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United Spirits Ltd.

BSE: 532432 Sector: Consumer
NSE: MCDOWELL-N ISIN Code: INE854D01024
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OPEN 805.35
CLOSE 796.35
VOLUME 30468
52-Week high 1019.75
52-Week low 567.55
P/E 65.57
Mkt Cap.(Rs cr) 58,078
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

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

Company auditors report

To the Members of United Spirits Limited

Report on the audit of the Standalone Financial Statements

Opinion

1. We have audited the accompanying standalone financial statements of United SpiritsLimited ("the Company") which comprise the Balance Sheet as at March 31 2021the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year then ended and notes tothe financial statements including a summary of significant accounting policies and otherexplanatory information.

2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (the "Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of Affairs of the Company as at March 31 2021 its total comprehensive income(comprising of Profit and other comprehensive income) changes in equity and its cashflows for the year then ended.

Basis for opinion

3. We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under Section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the financial statements under the provisions of the Actand the Rules thereunder and we have ful_lled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.

Emphasis of Matter

4. We draw attention to the following matters:

a) As explained in Note 40(a) to the standalone financial statements upon completionof the Initial Inquiry which identified references to certain Additional Parties andcertain Additional Matters the MD & CEO pursuant to the direction of the Board ofDirectors had carried out an Additional Inquiry that revealed transactions indicatingactual and potential diversion of funds from the Company and its Indian and overseassubsidiaries to in most cases Indian and overseas entities that appear to be affiliatedor associated with the Company's erstwhile non-executive Chairman and other potentiallyimproper transactions. The amounts identified in the Additional Inquiry have been fullyprovided for or expensed by the Company and/or its subsidiaries in earlier periods.Management is currently unable to estimate the financial impact on the Company if anyarising from potential non-compliances with applicable laws in respect of the above.

b) As explained in Note 40(b)(i) to the standalone financial statements the Companyhas commenced the rationalisation process for divestment/ liquidation/ merger of certainoverseas subsidiaries including step down subsidiaries. The completion of the aboveprocess is subject to regulatory and other approvals (in India and overseas). At thisstage it is not possible for the management to estimate the financial impact on theCompany if any arising out of potential historical non-compliances with applicable lawsif established.

c) As explained in Note 40(d) to the standalone financial statements the Managerialremuneration for the year ended March 31 2015 included an amount paid in excess of thelimit prescribed under the provisions of Schedule V to the Act by INR 134 million to theformer Executive Director and Chief Financial Officer (ED & CFO). The Company hasinitiated steps including by way of filing a suit for recovery before the jurisdictionalcourt to recover such excess remuneration from the former ED & CFO.

d) Note 40(e) to the standalone financial statements which describes the variousregulatory notices and communications received from Securities Exchange Board of India(‘SEBI') Ministry of Corporate Affairs (‘MCA')/ Registrar of CompaniesKarnataka (the ‘Registrar') Directorate of Enforcement (‘ED') to which theCompany has responded to and communication received from the Company's authorised dealerbanks (‘AD') to which the Company is in the process of responding.

e) Note 40(f) to the standalone financial statements which describes the uncertaintyrelating to the final outcome of litigations with a bank ("the bank") thatcontinues to retain the pledge of certain assets of the Company and of the Company'sshares held by USL Benefit Trust (of which the Company is the sole beneficiary) despitethe Company prepaying the term loan to that bank along with the prepayment penalty andfurther depositing an additional sum of INR 459 million demanded by the bank and asdirected by the Hon'ble High Court of Karnataka (the "Court"). Based onmanagement assessment supported by external legal opinions the Company has disclosed theaforesaid amount of INR 459 million under Other Non-current financial assets asrecoverable from the bank pending the final outcome of the litigation. In a separateproceeding before the Debt Recovery Appellate Tribunal the bank's appeal against thejudgement awarded by Debt Recovery Tribunal in favour of the Company in respect ofattachment of the aforesaid pledged shares for recovery of the loans advanced by the bankto Kingfisher Airlines Limited is pending disposal.

f) As explained in Note 40(g) to the standalone financial statements the Company cameacross information suggesting continuing past practices resulting in differences inreporting to the relevant Regulatory Authorities of yields of certain non-potableintermediates and associated process losses in the liquor manufacturing process. Relatedactions taken and monitoring of future development by the Company in this respect havebeen described in the said note.

Our opinion is not modified in respect of the matters described under paragraph 4above.

Key audit matters

5. Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

Key audit matter How our audit addressed the key audit matter
a) Assessment of Expected Credit Loss (ECL) provision in respect of Loans to subsidiaries Our audit procedures included the following:
(Refer Notes 5 and 31 to the standalone financial statements) • Understood evaluated and tested the design and operating effectiveness of Company's controls to assess the adequacy of credit loss on loans to subsidiaries.
These loans to subsidiaries fall within the scope of Ind AS 109- Financial Instruments and are measured at amortised cost using effective interest method. A credit loss provision is recorded to adjust the balance to the present value of estimated cash flows. • Tested the methodology applied in the credit loss provision estimation by comparing it to the requirements of the relevant accounting standard.
The Company has made a (net) provision for credit loss of INR 475 million (March 31 2020: IR 478 million) for the year ended March 31 2021. • Examined the repayment terms by reference to the loan agreements with subsidiaries
We considered provisioning for credit loss on loans to subsidiaries as a key audit matter as estimation of credit loss provision requires management to make significant assumptions on forward looking information for subsidiaries such as financial projections other resources and the ability of the subsidiaries to repay those loans. • Tested the mathematical accuracy of management's model used to calculate credit loss provision and evaluated key underlying assumptions such as expected growth in revenue cost savings timing and ability to repay loans by evaluation of forecasts of future cash flows.
• Evaluated the adequacy of disclosures made in the standalone financial statements.
Based on above audit procedures performed we did not note any significant exception to ECL provision in respect of loans to subsidiaries.
a) Assessment of the appropriateness of provisions recognised and contingent liabilities disclosed in respect of certain tax matters (Refer notes 8 17 and 42 to the standalone financial statements and Appendix 1 to Annexure A of the Audit Report) Our audit procedures included the following:
• Understood assessed and tested the design and operating effectiveness of the Company's controls in respect of identifying potential tax exposures and/or the accounting and disclosures thereof.
• Evaluated the related accounting policy for provisioning for tax exposures/ disclosure of contingent liabilities by comparing it to the requirements of the relevant accounting standards.
As at March 31 2021 the Company has significant tax exposures and is subject to periodic assessments/ demands by tax authorities on transfer pricing income tax and a range of indirect tax matters. Consequent to such tax assessments and demands relating to past several years the Company has paid certain amounts under protest at various dates. The Company has also filed appeals with various appellate authorities against such demands. • Obtained management's assessment in respect of tax demands on whether tax outflow is either probable possible or remote.
• Evaluated the management's assessment with the help of auditors' experts where necessary as follows:
o For the samples selected read the correspondences received during the year from the tax authorities/ orders from appellate authorities.
Management judgement is involved in assessing the likelihood of ultimate outcome of the tax disputes to decide on the accounting/ disclosure requirements. In certain complex matters the probable amount of the outflows determined by management is supported by opinions obtained from external tax counsels/ assessment performed by internal experts (management tax experts). o Read views provided by the management/ management tax experts as applicable.
o Assessed management's positions on significant tax exposures in accordance with tax laws and past precedents of tax judgements.
o Ensured completeness of litigations by inquiring with the management review of board minutes and review of significant legal expenses.
We considered this a key audit matter as: o Evaluated the objectivity competence and capabilities of the management tax experts.
• The amounts involved are significant to the standalone financial statements. o Evaluated the adequacy of disclosures made in the standalone financial statements.
• Change in the management's judgements and estimates may significantly a_ect the provisions recognised or contingent liabilities disclosed. Based on the above procedures we considered the management's assessment in recognising provisions and disclosing contingent liabilities in respect of the stated tax matters as reasonable.
• Matters of disputes are complex in some cases due to the industry in which the Company operates and may lack clarity under tax laws.

Other Information

6. The Company's Board of Directors is responsible for preparation of the otherinformation. The other information comprises the information included in the Report of theDirectors Business Responsibility Report Corporate Governance Report and ManagementDiscussion and Analysis but does not include the standalone financial statements and ourauditor's report thereon.

7. Our opinion on the standalone financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.

8. In connection with our audit of the standalone financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofother information we are required to report that fact. We have nothing to report in thisregard.

Responsibilities of management and those charged with governance for the StandaloneFinancial Statements

9. The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance (includingother comprehensive income) changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the AccountingStandards specified under Section 133 of the Act . This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate implementation andmaintenance of accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

10. In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so. The Board of Directors is also responsible foroverseeing the Company's financial reporting process.

Auditor's responsibilities for the audit of the Standalone Financial Statements

11. Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

12. As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit.

13. We also:

a) Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal controls.

b) Obtain an understanding of internal controls relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the companyhas adequate internal financial controls with reference to the standalone financialstatements in place and the operating effectiveness of such controls.

c) Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

d) Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

e) Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

14. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal controls that we identify during our audit.

15. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.

16. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the standalone financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

17. As required by the Companies (Auditor's Report) Order 2016 issued by the CentralGovernment of India in terms of Section 143(11) of the Act ("the Order") and onthe basis of such checks of the books and records of the Company as we consideredappropriate and according to the information and explanations given to us we give in the"Annexure A" statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

18. As required by Section 143(3) of the Act to the extent applicable we report that:

a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Statement of Changes in Equity and the Statement of Cash Flows dealt with bythis Report are in agreement with the books of account.

d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act.

e) On the basis of the written representations received from the directors as on March31 2021 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2021 from being appointed as a director in terms of Section164(2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference tothe financial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact if any of pending litigations as at March 312021 on its financial position in its standalone financial statements – Refer Notes8 17 40(c) 40(d) 40(f) and 42 to the standalone financial statements;

ii. The Company has long-term contracts for which there are no material foreseeablelosses. The Company did not have derivative contracts as at March 31 2021 – ReferNote 39 to the standalone financial statements;

iii. The Company has transferred amounts required to be transferred to the InvestorEducation and Protection Fund by due dates during the year ended March 31 2021 . AlsoRefer Note 16 to the Standalone financial statements;

iv. The reporting on disclosures relating to Specified Bank Notes is not applicable tothe Company for the year ended March 31 2021.

19. The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.

For Price Waterhouse & Co Chartered Accountants LLP

Firm Registration Number: 304026E/E-300009

Chartered Accountants

Dibyendu Majumder

Partner

Membership Number: 057687

UDIN: 21057687AAAAAP6562

Place : Bengaluru

Date : May 21 2021

Annexure A to Independent Auditors' Report

Referred to in paragraph 17 of the Independent Auditors' Report of even date to themembers of United Spirits Limited on the standalone financial statements as of and for theyear ended March 31 2021

i. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The fixed assets are physically verified by the Management according to a phasedprogramme designed to cover all the items over a period of three years which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to the programme a portion of the fixed assets has been physicallyverified by the Management during the year and no material discrepancies have been noticedon such verification.

(c) The title deeds of immovable properties as disclosed in Note 3.1 and Note 3.2 tothe standalone financial statements (Property plant and equipment) are held in the nameof the Company except as disclosed as below:

Description Building
Number of properties 1
Gross carrying amount as at March 31 2021 (INR millions) 339
Net carrying amount as at March 31 2021 (INR millions) 301

The above table does not include the title deeds of immovable properties mortgaged witha bank properties for which title deeds are held in the name of erstwhile merged entitiesand certain immovable properties for which management has furnished photocopies of thetitle deeds and other corroborative documents to evidence the ownership of the properties.Refer notes 3.1 3.2 and 33 to the standalone financial statements.

ii. The physical verification of inventory including stocks with certain third partiesand excluding stock in transit have been conducted at reasonable intervals by theManagement during the year. In respect of inventory lying with the third parties thesehave substantially been confirmed by them. The discrepancies noticed on physicalverification of inventory as compared to book records were not material.

iii. There are no companies firms limited liability partnerships or other partiescovered in the register maintained under Section 189 of the Act for the purpose of loansgranted by the Company.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofthe loans and investments made. The Company has not provided any guarantees or security toparties covered under Sections 185 and 186 of the Act.

v. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 73 74 75 and 76 or any otherrelevant provisions of the Act and the Rules framed thereunder to the extent notifiedwith regard to the deposits accepted from the public. According to the information andexplanations given to us no order has been passed by the Company Law Board or NationalCompany Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on theCompany in respect of the aforesaid deposits.

vi. The Central Government of India has not specified the maintenance of cost recordsunder Section 148 (1) of the Act for any of the products of the Company.

vii. (a) According to the information and explanations given to us includingmanagement's assessment in respect of the provident fund matter as referred to in Note 42(d) to the standalone financial statements and the records of the Company examined by usin our opinion the Company is generally regular in depositing the undisputed statutorydues in respect of employees' state insurance tax deducted at source value added taxprovident fund income tax and professional tax though there has been slight delay in afew cases and is regular in depositing other undisputed statutory dues including goods andservices tax tax collected at source sales tax duty of excise duty of customs andother material statutory dues as applicable with appropriate authorities. Further forthe period April to May 2020 the company has paid Goods and Services Tax and filed GSTR-3B after the due date but within the timelines allowed by Central Board of Indirect Taxesand Customs under the Notification number 32/2020 and Circular no- 136/06/2020 dated April3 2020 on fulfilment of conditions specified therein.

(b) According to the information and explanations given to us and the records of theCompany examined by us the particulars of dues of income tax sales tax value added taxservice tax duty of customs duty of excise and entry tax as at March 31 2021 which havenot been deposited on account of a dispute are disclosed in Appendix 1 to this report.There have been no dues of goods and services tax which have not been deposited on accountof a dispute.

viii. According to the records of the Company examined by us and the information andexplanations given to us the Company has not defaulted in repayment of loans orborrowings to any financial institution or bank or Government or dues to debenture holdersas at the balance sheet date.

ix. The Company has not raised any moneys by way of initial public offer furtherpublic offer (including debt instruments) and term loans. Accordingly the provisions ofClause 3(ix) of the Order are not applicable to the Company.

x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its Officers or employeesnoticed or reported during the year nor have we been informed of such case by theManagement.

xi. The Company has paid/provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct. Also refer to paragraph 19 of the main audit report.

xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the standalone financial statements as required underIndian Accounting Standard (Ind AS) 24 Related Party Disclosures specified under Section133 of the Act.

xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year. Accordingly the provisions ofClause 3(xiv) of the Order are not applicable to the Company.

xv. The Company has not entered into any non cash transactions with its directors orpersons connected with them. Accordingly the provisions of Clause 3(xv) of the Order arenot applicable to the Company.

xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.

For Price Waterhouse & Co Chartered Accountants LLP

Firm Registration Number: 304026E/E-300009

Chartered Accountants

Dibyendu Majumder

Partner

Membership Number: 057687

UDIN: 21057687AAAAAP6562

Place : Bengaluru

Date : May 21 2021

Appendix 1 – Particulars of Tax dues not deposited on account of a dispute *

Referred to in paragraph vii(b) of Annexure A to the Independent Auditors' Report tothe members of United Spirits Limited on the standalone financial statements as of and forthe year ended March 31 2021

Name of the statute Nature of dues Disputed amount Amount paid Unpaid Amount Financial year to which the amount relates Forum where the dispute is pending
(INR millions) (INR millions) (INR millions)
Income Tax Act 1961 Income Tax 3298 2949 350 2006-07 to 2008-09 2010-11 and 2011-12 Assessing Officer of Income Tax
Income Tax Act 1961 Income Tax 158 158 - 2009-10 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income Tax 6822 - 6822 2015-16 Dispute Resolution Panel
Income Tax Act 1961 Income Tax 19341 6611 12730 1988-89 1989-901991- 92 1992-93 1993-94 1995-962000-01 2005-06 2006-07 2008-09 2012-13 to 2014-15 Income Tax Appellate Tribunal
Income Tax Act 1961 Income Tax 8927 553 8374 1985-86 to 2004-05 2007- 08 2011-12 High Courts of various states
Customs Act 1962 Custom Duty 0 - 0 1997-98 Commiss ioner of Customs
Customs Act 1962 Custom Duty 2 - 2 1993-94 to 1995-96 Madras High Court
Service Tax - Finance Act 1994 Service Tax 1344 - 1344 2006-07 to 2015-16 Commissioner of Service Tax
Service Tax - Finance Act 1994 Service Tax 924 40 884 2004-05 to 2006-07 2008- 09 to 2010-11 2015-16 2016-17 Customs Excise and Service Tax Appellate Tribunal
Service Tax - Finance Act 1994 Service Tax 2 - 2 2012-13 High Court of Kerala
Central Excise Act 1944 Central Excise Duty 1780 14 1766 1994-95 1999-2000 and 2017-2018 Commissioner of Central Excise
Central Excise Act 1944 Central Excise Duty 2 - 2 1999-2000 Deputy Commissioner of Central Excise
Karnataka Sales Tax Act_1957 Sales Tax/ Value Added Tax 3 - 3 2006-07 Civil Court Karnataka
West Bengal Sales Tax Act 1994_ Sales Tax/ Value Added Tax 766 - 766 2015-16 Commissioner of
Commercial Taxes
Central and Various State Sales Tax Acts Sales Tax/ Value Added Tax 7 3 4 2015-16 2016-17 Assessing Officer
Central and Various State Sales Tax Acts Sales Tax/ Value Added Tax 10 6 4 1993-94 to 1997-98 Commercial Tax Officer

* As represented by the management

# ‘0' indicates that the amounts involved are below INR five lakhs and the sign‘-' indicates that amounts are Nil

Appendix 1 – Particulars of Tax dues not deposited on account of a dispute *

Referred to in paragraph vii(b) of Annexure A to the Independent Auditors' Report tothe members of United Spirits Limited on the standalone financial statements as of and forthe year ended March 31 2021

Name of the statute Nature of dues Disputed amount Amount paid Unpaid Amount Financial Year to which the amount relates Forum where the dispute is pending
(INR millions) (INR millions) (INR millions)
Central and Various State Sales Tax Acts Sales Tax/ Value Added Tax 156 43 113 1994-95 to 1996-97 2005-06 2006-07 2009-10 to 2013-14 2015-16 to 2017-18 Assistant Commissioner of Commercial Taxes
Central and Various State Sales Tax Acts Sales Tax/ Value Added Tax 29 1 28 2003-04 2004-05 2006-07 to 2013-14 2016-17 and 2017-18 Additional Commissioner of Commercial Taxes
Central and Various State Sales Tax Acts Sales Tax/ Value Added Tax 208 56 152 1985-86 1989-90 2004-05 to 2013-14 2015-16 and 2017-18 Deputy Commissioner of Commercial Taxes
Central and Various State Sales Tax Acts Sales Tax/ Value Added Tax 2191 537 1654 2000-01 to 2015-16 Joint Commissioner of Commercial Taxes
Central and Various State Sales Tax Acts Sales Tax/ Value Added Tax 215 25 190 1987-881990-91 1992-93 to 2000-01 2004-05 2005-06 2007-08 2012-13 Commercial Taxes Appellate Tribunal
Central and Various State Sales Tax Acts Sales Tax/ Value Added Tax 15 - 15 1993-94 2003-04 2005-06 Commercial Taxes Appellate Tribunal and Revisionary Board
Central and Various State Sales Tax Acts Sales Tax/ Value Added Tax 198 157 41 1978-79 to 1984-85 1988-89 1989-90 1992-93 1993-94 1996-97 to 2001-02 2007-08 and 2009-10 to 2011-12 High Courts of various states
Various Entry Tax Acts Entry Tax 5 2 3 1989-90 and 2015-16 Assessing Officer
Various Entry Tax Acts Entry Tax 7 1 6 2007-08 to 2010-11 Joint Commissioner of Commercial Taxes
Various Entry Tax Acts Entry Tax 24 16 8 2000-01 2004-05 and 2007-08 Commercial Taxes Appellate Tribunal

* As represented by the management

# ‘0' indicates that the amounts involved are below INR five lakhs and the sign‘-' indicates that amounts are Nil

Appendix 1 – Particulars of Tax dues not deposited on account of a dispute *

Referred to in paragraph vii(b) of Annexure A to the Independent Auditors' Report tothe members of United Spirits Limited on the standalone financial statements as of and forthe year ended March 31 2021

Name of the statute Nature of dues Disputed amount Amount paid Unpaid Amount Financial Year to which the amount relates Forum where the dispute is pending
(INR millions) (INR millions) (INR millions)
Various Entry Tax Acts Entry Tax 337 15 322 2005-06 2007-08 to 2013-14 High Courts of various states
Various Entry Tax Acts Entry Tax 17 14 3 2003-04 to 2007-08 Supreme Court
Bengal Excise Act 1909 and Bengal Excise (Amendment) Act 2012 State Excise 13 - 13 1993-94 Civil Court West Bengal
Bengal Excise Act 1909 and Bengal Excise (Amendment) Act 2012 State Excise 1 - 1 1994-95 and 2014-15 Collector of State Excise West Bengal
Bengal Excise Act 1909 and Bengal Excise (Amendment) Act 2012 State Excise 1 - 1 2016-17 Additional District Magistrate West Bengal
Various State Excise Acts State Excise 26 - 26 2010-11 to 2017-18 Superintendent of State Excise
The Maharashtra Prohibition Act 1949 State Excise 168 36 132 2019-20 Deputy Superintendent of State Excise
Various State Excise Acts State Excise 66 33 33 2001-02 2002-03 2015-16 Principal Secretary Excise
Various State Excise Acts State Excise 181 51 130 1974-75 to 1988-89 1993- 94 to 1998-99 2002-03 to 2009-10 2011-12 2013-14 to 2016-17 Commissioners of State Excise
Various State Excise Acts State Excise 2 1 1 1987-88 Additional Commissioners of Excise
Various State Excise Acts State Excise 10 - 10 1994-95 2001-02 and 2003-04 to 2007-08 State Taxation Tribunals
Various State Excise State Excise 254 94 161 1972-73 1973-74 1980-81 1982-83 1997-98 1998-99 2001-022002-03 2010-11 2012-13 to 2015-16 High Courts of various states
Acts
Various State Excise Acts State Excise 1506 84 1422 1971-72 1992-93 1996-97 2002-03 2004-05 2012-13 Supreme Court

* As represented by the management

# ‘0' indicates that the amounts involved are below INR five lakhs and the sign‘-' indicates that amounts are Nil

Annexure B to Independent Auditors' Report

Referred to in paragraph 18(f) of the Independent Auditors' Report of even date to themembers of United Spirits Limited on the standalone financial statements as of and for theyear ended March 31 2021 Report on the Internal Financial Controls with reference toFinancial Statements under Section 143(3)(i) of the Act

1. We have audited the internal financial controls with reference to the financialstatements of United Spirits Limited ("the Company") as of March 31 2021 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

Management's Responsibility for Internal Financial Controls

2. The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditors' Responsibility

3. Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing deemed to be prescribedunder Section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls both applicable to an audit of internal financial controls and bothissued by ICAI. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls with reference to financial statements wereestablished and maintained and if such controls operated effectively in all materialrespects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrols based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit

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