2012 aug-usl

1
ICRA EQUITY RESEARCH SERVICE
UNITED SPIRITS LIMITED
Q1 FY 13 Results Update August 1, 2012 Industry: Alcoholic Beverages
Standalone Performance: Premiumization strategy starts paying off
United Spirits’ standalone operating performance in Q1 FY13 improved
substantially on a sequentially basis aided by sharp improvement in operating
margins following price increases and continuing benefits of a changing product
mix in favour of premium brands. In Q1 FY13, even volumes grew by a modest
1.8% on a YoY basis; the company’s revenues reported a growth of 6.6% led by
better pricing and a favourable product mix. As a result, the company’s EBITDA
margins expanded by 650 bps on sequential basis and remained broadly in line
on YoY basis even as cost pressures continued during the quarter. With
company’s strategy clearly shifting towards improving profitability rather than
chasing volume growth, we estimate, full year volumes to grow by 6% (below
the historical average) with improvement in realization supporting a growth of
12% during the year. In terms of operating margins, although ENA prices are
likely to trend upwards on expectation of poor monsoons, the impact of price
increases planned during the rest of the year and efforts of improving the
product mix should offset some of the cost pressures. Further, increasing
reliance on in-house distillation capacities should also support in margin
improvement going forward. The management’s plans of deleveraging the
balance sheet at an opportune time frame could add to the improvement in
earnings.
Consolidated Performance: W&M’s performance remains muted
While United Spirit’s standalone performance improved in Q1FY13, the
consolidated performance was below expectations largely on account of lower
than expected EBITDA margins in Whyte & Mackay (W&M) business, foreign
exchanges losses (on translation) and provisioning for pension funds. W&M’s
growth in the branded business at 10.0% was also affected by lower off take in
own-label brands. As a result, company’s consolidated turnover grew by 7.7%,
while it reported net loss of Rs. 39.7 crore for the quarter owing to higher
interest expense and foreign exchange losses. Although, United Spirits’ Q1 FY13
performance shows initial signs of stabilization, its cautious strategy of focusing
on premium segment brands, enhancing utilisation of in-house distillation assets
may take time to deliver desired results. Additionally, competitive pressures
continue to be on uptrend in the Indian market, which may limit company’s
pricing power to some extent and restrict profitability improvement in an
elevated cost based environment. On consolidated basis, W&M’s strategy of
focusing on branded business is also likely to delay any material improvement in
consolidated profitability indicators.
ICRA Online Grading Matrix
Valuation Assessment
Fundamental
Assessment
A B C D E
5
4
3 3C
2
1
 Fundamental Grading of ‘3’ indicates “good
fundamentals”
 Valuation Grading of ‘C’ indicates “Fairly
Valued” on a relative basis
Key Stock Statistics
Bloomberg Code UNSP IN
Current Market Price* (Rs.) 803.0
Shares Outstanding (crore) 13.1
Market Cap (Rs. crore) 10,503
52-Week High (Rs.) 1039.0
52-Week Low (Rs.) 450.0
Free Float (%) 70%
Beta 1.2
P/E on 2012-13 EPS Estimate (x) 32.2
*As on 1
st
August 2012
Current Valuations
Shareholding Pattern (30 June 2012)
Source: BSE Website
Share Price Movement (24 months)
Source: Bloomberg
17.7
53.8
32.2
22.4
13.3 14.1 12.6 10.7
-
10.0
20.0
30.0
40.0
50.0
60.0
FY11 FY12e FY13e FY14e
P/E EV/EBITDA
Promoters
28%
DIIs
6%
FIIs
50%
Others
16%
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
-
1,000
2,000
3,000
4,000
5,000
6,000
1-Jun-10
1-Aug-10
1-Oct-10
1-Dec-10
1-Feb-11
1-Apr-11
1-Jun-11
1-Aug-11
1-Oct-11
1-Dec-11
1-Feb-12
1-Apr-12
1-Jun-12
CNX 500 USL (RHS)
Table 1: Key Financials (Consolidated)
FY11A FY12A FY13E FY14E
Operating Income (Rs. crore) 7,420.8 9,356.1 10,499.4 11,796.2
EBITDA Margin (%) 16.1% 13.1% 14.0% 14.7%
PAT Margin (%) 7.6% 2.0% 3.0% 3.8%
Fully Diluted EPS (Rs.) 45.3 14.9 25.0 35.8
EPS Growth (%) - -67.1% 67.9% 43.5%
P/E (x)* 17.7 53.8 32.2 22.4
P/BV (x)* 2.4 2.2 2.0 1.9
RoE 14.4% 4.2% 6.5% 8.7%
RoCE 14.1% 10.7% 10.5% 11.6%
EV/EBITDA* 13.3 14.1 12.6 10.7
Source: Company, ICRA Online estimates *on fully diluted basis

ICRA Equity Research Service United Spirits Limited
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Given the above considerations, we have revised the fundamental grade to “3/5”, indicating “good fundamentals”
and retained the valuation grade at “C”, indicating that the company is “fairly valued” at present. The assigned grades
continue to assume that United Spirits would not extend any financial support to any of the group companies. Any
change in this may lead to a review of the grades.
Standalone Performance: Focus on premium segment brands is a positive; EBITDA expands on QoQ
Exhibit 2: United Spirits’ Quarterly Standalone Financial Performance (in Rs. Crore)
Standalone Q1 FY12 Q1 FY13 YoY Change (%) Q4 FY12 QoQ Change (%)
Volumes (in Million Cases) 30.72 31.28 1.8% 30.24 3.4%
Operating Income 1,944.5 2,072.9 6.6% 1881.7 10.2%
OPBDIT 339.4 350.6 3.3% 195.1 79.7%
Depreciation 12.7 16.2 17.5
Interest Expenses 130.2 165.6 166.3
Other Income 7.5 10.6 14.7
Exchange Diff. - Gain/(Loss) 0.8 34.5 (20.5)
Exceptional Items - - 2.1
PAT 137.7 145.0 5.3% 10.0 1348.1%
Key Ratios
Raw Material Cost/OI (%) 59.4% 58.3% 60.3%
Employee Cost/OI (%) 5.0% 5.3% 5.3%
Advertising & Promotions Cost/OI (%) 7.7% 8.3% 11.1%
Other Expenditure/OI (%) 10.4% 11.2% 12.8%
OPBDIT Margin (%) 17.5% 16.9% (50) bps 10.4% 630 bps
PAT Margin (%) 7.1% 7.0% 0.5%
Source: Company Data, ICRA Online Estimates
Revenue Growth: In Q1 FY13, United Spirits’ standalone revenues at Rs. 2,072.9 crore grew by 6.6% on YoY basis
aided by a growth of 1.8% in volumes and a favourable impact of price increases and an improving product mix. The
company’s strategy of shifting its focus away from lower margin brands and increasing impetus on premium brands
continued to reflect in a modest volume growth during the quarter. As a result of this strategy, while volumes of
regular segment brands (which contributes 63% to total volumes) dropped by 6.1%, those from prestige & above
segments grew at a healthy pace of 17.2%. Despite strong competition in the premium-end of the market, United
Spirits’ gained market share aided by increased focus and introduction of new brands. Apart from diminishing focus
on lower-margin brands, lower growth in some of markets, especially, West Bengal (following sharp rise in duties in
Q3 FY12) and supply disruption in Tamil Nadu continued to affect expansion in volumes. Additionally, demand from
the some states such as U.P. where country liquor is a prominent substitute also moderated during the quarter was as
widening price gap between country liquor and IMFL shifted demand in favour of the former.
Exhibit 3: Segment-wise Volume Growth (%)
Segments/Volumes (in Million Cases) Q1 FY12 Q1 FY13 YoY Change (%)
Prestige & Above 6.80 7.97 17.2%
Regular 20.87 19.60 -6.1%
II Line 2.54 3.11 22.4%
Franchisee 0.51 0.60 17.6%
Total 30.72 31.28 1.8%
Source: Company Data

3
26.7
26.6
30.3
28.6
30.7
28.7
30.5
30.2
31.3
24.0
25.0
26.0
27.0
28.0
29.0
30.0
31.0
32.0
Q1
FY11
Q2
FY11
Q3
FY11
Q4
FY11
Q1
FY12
Q2
FY12
Q3
FY12
Q4
FY12
Q1
FY13
Volume Sales (in MillionCases)
548
509
572
556
630
624
640
616
658
400
450
500
550
600
650
700
Q1
FY11
Q2
FY11
Q3
FY11
Q4
FY11
Q1
FY12
Q2
FY12
Q3
FY12
Q4
FY12
Q1
FY13
Realisation (Rs. Per MillionCases)
299
271
382
320
376
364
390
375
387
-
50
100
150
200
250
300
350
400
450
Q1
FY11
Q2
FY11
Q3
FY11
Q4
FY11
Q1
FY12
Q2
FY12
Q3
FY12
Q4
FY12
Q1
FY13
Raw Material Consumption/Case
108
87
94
73
110
116
66
65
112
0.0%
4.0%
8.0%
12.0%
16.0%
20.0%
-
20
40
60
80
100
120
140
Q1
FY11
Q2
FY11
Q3
FY11
Q4
FY11
Q1
FY12
Q2
FY12
Q3
FY12
Q4
FY12
Q1
FY13
EBITDA(Rs. Per MillionCases) EBITDAMargins (%)
Profitability Indicators: In terms of operating profitability, United Spirits’ standalone EBITDA margins at 16.9%
improved substantially on sequential basis (Q4 FY12 EBIDAT margins stood at 10.4%) aided by a combined impact of a
changing product mix in favour of premium brands, price increases and lower Extra Neutral Alcohol (ENA) cost during
the year. On YoY basis, the company’s margins were marginally lower as impact of lower input material cost was
partially offset by higher advertising & promotional spend and other overheads.
With pricing being restricted by local Governments, the impact of higher material prices has impacted United Spirits
margins in the past. In FY12, the cost of basic raw material – ENA continued on an upward trend due to increased
floor rates of ethanol supplies to the OMCs (raising the minimum prices of ENA) and supply constraints owing to
delayed crushing season and supply disruptions. Apart from higher spirits cost, the company’s packaging cost also
went up due to rise in cost of manufacturing glass with higher energy prices. While ENA prices may have softened
during the first quarter, expectation of poor monsoon may have benign impact on ENA cost for balance part of the
year. However, this would possibly be offset to some extent by price increases expected from some of the states in
the near term, cost savings on account of higher sourcing from in-house distilleries and benefits of premiumization
strategy.
Business Performance Analysis (FY12)
Exhibit 4: Volume growth remained sluggish in Q1 FY13 Exhibit 5: Realisations continued to improve
Exhibit 6: Material prices remain benign Exhibit 7: Offset by price increases to some extent
Consolidated Performance
Apart from United Spirits’ Indian business, Whyte & Mackay (W&M) is the key contributor to company’s consolidated
performance. In Q1 FY13, W&M’s operating performance continued disappoint with 10% drop in revenues and a

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sharper reduction in contribution and EBITDA margins. According to the management, the impact of the company’s
strategy of developing a branded business and preserving the bulk liquid continues to weigh on its performance and
expects results of the cautious strategy to be delayed to some extent. Apart from W&M’s weaker performance,
higher interest outgo, foreign exchanges losses (on translation) and provisioning for losses in pension fund accounts
cumulatively resulted in a loss of Rs. 39.7 crore on consolidated basis during the quarter.
W&M repositioning remains key concern
We believe that company’s consolidated performance is likely to remain under pressure as it continues to pursue a
strategy of focusing of changing W&M’s business model towards branded scotch whiskey segment compared to the
bulk segment, which accounted for nearly half of company’s total volumes. Post the acquisition by United Spirits,
W&M has been working on a three-pronged strategy which involves a) increasing share of premium scotch whiskies, b)
expanding presence in emerging markets thereby reducing dependence on developed markets particularly the U.K.
and c) strengthening its own-label/private label in key markets in Western Europe. With respect to its premium
branded business, the company has already stepped its efforts to introduce premium variants of its existing offerings
and also upgraded the packaging of few of its brands. While W&M strategy to focus on strengthening its branded
business and expanding presence in fast-growing emerging markets are steps in right direction but are likely start
showing results at least after 2-3 years as creating brand recognition and developing a distribution network in
emerging markets is likely to take some time.
Exhibit 8: United Spirits’ Quarterly Consolidated Financial Performance
Consolidated Q1 FY12 Q1 FY13 YoY Change (%)
Operating Income 2,260.7 2,434.3 7.7%
OPBDIT 333.2 356.8 7.1%
Depreciation 29.4 50.2
Interest Expenses 152.1 212.8
Other Income 21.2 50.5
Exchange Diff. - Gain/(Loss) (7.7) (86.4)
Exceptional Items 17.3 (19.7)
PAT 165.2 57.9 -135.9%
Key Ratios
Raw Material Cost/OI (%) 52.7% 52.5%
Employee Cost/OI (%) 7.2% 6.0%
Advertising & Promotions Cost/OI (%) 9.1% 9.6%
Other Expenditure/OI (%) 16.2% 17.3%
OPBDIT Margin (%) 14.7% 14.7%
PAT Margin (%) 4.9% -1.6%
Key Takeaways
 Improving Product Mix: United Spirits’ premiumization strategy and focus at the top-end of the product
portfolio continues to reap dividends and mitigate the impact the impact of lower volume growth and cost
pressures; the company continued to take price increases through a mix of increase in billing prices, lower
promotional trade spends and introduction of higher-prices alternate brands.
 key brands at the top-end continue to exhibit healthy growth – Mc Dowell’s Platinum (up 16%), Royal
Challenge (up 27%) and signature also grew in double digits
 Price Increases & Growth Outlook: Management remains fairly confident of affecting healthy prices
increases during the year; while Kerala has recently declared an average price revision of 6%, it expects
Andhra Pradesh to follow suit.

5
 Overall, the company has guided to maintain a volume growth in 8-9% for the full year, expecting growth to
stabilize in states where impact of increase duties has dampened demand in recent months.
 In addition, the company has also stepped up its focus on emerging markets and has initiated business in
South-East Asian and African countries.
 Debt Position: As on 30th
June 2012, United Spirits’ consolidated debt levels stood at Rs. 8,515.8 crore (up
from Rs. 8,136.1 crore as on March 2012). The rise in debt levels was primarily driven by revaluation of
foreign exchange loans and marginal increase in working capital loans. With sharp increase in debt levels, the
company’s consolidated leverage has inched up to 1.7x as on June end.
 Equity Infusion: The management has guided that it will continue to explore ways of deleveraging the
balance sheet; however, the time frame for the same has not been indicated.
 Capital Expenditure: The glass bottling project has been put on hold and will be taken up once equity
infusion has been concluded; overall, the capital expenditure for FY13 will be restricted to Rs. 100 crore.
 Extraordinary Items: In FY12, the company also booked a loss of Rs. 86.4 crore on revaluation of foreign
exchange borrowings; the company also made provision of Rs. 22.2 crore related to pension fund deficit.
Exhibit 9: Whyte & Mackay’s Financial Performance (in GBP Million)
In GBP Million Q1 FY12 Q1 FY13 Change (%)
Operating Income (A+B) 37.82 33.77 -10.7%
Gross Profit 14.30 12.00
Marketing Expenses 7.21 7.13
Contribution 7.09 4.87
Overheads 2.93 3.68
EBITDA 4.16 1.19
Less: Depreciation 1.04 1.07
Less: Interest Expenditure 2.19 0.84
Restructuring & Goodwill 0.86 1.11
PBT 0.07 (1.83)
Ratios (%)
Contribution Margins (%) 18.7% 14.4% -4.3%
EBITDA Margins (%) 11.0% 3.5% -7.5%
Source: Company Presentation
Exhibit 10: United Spirits’ Consolidated Balance Sheet (in Rs. Crore)
Q1 FY12 Q1 FY13
Net Worth 4,669.4 4,911.5
Minority Interest 14.6 17.4
Non-Current Liabilities 5,357.5 5,508.6
Current Liabilities 5,583.9 5,752.4
Term Liability towards Franchisee Rights 231.1 196.7
Total 15,856.5 16,386.6
Net Fixed Assets 2,821.2 2,870.2
Goodwill on Consolidation 5,167.4 5,453.9
Investments 216.9 222.1
Loans & Advances 1,240.0 1,166.4
Other Non Current Assets 338.5 346.0
Cash & Bank Balances 363.2 452.4
Other Current Assets 5,709.3 5,875.6
Total 15,856.5 16,386.6

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VALUATION GRADE
Exhibit 11: Relative Valuation
Parameter USL* Radico Khaitan# CNX FMCG Index# S&P CNX Nifty#
Current Market Price 803.0 108.6 12,945.3 5,240.5
Market Capitalisation 10,503 1,441 n.a. n.a.
FY13e FY14e FY13e FY14e FY13e FY14e FY13e FY14e
Price/Earnings 32.2 22.4 14.5 11.4 27.6 23.4 13.1 11.6
EV/EBITDA 12.6 10.7 8.9 7.4 17.8 15.2 9.5 8.5
Price/Sales 1.0 0.9 1.1 0.9 3.6 3.2 1.4 1.3
Price/Book Value 2.0 1.9 1.8 1.6 8.2 7.4 2.2 1.9
Price Cash Flows 20.3 15.5 10.3 8.2 25.3 21.4 10.3 9.1
* ICRA Online estimates based on share price as on August 1st 2012 # Based on Bloomberg consensus estimates
Since our last update (on January 25, 2012), United Spirits’ stock has appreciated by almost 23% with much of
appreciation coming in after the recently announced quarterly financials, which indicate a significant improvement in
company’s operating margins on a sequential basis as well as initial signs of stability coupled with management stated
guidance of pursuing profitable growth. The company’s stock price has also outperformed the benchmark indices by a
healthy margin during the same period. At current market price of Rs. 803, the company’s valuations at 32.2x FY13e
earnings are at significant premium to other companies in the alcoholic beverages space but only marginally higher to
the FMCG index. In our view, EV/EBITDA is a better metrics to value United Spirits given its high debt levels and
variability in earnings. Historically, the company has traded in a forward EV/EBITDA band of 10-25x and current
valuation of 12.6x is within the historical band. We expect United Spirits EPS to grow to Rs. 25.0, a growth of 68% over
the previous year as standalone performance may strength to shield the weakness in W&M’s performance.
While volume growth in the current year has been impacted by increased duties in certain states and other issues, we
believe that the long-term growth prospects remain steady for the alcoholic beverages industry and United Spirits
would continue to benefit from its strong brand position, wide product portfolio and pan-India manufacturing and
distribution footprint. Nevertheless, competitive pressures in the industry continue to be on an uptrend, which may
limit company’s pricing power to some extent and restrict profitability improvement in an elevated cost based
environment. On consolidated basis, W&M’s strategy of focusing on branded business is also likely to delay any
material improvement in consolidated profitability indicators. Given the above considerations, we have revised the
fundamental grade to “3/5”, indicating “good fundamentals” and retained the valuation grade at “C”, indicating that
the company is “fairly valued” at present. The assigned grades continue to assume that United Spirits would not
extend any financial support to any of the group companies. Any change in this may lead to a review of the grades.
Increasing in competitive pressures, further rise in duties (and prices) and deterioration in capital structure remains
key risks to our view on company’s earnings estimates and valuations.

7
COMPANY PROFILE
Bangalore-based, USL Limited is the largest spirits company in the branded spirits market in the world. Incorporated
in 1898, USL belongs to the Bangalore-based Vijay Mallya owned UB Group. The promoters, own a 28% stake in the
company. With over 112.2 million cases of liquor sold in FY11, the company commands over 40% market share in
India. The company has a very strong and wide portfolio of spirits with 21 of those brands selling more than a million
cases a year in its portfolio and enjoying a strong 55% market share for its first line brands in India. Its largest selling
brand – Mc Dowell’s has also attained the largest alcoholic beverage brand status in the world besides India’s largest
FMCG brand status.
The company has also been fairly aggressive in pursuing in-organic opportunities over the past 6-7 years. In 2005, USL
acquired the second largest Indian liquor manufacturer – Shaw Wallace which it followed with the acquisition of
Bouvet Ladubay (a French wine maker) and Whyte & Mackay, the fourth largest Scotch whiskey maker in the World in
FY08. The company has also won several prestigious awards for flavours including Mondial, International Wine and
Spirit Competition (IWSC) and International Taste and Quality Institute (ITQI). The company has been recognized in
the industry as an innovator with several firsts to its credit such as the first pre-mixed gin. USL has a well established
global network with exports to over 59 countries. It has a sizeable presence in India with distilleries and
manufacturing and bottling plant in every state in India. It has 37 owned manufacturing units and 57 contract
manufacturing facilities. The company has also established a robust distribution network covering almost 98% of the
~66,000 retail outlets across the country.
Grading Positives
The company’s key strengths include a) its strong market position in the Indian alcoholic beverages industry
supported by leadership position across segments, wide product portfolio and well established brands. With the
industry being highly regulated and governed by restrictions across the value chain, USL’ pan India foot print in
manufacturing and distribution supports its position against rising competitive pressures. The company’s overall
strategy to enhance the share of more profitable premium segment brands both in India and in Whyte & Mackay
supports a favourable long term view. USL is also focussing on a backward integration strategy to enhance its in-
house distillation capacity besides pursuing plans to set up a glass bottle manufacturing plant to improve its cost
structure and reduce vulnerabilities to cost-based headwinds.
Grading Sensitivities
With prices governed by the state governments to the extent of ~60% of industry volumes, sharp variation in input
material prices (molasses, glass etc.) tend to have an adverse impact on margins given that the pricing power is
limited. Any increase in taxes (as witnessed recently in some states), could hurt volume growth and consequently
earnings estimates. We believe, the most significant dissimilarity between alcoholic beverage player via-a-vis a
branded FMCG business is the former’s lack of pricing power despite strong brand loyalty associated. Rising
competitive pressures particularly in the premium-end of the market from international majors is also a challenge for
the company.

8
USL Brand Pyramid
Source: Company, ICRA Online
RUM
Mc Dowell
Celebration
Old Cask
WHISKY
Bagpiper
Old Tavern
Haywards
Green Label
BRANDY
Mc Dowell
No 1
Honey Bee
John Exshaw
VODKA
White
Mischief
Romanov
Blue
Riband
GINW&M
John
Barr
REGULAR
PRESTIGE
PREMIUM
VODKA
Red Romanov
Vladivar
WHISKY
Mc Dowell No 1
DSP Black
WHISKY
Royal Challenge
Signature
Antiquity
SCOTCH
Black Dog 12yr
Black Dog 8yr
Isle of Jura
Dalmore
W&M Special

9
Table 9: Key Milestones for USL
Year Milestones
1898 Establishment of Mc Dowell & Co.
1951 Late Mr. Vittal Mallya (founder of UB Group) acquired Mc Dowell & Co.
1983 Mr. Vijay Mallya took over as the Chairman of UB Group
2002 Acquired Triumph Distillers & Vinters; indirectly acquired Diageo PLC’s IMFL business in India
2005
Acquired 54.6% stake in India’s second-largest spirits company, Shaw Wallace for a consideration of Rs. 1,300
crore
Acquired balance 15% stake in Triumph; increased stake in Herbertsons during the year
2006
To strengthen presence in wine segment, USL acquired 100% stake in a French winemaker – Bouvet Ladubay
for Euro 16.5 million
2007
Acquired world’s fourth largest scotch maker – Whyte & Mackay to become a formidable player in the scotch
whiskey segment; USL acquired W&M for a consideration of GBP 595 million
2007 Shaw Wallace merged with USL
2010 Became the second-largest spirits company in the world surpassing Pernod Ricardo; second only to Diageo
Source: Company, ICRA Online
Table 10: Details of Key acquisitions by USL
Year Company Acquisition Rationale
June 2005 Shaw Wallace USL became a dominant player in the spirits market in India with the acquisition of
Shaw Wallace; the acquisition added strong brands such as Royal Challenge,
Director’s Special and Antiquity to USL’s portfolio
Acquisition Price: Rs. 1,300 crore
May 2007 Whyte & Mackay Got access to huge reserves of pure scotch whiskey, strong brand portfolio,
international distribution footprint and an essential source for its spirits production
Acquisition Price: US$ 1.18 billion
Bouvet Ladubay Allowed USL to kick start its presence in the wine segment
Acquisition Price: Euro 16.5 million
Liquidity Inc. Acquired established and premium vodka brands for introduction in the Indian
market
Balaji Distilleries Allows USL to raise in-house primary distillation capacities
Tern Distilleries Allows USL to raise in-house primary distillation capacities
Pioneer Distilleries Allows USL to raise in-house primary distillation capacities
GOVERNANCE AND MANAGEMENT STRUCTURE
USL has a seven member board comprising of four independent directors. While the promoters – Dr. Vijay Mallya is
closely involved in running the business, key managerial positions are handled by a team of professional managers.
The accounting policies followed by USL are generally in line with best practises and there has been no material
auditor qualification in recent period. The disclosure levels in USL’ annual report are broadly in line with that followed
by the industry.
The UB Group has presence across a number of business segments including alcoholic beverages, aviation,
engineering and fertilisers. While the management’s stated policy indicates that no financial support would be
extended by USL to other group companies, the stress in some of the other businesses of the group, notably aviation
has weakened the outlook on the group and subsequently affected valuation for some of the group companies
including USL.

10
Annexure I: P&L Estimates (Consolidated)
Rs. Crore FY09A FY10A FY11A FY12A FY13e FY14e
Net sales 5,054.1 5,853.0 6,858.6 9,186.5 10,322.0 11,609.7
Other related income 452.0 547.1 562.1 169.6 177.4 186.5
Total revenue 5,506.1 6,400.2 7,420.8 9,356.1 10,499.4 11,796.2
OI Growth 16.2% 15.9% 26.1% 12.2% 12.4%
EBITDA 808.4 1,072.1 1,197.1 1,229.8 1,464.9 1,731.2
Depreciation 92.6 95.0 102.3 147.4 183.2 202.8
EBIT 715.9 977.1 1,094.8 1,082.4 1,281.6 1,528.5
Interest expenses 737.7 618.7 557.5 875.7 868.7 909.7
Other income/expense (295.1) (258.8) 258.0 99.6 70.5 74.9
PBT (before extraord) (317.0) 99.6 795.3 306.4 483.5 693.6
Extraordinary Gain/Loss 0.0 70.0 36.8 28.9 0.0 0.0
PAT (408.6) (23.6) 566.9 187.2 314.3 450.9
Minority interest (0.2) (0.9) (2.6) (0.7) 0.0 0.0
PAT (concern share) (408.4) (22.7) 569.5 187.9 314.3 450.9
No of shares 100,163,256 120,669,098 125,869,737 125,869,737 125,869,737 125,869,737
DPS 2.0 2.5 2.5 2.5 2.5 2.5
EPS (39.7) (2.1) 45.3 14.9 25.0 35.8
CEPS (31.5) 5.9 53.2 26.6 39.5 51.9
Annexure II: Balance Sheet Estimates
Liabilities (Rs. Crore) FY09A FY10A FY11A FY12A FY13e FY14e
Net worth 2,312.3 3,728.7 4,133.9 4,661.8 4,939.3 5,353.4
Minority interest 6.3 8.5 17.5 14.6 14.6 14.6
Total Debt 7,360.5 5,554.2 6,455.7 7,523.1 8,740.7 8,729.0
NO Non Current Liability 443.1 344.4 329.6 0.0 204.9 163.9
Deferred Tax Liability (91.8) (71.5) (32.5) (59.2) (59.2) (59.2)
Trade Creditors 1,091.8 1,142.4 1,468.3 1,995.1 2,174.6 2,415.9
Other Current Liabilities 554.5 630.8 541.9 1,661.9 693.9 716.8
Total liabilities 11,676.7 11,337.5 12,914.3 15,797.4 16,708.8 17,334.5
Assets (Rs. Crore) FY09A FY10A FY11A FY12A FY13e FY14e
Net Fixed Assets 6,100.8 5,969.5 6,371.9 7,988.6 8,466.2 8,435.9
Capital Work in Progress 28.8 94.3 129.1 - 60.0 12.5
Total Net Fixed Assets 6,129.6 6,063.8 6,501.0 7,988.6 8,526.2 8,448.4
Total Long-Term Investments 950.1 126.5 150.9 235.8 235.8 235.8
Cash and Bank Balances 449.0 768.6 637.0 363.2 350.0 350.0
Receivables 888.0 1,388.1 1,557.1 1,972.9 2,223.7 2,507.9
Inventories 1,745.8 1,746.2 2,116.8 2,754.8 3,096.5 3,444.5
Loans & Advances 617.6 563.2 1,381.4 1,240.0 1,579.1 1,596.7
Other Current Assets 896.6 681.0 570.1 1,242.0 697.5 751.2
Total Current Assets 4,597.0 5,147.2 6,262.4 7,572.9 7,946.8 8,650.3
Total Assets 11,676.7 11,337.5 12,914.3 15,797.4 16,708.8 17,334.5

11
Annexure III: Cash Flow Estimates
Cash flows (Rs. Crore) FY09A FY10A FY11A FY12A FY13e FY14e
OPBDIT 808.4 1,072.1 1,197.1 1,229.8 1,464.9 1,731.2
Less: Taxes 186.5 178.1 192.8 171.3 169.2 242.8
Changes in Net Working Capital (1,231.4) (385.8) (722.2) 364.9 (1,393.8) (376.3)
Net Interest Charges (726.4) (606.9) (585.7) (1,044.0) (616.8) (897.8)
Cash flow from operating activities (1,336.0) (98.8) (303.6) 379.4 (715.0) 214.4
Investments (295.1) 724.9 (42.7) (411.0) 204.9 (41.0)
Capital expenditures 220.0 (29.2) (539.6) (1,635.0) (720.8) (125.0)
Cash flow from investing activities (75.1) 695.7 (582.2) (2,046.0) (515.9) (166.0)
Equity Raised / (Buyback) 14.4 1,546.0 5.2 0.0 (0.0) 0.0
Loans Raised / (Repaid) 756.4 (1,806.2) 901.4 1,071.5 1,217.6 (11.7)
Others (Including Extra-ordinaries) 23.3 106.8 36.9 73.7 0.0 0.0
Dividend (14.0) (25.2) (35.7) (70.6) 0.0 (36.7)
Cash Flow from Financing activities 780.2 (178.7) 907.8 1,074.6 1,217.6 (48.4)
Cumulative cash flow (630.9) 418.2 22.0 (592.0) (13.2) (0.0)
Opening Cash Balance 543.8 449.0 768.6 637.0 363.2 350.0
Closing Cash Balance (87.1) 867.2 790.7 45.0 350.0 350.0

12
Annexure IV: Key Financial Ratios
Key Financial Ratios FY09A FY10A FY11A FY12A FY13e FY14e
Growth indicators
Sales Growth 18.3% 15.8% 17.2% 33.9% 12.4% 12.5%
EBITDA Growth -27.3% 32.6% 11.7% 2.7% 19.1% 18.2%
EPS Growth -216.9% -94.8% -2307.3% -67.1% 67.9% 43.5%
Cash EPS Growth -174.6% -118.8% 798.1% -50.0% 48.7% 31.4%
Profitability indicators
EBITDA Margin 14.7% 16.8% 16.1% 13.1% 14.0% 14.7%
EBIT Margin 13.0% 15.3% 14.8% 11.6% 12.2% 13.0%
PAT Margin -7.4% -0.4% 7.6% 2.0% 3.0% 3.8%
RoE -18.2% -0.8% 14.4% 4.2% 6.5% 8.7%
ROCE 4.6% 8.4% 14.1% 10.7% 10.5% 11.6%
Liquidity ratios
Debtor (days) 36 48 42 39 39 39
Inventory (days) 184 167 174 172 172 172
Net working capital/Revenues 49.2% 44.3% 51.4% 38.0% 47.8% 46.4%
Capitalization Ratios
Total Debt/ Equity + MI 3.2 1.5 1.6 1.6 1.8 1.6
Interest coverage 1.1 1.7 2.1 1.4 1.7 1.9
Total Debt/EBITDA 9.1 5.2 5.4 6.1 6.0 5.0
Valuation Ratios
Price/Sales 1.5 1.5 1.4 1.1 1.0 0.9
Price/Earnings (19.7) (426.7) 17.7 53.8 32.2 22.4
Price/Book Value 3.5 2.6 2.4 2.2 2.0 1.9
EV/EBITDA 18.5 13.5 13.3 14.1 12.6 10.7
Price/Cash Flows (25.5) 135.6 15.1 30.2 20.3 15.5

13
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