Dear fellow shareholders,

Its been another wonderful year for our company, with achievements on every front - sales of over 125 million cases, expansion of market share in the face of international competition, launch of Heineken in select markets, packaging innovations, corporate reorganisation, ... The list goes on!

Our company has clocked its highest ever volume growth of 23% during the year under review, driven by a 27% growth in strong beer and a healthy 16% in mild beer. In both segments, we have significantly outperformed the market.

Kingfisher Ultra continues its run as the preferred premium lager among discerning consumers, and has established its superiority over competing offerings from leading international brewers.

The highlight of the year, is the success launch of locally brewed Heineken in select markets. I am pleased that, through United Breweries Limited, India is amongst select countries in the world where this world leading premium brand is brewed. Connoisseurs confirm that in both taste and packaging, UB’s offering matches the quality of Heineken available anywhere in the world.

Many consecutive years of outperforming the market in key large states, has enabled UBL to achieve a 54% national market share, the highest ever.

Operating, as we do, in a highly regulated environment, control of costs is an important element of our business, and considerable attention has been paid to this by the management.

A very significant innovation that will have long term benefits for the company, is the introduction of “patented” proprietary bottles. This initiative means that UB’s patented bottles cannot be diverted to alternate uses and this has had a salutary effect on the price of second hand bottles.

Other cost containment initiatives, including use of biomass boilers for co-generation of power, have helped to keep our overall costs down despite an inflationary environment. This has enabled us to achieve a growth of over 45% in EBITDA in comparison to what was earned in the previous year.

We are committed to a continuous process of improving quality and vigorously attacking costs. To achieve this in the backdrop of robust growth in volume requires the company to make continuous investments in the manufacturing and sourcing end of the business.

With this intent, our company has earmarked investments exceeding Rs.1000 crores over the next 3 or 4 years to not merely augment capacities but also incorporate the latest technologies to improve even further, the quality of our already excellent product range.

The high yield variety of barley patented by the Vittal Mallya Scientific Research Foundation has captured the imagination of the farmers in northern India and the same is being sown in increasingly larger acreages. The extension of cropping of this vital input bodes well for the future availability of this most important raw material keeping pace with rising demand. Simultaneously, investments are planned in malting facilities so as to stay abreast of our requirements.

Our company has a conservative financial position, with very little debt in relation to its borrowing capacity. Our Debt to Equity ratio is also very healthy and has been recently augmented through the sale of Treasury Shares amounting to Rs. 285 crores. This enables us to raise the resources required for the investment programme at attractive rates.

You will recall that a number of acquisitions over the years had led to a complex holding structure. The tie up with Heineken also brought the Asia Pacific Breweries’ two manufacturing facilities into our fold. In an effort to simplify the corporate structure, integrate units, and enhance both operating and tax synergies, a number of mergers, already approved by all of us, have been completed and judicial orders in hand. Accordingly, the accounts for the year ended 31st March 2011 incorporate the numbers for Associated Breweries and Distilleries Limited, Millennium Alcobev Private Limited, Empee Breweries Limited, Millennium Beer Industires Limited, United Millennium Breweries Limited, UB Nizam Breweries Private Limited and Chennai Breweries Private Limited.

Even as we focus on our consumers, we have not lost sight of the communities in which we operate. We continue to be committed to education, health care and water initiatives in each location that we operate in. Not only have these won recognition from national & international agencies, but most importantly, have helped to make the lives of thousands of people better. It is our way of saying “thank you” and giving back more than we take out of our environment.

I look to the future with optimism. Despite the palpable sense of a slowing down of the global economy, India and its young population is still imbued with anticipation of good times to come. United Breweries is well placed to be a part of the good times, and this will translate into higher sales with improved profitability.

All stake holders have contributed to the success of our company and I look forward to the continuing and enthusiastic participation of all our employees, customers, suppliers, bankers, and above all, you, dear shareholders.

Thank You!

Dr. Vijay Mallya
Chairman