reducingimpact of its operations on the environment it draws its resources from.

UBL is committed to water stewardship and makes conscious efforts toconserve and replenish water. Last year we have spent more than 60% of our CSR funds onWater initiatives. In the next 5 years we are focused to increase this commitment to 75%.

In addition to implementing large rainwater harvesting and watershedmanagement projects in the vicinity of our breweries for water conservation we also makeextensive efforts in generating awareness in the communities on the adoption of rainwaterharvesting practices promoting climate resilient practices for agriculture andincorporating necessary infrastructure for water preservation. We have active waterconservation projects running in the states of Rajasthan Punjab Haryana MaharashtraTelangana Karnataka and Kerala. Our water projects have touched the lives of lakhs ofpeople till date.

Our safe drinking water projects aim to provide a sustainable solutionfor clean drinking water and reduce water borne diseases resulting from consumption ofcontaminated water. The 1000 lph Community Safe Drinking Water Hub in Tapukara VillageRajasthan inaugurated last year targets to give more than 10000 denizens access topotable drinking water.

We collaborated with Canpack India to implement a unique initiative todevelop an Urban Dense forest in Waluj MIDC area in Aurangabad Maharashtra. We haveplanted 75000 trees in 50 native species in an area of 5 acres to develop this forest andimprove the biodiversity in this region using the Miyawaki technique of afforestation.

The COVID pandemic has taken innumerable lives and livelihood. As aresponsible corporate citizen our first response was to stand beside our co-communitiesand supply them with basic necessities during lockdown. Initiating discussions with thePanchayat and the people on the ground UBL galvanized its NGO partners to carry a rapidneeds assessment to find out requirement of the community. With the help of our NGOpartners we distributed ration kits and hygiene kits in the villages benefiting more than12000 families all over the country. We also made provisions for ambulances and helpedgovernment schools conduct board exams safely in some of our co-communities.

Our next step was to support the brave frontline workers who have beenrisking their lives for the safety of the community. We got in touch with local governmenthospitals police departments and donated PPEs masks sanitizers safety overallsimmunity boosters etc. across the country.

The Amphan super cyclone caused widespread damage to life and propertyin West Bengal specifically in the ecologically sensitive Sunderbans. UBL supported the1400 affected families of 20 villages of Sunderbans with dry ration householdessentials temporary shelter and hygiene essentials.

The Company has also spearheaded some of the critical communityinterventions to improve the socioeconomic conditions of its co-communities-major onesbeing infrastructure development of schools supporting students through happiness boxesas an alternative to mid-day meals and enhancing the scope of digital learning in thepandemic-stricken world.

The Business Responsibility Report in the format prescribed under theSecurities and Exchange Board of India ("SEBI") (Listing Obligations andDisclosure Requirements) Regulations 2015 ("the Listing Regulations") isannexed as Annexure-A. Annual Report on CSR activities in terms of the Companies Act 2013("the Act") and the Companies (Corporate Social Responsibility) Rules 2014 isannexed as Annexure-B.

Sustainability

UBL's sustainability reporting articulates its perspective on theemerging forces in the global sustainability landscape and UBL's response on multipledimensions like economic ecological and social sustainability. We articulate key issuesas well as opportunities that emerge and update our engagements. We are continuallyworking towards reducing our water and energy consumption and adopting renewable sourcesof energy thereby reducing our carbon footprint. We are also continuously focusing onrecycling our packaging materials. More than 65% of bottles used by us are recycled by usand the remaining is also recycled by bottle manufacturers and others. Our secondarypackaging like carton is made using more than 80% recycled paper and the same is recycledupwards of 90% by trade. We have tied up with Central Pollution Control Board approvedplastic waste recyclers to recycle 100% equivalent of the low-density polyethylene used inour manufacturing process.

Green Energy

UBL has been continuously marching ahead in its journey of maximizingusage of Green Energy. This journey demonstrates the organisational vision to lead theinitiative by being proactive and thereby contribute to environmental protection. As anorganisation we currently use 78.7% of our total energy from Renewable Energy sourceswith Thermal Renewable Energy contributing 95% and Electrical Renewable Energy at 30%. Ourbreweries in Karnataka and Tamil Nadu are leading the drive with Total Renewable Energyusage of more than 95% & 89% respectively. Electrical Renewable Energy has improvedfrom 23% in FY19-20 to 30% in FY20-21 in our manufacturing facilities.

Awards

1) Pollution Control Board:

• Our brewery at Nanjangud Mysore won the "20th AnnualGreentech Environment Award 2020" for Energy Efficiency.

2) Safety:

• Our brewery at Palakkad received "Safety" award 2020from Kerala State Department of Factories & Boilers under Large Factories - Food andFood Product Category.

3) Confederation of Indian Industry (CII) Environment Health andSafety (EHS) Excellence Awards:

• Our brewery at Sangareddy Telangana received "EHS 3 starrating" award for 2020 and also received supplement award for Best Hygiene at WorkPlace Initiatives.

• Our brewery at Palakkad recognized with EHS sectoral award underManufacturing - Food Process Category and "EHS 5 star rating (top rating)" awardfrom CII.

4) Total Productive Management (TPM):

In our Journey of Operational Excellence through Process of TPM we areon continual improvement path and in FY 20-21 we bagged 3 Prestigious national levelawards in the competition held by various forums like Confederation of Indian Industriesetc.

• Our Brewery at Ellora Aurangabad was awarded at KaizenCompetition organized by Quality Circle forum of India.

• Our Brewery at Palakkad Kerala was awarded with Platinum award(Restorative Kaizen Category) at Challengers Trophy organized by CII Institute of Quality.

• Our Brewery at Shahjahanpur Rajasthan was awarded with GoldMedal at 39th Kaizen Competition organized by CII Institute of Quality(Innovative Kaizen Category).

OPPORTUNITIES THREATS RISKS & CONCERNS

Beer is an increasingly popular drink in India. However for a varietyof socio economic and religious reasons India's current per capita consumption of beerstill hovers below 2 litres which is well below the Global average of around 30 litres andAsia average of about 27 litres. We believe such average low per capita consumption has alot of room to grow in years to come given our population climate evolving attitudeincreasing income and demography.

Attitude towards alcohol consumption is evolving particularly amongstyouth working women and other urban population who are gaining an appetite for beer associal drinking has become a more adaptable lifestyle in metros and tier two cities. Forthe urban youth beer consumption is increasingly becoming part of their socialinteractions. Beer is gradually becoming a perfect after-work companion for corporateIndia as well.

India is the second most populous country in the world with over 1.3billion people i.e. more than a sixth of the world's population. Over 50% of itspopulation is below the age of 25 and more than 65% below the age of 35 as per UnitedNations Department of Economic and Social Affairs statistics. Sheer size of India'spopulation itself is a huge opportunity which will be continuously tapped for futuregrowth.

During peak lockdown months while the central government had permittedopening of shops to sell essentials it had denied sale of alcoholic beverages though afew states did allow online delivery of alcohol. State governments should encouragelicensed retail outlets to set up their own portals to sell alcohol and allow aggregatorsfor home delivery. But for the pandemic there has been a steady growth of beerconsumption in India. Except for the last financial year where sales and revenue may beadversely impacted due to the after effect of this force majeure circumstance theopportunities for beer growth would stay northbound.

While Excise policies across States do not allow online supply ordelivery of alcohol the COVID pandemic has given the alcohol industry an opportunity topursue home delivery and online sales which is likely to augment easy availability ofbeer. Should the Government continue to proactively open-up and regulate online sale ofalcohol/home delivery it would be favourable for the beer industry in the long term. Indiahas all the necessary infrastructure required for the successful e-commerce and onlinesale in beer. Your Company is actively supporting the development of these newinitiatives.

Threats Risks and Concerns

A variety of taxes & levies are imposed on beer during and afterproduction movement and sale by each state. These taxing impositions pricingregulations inadequate market infrastructure and restrictions on interstate movement ofbeer pose a great challenge to the industry. Despite drivers of growth in placegovernment intervention in distribution ever increasing taxation restrictedcommunication and increased cost of raw material prices (glass barley malt otherpackaging material etc.) and government restrictions applied on advertising pose hugechallenges to industry growth.

The threat to sales in some territories in the country arises due tochanges in government regulations as also the threat of prohibitive actions which stemsfrom constant changes in the political climate in the country.

Though sales have been prohibited in certain states we haveeffectively identified avenues for increasing sales in other states. In entirety theindustry also faces the threat of partial or total prohibition based on politicalmanifesto of the ruling party in a State.

There is a perennial threat of competition introducing new products invarious segments. This would also include introduction of variety of craft and premiumbeers. Competition in the country's beer segment is witnessed amongst 3 major players.These companies compete in a healthy manner based on product variants product qualitydistribution network brand value and promotion strategies.

In order to cater to new consumers capture market opportunitiescompete with new launches by competitors and in continuous endeavour to offer new productranges UBL has added to its portfolio via "Kingfisher Ultra Witbier" in thepremium segment. "Kingfisher Ultra Witbier" has been launched in the profitablemarkets of Karnataka and Goa and has received an encouraging response from consumers. YourCompany plans to launch this brand in other relevant markets in a phased manner.

The distribution of beer in India is still largely controlled by thestate-or state-owned corporations resulting in stricter regulations across various statesso as to have better control over prices consumption and excise duty. This is a greatchallenge.

Non-availability of water rationing its supply and restrictions onwithdrawal of ground water also poses a major threat. We have built infrastructure whichhelps in reduction of water consumption in breweries as a sustainability initiative. Wehave pro-actively managed sustainability under our "3R" policy to reducerecycle and recharge as well as look at opportunities for water conservation through RainWater Harvesting to achieve a positive or at least neutral water balance.

The Company focuses also on secure IT operations and addressing risksof cyber security. This includes risks from IT security lapses malware and ransomwareattacks disruptions in key Enterprise Resource Processes and hacking which could lead todisruptions in business operations and loss and/or leakage of confidential data.

Prospects

Beer has become one of the most popular alcoholic beverages in thecountry over the past two decades. The majority of beer market growth is driven by youthand consumers who consider beer a trendy drink as compared to traditional spirits. Thehealthy growth rate during the last one and half decades in the beer industry is anindication of the immense potential for growth open for Indian breweries. Manyinternational brewers around the world have now created a base in India either in theform of manufacturing or through distributors and joint ventures. As per marketintelligence pub and bar culture in India is escalating significantly and is becomingmore popular in the age group of 20-45. Further the market is anticipated to grow at aCAGR of 6-8% over the next decade as alcohol consumption is growing in urban areas of thecountry.

Beer market in India has evolved from manufacturing usual beers such asstrong and lager to flavored / craft beers owing to adoption of latest trends andtechnologies from western markets.

The per capita beer consumption in India is still very low at less than2 litres compared to other countries in Asia Pacific region and therefore the market couldwitness huge growth in the coming years owing to factors such as the shift from hardliquor to beer consumption by consumers in India increase in disposable income change insocietal perspective amongst others.

It is expected that the demand for premium beer will continue to risein the future with an increase in personal disposable income and higher living standards.Your Company is actively making representations to various state governments forfavourable beer taxation and encourage taxation on the basis of alcohol content pavingthe way for incremental growth in the market. Barring the COVID impact both in terms ofrevenues and sales volume which may continue to last during the current FY21 the marketis expected to further grow going forward.

The market has been growing mainly because of the growth in the youngerdemography of the population proportionate increase in disposable income risingpreference for low alcohol beverage and gradual social acceptance. Drinking in bars isfast becoming a social phenomenon in cities such as Delhi Gurgaon Mumbai Pune andBangalore and with emergence of craft beers the growth in beer consumption increasedrapidly. The rising number of pubs and bars is another factor which increased beerconsumption in metropolitan cities increased the range of product availability andimproved the retail environment. Some state governments for instance Maharashtra andUttar Pradesh offered separate licenses for beer sale further boosting the prospects forthe industry.

For over three years the Company has been directly exporting to UAEand a few other countries along with its existing licensing arrangements for brewing in UK(including supplies to European market) Australia New Zealand and Nepal. The market inSingapore is now also served by a license arrangement.

While the Company navigates the near term challenging circumstances dueto COVID the strategy remains focused on increasing category penetration building astrong brand portfolio managing costs and cash ensuring further improvements onsustainability while fostering a highly engaged workforce that is supported by best inclass processes.

We continue to believe in the long term growth potential of the beermarket in India which we are convinced has secular tailwinds. While managing the crisisthat descended on us we have also taken the time to Refresh Renew and Re-energize thebusiness to realize this potential and keep the Good Times going forever.

Risk Management

Though already established efficiency programmes apply to all aspectsof our business there is a constant drive for further efficiencies and reducing cost.Backed by strong internal control systems the current Risk Management Framework consistsof key elements laying down the roles and responsibilities in relation to risk managementcovering a range of responsibilities from the strategic to the operational. These roledefinitions inter alia provide the foundation for appropriate risk managementprocedures their effective implementation across your Company and independent monitoringand reporting. The Risk Management Committee constituted by the Board monitors andreviews the strategic risk management plans of your Company as a whole and providesnecessary directions on the same.

The Corporate Risk Management Cell through focused interactions withbusinesses facilitates the identification and prioritisation of strategic and operationalrisks development of appropriate mitigation strategies and conducts periodic reviews ofthe progress on the management of identified risks.

The competitive environment is expected to remain intense. YourCompany's strategy and focus remains consistent to robustly strengthen its leadership andthereby maintain its position as the clear leader in the Indian Beer Market. In lineherewith your Company endeavours to continually sharpen its Risk Management systems andprocesses in line with a rapidly changing business environment.

The COVID pandemic has triggered new risks in business operations.While the gravity of the pandemic is still unfolding your Company pro-actively put inplace Crisis /Contingency Management Teams both at the Breweries as well as at theCorporate levels. These cross-functional teams represented by senior managementcontinually review strategic operational financial matters as well as measures relatingto employee well-being health and safety.

Detailed advisories have been issued to employees on how to safeguardthemselves their colleagues and associates and their families both at the workplace aswell as at their homes. These guidelines also provide details on social distancing normshow they should seek help on any aspect concerning their health from within theorganisational support system. Heightened safety protocols were implemented at all unitsthat resumed operations with end-to-end solutions from transportation of workmenscreening regular deep cleaning and sanitisation innovations to ensure safe distancingand strict adherence to hygiene standards and use of personal protective equipment whererequired.

Through these actions your Directors are confident that your Companywould sustain its leadership position grow ahead of the market and realize improvedprofitability in the years to come.

Internal Control System

UBL has established a robust system of Internal Controls to ensure thatassets are safeguarded and transactions are appropriately authorized recorded andreported. With the introduction of Internal Controls over Financial Reporting (ICFR) inthe Act we have made an evaluation of functioning and quality of internal controls andCorporate Governance Policy that guides the conduct of affairs of your Company and clearlydelineates the roles responsibilities and authorities at each level of its governancestructure and key functionaries involved in governance.

The Internal Financial Control framework of your Company is establishedin accordance with COSO (Committee of Sponsoring Organizations) framework and iscommensurate with the size and operations of your Company's business. In addition tostatutory mandate Internal Audit evaluates and provides assurance of its adequacy andeffectiveness through periodic reporting. Controls in place are routinely evaluated andaudited by Internal and Statutory Auditors and gaps are identified by the Auditors througha detailed testing exercise. The process of internal control ensures orderly and efficientconduct of business safeguarding of assets prevention and detection of frauds anderrors accuracy and completeness of accounting records and timely preparation of reliablefinancial information. Financial Statements are prepared based on Significant AccountingPolicies that are carefully selected by management. The Accounting Policies are reviewedand updated from time to time.

These in turn are supported by a set of Standard Operating Procedures(SOPs) that have been established for the business. Internal Control evaluates adequacy ofsegregation of duties transparency in authorization of transactions adequacy of recordsand documents accountability & safeguarding of assets and reliability of themanagement information system. The systems SOPs and controls are reviewed and audited byInternal Audit periodically for identification of control deficiencies and opportunitieswhose findings and recommendations are reviewed by the Audit Committee and tracked throughto implementation.

The Company believes that the overall internal control system isdynamic and reflects the current requirements at all times thereby ensuring thatappropriate procedures and operating and monitoring practices are in place by regularaudit and review processes to ensure that such systems are reinforced on an ongoing basis.

OTHER INFORMATION

Subsidiary Company

Maltex Malsters Limited is the only subsidiary in which your Companyholds 51% of its Equity Share Capital. Maltex Malsters Limited is a non-listed entity andis not a material non-listed subsidiary as defined in Regulation 16(1)(c) of the ListingRegulations.

UBL has formulated a policy for determining material subsidiaries whichis placed on the website of the Company www.unitedbreweries.com and is available throughthe webpage:

http://unitedbreweries.com/pdf/policyandcodes/Policy%20for%20Determining%20Material%20Subsidiaries-PDF.pdf

The consolidated financial statement of the Company including thefinancial statement of its subsidiary forms part of this Report in terms of the Act andthe Listing Regulations. A statement containing the salient features of the financialstatement of the subsidiary and associate is attached as Annexure-C to this Report.

Cash Flow Statement

A Cash Flow Statement for the year ended March 31 2021 is appended.

Particulars of Loans Guarantees or Investments

Details of loans guarantees and investments covered under Section 186of the Act are given in the notes to the Financial Statements. The Company has notadvanced loans to Directors / to a Company in which the Director is interested to whichprovisions of Section 185 of the Act apply and has not given loans / guarantees / providedsecurity to which provisions of Section 186 of the Act apply.

Listing requirements

Your Company's Equity Shares are listed on the BSE Limited and NationalStock Exchange of India Limited. Listing fees have been paid to these Stock Exchanges forthe year 2021-2022.

Depository System

The trading in the Equity Shares of the Company is under compulsorydematerialization mode. The Company has entered into an agreement with National SecuritiesDepository Limited and Central Depository Services (India) Limited in accordance with theprovisions of the Depositories Act 1996 and as per the directions issued by theSecurities and Exchange Board of India. As the depository system offers numerousadvantages Members are requested to take advantage of the same and avail the facility ofdematerialization of the Company's shares.

Deposits

There were no outstanding deposits at the end of the previous financialyear. The Company has not invited any deposits during the year.

Ratio of Remuneration and Particulars of Employees

In terms of sub-section(1) of Section 136 of the Act the Company hasopted to provide full version of financial statements including consolidated financialstatements auditor's report and other documents required to be annexed to such financialstatements excluding the details relating to ratio of the remuneration of each Director tothe median employee's remuneration and remuneration drawn by certain employees over thethreshold etc. as provided in sub-section(12) of Section 197 of the Act read with Rule5(1) & 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014. The details provided by the Company are in compliance with Section 136(1) ofthe Act and includes salient features of Form AOC-3A.

Also in terms of second proviso to this Section the Company shallkeep open for inspection for all Members statement relating to above details at itsregistered office. Any Member interested in inspection of the documents pertaining toabove information or desires a copy thereof may write to the Company Secretary. The abovedetails be treated as part of this Annual Report.

Cautionary Statement

Statements in this Report particularly those which relate to'Management Discussion and Analysis' and 'Opportunities Threats Risks and Concerns'describing the Company's objectives projections estimates and expectations mayconstitute 'forward looking statements' within the meaning of applicable laws andregulations. Actual results might differ materially from those either expressed orimplied.

Employees Stock Option Scheme and Sweat Equity Share

The Company has not offered any shares to its employees or KeyManagerial Personnel under a scheme of Employees' Stock Option and has also not issued anySweat Equity Shares at any time.

Related Party Transactions

Details of transactions with related parties as defined in the Act andthe Rules framed thereunder the Listing Regulations and Accounting Standard 18 of theCompanies (Accounting Standards) Rules 2006 have been reported in the Notes to financialstatements. Approval of the Audit Committee and the Board of Directors as required underthe Listing Regulations has been obtained for such transactions.

The Company has formulated a policy on materiality of Related PartyTransactions and also on dealing with Related Party Transactions which is placed on thewebsite of the Company www.unitedbreweries.com and is available through the webpage:http://unitedbreweries.com/pdf/policvandcodes/Policv%20on%20Related%20Partv%20Transactions.pdf.

All transactions entered by the Company during FY21 with relatedparties were in the ordinary course of business and on an arm's length basis. During theyear the Company has not entered into any transaction with related parties which could beconsidered material in accordance with the policy of the Company on materiality of relatedparty transactions.

Familiarization programme for Independent Directors

During this year the Company has not appointed any new IndependentDirector. The existing Board comprises Executive Independent and Non-Executive Directorswho have been at the helm of Management of the Company for several years and are fullyconversant with the business and operations of the Company. The Familiarization programmefor new Independent Directors as and when inducted shall aim to familiarize them with theCompany their roles rights responsibility in the Company market business model of theCompany etc. The Board of Directors has complete access to requisite information withinthe Company.

Familiarization is done at the Board Meeting itself where business isdiscussed at length along with Industry dynamics Strategic planning and other relevantinformation. Presentations are regularly made to the Board of Directors/AuditCommittee/Nomination & Remuneration Committee on various related matters whereDirectors get an opportunity to interact with Senior Managers. The Company has issuedappointment letters to the Independent Directors which also incorporates their roleduties and responsibilities. The details of the Familiarization Programme for IndependentDirectors is disclosed on the Company's website at the webpage:http://unitedbreweries.com/pdf/policyandcodes/Familiarisation%20Programme.pdf

Whistle Blower Policy

The Company has adopted vigil mechanism which is a channel forreceiving and redressing of complaints about any misconduct actual or suspected fraudactual or potential violations of the Company's code of conduct and any other unethicalunlawful or improper practices acts or activities within the Company. The Company hasformulated a Whistle Blower Policy for Employees & Directors and has ensured adequatesafeguards against victimization of whistle blowers. The details of establishment of thevigil mechanism are disclosed on the website of the Company.

None of the Employees and Directors have been denied access to theChairman of the Audit Committee.

Internal Complaints Committee

UBL has constituted an Internal Complaints Committee (ICC) at itsCorporate / Registered Office and at all its breweries/ Regional Offices to consider anddeal with all reported sexual harassment complaints. The constitution of the ICC is

as per the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013. Investigations are conducted and decision made bythe ICC at the respective locations and the constitution is as prescribed. Details ofcomplaints pertaining to sexual harassment filed disposed of and pending during thefinancial year are provided in the Corporate Governance and Business ResponsibilityReports of this Annual Report.

Conservation of Energy

The Company is taking continuous steps to conserve energy. Its"Sustainability" initiatives are disclosed separately as part of this Report.

The information on conservation of energy technology absorptionforeign exchange earnings and outgo as stipulated under Clause (m) of sub-section (3) ofSection 134 of the Act read with the Companies (Accounts) Rules 2014 is set out herewithas Annexure-D to this Report.

Code of Business Conduct and Ethics

The Board of Directors of UBL have adopted a Code of Business Conductand Ethics in terms of the Listing Regulations which has been posted on the website of theCompany viz. www.unitedbreweries.com.

Code for Prevention of Insider Trading

Your Company has adopted a comprehensive 'Code of Conduct to RegulateMonitor and Report of Trading by Insiders' and also a 'Code of Practices and Proceduresfor Fair Disclosure of Unpublished Price Sensitive Information' relating to the Companyunder the provisions of the Securities Exchange Board of India (Prohibition of InsiderTrading) Regulations 2015.

The Board of Directors have approved and adopted the 'Code of Conductto Regulate Monitor and Report of Trading by Insiders' and a 'Code of Practices andProcedures for Fair Disclosure of Unpublished Price Sensitive Information'.

Directors

The Board of Directors of UBL currently comprises of eight Directorswith a balanced combination of Executive Non-Executive and Independent Directors.

Mr. A K Ravi Nedungadi a Non-Executive Director retires by rotation atthis Annual General Meeting (AGM) and being eligible has offered himself forre-appointment. Resolution for re-appointment of Mr. A K Ravi Nedungadi is proposed atthis AGM.

Mr. Rishi Pardal is the Managing Director.

Chief Financial Officer (Key Managerial Personnel)

Mr. Berend Odink is the Chief Financial Officer of the Company.

Meetings of the Board of Directors and Committees of the Board

The Meetings of the Board and Committees are pre-scheduled and atentative calendar of the meetings finalized in consultation with the Directors iscirculated to them in advance to facilitate them to plan their schedule. In case ofspecial and urgent business needs approval is taken by passing resolutions throughcirculation. During FY21 six (6) Board Meetings were held. Other details including thecomposition of the Board and various Committees and Meetings thereof held in FY21 aregiven in the Corporate Governance Report forming part of this Report.

Meeting of the Independent Directors

During the year two Meetings of Independent Directors were held onOctober 17 2020 and March 24 2021. All Independent Directors have given a declarationthat they meet the criteria of Independence and in the opinion of the Board theIndependent Directors fulfill the condition of Independence as laid down under the Act andListing Regulations.

Audit Committee

The Audit Committee of the Board of Directors is constituted to act inaccordance with the terms of reference and perform roles as prescribed under the Act andListing Regulations. The composition of the Audit Committee its terms of reference rolesand details of Meetings convened and held during the year under review is given in theCorporate Governance Report forming part of this Report.

During the year under review all the recommendations of the AuditCommittee were accepted by the Board. Nomination and Remuneration Committee

The Nomination and Remuneration Committee is constituted to act inaccordance with the terms of reference and perform roles as prescribed under the Act andListing Regulations. The composition of the Nomination and Remuneration Committee itsterms of reference roles and details of Meetings convened and held during the year underreview is given in the Corporate Governance Report forming a part of this Report.

Policy on Performance Evaluation

UBL has formulated a Performance Evaluation Policy inter-aliaprescribing evaluation criteria for Independent Directors and the Board of Directors ofthe Company. The Policy is posted on the website of the Company and is available throughthe webpage:http://unitedbreweries.com/pdf/policyandcodes/Directors%20Performance%20Evaluation%20Policy.pdf.

Performance Evaluation of Directors

Performance evaluation of Non-Executive Directors including IndependentDirectors the Board as a whole and Committees of the Board is being carried out inaccordance with the statutory provisions as contained in the Act and Listing Regulations.

To ensure an effective evaluation process the Nomination andRemuneration Committee has put in place a robust framework for conducting the exercisewith key steps and practices defined clearly. Performance of the Board is evaluated onvarious parameters such as composition strategy tone at the top risk and controls anddiversity. Also a questionnaire for Committees is framed on parameters such as adherenceto the terms of reference and adequate reporting to the Board. Parameters for theDirectors include intellectual independence of the Director participation in formulationof business plans constructive engagement with colleagues and understanding of the riskprofile of the Company.

Keeping in view the sensitivity confidentiality is ensured. As part ofthis process customized questionnaires are circulated to all Directors of the Company.Each Director is required to undertake a self-assessment. Additionally the effectivenessof the Board and Committees is also evaluated by each Member of the Board and Committeethrough an electronic platform and kept confidential.

Summary of responses received from Directors is placed at a BoardMeeting.

Remuneration Policy

The Company carries out periodic reviews of comparable companies andthrough commissioned survey ascertains the remuneration level prevailing in thesecompanies. The Company's Remuneration Policy is designed to ensure that the remunerationapplicable to Managers in the Company is comparable with Multi-national Companiesoperating in Brewing or similar industry in India. In line with statutory requirementsthe Board of Directors has adopted a Remuneration Policy for Directors Key ManagerialPersonnel (KMP) and other employees of the Company. The Remuneration Policy lays down thecriteria for appointment and removal of Directors KMP and Senior Management. The Policyalso prescribes the criteria and manner for fixation and approval of remuneration payableto Directors KMP and other employees. The Policy is posted on the website of the Companywww.unitedbreweries.com.

Dividend Distribution Policy

As required under Regulation 43A of the Listing Regulations theCompany has formulated a Dividend Distribution Policy. This policy can be viewed on theCompany's website at www.unitedbreweries.com.

Foreign Exchange Earnings and Outgo

During FY21 total foreign exchange earnings of the Company stood atRs. 768 Million (Previous Year: Rs. 1953 Million) and foreign exchange outgo stood atRs.1641 Million (Previous Year: Rs. 3754 Million).

Corporate Governance Report

Report on Corporate Governance forms a part of this Report along withthe Certificate from the Company Secretary in Practice.

Annual Return

As required under sub-section (3) of Section 92 of the Act as amendedby the Companies (Amendment) Act 2017 the Company has placed a copy of the Annual Returnin Form MGT-9 on its website www.unitedbreweries.com and is available through the webpage:

http://unitedbreweries.com/pdf/AGM/Annual%20Return%20MGT-9%20-%202020-2021.pdf.

Auditors and the Auditor's Report

Messrs S. R. Batliboi & Associates LLP Chartered Accountants (FirmRegistration No. 101049W/E300004) were re-appointed as Auditors of the Company by theMembers at the AGM held on September 23 2017 to hold office for a period of five yearstill the conclusion of the AGM in 2022. In terms of Section 139 of the Act as amended bythe Companies (Amendment) Act 2017 notified on May 07 2018 appointment of Auditors neednot be ratified at every AGM. Accordingly the Notice convening the ensuing AGM does notcarry any resolution for ratification of appointment of Statutory Auditors. The Auditorshave confirmed that they continue to fulfil the criteria for appointment as Auditor's ofthe Company as prescribed under the Act and the Rules framed thereunder.

There are no qualifications or adverse remarks in the Auditor's Report.

Secretarial Audit

Pursuant to Section 204 of the Act 2013 and Rule 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. Sudhir Hulyalkar Company Secretary in Practice to undertake SecretarialAudit of the Company for the FY21. The Secretarial Audit Report forms part of this Reportand is annexed as Annexure-E.

There are no qualifications or adverse remarks in the Secretarial AuditReport.

Reporting of frauds by auditors

During the year under review under Section 143(12) of the Act neitherthe statutory auditors nor the secretarial auditor have reported to the audit committeeany instance of fraud committed against the Company by its officers or employees thedetails of which would be required to be mentioned in this Report.

Details of Significant and Material Orders

No order/s have been passed or stringent action taken by any Regulatoror Court or Tribunal impacting the going concern status of the Company. However we bringto your attention the following developments/orders for sake of transparency.

(i) It is in public domain that United Breweries (Holdings) Limited{UBHL} a promoter of UBL was ordered to be wound up by Hon'ble High Court of Karnatakavide dated February 07 2017. Appeal filed by UBHL against the said winding up order wasdismissed by the Hon'ble Karnataka High Court on March 06 2020. Against this dismissal

a special leave petition has been filed by UBHL before the Hon'bleSupreme Court of India. The Supreme Court on October 2 2020 had also allowed thewinding-up of UBHL. However UBL has not received any confirmation from UBHL in terms ofSupreme Court order of Winding-up.

(ii) As per disclosures received by UBL in May 2018 under SEBI(Prohibition of Insider Trading) Regulations 2015 and SEBI (Substantial Acquisition ofShares and Takeovers) Regulations 2011 from a few Promoter companies controlled by Dr.Vijay Mallya we notice that 41315690 Equity Shares held by such entities in UBLconstituting 15.63% of the total paid up capital have been transferred to the demataccount of Enforcement Directorate (ED) Mumbai Government of India. Earlier in August2017 1389068 Equity Shares constituting 0.52% of the total paid up capital were alsotransferred to the demat account of ED. The ED now holds 42704758 Equity Sharesconstituting 16.15% of the total paid up capital in the Company. UBL has not received anycommunication from the ED in this regard. As per the legal opinion obtained by the Companywith respect to such transfer of shares the ED has only taken possession of the EquityShares under the Prevention of Money Laundering Act 2002 and these Equity Shares have notbeen confiscated. Transfer of these shares therefore may not constitute a transfer ofownership.

Further the Recovery Officer-I DRT-II Bengaluru has transferred7404932 Equity Shares comprising 2.80% of the total paid-up Equity Share capital of theCompany in its name from the demat account of UBHL which is under liquidation. HoweverUBL has not received any disclosure from UBHL in terms of SEBI (Prohibition of InsiderTrading) Regulations 2015 and SEBI (Substantial Acquisition of Shares and Takeover)Regulations 2011. The Recovery Officer-I DRT-II pursuant to a block deal throughBSE/NSE on March 27 2019 has transferred 7404932 constituting 2.80% Equity Shares ofthe Company to Heineken International B.V

(iii) Pursuant to Order of Debt Recovery Tribunal Karnataka Bengalurudated September 30 2015 dividend for the financial years 2015-2016 onwards payable toDr. Vijay Mallya and United Breweries (Holdings) Limited (UBHL) have been withheld tilldisposal of the O.A. The Recovery Officer-I DRT-II Bengaluru vide letter dated October11 2018 directed the Company to make payment of dividend for the financial year 2017-2018on Equity Shares held by UBHL in the Company to the account of Recovery Officer-I DRT-II.Thereafter the Official Liquidator vide letter dated October 26 2018 informed theCompany that the Hon'ble High Court of Karnataka has directed the Official Liquidator byOrder dated August 29 2018 to collect rent and other income due to UBHL the Companywhich is in liquidation. The Official Liquidator also directed the Company to remit thedividend aggregating to Rs.78389631.10 for the financial years 2015-2016 2016-2017 and2017-2018 payable to UBHL to the account of Official Liquidator. Accordingly the Companyhas remitted the aforesaid dividend amounts to the account of Official Liquidator.

(iv) Effective April 05 2016 the State Government of Bihar hadimposed a ban on sale and consumption of alcoholic beverages in Bihar though it hadpermitted manufacture of alcoholic beverages for export out of the State vide Notificationdated April 05 2016. The said Notification of Bihar Government imposing ban was struckdown by Patna High Court vide Judgement dated September 30 2016. The State Government ofBihar has challenged the Judgement of Patna High Court in Supreme Court which is pending.Subsequently effective April 01 2017 total prohibition (including export out of state)has been imposed in Bihar State and production of beer at the Company's brewery atKopakalan Naubatpur Patna was discontinued. The Company has since commenced manufactureof non-alcoholic beverages at its above facility.

(v) Pursuant to enquiry initiated by Competition Commission of India("CCI") on October 10 2018 in relation to allegations of price-fixation andcartelisation the office of the Director General Competition Commission of India hadcompleted its investigation in November 2019 and had filed its investigation report (DGReport) with the CCI. The CCI had permitted UBL and other parties to the enquiry to filetheir comments/objections to the DG Report and appear for an oral hearing in the matter.Hearings were held on February 1 1 2021 and March 12 2021 respectively. UBL filed itsresponse and argued during the oral hearings countering the DG report. Subsequentlywritten submissions were filed with the CCI. The Management along-with its legaladvisors believe that there are likely mitigating circumstances to counter presumptionsmade against the Company by the CCI as contained in the Competition Act 2002. Orders arenot yet passed.

The orders/proceedings mentioned above do not have any impact on goingconcern status of the Company.

Directors' Responsibility Statement

Pursuant to clause (c) of sub-section (3) of Section 134 of the Act2013 the Board of Directors report that:

(a) in the preparation of the annual accounts for the financial yearended March 31 2021 the applicable accounting standards have been followed along withproper explanation relating to material departures;

(b) the Directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;

(c) the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

(d) the Directors have prepared the annual accounts on a going concernbasis;

(e) the Directors have laid down internal financial controls to befollowed by the Company and ensured that such internal financial controls are adequate andwere operating effectively and

(f) the Directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and ensured that such systems were adequate andoperating effectively.

All Annexures referred to in the Directors' Report have been disclosedunder the Statutory Information forming part of this Annual Report.

ACKNOWLEDGEMENT AND APPRECIATION

Your Directors take this opportunity to thank UBL's customersshareholders suppliers bankers business partners and associates financial institutionsand central and state governments for their consistent support and encouragement to theCompany. Finally your Directors would like to convey sincere appreciation to all theemployees of the Company for their hard work and commitment.

By Authority of the Board
Rishi Pardal Sunil Kumar Alagh
April 27 2021 Managing Director Director
Bengaluru DIN: 02470061 DIN:00103320

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