During the year 2005-2006, United Breweries Limited (UBL) has achieved a volume growth of 18% over the volume last year. The industry has grown at a rate of 14% during the period. For the year ended March 31, 2006 the volume stood at 43.4 million cases as compared to 36.4 million cases as on March 31, 2005. Against an industry volume growth of 14% for the year, your Company has continued to outperform the market in both the strong and mild beer segments. While the mild beer segment witnessed a growth of 13% (against a market growth of 9.4%), and spectacular growth in strong beer of 36% (against a market growth of 16%) was witnessed. Kingfisher Strong has now achieved the number one position in the strong beer segment, followed by Kingfisher Premium which continues to remain a leading brand in the mild beer segment. Net sales for the year under review stood at Rs.6873.5 million as against Rs.5153.8 million in the previous year representing an increase of 33.3%.

Kingfisher Strong has witnessed remarkable growth during the last 6 years after its launch. Kingfisher Strong has crossed sales of 17 million cases growing by 36% compared to an industry growth rate of 16% in the strong beer segment. In this segment UBL is the market leader in 7 out of the 10 largest states of India and in the lager beer segment, UBL is the market leader in all the 10 largest states of the Country. UBL commands a market share of around 40% with 67% of the market share in the mild beer segment and 27% in the strong beer segment. The sales of lager beer have been flat or mildly de-growing, whereas over the last 5 years the share of strong beer in the overall industry is over 65%.

UBL continues to lead the industry with overall market share of 40%, Kingfisher Premium Lager achieved sales in excess of 20 million cases representing a market share of 65% in the mild beer segment. Kingfisher Strong has become the No.1 Strong Beer in India selling over 17 million cases, and, commanding a market share of 19% in the strong beer segment. Kingfisher Strong crossed 2 million cases (sales) in 5 major markets, which is a record in itself.

Innovative launches of Kingfisher Stubby in Goa, launch of Kingfisher 650 ml in a innovative international carton pack in key markets, launch of London Pilsner 330 ml can pack in Mumbai and London No.1 Strong 330 ml bottle in Karnataka has provided further competitive advantage. Promotional events like Kingfisher Premium "Voice of Goa" and the "Great India Oktoberfest" coupled with various snack promotions have not only given a boost in volumes but also expanded the consumer base. UB Export Lager continues to deliver superior value to the consumer supported by its brand Ambassador Upendra.

Capacities created in Australia and New Zealand through contract agreements have further enhanced brand equity and retention.

UBL management's undiluted focus on the consumer with an emphasis on delivering value has enhanced the perception of brands in the consumers mind.

With a rapid growth in GDP at 8%, higher disposable income, change in consumer behaviour, advent of, and exposure to, western infl uences, liberalisation in retail/distribution, the beer market in India is growing rapidly and is expected to grow at a rate of over 10% year on year. Growth in income for the young educated population, particularly in the service industry, gives
cause to expect acceleration in demand for beer in the coming years.