The Ub Group

THE UB GROUP

Corporate History and Structure The UB Group

The UB Group was established in 1947 when the late Mr. Vittal Mallya (Dr. Vijay Mallya’sfather) acquired United Breweries Limited.

In the period 1950 to 1960, United Breweries expanded rapidly and made numerous acquisitions.It entered the spirits business by acquiring McDowell in 1951, and launched its flagship brand,Kingfisher Lager Beer, in 1955. Mr. Vittal Mallya started creating a global conglomerate by moving into agricultural-based products and medicines by acquiring Kissan Products and forming a long-term relationship with Hoechst AG of Germany to promote a company today known as Aventis Pharma.In the mid-1970s, when liquor prohibition seemed a possibility in India, the late Mr. Vittal Mallya acquired breweries and distilleries across the country. The significant amount of financial risk taken by Mr. Vittal Mallya in acquiring these breweries and distilleries enabled United Breweries to attain a market leadership position at the end of the prohibition threat.

The UB Group has continued making acquisitions and also diversified into aviation, fertilizers, engineering, infrastructure, media (through the “NDTV Good Times” channel) and international trading.

The UB Group Today The UB Group has a presence in several countries across Europe, North America, the Caribbean,

the Middle East and Asia, with diverse interests in brewing, distilling, aviation, property development,engineering, fertilizers and information technology. It is also the largest Indian manufacturer of liquorproducts (beer and spirits), which accounts for a substantial portion of the UB Group’s turnover,according to Euromonitor. Under the leadership of Dr. Vijay Mallya, USL has become the world’s third largest manufacturer of spirits and UBL has 53% of the market share in India. USL, the flagship spirits company of the UB Group, is among the largest manufacturers of IMFL in India and grew to its size through a series of acquisitions. See “Our Investments — Business Operations of our Core Investments — USL” on page [●] of this Preliminary Placement Document. As of September 30, 2007, USL controls about 60% of the domestic market in first-line brands, and is the 3rd largest player in the world by sales volume. USL owns nearly 150 brands, 15 of which are “millionaire brands”. The following brands of USL are among the “Top 100 Spirits Brands Worldwide” list, put forth by Impact International: Bagpiper, McDowell’s No. 1 Whisky, Celebration Rum, McDowell’s No. 1 Brandy, Director’s Special, Old Tavern and Hayward’s Whisky. UBL, the flagship brewing company of the UB Group, is among the largest brewing companies in India. Its brands are currently widely available both within and outside of India. UBL owns several breweries across India. In April 2002, S&N entered into a Shareholders’ Agreement with certain members of the Promoter Group with respect to creation of UBL. We intend for the UBL-S&N relationship to give the Kingfisher beer brand a boost in overseas markets through Scottish & Newcastle’s wide distribution network. Scottish & Newcastle will also introduce its brandsin the Indian market 179 We have recently pioneered the construction of UB City, one of the largest mixed-use developments of real estate in the heart of Bangalore, and which is intended to be the new headquarters of all of the companies in the UB Group. The construction of UB City is almost completed. The UB Group also owns interests in MCF, makers of the “Mangala” brand of fertilizer that is popular among farmers in South India.

The UB Group owns interests in UB Engineering, which specializes in the installation of industrial plants. Its turnkey division has worked on projects in India and overseas in the areas of power, fertilizers, oil and gas, fire fighting, effluent treatment plants, agrotech and other sectors, from concept to commissioning, on-site fabrication, installation, overhauling and maintenance. In May 2005, the UB Group launched KFA in India. Within 29 months of its launch, KFA expanded its fleet to 22 new Airbus A320 aircraft and 12 new ATR 72-500 Aircrafts which offer around 1,400 flights weekly across India. KFA is planning a possible corporate restructuring with DAL, which would provide it with access to the low-cost carrier market. In May 2007, the UB Group purchased a 26% interest in DAL, which was increased by 20% to 46% in October 2007. DAL runs Deccan, a low-cost scheduled carrier, as well as Deccan Aviation, a chartered aircraft service. Today, the UB Group is one of India’s largest corporates with a turnover in excess of Rs.77,800 million for fiscal 2007.

The UB Group’s International Presence Mendocino Brewing Company Inc., located in California, is a pioneer in the American Craft Brewing, or “micro-brewing,” trend. It has two breweries, one north of San Francisco, California and the other at Saratoga Springs, New York. Red Tail Ale and Blue Heron Pale Ale are two of Mendocino’s popular brands. UBSN Limited, based in Faversham, Kent (United Kingdom), is a whollyowned subsidiary of Mendocino Brewing Co. Inc. UBSN Limited has an exclusive licensing arrangement with UBL for brewing and of distributing Kingfisher in Europe and Canada. UBSN Limited predominantly sells Kingfisher in the United Kingdom, where it has a large share of the market for ethnic Indian restaurants and food and beverage outlets.

Business Interests of UB Group Beverage Alcohol: The UB Group is 3rd largest spirits marketer in the world, with overall sales of 60 million cases. The company offers 140 brands at varying price points. Some of the famous brands of the UB Group are: Bagpiper Whisky, McDowell's No.1 Whisky, Director's Special Whisky, McDowell's No.1 Brandy and McDowell's Celebration Rum.

Pharmaceuticals: The group's company Aventis Pharma Limited is the second largest pharmaceutical multinational in India. It develops and markets branded prescription drugs and vaccines.

Media: The UB Group also has a shareholding in Asian Age Holdings Ltd, the company that owns and manages daily newspaper, The Asian Age.

International Trading: The Group's company UB Global Limited is a recognized export house engaged in the export of Beer, Spirits, Leather Footwear and Processed Foods. The Company also exports Pharmaceutical Products and customized perfumeries.

Fertilizer: Mangalore Chemicals & Fertilizers Limited is under UB Group's management. It has a manufacturing capacity of 2,17, 800 MT of Ammonia and 3,80,000 MT of Urea.

Research & Development:

Vittal Mallya Scientific Research Foundation (VMSRF) was established in 1987 with the objective of developing newer and novel technologies that will have substantial application in industry and health care. The foundation is it is recognized by the Departments of Scientific & Industrial Research (DSIR), Dept. of Biotechnology (DBT), Council for Scientific and Industrial Research (CSIR) and the Ministry of Finance, Govt. of India.

Aviation: UB Group entered aviation sector in 2005 with the launch of Kingfisher Airlines Limited. Kingfisher Airlines has captured an impressive market share and has established a niche identity for itself. The airlines recently acquired 25% stake in Deccan Airlines. BOARD OF DIRECTORS AND SENIOR MANAGMENT As per the prescribed for corporate governance by SEBI, our compony was required to implement the corporate governance code in the financial year 20012002.howeaver ,as a proactive step,our company introduced several initiatives on corporate governace well before our company was enjoined to do so under the said guidelines. MANAGEMENT UBHL is managed by board of directors, and management team consisting of head of finance , internal audit, taxation, infrastructure declopment, and trading and human resourses.

BOARD OF DIRECTORS We currently have directors on our Board The following table seat the detai of our board of directors as of the date of this prilimnary place ment document. NAME 1. DR. VIJAY MALIYA 2. MR. N . SHRIVASAN 3. MR.SHRIKANT G. RUPAREL

DESIGNATION AGE CHIRMAN: 51 DIRECTOR: 76 DIRECTOR: 66

4. 5. 6. 7. 8. 9.

MR.P.A.MURLY MR.A HARISH BHAT MR.SIDHARTH V.MALAYA PIYUSH G. MANKAND B.S.PATIL R.N.PATIL

DIRECTOR: DIRECTOR: DIRECTOR: DIRECTOR: DIRECTOR: MANAGING DIRECTOR:

BEER and SPIRITS Industry

Board committee Audit committee Mr.N. Srivinasan Mr.shrikant g ruparel Mr.A.hrish bhat Mr.B.S. patil,

chairman member member member

REMUNARETION/COMPENTION COMMITTEE Mr. shrikant g ruparel Mr. N. Srinivasan

chairman member

Shareholders/investors grievance committee Mr shrikant g ruparel Mr.N.Shrinivasan Mr.R.N. pillai

chairman member member

OTHER BOARD COMMITTEES Genetal committee of directors Mr.N srinivasan Mr.P A Murali Mr.A Harish bhut INDIAN SUBSIDIARIES

chairman member member

49 53 20 62 63 51

•

KFA Limited

• • • • • • •

KFR Kingfisher Aviation Training Limited UB Electronic Instruments limited UB Infrastructure Projects Limited UB International Treding Limited Kingfisher Training Academy Limited City Properties maintenance company Banglore Limited

FOREIGN SUBSIDIARY COMPANY •

Rigby International Corp.

• • • • • • • • •

Nited Breweries of America., Delaware. Inversiones Mirabel, SIA McinoBrewing Co.inc. USA United Breweries International (UK) Limited UBSN Limited Relata Brewing Company, LLC UB Overseas Limited Rubic Technologies Inc, USA UBHL (BHI) Limited

IMPACT OF EXTERNAL ENVIRONMENT As point out earlier, every company has to work within a framework of certain environment forces , and there is a continuous interaction between the org and its environment. The interaction suggest a relationship between two. This relationship can be analysed in three ways. First, the org can be thought of as an input output system. It takes various input-human,capital,technical-from the environment. This inputs are transforned to produce output – goods , services, profit-which are given back to environmet. Thus,the org merely performs the function of input-output mediator.in this process , what kind of input should be taken or output given will be determine by the env. In its interaction with the internal factor of the org. second, the org can be taken as the center focus for realizing the contribution of UNITEDBEVERAGE GROUP, both within and outside the org. when this group contribute to the well being of the org. they must have legitimate share in org output. This group may be employees , consumer , supplier, shareholder, govt , and the society in general. Thus the org functioning will be affect by the expectation of this group and the org has to take this factor into account. Third, the org can be treated as operating in environment presenting opportunity and threats to it.

OPERATION OF STRATEGIES IN WADIA GROUP

CORPORATE LEVEL Issues involving : resource mobilization, iffective use of resoursis , merger& acquisition, proper management of investment and earnings. BUSINESS LEVEL Strategic business unit : air lines, research, training, electronics & engineering, infrastructure managment. FUNCTIONAL LEVEL Issue involving: technical, marketing, finance, H.R., research, corporate affairs, legal & secretarial.

MERGER AND JOINT VENTURE UB Engineering Limited is the group's engineering business arm. It undertakes EPC Projects, Infrastructure, On-site fabrication of structures, Installation, Testing and Commissioning of Electrical and Mechanical Equipments, Piping etc. for large Industrial projects such as Power, Refineries, Steel, Cement, Fertilizer, Petrochemical and Desalination Projects. The company was initially established as Western India Erectors in 1963 and came under the UB Group in 1988. The group entrance to the IT sector had also been marked by the formation of UBICS, Inc. The company provides IT consulting, services and professional IT products to business companies. In August 2007, the group made a first-of-its-kind media alliance for the promotion of NDTV Good Times, a lifestyle television channel run by NDTV. One of the world leaders in the food industry,there are some of the laurels it possesses: • • •

Worldwide in beverage products Worldwide spred in bottaled water Worldwide infrastructure

KINGFISHER

PROFILE

The beginnings of what is today The UB Group are rooted in the flagship company, United Breweries Limited, (UBL) also referred to as the Beer Division of the UB Group. Led by Mr. Kalyan Ganguly, President & Managing Director, it has around 48% market share in the country. Millennium Alcobev Pvt Ltd., (MABL), is the Joint Venture Company in which UB along with its subsidiary and Scottish & Newcastle of the UK have equal stake of 50%.

United Breweries Limited, the flagship company of the UB Group, has an association with the brewing dating back over five decades, starting with 5 breweries in South India in 1915. From bullock cart-loaded barrels or 'hogheads' of frothing ale, the Beer business has gone on to become the undisputed 'king' in the Indian beer market.

Its flagship brand 'Kingfisher', has achieved international recognition consistently, and has won many awards in International Beer Festivals. Kingfisher Premium Lager beer is currently available in 52 countries outside India and leads the way amongst Indian beers in the International market. It has been ranked amongst the top 10 fastest growing brands in the UK.

MARKET SHARE The year saw our brands consolidating their leadership in the market. Against an industry growth of 14% we have recorded growth of 18% thereby increasing the combined market share of UB Group to over 50%. The largest selling Beer in India Commanding a 29% market share in the country One out of every 4 bottles of beer sold every second in India Available in 52 countries across the globe The first among Indian brands to launch its own range of designer wear Kingfisher, the bird is known for its keen instinct, and perfect aim. It zeros on its target with unfaltering focus. It is a very vibrantly coloured bird. All of its colours represent energy, youthfulness, enthusiasm, freedom with a touch of formality and discipline. No wonder, that this bird with an eye for right focus and an aim for succeeding in its attempt became the mascot for The Kingfisher brand of Beer from the stables of UB group.

Since the launch, Kingfisher Beer has become one of the largest selling beer brands in the world. "It's flying" and the mood is upbeat - both within the Company and among consumers. The new look designed by the UK based packaging specialists, Claessens, is representative of the brand in full flight, in a supportive environment. It reflects the energy, youthfullness and freedom that are characteristic of the brand's target consumer and reiterates its contemporary positioning.

ETOP Analysis: Environmental sector Socio economic

Technological Government Competition

Impact (+)opportunity (-)threat (+)continued focuse on infrastructure devlpoment including power supply for Industry, transport (-)technical resource constraints (+)Higher growth in standerdization and Product upgration (+)liberlisation for technology import (-) rules & regulations (-)increasing difficulty in retaining specialization and highly qualitified personal (-)inceasing role of combo plan cunsulnt

Strategic Advance profile:(SAP) For a Breverage Company CAPABILITY FACTOR &WEAKNESS

COMPETITIVE STRENTH

1) FINANCE position 2)MARKETING 3)OPERATION 4)PERSONNEL with 5)INFORMATION process of

6)GENERAL MGT. generally

High cost of capital;reserve and surplus unsatisfactory fierce completion in industries company’s position secure at present plant and machinery in excellent condition Captive sources for part and component available quality of mgt and workers comparable them in competitor companies computerizes mgt information in the Development traditional function such as pay Roll and accounting computerizes high quilty and experience top mgt adopt a productive stance with regard to decision making

DISTINCTIVE COMPETANCE OF KINGFISHER

“Kingfishar premium” is amongst the fastest growing brands in kingfisher's portfolio and is today the market leader with almost 2/3 share of the market. The brand is synonymous with everyday treats that infuse happiness into people's daily lives. After some more times of magnificent success; it wass time to give new enjoyment to people .so its provide new emage of fun it calld a “kingfisher premium beer”

Then ub group launce new brand as name is “KALYANI BLACK LABEL PREMIUM” . very testy and strong brand for capture second nombur market in india . It’s launched in india in 1969-70.it’s no-2 larger beer in india.its largest selling lager beer brand in east india.

It’s not a strong beer. Very little hops, evident in the aftertaste. Yet the bottle containing 650ml of the lovely brew states 8.7% alcohol--brewed in Pallakad, Kerala For those who can appreciate light beers, this one beats Kingfisher by a mile. It is available in Kerala but not a hit with the better hotels, where eyebrows get raised when you mention the name..The marketing folks need to make it available across the country as in the case of Kingfisher

VALUE CHAIN ANNALYSIS FOR KINGFISHER Value Chain Analysis is a useful tool for working out how you can create the greatest possible value for your customers. KINGFISHER is a multi product company and focuses itself on manufacturing BEER. It is started as a big scale manufacturer of beer. Inspite of fierce competition since its inception from well establish names, it has grown to be 49% of market share in beer. This beer enjoys a fan following of consumers across legal ages, loyal to the brand promise of a great taste evident from the visibly abundant ingredients. In terms of value chain, company’s activities are divided in two group : primary activities &support activities. PRIMARY ACTIVITIES: In cash of kingfisher beer, this includes bringing materials of different type in the company those material have been divided in to three categories : raw material (mostly wheat, grapes to be use in manufacturing process), component purchase from outside requiring further machining at the company’s plant and component and other materials (like packeting and some minor accessories) which can be assemble without any further processing. the company saves cost in this part in several ways. First except for few critical component. It procures component from a number of component manufacturing companies all those manufacturer are in big scale sector and enjoy cost advantage in form of lover overhead. Therefore,the supply from those manufacturer is comparatively at competitive price. In operation, company save cost through higher productivity which is generated through enthusiastic and loyal workers. In the cash of outbound logistics, the company has adopted the approach of just- in- time finished product in which product are transported with in the week of their manufacturing. in the area of marketing and sales, the company has reduced the number of intermediaries in its distribution channel by going through the process of manufacturer to stockist to customer rather than the usual channel of inserting C&F agent or dealer in between. For marketing and demand generation, the company’s marketing department which is very thing maintain regular contain with stockists and occasional visit are also under taken. The company believe and it is true even in the present competitive environment, that satisfied customer are the best source of publicity. Thus, the marketing and sales cost of the company is very insignificant. In the case of service, the company is not require to do much because beer is not complicated product.

SUPPORT ACTIVITIES: The company has under taken various support activities in such a way that either each save the money on this activities directly or they provide sample support to various primary activities. Firm infrastructure which include general management, accounting and finance etc. are performed quiet satisfactorily. However, the company save lot of money in finance area. being of case rich and debt free company, it has not to bear any interest burden. In the case of human resource mgt the company enjoys far greater superiority than it industries competitors though its HRM practices can be envy for many org outside biscuit industries. In the area of technology development the company has adopt the concept of informalisation rather than structuring various processing and method. Its R&D activities are always oriented to make biscuit more functionally useful rather than adding packaging which are reserved for export. In the procurement there are two centralized procurement systems for human resources and physical resources. Thus it can be concluded that the companies value chain provides value to its customers and to itself. This differentiates the company from its competitors.