This document is the Directors' Report from SKOL Breweries Limited for the financial year 2008-2009. It reports that while the Company's revenues increased year-over-year, it experienced losses both before and after taxation. Challenges faced by the Company included rising commodity and input costs, an inability to raise prices in some markets, and the economic slowdown reducing disposable consumer income and sales. The Company remains committed to sustainable development and water management practices in India.

7. SKOL Breweries Limited
Board of Directors Audit Committee
Mr. Ari Mervis - Chairman Mr. Jonathan Andrew Kirby
Mr. Jonathan Andrew Kirby Mr. Ari Mervis
Ms. Sue Clark Mr. Richard (Pete) L Lloyd–Upto 23.02.2009
Mr. T.S.R. Subramanian
Mr. Jean-Marc Delpon de Vaux
Mr. Richard (Pete) L Lloyd – Upto 23.02.2009
Mr. Jean-Marc Delpon de Vaux – Managing Director
Registered Office
Statutory Auditors No.1, Mahal Industrial Estate
BSR & Co., Mahakali Road
Chartered Accountants Andheri (East)
Maruthi Info-Tech Centre Mumbai – 400 093
11-12/1, Inner Ring Road
Koramangala, Bangalore – 560 071 Corporate Office
Jalahalli Camp Road
Bankers Yeshwanthpur
Standard Chartered Bank Bangalore-560 022
ABN Amro Bank
Citi Bank
Societe Generale
ICICI Bank Limited
Registrar & Share Transfer Agent
Share Transfer
Sharepro Services (India) Pvt Ltd
Samhita Warehousing Complex
Gala No-52 to 56, Bldg No.13 A-B
Near Sakinaka Telephone Exchange
Andheri – Kurla Road, Sakinaka
Mumbai – 400 072
Units
Charminar Breweries, Medak, AP
Haryana Breweries, Sonepat, Haryana
Mysore Breweries, Bangalore, Karnataka
Pals Distilleries, Aurangabad, Maharashtra
Rochees Breweries, Neemrana, Rajasthan
Central Distilleries & Breweries, Meerut, UP
East Coast Breweries & Distilleries, Cuttack, Orissa
Malabar Breweries, Chalakudy, Kerala
SICA Breweries, Pondicherry
SKOL Breweries Limited

8. Notice
6-7
NOTICE is hereby given that the 20th Special Business: the consent of the Company be and
Annual General Meeting of the members is hereby accorded to offer, issue
04. To consider increase in Borrowing
of the Company will be held at M.C. Ghia and/or allot on preferential basis to
Powers.
Hall, Bhogilal Hargovindas Building, 2nd SABMiller Asia B.V. upto 50000000
floor, 18/20, K. Dubash Marg, Behind To consider and if thought fit, to Equity Shares of the Company of
Prince of Wales Museum, Kala Ghoda, pass, with or without modifications, the face value of Rs. 10/- each at a
Mumbai – 400 001 on Tuesday, the 15th the following Resolution as a Special premium of Rs.46/- per share.
September, 2009 at 3.00 p.m. to Resolution:
RESOLVED FURTHER THAT such
RESOLVED FURTHER THAT
transact the following business:
RESOLVED THAT pursuant to
RESOLVED THAT new equity shares shall rank pari
Ordinary Business: Section 293 (1)(d) of the Companies passu with the existing equity shares
Act, 1956 and other enabling of the Company, except that they
01. To receive, consider and adopt the
provisions, if any, of the said Act, shall not rank for dividend, if any,
Audited Balance Sheet as at 31st
consent be and is hereby accorded declared or paid in respect of any
March, 2009 and the Profit & Loss
to the Board of Directors of the financial year of the Company prior
Account for the year ended on that
Company for borrowing any sum or to the financial year in which they are
date and the Report of the Directors
sums of money from time to time alloted and shall rank for dividend
and Auditors thereon.
from one or more body corporate, pari passu from the date of their
02. To appoint a Director in place of Ms. banks or financial institutions or the allotment in respect of the financial
Sue Clark, who retires by rotation at public by way of cash, credit year in which they are alloted.
this meeting and being eligible, advances, deposits or other loans
RESOLVED FURTHER THAT
RESOLVED FURTHER THAT
offers herself for re-appointment. whether secured or unsecured by
Mr. Kevin Heydenrych, Mr. Gobind
mortgage, charge, hypothecation or
03. RESOLVED THAT M/s. BSR & Co,
RESOLVED THAT Chandiramani, Mr. Deepak
pledge of the Company’s assets and
Chartered Accountants, who retire Kewalramani and Mr. S.M. Pramod
properties whether movables and/or
at the conclusion of this Annual be and are hereby jointly and/or
immovables or stock-in-trade
General Meeting be and are hereby severally authorized to negotiate,
(including book debts, bills, raw
appointed as Statutory Auditors of execute and deliver any agreement,
materials, stores and spare parts
the Company till the next Annual letter, deed or document or any
and components in stock or in
General Meeting at remuneration to amendments or modifications
transit) work-in-progress and debts
be fixed by the Board of Directors thereto in connection with the
and advances notwithstanding that
and billed progressively. aforesaid preferential issue of shares
the sum or sums so borrowed
in favour of SABMiller Asia B.V. and
together with the money’s, if any,
to sign, execute, deliver and/or file all
already borrowed by the Company
relevant forms, filings, reports,
(apart from the temporary loans
documents, etc., required by any
obtained from the Company’s
applicable regulations including with
bankers in the ordinary course of
any regulatory authorities or an
business) may exceed in the
authorized dealer in terms of the
aggregate the paid-up capital of the
Indian exchange control regulations.
Company and its free reserves
which have not been set part for any BY ORDER OF THE BOARD
specific purpose but so that the
Pramod S M
total amount upto which the moneys
Company Secretary
may be so borrowed shall not at any
time exceed Rs.2000 Crores. Date : 8th July, 2009
Place : Bangalore
05. To consider a preferential issue of
shares.
To consider and if thought fit, to
pass, with or without modification/s
the following Resolution as a Special
Resolution.
RESOLVED THAT pursuant to the
RESOLVED THAT
provisions of Section 81(1A) and
other applicable provisions (if any) of
the Companies Act, 1956, the
Unlisted Public Companies
(Preferential Allotment) Rules, 2003
and the relevant provisions of the
Memorandum and Articles of
Association of the Company,

9. NOTES:
01. A member entitled to attend and 05. Pursuant to Section 205C of the 04. At the Annual General Meeting of the
vote at the meeting is entitled to Companies Act, 1956 all unclaimed Company held on 10th September,
appoint a proxy to attend and vote dividends upto the Financial Year 2008, the Members empowered the
on a poll in his/her stead. A proxy 2000-2001 have been transferred to Board of Directors under Section
need not be a member of the the Investor Education and 293(1)(d) of the Companies Act,
Company. Proxies in order to be Protection Fund. Members of the 1956 to borrow monies for the
effective must be deposited at the erstwhile Mysore Breweries Limited business purposes of the Company
registered office of the Company not who have not yet claimed their up to a limit of Rs.1500 Crores.
less than forty-eight hours before the Dividend for the financial year 2001- Keeping in view the Company’s
meeting. A blank proxy form is 2002 and thereafter, may claim from business requirements and its
enclosed. the Company before the same is investment and growth plans, it is
transferred to the Fund. It may be considered desirable to increase the
02. The Register of Members and the
noted that no claims shall lie against said borrowing limits to Rs.2000
Share Transfer Books of the
the Company or the Fund in respect Crores as outlined in the resolution.
Company will remain closed from
of individual amounts which were
1st September 2009 to 15th In terms of the provisions of Section
unclaimed and unpaid for a period of
September 2009 (both days 293 (1) (d) of the Companies Act,
7 years and transferred to the Fund
inclusive). 1956, approval of the members is
and no payment shall be made in
being accordingly sought through
03. For convenience of members an respect of any such claim.
resolution under item no.04 for such
attendance slip is also annexed.
Explanatory Statement pursuant to increase in limits.
Members are requested to affix their
Section 173(2) of the Companies Act,
signature at the space provided 05. The Company proposes to issue and
1956.
therefore and hand over the same at allot, on a preferential basis upto
the place of Meeting. The proxy of a Item Nos. 2, 4 and 5 50000000 equity shares of face
member should mark on the value of Rs.10/- each to SABMiller
A brief resume of the Directors offering
attendance slip as Proxy. Asia B.V. at a premium of Rs. 46/-
themselves for re-election is given below:
Members are also requested to per share (based on the valuation
bring their copies of the Annual 02. Ms. Sue Clark is a Bachelor of report) which requires shareholders’
report to the venue of the Meeting. Science (Hons) & MBA. She joined approval under Section 81 (1A) of
SABMiller plc in 2003 as Corporate the Companies Act, 1956.
04. All queries relating to non-receipt of
Affairs Director. Prior to this, she held
share certificates after transfer/ Information as required under
a number of senior roles in UK
transmission/dematerialization/ Unlisted Public Companies
Companies, including Director of
rematerialisation, mandates, change (Preferential Allotment) Rules, 2003
Corporate Affairs for Railtrack Group
of address, nomination etc. may be is given below.
and Director of Corporate Affairs for
sent to the Registrar & Share
Scottish Power plc. a. The price of price band at which
Transfer Agents, M/s Sharepro
allotment is proposed: The Equity
Services (India) Pvt. Ltd, Samhita Except for Ms. Sue Clark, no other
Shares of Rs.10/- each will be
Warehousing Complex, Gala No-52 Director is interested in the aforesaid
allotted at a premium of Rs.46/- per
to 56, Bldg No.13 A-B, Near Resolution.
Share.
Sakinaka Telephone Exchange,
Andheri –Kurla Road, Sakinaka, b. The relevant date on the basis of
Mumbai-400 072, Telephone: 022- which price has been arrived at:
67720300/67720400, Valuation as at 31st March, 2009 and
Fax No: 022-28591568/28508927, the rate of the eariler preferential
E-Mail: sharepro@shareproservices.com accounts.
c. The objects of the issue through
preferential offer: To issue Equity
“Children of a culture born in a water-rich Shares of the Company to SABMiller
Asia B.V. for cash and to utilize the
environment, we have never really learned how money received hereunder for the
important water is to us. We understand it, purpose of paying down some of its
debts and for other corporate
but we do not respect it.” purposes.
SKOL Breweries Limited

10. Notice
8-9
d. The class or classes of persons to g. Proposed time within which the The Board recommends the adoption of
whom the allotment is proposed to allotment shall be completed: Within the resolution.
be made: The allotment will be made one year from the date of the AGM
BY ORDER OF THE BOARD
to SABMiller Asia B.V.
h. Whether a change in control is
Pramod S M
e. Intention of promoters/directors/key intended or expected: There will be
Company Secretary
management persons to subscribe no change in control of the Company
Registered office:
to the offer: SABMiller Asia B.V. has after the preferential issue.
1, Mahal Industrial Estate, Mahakali
signified its intention of subscribing
None of the Directors of the Company Road, Andheri (East), Mumbai-400 093
to the issue.
are deemed to be interested in the said
Place: Bangalore
f. Share holding pattern of promoters resolution.
Date : 8th July, 2009
and others classes of shares before
and after the offer: The shareholding
pattern of the Company before and
after the issue is set out below
Category Pre Issue Post Issue
No of Shares % No of Shares %
A Promoter’s holding
Promoter’
omoter’s 229384473 99.22 279384473 99.36
Sub total 229384473 99.22 279384473 99.36
B Non-Promoters Holding
Institutional Investors
a Mutual Funds and UTI 2240 0.00 2240 0.00
b Banks, Insurance Co, FI 4008 0.00 4008 0.00
c FII - - - -
Sub total 6248 0.00 6248 0.00
Others
a Private Corporate Bodies 73192 0.03 73192 0.03
b Indian public 1616507 0.70 1616507 0.57
c NRI 103325 0.04 103325 0.04
d Any other - - - -
Sub total 1793024 0.78 1793024 0.64
Total 231183745 100.00 281183745 100.00
“There are a number of ways to save water,
and they all start with you.”

11. “Water has become a highly precious resource.
There are some places where a barrel of water
costs more than a barrel of oil.”
SKOL Breweries Limited

12. Directors’ Report
10-11
Dear Members,
Your Directors have pleasure in submitting their report and the Statement of
accounts for the year ended 31st March 2009.
FINANCIAL RESULTS (Rupees in Crores)
Financial Year Financial Year
2008-2009 2007-2008
Gross Revenue 2171.91 1766.45
Profit/(Loss) before taxation (72.57) 40.85
Less: Provision for taxation (7.70) 6.37
Profit/(Loss) after taxation (64.88) 34.48
Surplus/(deficit) brought forward from previous year (95.22) 129.69
Balance carried to Balance Sheet 160.09 95.21
OPERATIONS
OPERATIONS 4. Cost pressures on account of rising WATER MANAGEMENT IN INDIA
commodity prices and glass bottles.
The turnover and volumes of your Your Company’s commitment to
Company during the year 2008-09 has 5. Inability to price in many markets sustainable development is ongoing.
considerably increased. The turnover where selling prices are constrained It is a core part of the organisation’s
increased by 23% over the previous year by regulations. business. It underpins our ability to
to Rs.2172 Crores from Rs.1766 grow and our license to operate.
6. Stand off in AP leading to stoppage
Crores. The turnover has increased by Water is one of our top sustainable
of production and supply for 38 days
6% as a result of entering into a lease development priorities.
during peak in the beginning of the
arrangement with a brewery which earlier
financial year. Given the fact that this key raw material
was a contract bottling arrangement.
for our Industry is a stressed resource its
The Company however reports a loss for A sum of Rs.411.26 Crores has been
scarcity and quality are becoming
the year on account of the following: invested in upgrading existing plant and
increasingly critical issues of immediate
machinery and in developing capacity.
1. A one time charge of Rs. 34 Crores relevance to the Company.
There has also been continuous
due to change in accounting policy of Conservation of water is one critical
upgrading and implementation of best
containers. (See Significant element of our commitment to deliver
practices at all units to increase
accounting policies Note 1.5) best in class performance within our
productivity and bring down the cost of
sustainable development framework.
2. The new brewery in Haryana was production.
The organisation is committed to sound
commissioned at the end of last year
Your Board enjoys the unqualified water management practices throughout
as a result of which the depreciation
support of all its financiers whose its global operations in a manner that
charged to the Profit and Loss
confidence in the future of your Company takes account of local geographical,
account has increased.
is evidenced by the fact that all environmental and social factors. This is
3. The Interest cost has gone up 182% borrowings have been made without the reflected in the “5 R” water management
due to increase in borrowings and the bankers taking any charges over any of strategy adopted by the group.
interest rates as compared to your Company’s assets. As such the
In India the implementation of 5R
previous year. majority of the borrowings are short term
strategy has seen internal measures to
and renewed from year to year.
reduce, recycle and reuse water at all
Observations of the auditors are self
our breweries.
explanatory.
DIVIDEND
As the Company has incurred loss during
the year, the Directors do not
recommend any dividend on the equity
capital.
“Water is life's mater and matrix, mother and medium.
There is no life without water.”

13. availability in the region for agriculture
which is the main source of livelihood for
the farming community.
Similarly, initiatives are on in the water
stressed area of Medak District in Andhra
Pradesh to build capacity of the
community to develop sustainable water
management practices and enhance
groundwater availability through
improved water use efficiency.
The interventions being conducted under
the leadership of ICRISAT ( International
Crop Research Institute for Semi Arid
Tropics) include enhancing rainwater
Our operations have been engaged in Northern India. The ground water conservation, improving water use
consistently reducing water consumption recharge initiative, launched in October efficiency and manage the water demand,
in the brewing process, year by year the 2008, is currently the largest in this while improving the livelihoods and
trends indicate a reduction in overall region. It is expected to recharge 300 promoting a shift towards less water
water consumption from 26.2 million HL million liters of water a year- the same intensive cropping patterns.
in F’08 to 23.6 million HL in F’09. amount as extracted by the brewery’s
This is despite growing volumes. borewell pumps. Spread over a
catchment expanse of about 120
Your Company committed to reduce
hectares the design involves the Water harvesting at Neemrana, Rajasthan
water waste in our breweries and has
construction of three check dams in a
set itself the target of reducing our water
wasteland area to facilitate natural
usage to 3.5 litres used to make litre of
recharge. The key strength of the
beer before the year 2015.
project lies in demonstrating a low
We recognise that water issues are by cost technology enabling natural
nature cross-community and cross recharge (as against artificial through
boundary, which therefore cannot be recharge shafts, etc).
managed simply within the fence lines of
The project is being conducted in
our own operations. Therefore we have
collaboration with the apex industry
started external interventions in
organisation – CII (Confederation of
partnerships with NGOs, communities
Indian Industry) and a partner
and local governments striving to build
organisation of CII, ACWADAM
long term sustainable partnerships to
(Advanced Center for Water Resources
address local water issues.
Development and Management)
Moving towards a country wide specialising in ground water
structured watershed mapping process management.
to understand the water availability and
This recharge will augment the local
quality across all our operations for
groundwater resources in the region.
future business planning, we have
The structures will trap the water that
completed watershed mapping for three
would otherwise have simply run off.
sites in India. The data will also be used
The recharge initiative assumes a greater
to assess the opportunity to manage
significance in view of the fact that the
these watersheds for the long term
overall incidence of irrigation through
sustainability of the community.
groundwater has increased in the region
Conservation through rain water further stressing the resource.
harvesting is practiced inside our
We are conducting further studies to
breweries. We have also commenced
identify more natural recharge sites within
water replenishing initiatives within the
the region to further augment the aquifer.
communities. We have embarked upon a
natural recharge initiative near our Your Company has also built 3 water
Rochees Brewery in the water stressed harvesting structures in the Cuttack
region of Alwar district, Rajasthan in District of Orissa, improving the water Beneficiaries of water harvesting at Neemrana, Rajasthan
SKOL Breweries Limited

14. Directors’ Report
12-13
REGULATOR
TORY
REGULATORY CHALLENGE AND DIRECTORS DIRECTORS’ RESPONSIBILITY
CONSTRAINT STATEMENT U/S 217 (2AA) OF THE
STA
In accordance with the Articles of
COMPANIES ACT,
COMPANIES ACT, 1956
Despite repeated request and Association, Ms. Sue Clark, Director of
representations to the State procured the Company retires by rotation at this Your Directors state that:
monopoly in the State of Andhra meeting and being eligible, offer herself
1. The financial statements have been
Pradesh no price increase has been for re-appointment.
prepared in conformity with the
forthcoming. Your Company along with
Mr. Richard (Pete) L Lloyd has resigned generally accepted accounting
United Breweries Ltd has therefore filed a
as a Director of the Company w.e.f. 23rd principles and applicable accounting
Writ Petition in the Hon’ble High Court of
February, 2009. The Board places on standards in India.
Andhra Pradesh against the repeated
record the meritorious services rendered
refusal of the Corporation to grant a price 2. The Directors have selected such
by Mr. Richard (Pete) L Lloyd during his
increase to meet rising input costs. accounting policies as are applicable
tenure as Director on the Board.
and have applied them consistently
As a consequence of the litigation the
AUDIT COMMITTEE and made reasonable and prudent
Corporation stopped procurement of
judgment and estimates so as to give
beer from 1st April to mid June 2009. The Pursuant to the provisions of Section
a true and fair view of the state of
case is still pending with the Andhra 292A of the Companies Act, 1956 an
affairs of the Company at the end of
Pradesh High Court. Audit Committee has been constituted.
the financial year and of the profit or
On account of resignation of Mr. Richard
Similarly in the State of UP the Company loss for the year.
(Pete) L Lloyd, the present members of
was unable to effect supplies during April
the Committee are Mr. Jonathan Andrew 3. The Directors have taken proper and
to early June 2009.
Kirby, Mr. Jean-Marc Delpon de Vaux and sufficient care for the maintenance of
The Government of Rajasthan has also Mr. Ari Mervis. Mr. Jean-Marc Delpon de adequate accounting records in
reduced the number of retail outlets and Vaux Chairman of the Audit Committee accordance with the provisions of the
has imposed an ad valorem tax. This has was present at the last Annual General Companies Act for safeguarding the
given a spurt to economy brands. As Meeting. assets of the Company and for
your Company does not participate in preventing and detecting fraud and
AUDITORS
this segment, this has adversely affected other irregularities.
the market share of the Company. M/s BSR & Co., Chartered Accountants,
4. The financial statements have been
retiring Auditors, have signified their
The above stands being taken by the prepared on the basis of “Going
willingness to be reappointed as
Company would have adverse short term Concern” considering the ability of
Statutory Auditors of the Company. They
impact on the profitability of the business the Company to carry on its business
have confirmed that their reappointment
of the Company but we believe that they in the foreseeable future.
if made will be within the limits prescribed
will inure long term benefits which are
under Section 224(1B) of the Companies ACKNOWLEDGEMENT
immeasurable.
Act, 1956. Your Directors recommend
Your Directors wish to place on record
their appointment at the ensuing Annual
their appreciation to employees at all
General Meeting.
levels for their co-operation. The
PUBLIC DEPOSIT Directors would also like to acknowledge
the continued support of the Company’s
During the year, the Company has not
Bankers, Distributors, Shareholders,
accepted any public deposits as defined
Customers and Suppliers.
in the Companies (Acceptance of
Deposits) Rules, 1975. FOR AND ON BEHALF OF THE BOARD
PARTICULARS OF EMPLOYEES
ARTICULARS Jonathan Andrew Kirby
Director
The details of employees covered under
the provisions of Section 217 (2A) of the Jean-Marc Delpon de Vaux
Companies Act, 1956 and the rules Managing Director
framed there under, as amended to date (Bangalore)
are attached herewith.
Place: Hong Kong
CONSERVATION OF ENERGY AND
CONSERV Dated: 8 July, 2009
TECHNOLOGY ABSORPTION
The statement pursuant to Section 217
(1) (e) of the Companies Act, 1956 read
with the Companies (Disclosure of
Particulars in the Report of Board of
Directors) Rules, 1988 to the extent
applicable are set in the annexure hereto.

15. “It is a curious situation that water,
from which life first arose, should now be threatened
by the activities of one form of that life.”
SKOL Breweries Limited

16. Directors’ Report
14-15
COMPANIES PAR
ARTICULARS
DISCLOSURE AS PER THE COMPANIES (DISCLOSURE OF PARTICULARS IN
THE REPORT OF DIRECTORS) RULES, 1988.
A. CONSERVATION OF ENERGY
CONSERV
Energy efficiency in breweries is achieved through a process of continuous
improvement. The Company is in the process of standardizing energy efficiency
measures across its breweries to further reduce the specific energy requirement
in brewing.
MANUFACTURED
STEAM ENERGY PER HL OF BEER MANUFACTURED MANUFACTURED
ELECTRICITY PER HL OF BEER MANUFACTURED
250 20
200 15
150
10
100
50 5
0.0 0.0
F’05 F’06 F’07 F’08 F’09 F’05 F’06 F’07 F’08 F’09
Steam Energy Requirement (MJ/HL) Steam Energy Requirement (MJ/HL)
The Company has commissioned a 1. Aggressive target setting in B. FOREIGN EXCHANGE EARNINGS
state-of-the-art brewery in Haryana in breweries based on extensive AND OUTGO
F’09. This brewery marks a significant benchmarking.
During the year, the Company has earned
reduction in the specific energy
2. Use of methane generated from Rs.16.10 Crores in foreign exchange
requirement and would become the
waste water treatment as boiler fuel. earnings. An amount of Rs.60.38 Crores
benchmark for future energy efficient
was incurred in foreign exchange.
breweries. 3. Fuel switch from fossil fuel to
biomass in selected breweries to
While the positive trend in energy
reduce the carbon footprint.
reduction thus far has been made FOR AND ON BEHALF OF THE BOARD
possible by operational excellence in 4. Adopting a 5 R strategy in breweries
breweries, there is a need to adopt Jonathan Andrew Kirby
aimed at Replenishment, Reduce,
newer energy efficient technologies to Director
Reuse, Recycle and Redistribute.
sustain this momentum going forward. A rain water harvesting structure has Jean-Marc Delpon de Vaux
been put up in one of the breweries in Managing Director
The Company is actively evaluating
the North. This would help replenish (Bangalore)
greener technologies for introduction in
the water table in the region.
its breweries. Some of these Place: Hong Kong
technologies are not prevalent in Indian 5. Use of treated effluent for gardening Dated: 8 July, 2009
breweries because of various barriers, of the factory campus by drain
one of them being high capital cost. system. Use of UF & RO technology
to recycle treated effluent water at
The possibility of availing Carbon Credits
strategic sites.
would certainly help the Company in
pursuing greener technologies otherwise
unsustainable due to high costs.
A summary of the major measures taken
by the Company at its various units are
as under-
“The crisis of our diminishing water resources is just
as severe as any wartime crisis we have ever faced.
Our survival is just as much at stake as it was at the time of
any major wars or revolutions.”

17. SKOL Breweries Limited

18. Auditors’ Report
16-17
To the Members of SKOL Breweries
Breweries (iv) in our opinion, the balance sheet, the
Limited profit and loss account and the cash
flow statement dealt with by this
We have audited the attached balance
report comply with the accounting
sheet of SKOL Breweries Limited
standards referred to in sub-section
(“the Company”) as at 31 March 2009,
(3C) of Section 211 of the Companies
the profit and loss account and the cash
Act, 1956;
flow statement for the year ended on that
date annexed thereto. These financial (v) on the basis of written
statements are the responsibility of the representations received from the
Company’s management. directors of the Company as on
Our responsibility is to express an 31 March 2009, and taken on record
opinion on these financial statements by the Board of Directors, we report
based on our audit. that none of the directors is
disqualified as on 31 March 2009
We conducted our audit in accordance
from being appointed as a director in
with auditing standards generally
terms of clause (g) of sub-section (1)
accepted in India. Those standards
of Section 274 of the Companies Act,
require that we plan and perform the
1956; and
audit to obtain reasonable assurance
about whether the financial statements (vi) in our opinion and to the best of our
are free of material misstatement. information and according to the
An audit includes examining, on a test explanations given to us, the said
basis, evidence supporting the amounts accounts give the information
and disclosures in the financial required by the Companies Act,
statements. An audit also includes 1956, in the manner so required and
assessing the accounting principles used give a true and fair view in conformity
and significant estimates made by with the accounting principles
management, as well as evaluating the generally accepted in India:
overall financial statement presentation.
a. in the case of the balance sheet,
We believe that our audit provides a
of the state of affairs of the
reasonable basis for our opinion.
Company as at 31 March 2009;
As required by the Companies (Auditor’s
b. in the case of the profit and loss
Report) Order, 2003, as amended,
account, of the loss of the
(“the Order”) issued by the Central
Company for the year ended on
Government of India in terms of
that date; and
sub-section (4A) of Section 227 of the
Companies Act, 1956, we enclose in c. in the case of the cash flow
the Annexure a statement on the statement, of the cash flows of the
matters specified in paragraphs 4 and 5 Company for the year ended on
of the Order. that date.
Further to our comments in the Annexure
referred to above, we report that:
for B S R & Co.
(i) we have obtained all the information Chartered accountants
and explanations, which to the best
of our knowledge and belief were Zubin Shekary
necessary for the purpose of our Partner
audit; Membership No. 48814
Bangalore
(ii) in our opinion, proper books of
08 July 2009
account as required by law have been
kept by the Company so far as
appears from our examination of
those books;
(iii) the balance sheet, the profit and loss
account and the cash flow statement
dealt with by this report are in
agreement with the books of
account;

19. Annexure to the Auditors’ report
19
Annexure referred to in the Auditors’ iii. (a) The Company has not granted any b) In our opinion, and according to the
Report to the Members of SKOL loans, secured or unsecured, to information and explanations given
Breweries Limited (“the Company”) for the companies, firms or other parties to us, the transactions made in
year ended 31 March 2009. We report covered in the register maintained pursuance of contracts and
that: under Section 301 of the arrangements referred to above
Companies Act, 1956. and exceeding the value of Rs. 5
i. (a) The Company has maintained
Accordingly, paragraph 4(iii)(a), lakhs with any party during the year
proper records showing full
4(iii)(b), 4(iii)(c) and 4(iii)(d) of the have been made at prices which
particulars, including quantitative
Order is not applicable. are reasonable having
details and situation of fixed
regard to the prevailing market
assets. (b) The Company has taken a loan
prices at the relevant time.
from Company covered in the
(b) The Company has a regular
register maintained under Section vi. In our opinion and according to the
programme of physical verification
301 of the Companies Act, 1956. information and explanations given
of its fixed assets by which all fixed
The maximum amount outstanding to us, the Company has complied
assets are verified over a period of
during the year and the year-end with the provisions of Section 58A,
three years. In our opinion, this
balance of such loan was Rs Section 58AA and other relevant
periodicity of physical verification is
513,170,374 and Rs 211,624,493 provisions of the Companies Act,
reasonable having regard to the
respectively. 1956 and the rules framed there
size of the Company and the
under/ the directives issued by the
nature of its assets. No material (c) In our opinion, the rate of interest
Reserve Bank of India (as
discrepancies were noticed on for the above loan taken from the
applicable) with regard to deposits
such verification. Company, listed in the register
accepted from the public.
maintained under Section 301 of
(c) Fixed assets disposed off during Accordingly, there have been no
the Companies Act, 1956 are not,
the year were not substantial, and proceedings before the Company
prima facie, prejudicial to the
therefore, do not affect the going Law Board or National Company
interest of the Company. Tenure
concern assumption. Law Tribunal (as applicable) or
and repayment terms have not
Reserve Bank of India or any Court
ii. (a) The inventory, except for goods-in- been specified for such loans.
or any other Tribunal in this matter
transit and stock lying with third and no order has been passed by
(d) According to the information and
parties, has been physically verified any of the aforesaid authorities.
explanations given to us, the tenure
by the management during the
and repayment terms have not
year. In our opinion, the frequency vii. In our opinion, the Company has an
been specified for the above
of such verification is reasonable. internal audit system commensurate
mentioned loan. Consequently,
For stocks lying with third parties with its size and nature of its business.
we are unable to comment on
at the year-end, written
paragraph 4(iii)(g) of the Order. viii. The Central Government has not
confirmations have been obtained.
prescribed the maintenance of cost
iv. In our opinion and according to the
(b) The procedures for the physical records under Section 209(1)(d) of
information and explanations given
verification of inventories followed the Companies Act, 1956 for any
to us, there is an adequate internal
by the management are reasonable of the products manufactured by
control system commensurate with
and adequate in relation to the size the Company.
the size of the Company and the
of the Company and the nature of
nature of its business with regard
its business.
to purchase of inventories and fixed
(c) The Company is maintaining assets and with regard to the sale
proper records of inventory. of goods. We have not observed
The discrepancies noticed on any major weakness in the internal
verification between the physical control system during the course
stocks and the book records were of the audit.
not material.
v. a) In our opinion and according to the
information and explanations given
to us, the particulars of contracts
or arrangements referred to in
Section 301 of the Companies Act,
1956 have been entered in the
register required to be maintained
under that Section.
SKOL Breweries Limited

20. Annexure to the Auditors’ report
18-19
ix. (a) According to the information Further, since the Central Government authorities at the time of the assessment.
and explanations given to us and has till date not prescribed the amount Hence payment of differential sales tax
on the basis of our examination of of cess payable under Section 441A has not been made on the statutory
the records of the Company, of the Companies Act, 1956, we are forms which are pending to be collected
amounts deducted/ accrued in the not in a position to comment upon the for the periods for which assessments
books of account in respect of regularity or otherwise of the have not been completed.
undisputed statutory dues Company in depositing the same.
(b) According to the information and
including Provident Fund,
According to the information and explanations given to us, there are
Employees’ State Insurance,
explanations given to us, there are no no dues of Wealth Tax and Cess
Income-tax, Sales Tax/ Value
undisputed amounts payable in respect of which have not been deposited
Added Tax, Wealth Tax, Service
Provident Fund, Employees’ State with the appropriate authorities on
Tax, Customs Duty, Excise Duty,
Insurance, Income-tax, Wealth Tax, account of any dispute. The
Cess, and other material statutory
Service Tax, Customs Duty, Excise Duty, following dues of Income-tax,
dues have generally been regularly
Investor Education and Protection Fund Sales Tax, Service Tax, Customs
deposited during the year by the
and other material statutory dues which Duty and Excise Duty have not
Company with the appropriate
were in arrears as at 31 March 2009 for a been deposited by the Company
authorities though there has been a
period of more than six months from the on account of disputes.
slight delay in a few cases. Amount
date they became payable.
due in respect of Investor
Education and Protection Fund has In respect of Sales Tax, the Company is in
not been regularly deposited during process of collecting statutory forms.
the year by the Company with the Management has represented that the
appropriate authorities. same would be submitted to the
Name of the Statute Nature of the Dues Amount (Rs.) Period to which Forum where
the amount relates dispute is pending
Punjab Excise Act, 1914 Duty on beer loss 13,745,236 1974-75 Financial
to 1990-91 Commissioner,
Haryana
Orissa and Bihar Interest on excise 3,222,705 1989 Orissa High Court
Excise Act, 1965 loan draw back
scheme
Adhesive label fees 10,877,028 2001-02 to 2004-05 Orissa High Court
Overtime wages 2,152,000 2005-06 Orissa High Court
of excise staff
Bombay Prohibition Supervision charges 550,930 1983-84 to 1988-89 Bombay High Court
Act, 1949 of excise staff
Duty on expired beer 1,037,085 2000-01 Commissioner of
State Excise,
Maharashtra
Karnataka Excise Duty on breakages 329,131 1997-98 to 1999-00 Karnataka High
Act, 1965 Court
Overtime wages of 6,679,691 1998-99 to 2004-05 Karnataka High
excise staff Court
Central Excise Act, 1944 Central excise duty 70,235,608 1996-97 to 1999-00 Customs Excise
Service Tax
Appellate Tribunal,
Mumbai
Orissa Sales Sales Tax 92,728,022 1994-95 to 2000-01 Sales Tax Tribunal,
Tax Act, 1947 Orissa
Orissa Entry Sales Tax 242,508 2000-01 Sales Tax Tribunal,
Tax Act, 1999 Orissa
Delhi Sales Sales Tax 1,260,000 2002-03 to 2003-04 Assistant
Tax Act, 1975 Commissioner of
Commercial Taxes
(Appeals), New Delhi

21. Annexure to the Auditors’ report
Name of the Statute Nature of the Dues Amount (Rs.) Period to which Forum where
the amount relates dispute is pending
Bombay Sales Sales Tax 1,514,943 1992-93 Appellate Tribunal,
Tax Act, 1959 Maharashtra
Sales Tax 4,139,154 1995-96 Sales Tax Tribunal,
Maharashtra
Sales Tax 1,445,537 1996-97 Sales Tax Tribunal,
Maharashtra
Bombay Sales Tax Act, Sales Tax 13,617,495 2001-02 Sales Tax Tribunal,
1959 & Central Sales Maharashtra
Tax Act, 1956
Sales Tax 8,050,922 2002-03 Deputy
Commissioner,
Mumbai
Sales Tax 4,984,290 2002-03 Joint Commissioner
(Appeals), Mumbai
Uttar Pradesh Penalty 185,000 2003-04 Sales Tax Tribunal,
Trade Tax Act, 1948 Uttar Pradesh
Uttar Pradesh Trade Sales Tax 4,026,568 2003-04 Commissioner of
Tax Act, 1948 & Central Appeals, Uttar
Sales Tax Act, 1956 Pradesh
Andhra Pradesh General Sales Tax 3,675,677 1991-92 to 1992-93 Andhra Pradesh
Sales Tax Act, 1957 High Court
Pondicherry General Sales Tax 11,982,000 1981-82 to 1984-85, Assessing Authority,
Sales Act, 1967 1997-98 to 1998-99 Pondicherry
Haryana Sales Sales Tax 5,965,472 1989-90 to 1996-97, Sales Tax Tribunal,
Tax Act, 1973 1998-99 to 2003-04 Haryana
Central Sales Tax Sales Tax 5,428,400 2002-03 Sales Tax Tribunal,
Act, 1956 Uttar Pradesh
Sales Tax 51,114 2006-07 Joint Commissioner,
Meerut
Delhi Sales Tax Act, 1975 Sales Tax 137,749 2004-05 Additional
Commissioner Sales
Tax, New Delhi
Uttar Pradesh Tax on Penalty 379,728 2003-04 Deputy
Entry of Goods Act, 2000 Commissioner,
Meerut
Entry Tax 7,465,500 2003-04 to 2005-06 Supreme Court
Haryana Local Area Local Area 6,175,447 2000-01 to 2003-04 Chandigarh High
Development Tax Act, 2000 Development Tax Court
Finance Act, 1994 Service Tax and penalty 32,129,640 2006-07 to 2007-08 Customs Excise and
Service Tax
Appellate Tribunal,
Mumbai
Customs Act, 1962 Customs Duty 261,555 2007-08 Customs Excise and
Service Tax
Appellate Tribunal,
Mumbai
Note: The amounts paid under protest have been reduced from the amounts demanded in arriving at the aforesaid disclosure.
SKOL Breweries Limited

22. Annexure to the Auditors’ report
20-21
x. The Company has accumulated xviii. The Company has not made any
losses of Rs. 1,600,944,149 at the preferential allotment of shares to
end of the financial year which is less companies/ firms/ parties covered in
than fifty per cent of its net worth. the register maintained under Section
The Company has not incurred cash 301 of the Companies Act, 1956.
losses in the financial year and in the
xix. The Company did not have any
immediately preceding financial year.
outstanding debentures during
xi. In our opinion and according to the the year.
information and explanations given to
xx. The Company has not raised any
us, the Company has not defaulted in
money by public issues during
repayment of dues to its bankers.
the year.
The Company did not have any
outstanding dues to any financial xxi. According to the information and
institutions or debenture holders explanations given to us, there was
during the year. one fraud on the Company during the
year where there was an allegation
xii. In our opinion the Company has
against an employee of the Company
maintained adequate records in
for colluding with a vendor involving
cases where it has granted loans and
an amount of Rs. 67,000. Services
advances on the basis of security by
of the employee have since been
way of pledge of shares.
terminated. According to the
The Company has not granted any
information and explanations given
loans and advances on the basis of
to us, no other fraud on or by
security by way of pledge of
the Company has been noticed
debentures and other securities.
or reported during the course of
xiii. In our opinion and according to the our audit.
information and explanations given to
us, the Company is not a chit fund or
a nidhi/ mutual benefit fund/ society. for B S R & Co.
Chartered accountants
xiv. According to the information and
explanations given to us, the Zubin Shekary
Company is not dealing or trading in Partner
shares, securities, debentures and Membership No. 48814
other investments. Bangalore
08 July 2009
xv. According to the information and
explanations given to us, the
Company has not given any
guarantee for loans taken by others
from banks or financial institutions.
xvi. In our opinion and according to the
information and explanations given
to us, the term loans taken by the
Company have been applied for the
purpose for which they were raised.
xvii. According to the information and
explanations given to us and on an
overall examination of the balance
sheet of the Company, we are of the
opinion that funds raised on
short-term basis amounting to
Rs. 4,451,820,029 have been
used for long-term investment in
fixed assets.

23. “Don’t throw away the old bucket
until you know whether the new one holds water.”
SKOL Breweries Limited

24. Balance sheet
22-23
(Rs.)
As at As at
Schedule 31 March 2009 31 March 2008
SOURCES OF FUNDS
Shareholders’ funds
Share capital 2 2,311,837,450 2,311,837,450
Reserves and surplus 3 6,140,637,748 6,406,852,856
8,452,475,198 8,718,690,306
Loan funds
Unsecured loans 4 6,170,031,896 3,774,422,006
Deferred tax liability, net 18 (15) - 63,744,036
14,622,507,094 12,556,856,348
APPLICATION OF FUNDS
APPLICATION
Fixed assets 5
Gross block 13,556,110,406 10,973,596,079
Less: Accumulated depreciation (2,397,970,441) (2,074,943,657)
Less: Provision for impairment of fixed assets (143,814,725) (156,563,671)
Net block 11,014,325,240 8,742,088,751
Capital work-in-progress 506,703,130 1,491,630,978
11,521,028,370 10,233,719,729
Investments 6 11,359,225 11,359,225
Current assets, loans and advances
Inventories 7 1,650,081,511 1,183,482,865
Sundry debtors 8 3,390,344,214 2,536,219,383
Cash and bank balances 9 317,395,443 311,251,107
Loans and advances 10 1,176,231,356 1,283,275,219
6,534,052,524 5,314,228,574
Current liabilities and provisions
Current liabilities 11 4,861,783,690 4,046,106,947
Provisions 12 421,930,244 413,580,309
5,283,713,934 4,459,687,256
Net current assets 1,250,338,590 854,541,318
Amalgamation adjustment reserve account 1,457,236,076 1,457,236,076
Debit balance in profit and loss account 1,600,944,149 952,184,208
Less: Balance in general reserve account 3 (1,218,399,316) (952,184,208)
382,544,833 -
14,622,507,094 12,556,856,348
S ignificant accounting policies 1
Notes to the accounts 18
The schedules referred to above form an integral part of the balance sheet.
As per our report attached
for B S R & Co. for SKOL Breweries Limited
Chartered Accountants
Zubin Shekary Jean-Marc Delpon De Vaux Jonathan Andrew Kirby
Partner Managing Director Director
Membership No. 48814 (Bangalore)
Kevin Heydenrych Pramod S M
Chief Finance Officer Company Secretary
(Bangalore) (Bangalore)
Bangalore Hong Kong
08 July 2009 08 July 2009

25. Profit and loss account
(Rs.)
Schedule For the year ended For the year ended
31 March 2009 31 March 2008
Income
Sale of manufactured goods, gross 21,622,215,155 17,367,693,602
Sale of traded goods, gross 96,894,530 296,758,472
21,719,109,685 17,664,452,074
Less: Excise duty (7,518,279,022) (6,307,912,578)
Less: Discounts (1,040,654,424) (730,233,870)
Sales, net 13,160,176,239 10,626,305,626
Income from contract bottling 143,573,120 219,335,661
Other income 13 185,950,917 281,767,214
13,489,700,276 11,127,408,501
Expenditure
Cost of materials 14 6,839,899,584 3,027,155,449
Personnel costs 15 974,679,780 804,928,296
Other expenses 16 4,982,476,471 5,757,867,250
Depreciation 5 651,299,955 858,090,043
Provision for impairment of fixed assets 18 (17) (7,066,845) 117,306,243
Opening adjustment for returnable containers 18 (2) 340,493,099 -
Borrowing cost 17 433,651,970 153,515,535
14,215,434,014 10,718,862,816
(Loss)/ profit before tax (725,733,738) 408,545,685
Provision for tax
- current tax - -
- pertaining to earlier years (reversal) (48,582,678) (37,573,724)
- fringe benefit tax 35,160,648 30,320,522
- deferred tax (credit)/ charge 18 (15) (63,744,036) 70,783,158
- wealth tax 192,269 238,542
(Loss)/ profit after tax (648,759,941) 344,777,187
Debit balance in profit and loss account brought forward (952,184,208) (1,296,961,395)
Debit balance in profit and loss account carried (1,600,944,149) (952,184,208)
over to the balance sheet
Earnings per share (par value; Rs. 10 each) 18 (6)
- Basic earnings per share (2.81) 1.52
- Diluted earnings per share (2.81) 1.49
Significant accounting policies 1
Notes to the accounts 18
The schedules referred to above form an integral part of the profit and loss account.
As per our report attached
for B S R & Co. for SKOL Breweries Limited
Chartered Accountants
Zubin Shekary Jean-Marc Delpon De Vaux Jonathan Andrew Kirby
Partner Managing Director Director
Membership No. 48814 (Bangalore)
Kevin Heydenrych Pramod S M
Chief Finance Officer Company Secretary
(Bangalore) (Bangalore)
Bangalore Hong Kong
08 July 2009 08 July 2009
SKOL Breweries Limited