Project On UNITED SPIRITS LTD

Submitted by Deepak MD MBA Department Sree Narayana Guru Institute of Science & Technology N.Paravur, Ernakulam

INTRODUCTION
The UB Group is one of Indias largest conglomerates with annual revenues in excess of US$ 2 billion, and with diverse interests in brewing, distilling, real estate, engineering, fertilizers, biotechnology, information technology and aviation. It is also the largest Indian manufacturer of beverage alcohol (beer and spirits). Dr. Vijay Mallya is the Chairman of the Group. United Breweries Ltd (UBL), the flagship company of the UB Group, is the largest brewing company in India with a national market share of 50 percent. Its flagship brand, Kingfisher, boasts a 40 percent national market share. The brand is currently available in 52 countries outside India and leads the way amongst Indian beers in the international market. UBL owns 16 breweries strategically located all over India, where stringent brewing quality specifications are adhered to. UBL h as entered into a strategic alliance with Scottish & Newcastle Plc, UK, who holds a 37.5 percent stake in the company. This alliance will ensure that the Kingfisher beer brand receives a significant boost in overseas markets through S&Ns wide distribution network. The UB Group's spirits business, with 145 brands including 15 millionaire brands makes it the world's 3rd largest drinks group. Some of the most popular brands from the UB stable are Bagpiper Whisky, the largest selling in India and also the largest selling whisky in the world; McDowells No.1 Brandy, the largest selling brandy in the world; and McDowells No.1 Celebration Rum, which is the 2nd largest selling rum in the world. United Spirits Limited (USL), Kumbalgodu is one among UB groups profit making units.

Alcoholic Beverage:
An alcoholic beverage is a drink containing ethanol, commonly known as alcohol. Alcoholic beverages are divided into three general classes beers, wines, and spirits. They are legally consumed in most countries, and over 100 countries have laws regulating their production, sale, and consumption. In particular, such laws specify the minimum age at which a person may legally buy or drink them. This minimum age varies between 16 and 25 years, depending upon the count ry and the type of drink. Most nations set it at 18 years of age. The production and consumption of alcohol occurs in most cultures of the world, from hunter-gatherer peoples to nation-states. Alcoholic beverages are often an important part of social event s in these cultures. In many cultures, drinking plays a significant role in social interaction mainly because of alcohols neurological effects.

Industry profile:
The use of alcohol as drink is an age -old story in India and it appears that the technique for fermentation and distillation was available even in the Vedic times. It was then called Somarasa and was used not only for its invigorating effect but also in worship. To date, not only has the consumption of alcohol been continued but it is an integral part of the Ayurvedic system of medicine. The First distillery in the country was set up at Kanpur in 1805 by Carew & Co. Ltd., for manufacture of Rum for the army. The technique of fermentation, distillation and blending of alcoholic beverages was developed in our country on the lines of practices adopted overseas particularly in Europe. The distillery industry today consists broadly of two parts, one potable liquor and the industrial alcohol. The potable distillery producing Indian Made Foreign Liquor and Country Liquor has a steady but limited demand with a growth rate of about 7-10 per cent per annum. The industrial alcohol industry on the other hand, is showing a declining trend because of high price of Molasses which is invariantly used as substrate for production of alcohol. The alcohol produced is now being utilized in the ratio of approximately 52 per cent for potable and the balance 48percent for industrial use. Over the years the potable liquor industry has shown remarkable results in the production of quality spirits. Indian Liquor industry is today exporting a sizable quantity of India Liquor products to ot her countries.

Types of alcoholic beverages available:

Because India has great variety in topography, climate, vegetation, culture, and traditions it is unsurprising hundreds of kinds of alcoholic beverages are made and consumed. All of them however can be grouped into the following four broad categories:

Indian Made Foreign Liquor(IMFL)

Indian Made Foreign Liquor , often abbreviated IMFL, is a term used to denote

western-style hard liquors such as whisky, rum, vodka, etc., which are manufactured in India. A common characteristic of many IMFLs, distinct from spirits elsewhere in the world, is that irrespective of the final product the starting ingredient is a neutral
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spirit distilled from molasses, a by-product of the sugar industry. For example, whereas a whisky in most countries would be distilled from grain, Indian whisky is made by adding whisky-like flavouring and colou ring to neutral spirit obtained from molasses. The same applies to other IMFL spirits, like rum or vodka. However some recent entrants distil spirits per traditional methods even when manufacturing in India. So far India does not have any world popular liq uor brand.

Country Liquor:
These distilled alcoholic beverages are made from any cheap raw materials available locally, example sugarcane, rice or grains. Country liquor is produced in licence distillery and sold from authorised outlets within the same di strict. Common varieties of country liquor are arrack, sharab, and tari (toddy). Excise duties are paid, but since production costs are low the retail prices are also low. The licensing system and some governmental monitoring of the production process ensu re a uniformity in alcohol content (around 40%) and basic safe guards against adulteration with other harmful intoxications.

Illicit Liquor:
Besides licensed distilleries, a number of small production units operate clandestinely. The raw materials they use are similar to those in country liquor, but since they evade legal quality controls the alcohol concentration in their products varies and adulteration is frequent. It is common to find samples containing up to 56% alcohol. One dangerous adulterant is industrial methylated sprit, which occasionally causes mass poisoning of consumer who lost lives or suffer irreversible eye damage. Since no government revenues are paid, illicit liquor is considerer ably less expensive licensed country liquor, and thus finds a ready market among poor.

Beer:
Beer is the world's most widely consumed and probably oldest of alcoholic

beverages; it is the third most popular drink overall, after water and It is produced by the brewing and fermentation of starches, mainly derived from cereal grainsmost commonly malted barley, although wheat, maize (corn), and rice are widely used. Most beer is flavoured with hops, which add bitterness and act as a natural preservative, though other flavourings such as herbs or fruit may occasionally
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be included. Some of humanity's earliest known writings refer to the production and distribution of beer: the Code of Hammurabi included laws regulating beer and beer parlours, and "The Hymn to Ninkasi", a prayer to the Mesopotamian goddess of beer, served as both a prayer and as a method of remembering the recipe for beer in a culture with few literate people. Today, the brewing industry is a global business, consisting of several dominant multinational companies and many thousands of smaller producers ranging from brewpubs to regional breweries. The strength of beer is usually around 4% to 6% alcohol by volume though may range from less than 1% to over 20% in rare cases.

Company Profile
United Breweries Group or UB Group, based in Bangalore, is a conglomerate of different companies with a major focus on the brewery (beer) and alcoholic beverages industry. The company markets beer under the Kingfisher brand and has also launched Kingfisher Airlines, an airline service in India, with international flights operating recently. United Breweries is India's largest producer of beer with a market share of around 48% by volume. [1] Its owned by Vijay Mallya who is also a member of the Indian Parliament. United Breweries now has greater than a 40% share of the Indian brewing market with 79 distilleries and bottling units across the world. Recently UB financed a takeover of the spirits business of the rival ShawWallace company giving it a majority share of India's spirits business. The group owns the Mendocino Brewing Company in the United States.

History:
The UB Group was founded by a Scotsman, Thomas Leishman, in 1857. The Group took its initial lessons in manufacturing beer from South India based British breweries. At the age of 22, Vittal Mallya was elected as the company's first Indian director in 1947. After a year, he replaced R G N Price as the chairman of the company. United Breweries made its initial impact by manufacturing bulk beer for the British troops, which was transported in huge barrels or "Hogsheads". Kingfisher, the group's most visible and profitable brand, made a modest entry in the sixties. Dur ing the 1950s and 60s, the company expanded greatly by acquiring other breweries.
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First was the addition of McDowell as one of the Group subsidiaries, a move which helped United Breweries to extend its portfolio to wines and spirits business. Strategically, the Group moved into agro -based industries and medicines when Mallya acquired Kissan Products and formed a long-term relationship with Hoechst AG of Germany to create the Indian pharmaceutical company now known as Aventis Pharma, the Indian subsidiary of the global pharma major Sanofi-Aventis.

The logo

The Pegasus, which is the symbol of the United Breweries, first found its place as the Group logo in 1940. Then, the Helladic horse associated with beer and nectar in Greek mythology carried a beer cask between the wings, ostensibly because beer formed the core operations of the Group. Later, the beer cask was removed to represent the Group's multifaceted operations. Now, it is just the Pegasus.

Branches of UB Group:
 Kingfishers Airlines

Kingfisher Airlines is an airline group based in India. Its head office is Kingfisher

House in Vile Parle (East), Mumbai. Kingfisher Airlines, through its parent company United Breweries Group, has a 50% stake in low-cost carrier Kingfisher Red. Kingfisher Airlines is one of the seven airlines to be ranked as a 5 -star airline by the independent research consultancy firm Skytrax. Kingfisher operates more than 375 daily flights to 71 destinations, with regional and long -haul international services. In May 2009, Kingfisher Airlines carried more than a million passengers, giving it the highest market share among airlines in India. Kingfisher Airlines is also the sponsor of F1 racing outfit, Force India, which Vijay Mallya also owns.

History:
Kingfisher Airlines was established in 2003. It is owned by the Bangalore based United Breweries Group. The airline started commercial operations in 9 May 2005 with a fleet of four new Airbus A320-200s operating a flight from Mumbai to Delhi. It started its international ope rations on 3 September 2008 by connecting Bangalore with London. On 7 June 2010 Kingfisher became a member elect of the one world airline alliance when it signed a formal membership agreement. A firm date to join the alliance will be announced once the implementation process is underway, it possibly may take 18 to 24 months.

Destinations:
Kingfisher Airlines serves 63 domestic destinations and 8 international destinations in 8 countries across Asia and Europe. Kingfisher's short haul routes are mostly domestic apart from some cities in South Asia, Southeast Asia and Western Asia. All short haul routes are operated on the Airbus A320 family aircraft. ATR 42s and ATR 72s are used mainly on domestic regional routes. Kingfisher has its medium, long haul destinations in East Asia, Southeast Asia, and Europe. Its first long haul destination was London, United Kingdom which was launched in September 2008. It has plans to launch new long haul flights to cities in Africa, Asia, Europe, North America and Oceania with deliveries of new aircraft. All long haul routes are operated on the Airbus A330 -200.

Code share agreement

Kingfisher has code share agreements with:
  

American Airlines British Airways Philippine Airlines

 Mangalore Chemicals & Fertilizers:

Mangalore Chemicals & Fertilizers is a Fertilizer Production factory located

in Mangalore, India. It is situated opposite to the New Mangalore Port on the other side of the national highway NH-17.The company produces fertilizers like urea, DAP and special nutrients and chemicals under the brand name of Mangala .The company was started by government of Karnataka. The company's management was subsequently sold to Vijay Mallya's UB Group during tenure of Veerendra Patil's as Karnataka's chief minister

Overview of MCF
1. In 1990 Government of Karnataka select the UB group to take over MCF, potential sick unit, with losses of 600 million rupees. 2. Now MCF with a turnover of over Rs.1625 Crore. 3. With 9 % growth over previous year. 4. The only manufacturer of chemical fertilizers in the state of Karnataka. 5. The factory is strategically located at Panambur, 9 km north of Mangalore City. 6. The Company is a part of the UB Group with Group shareholding of 30%. 7. The Company has capacity to manufacture 2,1 7,800 MT Ammonia (intermediate product), 3,80,000 MT Urea, 2,60,000 MT Phosphatic Fertilizers (DAP & NP 20:20:00:13), 13,860 MT Ammonium Bi -Carbonate (ABC) and 33,000 MT Sulphuric Acid (SAP) annually. 8. The design and engineering of the Ammonia/Urea plant s was done by Humphreys & Glasgow Limited, London, a leading international firm in the fertilizer field and their associates, Humphreys & Glasgow Consultants Pvt. Ltd., Bombay. 10. The Phosphatic plant is designed and engineered by Toyo Engineering Corpora tion, Japan. PDIL and Furnace Fabrica the Indian firms were involved in the construction of ABC and SAP respectively.

 United Spirits:
United Spirits Limited (USL) is the largest spirits company in the world by volume, selling 114 million cases for the fiscal ending March 21, 2011. Besides Whyte & Mackay and Bouvet Ladubay being 100% subsidiaries of USL, the company has 21 millionaire brands (selling more than a million cases a year) in its portfolio and enjoys a strong 59% market share for its first li ne brands in India. United Spirits' brands have won the most prestigious awards for flavours, ranging from Mondial to International Wine and Spirit Competition (IWSC) to International Taste & Quality Institute (ITQI); more than 115 awards & certificates. The Company is known to be an innovator in the industry and has several firsts to its credit like the first pre -mixed gin, the first Tetra pack in the spirits industry in India,
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first single malt manufactured in Asia and the first diet versions of whisky and vodka in India. USL has a global footprint with exports to over 37 countries. It has a sizeable presence in India with distilleries and sales offices all across the country, and a committed team of over 7500 people dedicated to the fulfilment of the company's mission. It has established manufacturing and bottling plants in every state of India. In addition, to deliver its products to customers located anywhere in India, USL has established a robust distribution network covering the whole count ry.

Particulars
Brands

Total Number
140

Comments
19 of these are millionaire brands and there are about 151 brand variants

SKUs Distilleries / Bottling Units Depots Retail Outlets

2992 79 48 64000

Distillery-State-BrandPack combinations 30 Owned Manufacturing facilities;49 contract manufacturing units Break-bulk points for finished goods distribution Inclusive of both on and off premise outlets

A brief overview of company:

y y y y y y y

UB group gives a new look to No.1 McDowells its flagship in the prestige segment of the whisky market. Forges alliances with US, Australia and French Cos. For bulk wine import. Phipson Distillery becomes a wholly owned subsidiary of McDowell & Co. Acquires 85% equity stake of Triumph Distilleries & Vintners Pvt ltd. Triumph Distilleries and Vinters becomes a subsidiary of McDowell. 2003 Rolls out its new Whisky brand, Derby Special Whisky in Andhra Pradesh Market. Increase its exposure in Indian as well as in Hollywood films.
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y y y y y y y

No 1 Celebration rum crosses sales over 3 million during the year. 2004 McDowell & Co launches Old Cask Rum, in the Karnataka market 2006 United Sprits is likely to declare the acquisition of Whyte & Mackay by January 2007 United sprits Ltd has appointed Mr. Sudhinar K irishna Khanna as an Additional Director of the company with effect from June 01,2007 2008 The company has introduced rum and whisky in 90 and 60 ml PET High-end Whiskies single-use packs, in Karnataka and Maharashtra respectively, on a test basis last week, reports Economic Times. The company has said on Dec. 01, 2008 that its board has approved the merger of Balaji Distilleries, into USL in an all stock deal. The merger will be effective from Apr. 01, 2009 2009 United Spirits Ltd sells 90 million cases in 2008 -2009; Narrows the gap to no 1 Position in global spirits market.

Nature of business carried:

The groups principal activity is to manufacture, purchase and sell Indian made foreign liquor including brand franchise. Its products include whisky, brandy, and rum. The Group operates under the brand name of dalmore, jura, whyte & mackay, black dog, antiquity, signature, royal challenge, McDowells no.1, celebration rum, bouvet ladubay, pinky, Romanov, wihte mischief and four seasons. Its plan are located at Kerala, Andhra Pradesh, Goa, Bihar, Karnataka, Uttar Pradesh, Rajasthan, West Bengal, Madhya Pradesh ,Maharashtra, Pondicherry, Punjab, Haryana, Himachal Pradesh and Orissa.

Our clients:
We have a wide based clientele all over the globe. Our quality products have clinched us a set of satisfied high profile clients with whom we have a developed a strong bond. United spirits ltd maintain a long term relationship with their clients who reflects companys commitment and diligence. Some of our clients are      KSBCL- Karnataka civil BSF- Bangalore KSBC- Kerala civil CSD(Kerala, Karnataka, Tamilnadu, Andhra Pradesh) Pondicherry
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 MAHE  ANIIDCO

Our Vision:
Dedicated and commitment to the vision of becoming the worlds no 1 in spirits industry.

Our mission:
To be the most admired global leader in the spirits industry by creating unique high quality brands for consumers, driven by highly motivated employees and supported by best in class processes and continued innovations. United Spirits is and will continue to be responsib le towards its stakeholders and the society

Steps taken to achieve the mission:

 We are focused on assuming leadership in all our target markets.  We seek to be the most preferred employer wherever we operate.  We recognize that our organization is built aro und people who are our most valuable asset.  We will always be the partner of choice for customers, suppliers and other creators of innovative concepts.
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 We will continually increase the long term value of our Group for the benefit of our shareholders.  We will operate as a decentralised organisation and allow each business to develop within our stated values.  We will be a major contributor to our National Economy and take full advantage of our strong resource base.  We commit ourselves to the ongoing mission of achieving scientific Excellence.  Building quality into our workplace, products and service is essential to a successful future for our customers, employees, suppliers communities and shareholders.  The USL will work to provide products and service that a lways meet to exceed expectation.

Quality policy:
Quality leadership is vital to long term success of the USL in increasingly competitive marketplace. Building quality into our workplace, products and service is essential to a successful future for our customers for our customers, employees, supplier, communities and shareholders. The USL will work to provide products and service that always meet or exceed expectations. Management will commit resources and create an environment in which each employee can contribute skills, talents and ideas to never -ending process of improvement and innovation in all aspect of our business.

Products/service profile:
Products include all IMFL spirits such as rum, vodka, whisky, gin. These are made in India under the government licence and maximum alcohol content allowed is 42.8%. Whisky is by far the most popular drink in this category, with hundreds of brands available, at least 20 of which have an Indian presence.

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USL Brands
Whisky
                

Royal Challenge Dalmore Jura Whyte & Mackay Black Dog whisky Antiquity rare Antiquity blue Signature McDowell's No.1 McDowell's No.1 Platinum Bagpiper Whisky Bagpiper Gold Directors Special Old Tavern Haywards McDowells Green Label Gold Riband

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Brandy
   

McDowells No.1 Honey Bee John Exshaw Mr Shah Brandy

Rum
  

Celebration Rum Old Cask Rum

Old Adventurer Rum Gin



Blue Riband Vodka

  

Romanov White Mischief Pinky

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 Black dog: Largest selling Premium Scotch with 45% market share USP: 123 year brand heritage Authentic ity consistent quality  Antiquity Blue Rare Premium Whisky: Finest and most expensive Indian Whisky Won several Blend awards USP: Finest Indian Whisky with world class credentials, specially imported blue bottle in line with brands super premium image.  McDowells No. 1: 4th largest selling whisky in the world Market leader with 60% market share Indias favourite whisky, constant innovations in packaging, marketing, promotions and consumer events has helped maintain leadership.

 Signature: One of the fastest growing brands in USL portfolio Exquisite whiskies from Scotland have been combined perfectly with finest aged Indian malts  Bagpiper: Worlds largest whisky Market leader with 29% market share 30 year old flagship brands of USL  McDowells Brandy: Worlds largest selling brandy With 40% market share in India
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 Royal Challenge: Largest selling premium whisky in India 24year Heritage Market share with 33% market share  Directors Special Whisky : Second largest selling regular whisky With 7% market share  White Mischief: Market leader Fastest growing vodka Five year CAGR of 34%  Blue Riband Gin; Market leader Has been delighting customer for 47 years Recently launched in new and contemporary packaging  McDowells No.1 Celebrations Rum: 4th largest rum in the world Market leader

Area of operation global/national/regional:

United spirits has a global footprint with exports to over 37 countries. It has 79 manufacturing and bottling units across the country and in Nepal and is supported by a robust distribution network to deli ver its products to customers across India.

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Ownership pattern: Names

Vijay Mallya V K Rekhi Deepak Anand Sudhindar Krishan Khanna S R Gupte Kalyan Ganguly Ravi Nedungadi

Designation
Chairman/Chair Person President, spirit division President, Fertilizer division Director Vice Chairman President, Breweries division President & CFO

Vijay Mallya:

Vijay Mallya (born 18 December 1955) is an Indian liquor baron and Rajya Sabah

MP. The son of industrialist Vittal Mallya, he is the Chairman of the United Breweries Group and Kingfisher Airlines, which draws its name from United Breweries Group's flagship beer brand, Kingfisher.

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He also owns the Formula One team Force India, the Indian Premier League team Bangalore Royal Challengers, and the I-League team East Bengal FC and Mohun Bagan AC. According to Forbes.com, as of March 2010, Mallya is worth US $1 billion. He is ranked 937 in The Forbes World Billionaires Ranking (2010). He receives substantial press coverage that focuses on his lavish parties, v illas, automobiles, Force India, Royal Challengers Bangalore and his yacht, the Indian Empress.

Personal Life:
Mallya was born into a Konkani family which originally from the town of Bantwal, near Mangalore, in Karnataka and belongs to the Goud Sarswat Brahmin caste. He is the son of Vittal Mallya and Lalitha Ramaiah. He was educated at La Martiniere for Boys School, Calcutta and completed his degree at St. Xavier's College, Calcutta. He later set up business ventures in Dubai, United Arab Emirates. Mall ya is married twice. His first wife was Sameera and they have a son together, named Sidharth Mallya. Sidhartha was educated at Wellington College in Crowthorne followed by Queen Mary's College in the University of London. Later on, he married Rekha and has two daughters Laila and Tanya Mallya and one son.

Business:
Breweries
Mallya took over as Chairman of United Breweries Group in 1984 from his father Vittal Mallya. Since then, the group has grown into a multi -national conglomerate of over sixty companies, with an annual turnover which increased by 63.9% over 15 years to US$11.2 billion in 1998 -1999. The focal business areas of the group encompass alcoholic beverages, life sciences, engineering, agriculture, chemicals, information technology, aviation and leisure. In May 2007, United Breweries Group announced the all-cash acquisition of scotch whisky maker Whyte & Mackay for 595 million (approximately Rs 6000 crore). In 2005 he took over Millennium Breweries Ltd (formerly known as Inertia Industri es Ltd), which owned the two premium beer brands named Sandpiper and Zingaro.

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Vijay Mallya has recently indicated his intention to buy AS Bari, a football team which plays in the Italian Series A.

y Cricket:
Vijay Mallya is the owner of Royal Challengers IPL team through his flagship firm UB Group. Mallya wanted to associate one of his top -selling liquor brands, either McDowell's No. 1 or Royal Challenge with the team.[8] The latter was chose n, hence the name. The jersey colours of the team are red and golden yellow, the same as the Karnataka state flag,[9] and the logo consists of the RC emblem with "Royal Challengers Bangalore" in standard format.

Political Career:
Mallya entered politics in 2000 and replaced Subramanian Swamy as the president of the Janata Party. His party contested almost all of the 224 seats during the Karnataka State legislative election. He campaigned vigorously through the media, but his party failed to make any impac t and did not win a single seat. Following the party's failure in the elections, it has been largely ignored by the media, although Mallya recently became an MP independently.

Share Holding Pattern United Spirits Ltd

Shareholding pattern - United Spirits Ltd. Holder's Name No of Shares % Share Holding

Promoters Foreign Institutions General Public Foreign Ocb Other Companies N Banks Mutual Funds

36640760 65839632 12088115 5224585 4543053 3822683

28.01% 50.34% 9.24% 3.99% 3.47% 2.92%

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Foreign NRI Others Financial Institutions Central Govt

915220 910077 142708 7521

0.70% 0.70% 0.11% 0.01%

Competitors Information:
United spirits ltd basically manufactures IMFL spirits and distilled spirits and is facing domestic and international competition

Domestic competition:
y y y y y y y y

United Breweries Radico Khaitan Tilaknagar Industry Globus Spirits Empee Distill GM Breweries Ravikumar Distill Pioneer Distll

Global Competition:
Bacardi Limited:
Bacardi is a family-controlled spirits company, best known as a producer of rums,

including Bacardi Superior and Bacardi 151. The company sells in excess of 200 million bottles per year in nearly 100 countries. The company's sales in 2007 were US$5.5 billion, up from $ 4.9 billion in 2006. Bacardi is headquartered in Hamilton, Bermuda and has a 16-member board of directors led by the original founder's great -great grandson, Facundo L. Bacard. The President Bernard F. Ramrez and Co -President Charles M. Hernndez, also p lay a large part in production and sales.

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Pernord Ricardo:
Pernod Ricar is a French company that produces distilled beverages. The

company's eponymous products, Pernod Anise and Ricard Pastis, are both aniseflavoured liqueurs and are often referred to simply as Pernod or Ricard. The company also produces several other types of pastis. After the banning of absinthe, Pernod Ricard was created from the Pernod Files company, which had produced absinthe. It is now a worldwide conglomerate. Pernod Ricard owns the distilled beverage division of the former corporation Seagram, along with many other holdings. In 2005, the company acquired a British-based competitor, Allied Domecq plc. In 2008, Pernod Ricard announced its acquisition of Swedish -based V&S Group, which produces Absolute Vodka.

Diageo:
Diageo plc is a global alcoholic beverages company headquartered in London, United Kingdom. It is the world's largest producer of spirits and a major producer of beer and wine Its brands include Smirnoff (the world's bestselling vodka), Johnnie Walker(the world's best -selling whisky), Jos Cuervo (the world's best-selling tequila), Baileys (the world's best-selling liqueur) and Guinness (the world's best-selling stout). It also owns 34 per cent of Mot Hennessy, which owns brands including Mot & Chandon, Veuve Clicquot and Hennessy. It sells its products in approximately 180 countries and has offices in 80 countries.

Achievement/Awards if any:
United Spirits ltd has achieved around 108 awards. Some of the awards are shown below: 1. 2. 3. 4. 5. 6. 7. Mundusvini international spirits awards 2007 -Silver World beverage competition 2006 -Gold International review of spirits, Chicago-Bronze Institute of economic studies excellence award Asian Packaging Federation 2006 Superior Taste Award International wine and spirits award
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8. Mondiel de bruxellus 2005 9. India institute of packaging award 10. World star packaging award

Infrastructure Facility:
1. Bottlery Plant(It contains production line 1 -5) 2. Re-distillation plant 3. Tetra plant(It contains production line 6 -7 and also has a flour for carton storage) 4. EBG(Empty Bottle Godown) 5. IMFL(Indian Made Foreign Liquid godown) 6. Scrap Yard 7. Boilers(Husk Boilers) 8. ETP(Effluent treatment Plant) 9. Water treatment plant 10. Excise superintendent office 11. Time Office(To control man Power) 12. Main Office 13. Security check post

Marketing Strategy of UB group:

Beverage market leaders UB group promotes its brand Kingfisher by associating itself with sponsorship of tennis tournaments and Formula ne . More, the supermodel and star studded Kingfisher calendar is another form of surrogate advertising for this line of UB gr oup beverages. Another UB group liquor brand Royal Challenge promotes itself through golf tournaments and recently through IPL cricket team Bangalore Royal Challengers. On the other hand, Smirnoff markets itself under an apple juice product and White Misch ief associates itself with tourism and hospitality for its marketing. The spirits division of the UB Group is planning to invest around Rs 50 crore in the company's whisky brands to boost sales to around 30 million cases in two years. Alok Gupta, divisional vice-president, UB Group, said the division had chalked out major promotion campaigns for its core whisky brands, which
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include Blackdog, McDowell Signature, McDowell No 1, Bagpiper, Gold Ribbon and Diplomat. "Each of these brands makes a statement and we have tried to create excitement around these brands through new ad campaigns," Gupta said. For example, McDowell No 1, UB's largest selling whisky brand, which also happens to be the eight largest selling whisky brand in the world, has newer advertisement campaigns. The brand will also have a slogan contest and separate packaging for every festive occasion. McDowell's wh isky was launched as an extension of the successful No 1 McDowell's brandy. "McDowell No 1 customer profile is that of a trendy but conservative person," Gupta said. The brand sells over 3.5 million cases and is growing at the rate of 20 per cent. It expec ts sales to cross 4 million cases by the end of the current fiscal. Signature rare whisky is blend of Indian malts and rare aged Scotch. It is currently the fastest growing brand in the McDowell portfolio, selling 1.5 lakh cases. The brand has grown five t imes over in the last two years and expects to carve out a market share of 17 per cent by the end of the current fiscal. Blackdog, a 12-year-old Scotch has two-thirds of the market share. In the regular segment, Bagpiper whisky has recently been launched i n a new packaging and is also available in halves and quarters of its classic quart bottles.

The UB Group Spirits Division is the largest spirits' manufacturing and marketing company in India with a 35 per cent market share. Its nearest competitor Shaw Wallace, which has a 12 per cent market share.

Marketing through sports:

The group, which signed on Mahendra Singh Dhoni to promote McDowell's soda, will come out with a television commercial featuring Dhoni. Incidentally, Vijay-Mallya's UB group owns the Royal Challengers Bangalore IPL team and Dhoni is the captain of the Chennai Super Kings team. Dhoni is a cricketer and we are using him to endorse our product. In any case, to avoid any clash of interests, we have obtained the permission of CSK as a safety net and they have given us clearance, said Mr Ashok Capoor, Deputy President, United Spirits, the Rs 5,700-crore spirits arm of the UB Group. On whether the company did not release the TVC during the World Cup given the confusion and controversy surrounding ambush marketing, Mr Capoor said, We are not even ready with the commercial now. The TVC will be released post the World Cup and it will tie in with the IPL. The TVC, which is currently being shot in the country, will showcase the unique leadership style of the Indian captain. The advertising agency for the commercial is Mudra, Bangalore. Apart from the advertisement, the company plans to use Dhoni in meet -and-greet' programmes with consumers. While Dhoni would promote McDowell's No. 1 Platinum Soda, this is bound to have a rub -off effect on other brands in the
25

McDowell's portfolio (which includes No. 1 whisky and Celebration rum) as well. We expect the signing of Dhoni to give a big lift to the McDowell's brand, said Mr Capoor. The McDowell's portfolio contributes to over 30 p er cent of United Spirits' total volumes

Among other things, the UB Group owns the Royal Challengers Indian Premier League (IPL) franchise. Earlier, Castellino was Emerging Media CEO. The company owns the Rajasthan Royals IPL franchise, which came out on top in the inaugural edition of the IPL. The UB Group also owns the Mohun Bagan and East Bengal soccer teams. It is also present in F1 through its team Force India. The UB Group also runs the Kingfisher Cricket Academy in Bangalore. Castellino will be responsible for all commercial, administrative and sponsor promotion activities while each team will retain its sporting management organisation as currently existing. The marketing divisions responsible for The UB Group's brand association with such sporting activities shall remain unchanged. UB Group chairman Dr Vijay Mallya says, "The UB Group has significant interests in various sports and with the appointment of Fraser, we hope to significantly enhance the value of the sporting activities in which we, currently, have interests. The UB Group companies are committed to building superior brand value using sports as an effective platform."

NDTV Good Times: A Unique Co- branding:

In September 2007, NDTV launched India's first hardcore lifestyle channel branded NDTV Good Times. This new channel is unique in two ways - its India's first lifestyle channel and secondly its the first time where a product brand has co -branded with a channel. Co-Branding is where two brands operating in two different domains coming together for a common cause (objective). The objective can be anything from tapping a common market or sharing promotions. The oft quoted examples in classrooms were the co-branded credit cards. NDTV Good Times is promoted by NDTV alone and not with any equity stake by the UB Group. The new channel is all about lifestyle. In theory, we tend to describe lifestyle with the three descriptors

26

Activities Interests & Opinions (AIO). Truly like this concept, Good Times is all about activities, opinions and interests. The channel devotes its time to Health, Fashion, Food, Luxury, Technology , Chats with celebrities, life of rich and the famous etc. The channel also wants to create a class of its own by roping in HOT Properties to anchor respective shows. These include the actor Rajat Kapoor, Chef Manju Malhi, Techie Rajiv Makhni etc. The channel is full of aspirational lifestyle programs and contains about 50 -60 original programs per week. The channel is looking at the target market comprising of socially upbeat 20 -40 yr old SEC A viewers. The questions arise as to the benefit of these two different brands coming together in a channel. For NDTV, the brand association with Kingfisher gives it the revenue cushion. According to Agency faqs, UB group has committed around Rs 100 crore worth of ads in the next five years. For NDTV this takes away the risk of launching a lifestyle channel with is at most a Niche. Kingfisher will provide the much needed ad revenue till the channel began to attract other advertisers. For UB Group, its a boon. We know that Indian law does not permit Kingfisher Beer to advertise. The rules are getting stricter day by day. Hence there is nothing better than a channel that carries your tagline and the mascot. Besides that every businessman knows the power of having a media under its f old. UB Group may not have the capability to run a media, so why not associate with the best brand in the media domain NDTV. Also Kingfisher as a brand epitomizes lifestyle positioning. Whether its the beer or the airlines, Mallya has built the brand on li festyle platform. Hence Co-branding with a lifestyle channel makes perfect sense. But things are not as rosy as it seems. This whole concept will work only if NDTV can bring in quality content to the channel. NDTV has proved its capability in the news front but entertainment is a different ballgame altogether. Right now cost of the new launch may not be a headache since NDTV has its processes and systems in place. What is going to make or break this channel is the quality of programming and the innovation that this channel will bring in to get the eyeballs sticking. For NDTV , Good Times is testing waters since it plans to roll out an entertainment channel in collaboration with the ace director Karan Johar. For Kingfisher, its a promotional expenditure ( nobody ever has perfectly measured the effectiveness of advertising as yet !!!). I feel that Good Times channel will be an integral part of in-flight
27

entertainment in the airlines too in future. So as of now its a win-win game for both the brands. Time will tell if GOOD TIMES will last.

Surrogate Marketing:
Surrogate Marketing is a requirement of all alcohol/cigarette brands in countries where it is prohibited by law to directly advertise addictive products such as alcoholic beverages and cigarettes in mass media. It is a strategy which refers to the indirect way in which companies advertise their products, and use minor loopholes in the law to still achieve the basic marketing objectives of building brands, creating customer associations and promoting brands . They do this by associating the same brand names to other acceptable products, ranging from sodas to music CDs!! India too falls under the category of countries who have prohibited advertising of alcoholic beverages, but still companies and brands make their own efforts to do the same.

United Breweries is the group which has really exploded the restrictions, expanding surrogate methods of branding in all directions imaginable. Lets list down where all they are present: a) Kingfisher Kingfisher has the most diverse set of surrogates floating around: a) Kingfisher Airlines (even though it is a full fledged business with a monetary interest); b) Kingfisher Calendar; c) Kingfisher bird as a part of the logo of NDTV Good Times (co-branding) d) shows on making of the calendar on NDTV Good Times etc. Vijay Mallya himself is a popular brand ambassador now for the company. b) Bagpiper A host of ads on Bagpiper soda, featuring Akshay Kumar and a few others, with the now-famous tagline: khoob jamega rang jab mil baithenge 3 yaar aap, main aur bagpiper again, promoting Bagpiper soda. c) Royal Challenge: A major property in the form of Royal Challengers Bangalore playing in IPL. d) Whyte and Mackay: Nothing notable apart from being present on the RCB I PL jerseys e) White Mischief: An indirect promotion through the White Mischief holidays, and also through the RCB cheerleaders So the above was a snapshot on what all the liquor companies are doing in India, trying to spread awareness about their brands through indirect means and mechanisms. Of these, some are full fledged business interests, such as Kingfisher
28

airlines, RCB in IPL, White Mischief Holidays etc (this seems to be Mallyas promotion strategy). Surrogate marketing is definitely here to stay, because the prohibition is unlikely to be removed any time soon, and alcohol companies would likely never cease to exist. And as long as both business interests and restrictions remain, surrogate marketing will thrive.

HR department: Functions of HR Department:

Function 1: Manpower planning
y y

Understaffing loses the business economies of scale and specialization, orders, customers and profits. Overstaffing is wasteful and expensive, if sustained, and it is costly to eliminate because of modern legislation in respect of redundancy payments, consultation, minimum periods of notice, etc. Very importantly, overstaffing reduces the competitive efficiency of the business. Future staffing needs will derive from:

y y y y y y

Sales and production forecasts The effects of technological change on task needs Variations in the efficiency, productivity, flexibility of labour as a result of training, work study, organizational change, new motivations, etc. Changes in employment practices (e.g. use of subcontractors or agency sta ffs, hiving-off tasks, buying in, substitution, etc.) Variations, which respond to new legislation, e.g. payroll taxes or their abolition, new health and safety requirements Changes in Government policies (investment incentives, regional or trade grants, e tc
Function 2: Recruitment and selection of employees Recruitment of staff should be preceded by: An analysis of the job to be done (i.e. an analytical study of the tasks to be performed to determine their essential factors) written into a job description so that the selectors know what physical and mental characteristics applicants must possess, what qualities and attitudes are desirable and what characteristics are a decided disadvantage;

29

y y

In the case of replacement staff a critical questioning of the need to recruit at all (replacement should rarely be an automatic process). Effectively, selection is 'buying' an employee (the price being the wage or salary multiplied by probable years of service) hence bad buys can be very expensive. For that reason some firms (and some firms for particular jobs) use external expert consultants for recruitment and selection. Equally some small organizations exist to 'head hunt', i.e. to attract staff with high reputations from existing employers to the recruiting employer. However, the 'cost' of poor selection is such that, even for the mundane day -to-day jobs, those who recruit and select should be well trained to judge the suitability of applicants.
Function 3: Employee motivation To retain good staff and to encourage them to give of their best while at work requires attention to the financial and psychological and even physiological rewards offered by the organization as a continuous exercise. Basic financial rewards and conditions of service (e.g. working hours per week) are determined externally (by national bargaining or government minimum wage legislation) in many occupations but as much as 50 per cent of the gross pay of manual workers is often the result of local negotiations and details (e.g. which particular hours shall be worked) of conditions of service are often more important than the basics. Hence there is scope for financial and other motivations to be used at local levels. As staffing needs will vary with the productivity of the workforce (and the industrial peace achieved) so good personnel policies are desirable. The latter can depend upon other factors (like environment, welfare, employee benefits, etc.) but unless the wage packet is accepted as 'fair and just' there will be no motivation. Function 4: Employee evaluation: An organization needs constantly to take stock of its workforce and to assess its performance in existing jobs for three reasons:

To improve organizational performance via improving the performance of individual contributors (should be an a utomatic process in the case of good managers, but (about annually) two key questions should be posed: y ** What has been done to improve the performance of a person last year? o And what can be done to improve his or her performance in the year to come?). y To identify potential, i.e. to recognize existing talent and to use that to fill vacancies higher in the organization or to transfer individuals into jobs where better use can be made of their abilities or developing skills. y To provide an equitable method of linking payment to performance where there are no numerical criteria (often this salary performance review takes place about three months later and is kept quite separate from 1. and 2. but is based on the same assessment).
Function 5: Industrial relations Good industrial relations, while a recognizable and legitimate objective for an organization, are difficult to define since a good system of industrial relations involves complex relationships between: (a) Workers (and their informal and formal groups, i. e. trade union, organizations and their representatives);
30

(b) Employers (and their managers and formal organizations like trade and professional associations); (c) The government and legislation and government agencies l and 'independent' agencies like the Advisory Conciliation and Arbitration Service.
Function 6: Provision of employee services Attention to the mental and physical well -being of employees is normal in many organizations as a means of keeping good staff and attracting others. The forms this welfare can take are many and varied, from loans to the needy to counselling in respect of personal problems. Among the activities regarded as normal are:
y y y y

y y y y y y

Schemes for occupational sick pay, extended sick leave and access to the firm's medical adviser; Schemes for bereavement or other special leave; The rehabilitation of injured/unfit/ disabled employees and temporary or permanent move to lighter work; The maintenance of disablement statistics and registers (there are complicated legal requirements in respect of quotas of disabled workers and a need for 'certificates' where quota are not fulfilled and recruitment must take place); Provision of financial and other support for sports, social, hobbies, activities of many kinds which are work related; Provision of canteens and other catering facilities; Possibly assistance with financial and other aid to employees in difficulty (supervision, maybe, of an employee managed benevolent fund or scheme); Provision of information handbooks, Running of pre-retirement courses and similar fringe activities; Care for the welfare aspects of health and safety legislation and provision of first -aid training. The location of the health and safety function within the organization varies. Commonly a split of responsibilities ex ists under which 'production' or 'engineering' management cares for the provision of safe systems of work and safe places and machines etc., but HRM is responsible for administration, training and education in awareness and understanding of the law, and fo r the alerting of all levels to new requirements.
Function 7: Employee education, training and development In general, education is 'mind preparation' and is carried out remote from the actual work area, training is the systematic development of the attit ude, knowledge, skill pattern required by a person to perform a given task or job adequately and development is 'the growth of the individual in terms of ability, understanding and awareness'. Within an organization all three are necessary in order to:

y y y y

Develop workers to undertake higher -grade tasks; Provide the conventional training of new and young workers (e.g. as apprentices, clerks, etc.); Raise efficiency and standards of performance; Meet legislative requirements (e.g. health and safety);
31

Inform people (induction training, pre -retirement courses, etc.); From time to time meet special needs arising from technical, legislative, and knowledge need changes. Meeting these needs is achieved via the 'training loop' We constitute a large global group based in India and associate with world leaders in order to adopt technologies and processes, which will enable a leadership position in a large spectrum of activities. At UB, we take great care in how we attract and hire the best talent as we recognize that our organization is built around people, who are our most valuable assets. UB Group is an employer of choice for aspiring professionals who like challenges no matter what the field or function. We endeavour to be the most preferred employer wherever we operate.

RECRUTMENT AND SELECTION

The recruitment process is basically divided into 3 these are
y y y

Casual (Temporary) workers Staff level workers Executive level workers

Casual (temporary) workers: Temporary work or temporary employment refers to a situation where the employee is expected to leave the employer within a certain period of time. Temporary employees are sometimes called "contractual", "seasonal", "interim", "casual staff", or "freelance"; or the word may be shortened to "temps. The workers in the bottlery section may be described as the temporary workers. They are selected on the basis of the daily requirements. And are paid within weekly basis. The age of the workers must be between 18 -45. Staff level workers:

For recruiting the staff level employees there is a system in the company called The Man Power Budgeting System. By which the man power required for the office work or the staff level are studied and analysed. Then the system publishes the m an power requirement. From which the employees are recruited for the desired jobs. Proper training and development programmes are given to these employees to cop up with the work.
Executive level

The executive categorys recruitment and selection is don e at the Head Office in Mangalore. In this category the company has a structured procedure for doing
32

aptitude test, group discussion, physical examination, and personal interview. Company is also following the campus recruitment mode. These selected execut ives are been placed in different companies at various posts The Recruitment has a wealth of experience in recruiting technical personnel across countrys key industrial sectors. Since its inception UB Group has developed an impressive database of qualified personnel. Clients are kept informed of progress throughout the recruitment process and each permanent placement is tailored to the specific needs of both the client and the role. Rather than adhering to a structured process, UB consultants draw upon a range of tools, techniques and processes to successfully place candidates, ensuring that clients are presented with the best available candidates within the required timeframe, including:
y y y y y y y

Candidate sourcing strategies Tailored screening methods One-on-one interviewing Suitability testing tools Referencing and verification Negotiations and finalisation Ongoing follow up services

Training and Development:

The training and development function gives employees the skills and knowledge to perform their jobs effectively. In addition to providing training for new or inexperienced employees, organisations often provide training programmes for experienced employees whose jobs are undergoing change. Large organisations often have development pro grammes which prepare employees for higher level responsibilities within the organisation. Training and development programmes provide useful means of assuring that employees are capable of performing their jobs at acceptable level
Performance Appraisal:

This function monitors employee performance to ensure that it is at acceptable levels. Human resource professionals are usually responsible for developing and administering performance appraisal systems, although the actual

33

Appraisal of employee performance is the responsibility of supervisors and managers. Besides providing a basis for pay, promotion, and disciplinary action, performance Appraisal information is essential for employee development since knowledge of Results (feedback) are necessary to motivate and guide performance improvements.
Record-keeping:

The oldest and most basic personnel function is employee record - keeping. This function involves recording, maintaining, and retrieving employee - related information for a variety of purposes. Records which must be maintained include application forms, health and medical records, employment history (jobs held, promotions, transfers, lay-offs), seniority lists, earnings and hours of work, absences, turnover, tardiness, and other employee data. Co mplete and up-to-date employee records are essential for most personnel functions. More than ever employees today have a great interest in their personnel records. They want to know what is in them, why certain statements have been made, and why records ma y or may not have been updated. Personnel records provide the following: i) ii) iii) iv) v) vi) A store of up-to-date and accurate information about the companys employees. A guide to the action to be taken regarding an employee, particularly by comparing him with other employees. A guide when recruiting a new employee, e.g. by showing the rates of pay received by comparable employees. A historical record of previous action taken regarding employees. The raw material for statistics which check and guide personnel policies. The means to comply with certain statutory requirements.

Skills:
An organisations dominant capabilities and competency. Suitable training is required to enhance skills of the executives and enrich their multifunctional tasks. United Spirits Ltd trains the unskilled operators for a period of few weeks. Training depends on the job description of the workers. There is also an orientation program for upper level staff. United Spirits Ltd employed mostly the lower educated manpower for the employment and the search for minimum skill in
34

their routine job. In top level management the employees should have technical, managerial and team work skill.

Management style:
Managers collectively spend their time and at tention to achieve their objectives. The Acts is more important than what it. The company follows both styles such as
y y

Top down/bottom up Authoritarian/participative

1. TOP DOWN/BOTTOM UP

The company follows top down / bottom up style which means the rule and responsibilities will be followed from top level authorities to their respective workers or superiors. The same way the suggestion or idea or thoughts given supervisors will be passed to their respective or divis ion manager.

2. AUTHORITARIAN/PARTICIPATIVE

Here the company accept both authoritarian and participative among the organisation which means the employees in the organisation have the right to participate in meeting and can suggest ideas and solutions. United Spirits ltd accept the suggestions from the employees for better improvement and for the motivation purpose. The organisation is authoritarian in some management decision.

Production Department

United Spirits Limited (USL) is the largest Spirits Company in India and among the top three spirits companies in the world. Besides Whyte & Mackay and Bouvet Ladubay being 100 percent subsidiaries of USL, the company has 19 millionaire brands (selling more than a million cases a year) in its portfolio and enjoys a strong 59 percent market share for its first line brands in India. United Spirits' brands have won the most prestigious awards for flavours, ranging from Mondial to International Wine and Spirit Competition (IWSC)
35

to International Taste & Quality Instit ute (ITQI); more than 99 awards & certificates. The Company is known to be an innovator in the industry and has several firsts to its credit like the first pre -mixed gin, the first Tetra pack in the spirits industry in India, first single malt manufactured in Asia and the first diet versions of whisky and vodka in India. USL has a global footprint with exports to over 18 countries. It has a sizeable presence in India with distilleries and sales offices all across the country, and a committed team of over 7500 people dedicated to the fulfilment of the company's mission. It has established manufacturing and bottling plants in every state of India. In addition, to deliver its products to customers located anywhere in India, USL has established a robust distribution network covering the whole country. United Spirits Limited (United Spirits or "the company") is engaged in the manufacture, purchase, and sale of alcoholic beverages in India and international markets. The company primarily operates in India where i t is headquartered in Bangalore and employs about 7,500 people. Products include all IMFL spirits such as rum, vodka, whisky, gin, These are made in India under the government licence and the maximum alcohol content allowed is 42.8%. whisky is by far the most popular drink in this category, with hundred of brands available, at least 20 of which have an all Indian presence.

Technology
Initially, McDowell & Co. Ltd. Kumbalgodu had its distillation technology from the French company, Sawalle. McDowell & Co. Ltd. improved its technology both in distillation and production fields. Now Kumbalgodu is one of the pioneer distillers in its group to introduce instrumentation in its group to introduce instrumentation in its distillation plants with fully computerized remote controlled operational systems. Hence it is going on with out saying that the quality of the spirit produced in the plant has the unique character incomparable to any other unit. The high quality Extra Neutral Alcohol (ENA) when blended with Indian and foreign ingredients, maturated malt ad grape spirit, scotch whiskies, wines and sherries impacts very good fragrance to its products, i.e. why people think of high quality spirits, while on McDowell & Co.Ltd.

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The production in United Spirits ltd can be divided into two

y y

Bottlery plan Tetra plant

Bottlery Plant
About 300 labours are working in the production department. In the bottlery section there are 1 to 5 production lines. The bottles which are obtained from the market or from the suppliers are brought to the bottlery section. These bottles are cleaned and the required flavours are filled in the respective bottles. The 1 -5 production lines produce 5 different products every day. 15 -20 workers may be working in one line. The requirement of the workers are decided earlier and based on that these workers are allocated for particular production lines. In the bottlery section the bottles which are bought from the market are first washed and cleaned. For that about 5 -8 workers will be employed in a machine. After the cleaning is done the bottle is filled with the required flavours. The filtered blend is filled into the bottles. Then these filled bottles are sealed by the bottle caps. After sealing a couple of workers are appointed for the inspection of the bottle. The bottle is inspected to find out whether there is any damage or not. After being inspected the bottles are labelled. The stickers are labelled to the desired bottles. From here these bottles are filled to the carton box. After the filling and inspection are over these are packed to the carton boxes. These carton boxes are sealed and are taken to the Finish ed Good godown, and are taken to the respective clients. Likewise each line of production are producing a certain amount of products per day. The products are produced based on the allocation or the requirements of the clients.

Bottling

During bottling the different blends are filled in their respective bottle s. Company is using four Different sizes of bottle for bottling, which are as follows: 180ml- Quarter 375ml- Pint 500ml- Half 750ml- Full

Tetra
The tetra packs are now introduced to the market now. There are three tetra machines operating in the tetra section. And these three tetra machines are operated
37

by 5 workers. Here the remaining 6 to 8 production lines are operating. Now the tetra pack whiskies are only introduced. The three tetra machines constitute the three production lines. About 14 - 20 workers are working in each production line.

Production Process
Production department is headed by the Distillery manager who looks after the Distillery section, Bottlery section, Quality Control section and Effluent Treatment Plant for the company. Each day 350 trucks pass through the gates of the 52 manufacturing units of UB groups spirits division. This is a milestone that is not within the reach of any competitor in the country. Each of the groups owned units are ISO 9001 certified and maintain the highest standards of Quality 2.5lacs of cases is the average monthly production unit of Kumbalgodu (ENA is the basic component of liquor and is produced in distillery) Raw materials for ENA production In the past period the company had used raw materials like starchive materials, saccharine materials and cellulose materials. But the company is currently using the saccharine materials, mainly molasses for the production of ENA, because of th e costly nature of Starchive and cellulose materials. Molasses is the waste from sugar mills. The company has got out 3000 casks filled with malt and grape spirit of different ages and wooden tanks of 3600 litres to 5,000 litres to accommodate malt grape rum spirits. The company has devised its on blending procedure where by imported and Indian ingredients malts spirits of different ages water produced from its own dematerialized water plant and the experience of the chemists clubbed together makes miracle in the industry and this given astonishment to the common man. When the blended liquor is bottled in the fully automatic plant and when comes out with proper dressing and packing, a thrill is given to the people to insist on McDowells.

38

Production Process:
The entire production process can be summed up by the following 4 steps

Distillation

Blending

Bottling

Despatching

Distillation

Distillation process plays a vital role in the production of branded liquor. ENA is the basic component for liquor. ENA is produced from distilling molasses. In the distillation process, first stage is fermenting the molasses with the media of yeast. For fermentation, company uses continuous fermentation system
Continuous Fermentation System

Fermentation is a process by which converting the sugar in molasses into alcohol. Molasses is a waste from sugar factory. The molasses is in a liquid form. This liquid contains around 12%-14%, which is in non-crystallized form, but fermentable. This fermentable sugar can be converted into ENA by the way of yeast fermentation.

For the fermentation process this molasses is been pumped to the tank, which is situated in the plant as per requirement. In plant there is a molasses weighing system, is an electronic system placed f or computing the quantity of molasses is been taken from the main storage tank. The company having 3 culturing vessels and yeast is been in these vessels.
39

The cultured yeast is moved to yeast activation tank (Y AT). When Y A T is Ready, the weighed molasses is passes to 5 huge fermentation tanks namely FRMNTR I, FRMNTR II, FRMNTR III, FRMNTR IV, FRMNTR V. Then Cultured yeast is been pumped to the fermentation tanks. In each of these tanks the molasses is treated along with water. Molasses is the main food of yeast. In the fermentation process certain factor needs to be assured - Sugar concentration level, Ph level (Hydrogen iron concentration) and temperature level. Ph level can be maintained by adding sulphuric acid. For the further growth of yeast i n the fermentation tank certain additional ingredience like antifoam, nutrients, and process water to be added. Minimum 26 hours required for the completion of the fermentation process. While the fermentation, the sugar will be converted into Ethyl Alcohol (wash) and Carbon dioxide. CO2 will be escaped to the atmosphere. Then the remaining Ethyl Alcohol, Yeast contents, water and other ingredients moves to the Yeast Activation Tank (YST), here yeast settles down because of the continuous process. Overflow happens wash and other impurities moves to Wash Settlement Tank (WST). Here the sludge settles down and it passes to the Sludge Mixing Tank (SMT) and the remaining wash moves to the clarified wash tank and is being pumped to the distillation plant. In the S MT, sludge mixes with water and is pumped to the Sludge Settlement Tank (SST) and is been carries to ETP. The plant doing optimum utilization of resources. For the same, in YST the settled yeast is been pumped to the Yeast Holding Tank (YHT) and passes to the Yeast Treatment Tank (YTT). Here the yeast is well treated with water and passes to the Yeast Activation Tank (Y A T) as energetic yeast for further fermentation without wasting yeast, because entire performance of plant is depends on an atom of YEAST. Distillation Distillation is being separated by the use of steam. After the fermentation process the resultant is wash, which contains 6 -7% alcohol is pumped to Plate Heat Exchanger (PHE) and spent wash is separated to ETP. The ENA is produced through 7 columns. The liquid alcohol is separated in 15t column is called Analyzer Column. Then is passes through the Degasified Column, in this column the fusel oil is being separated and it moves to Fuse Oil Column. Then the liquid alcohol passes through Purifier Column, Rectifier Column, and Refining Column and finally spirit is extracted. In between each of these columns two condensers are fixed to
40

cool the steam. There is one head concentration column - is used to separate the heads or technical alcohol (highly poisonous) f rom liquid alcohol. Process water tank is used for providing necessary water to each section. Through distillation two items-Fuses I and other impurities are getting separated. For the entire operation company is using processed water. Distillation plant is fully controlled by instrumentation and computers.
Blending

Blending is a process where different proportion of constituents is mixed up to produce wide range of products. In this process variety of products are produced by mixing of ENA and other ingredients in varying proportions. The main ingredients are ENA, malt spirit, grape spirit, rum spirit, imported Scotch whisky and caramel for different products. Contents of each product are as follows: Brandy-ENA+ grape spirit+ caramel+ essence Whisky-ENA+ malt spirit+ caramel+ essence Rum -ENA+ rum spirit+ caramel+ essence Gin - ENA+ essence Vodka - ENA+ essence
Effluent Treatment Plant (ETP)

ETP is also a part of the production department. It is waste management system of the company. The waste generated from the alcohol distillation plant is been dumped in this plant. This waste, known as spent wash is an organic pollutant that can prove destructive to the aquatic life if disposed without proper effluent treatment.

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Stores and Purchase Department

This department headed by the manager looks after the procurement of raw materials, its storing and maintenance. The management has given 3 month rolling plan to the department. The department is responsible to purchase and store the materials foe production and maintain the records for the same and to prepare GRN and GRR. The stores and the purchase department can reject the purchased materials if so required, after it has been checked by the quality department. The department has a sufficient warehouse facility for storing both purchased material and finished goods. For storing the finished goods there is an IMFL go -down with capacity of 40000 cases and which is nearby the department. One case carries 9 litres of blend. Molasses is being purchased from different parts of India such as Up, Maharashtra, Tamil Nadu, Andrapradesh, Karnataka, and the company also has an overseas contract with Iran. Furnace oil is purchased from Indian Oil Corporation. Scotch is imported from United Distilleries, Scotland. Grape spirit for the production of whisky is purchased from Goa, Baramathi Distilleries, Maharashtra and the most of other purchases are localized. FIFO method is used for dealing the stock. The firm allows a normal loss of 3% for bottles and 1% for molasses. The unit has a central Materials Management Division (MMD) at Mangalore to control all purchases of raw materials and packing materials for united spirits limited. The company purchased the generators from Kirloskar India Ltd., boilers from Westor works, Mumbai and water treatment plant from ION Exchange India Ltd. Major factories, which supply Bottles, Labels, Mono carton, PP caps to the company are as follows:PP caps: Oriental Containers ltd, Metal Closures, Mumbai. Mono Cartons: Manohar Packaging Glass Bottles: Tantra Glass Ltd, Mahalakshmi Glass Ltd, Mangalore Labels (Stickers): Paper products Ltd, Alert Packing House, Mumbai

y y y y

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Finance Department
Finance is life-blood of any business. Finance department Is headed by the Finance Manager, who looks after the financial dealings of the company.th department is in charge of maintaining all financial documents such as journals, ledgers, income statement, balance sheet. The company, besides growing revenues, showed an improved p rofitability ratio as in obvious from the ratio of earnings before interest & tax (EBIT) to sales growing from 3.9% to 4.61%. The steady improvement in the fixed asset turnover is a measure of the efficiency with which fixed assets are employed. On an increasing revenue base, the gross block of assets has remained more or less constant over the last four years. The company has shown a turnover of Rs 62 crores last year

Balance Sheet Source of Fund Mar-10 Mar-11

Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserve Revaluation Reserves Net worth Secured Loans Unsecured Loans Total Debt Total liabilities
Application Of Funds

100.16 100.16 7.75 0.00 3,001.94 0.00 3,109.48 1,306.48 616.37 1,922.70 5,032.70 787.62 194.99 592.63 28.26 2,051.48 653.97

125.59 125.59 0.00 0.00 4,660.19 0.00 4,785.78 2,589.25 926.82 3,516.07 8,301.85 928.86 222.21 706.65 39.58 1,254.00 829.19
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Gross Block Less: Accum. Depreciation Net Block Capital Work In Progress Investments Inventories

Sundry Debtors Cash And Bank Balance Total Current Assets Loans And Advances Fixed Deposits Total CA, Loans & Advances Differed Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities
Book Value (Rs)

665.04 40.00 1,359.01 1,933.55 44.86 3,337.42 0.00 908.78 68.31 977.09 2,360.33 0.00 5,032.70 3,294.15 309.70

946.16 946.16 1,977.52 5,417.36 44.30 7,439.18 0.00 1088.15 81.78 1,169.93 6,269.25 32.36 8,301.84 207.27 381.05

Profit & Loss A/C Income Mar-10 Mar-11

Sales Turnover Excise Duty Net Sales Other Incomes Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Cost Selling And Admin Expenses

7,470.72 3,389.23 4,081.49 39.08 199.22 4,319.79 2,492.03 19.68 264.11 13.07 796.02

9,205.97 4,277.06 4,928.91 79.75 163.18 5,171.84 2,894.06 19.34 295.57 14.35 1,018.80

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Miscellaneous Expenses Preoperative Exp Capitalized Total Expenses Operating Profit PBDIT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT(Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax
Per Share Data(annualized)

52.38 0.00 3,637.29 643.42 682.50 36.16 0.00 445.49 13.66 459.15 162.50 296.66 1,145.25 0.00 21.58 3.67

51.31 0.00 4,293.33 798.76 878.51 38.63 0.00 524.81 18.86 543.67 167.65 376.02 1,399.25 0.00 31.40 5.22

Shares in Issue (lakh) Earning Per Share (Rs) Equity Dividend (%) Interest PBDT
Book value (Rs) Interpretation:

1,001.63 29.62 20.00 200.85 481.65 309.70

1,255.94 29.94 25.00 315.07 563.44 381.05

In case of comparison between current assets and advances of the year of 2010 with that of 2011 there is increase in value of the current assets so it is profitable in nature.  Current Asset ratio = current asset/current liability
y y

2011 = 1,977.52/8,301.84 =0.24 2010 = 1,359.01/5,032.70 = 0.27

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 Net Profit Ratio = Net Profit after Depreciation/net sales*100

y y

2011= (524.81/9,205.97)*100 = 5.70 2010= (445.49/7,470.72)*100 = 5.96

The above calculated ratio shows the profitability of the company.

Statement of Significant Accounting Policy 1. Basis of preparation of Financial Statements

The Financial Statements of the Company are prepared under historical cost convention, except as otherwise stated, in accordance with the Generally Accepted Accounting Principles (GAAP) in India, the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.
2. Fixed Assets

(a) Fixed assets are stated at their original cost of acquisition and subsequent improvements thereto including taxes, duties, freight and other incid ental expenses related to acquisition and installation of the assets concerned, except amounts adjusted on revaluation and amalgamation. Interest on borrowings attributable to qualifying assets are capitalised and included in the cost of fixed assets as appropriate. (b) The costs of Fixed Assets acquired in amalgamations are determined at their fair values, on the date of acquisition or nearer thereto, or as approved under the schemes of amalgamation. (c) Assets held for disposal are stated at their net boo k value or estimated net realisable value, whichever is lower.
3. Leases

Assets acquired under Leases where the Company has substantially all the risks and rewards of ownership are classified as finance leases. Such leases are capitalised at the inception of the lease at lower of the fair value or the brsent value of the minimum lease payments and a liability is created for an equivalent amount. Each

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lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant perio dic rate of interest on the outstanding liability for each period. Assets acquired as leases where a significant portion of the risk and rewards of ownership are retained by the lesser are classified as operating leases. Lease rentals are charged to the Pr ofit and Loss Account on accrual basis.
4. Depreciation and Amortisation

a) Depreciation is provided on the Straight Line Method, including on assets reviled, at rates described in Schedule XIV to the Companies Act, 1956 except for the following, which are based on management's estimate of useful life of the assets concerned: i) Computers and Vehicles over a period of three and five years respectively; ii) In respect of certain items of Plant and Machinery eligible for triple shift allowance, depreciation is provided for the full year on triple shift basis. b) Fixed assets acquired on amalgamation over the remaining useful life computed based on rates described in Schedule XIV to the Companies Act, 1956, as below: Buildings 1 to 30 years Plant & Machinery 1 to 20 years Vehicles 1 to 4 years Computers 1 to 2 years c) Assets taken on finance lease are prepared over their estimated useful lives or the lease term, whichever is lower. d) Leasehold Land are not amortised. e) Goodwill arising on amalgamation is cha rged to the Profit and Loss Account in the year of amalgamation. Depreciation charged as above is not less than the minimum specified as per Schedule XIV of the Companies Act, 1956.
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5. Impairment

Impairment loss, if any, is provided to the extent the carrying amounts of assets exceed their recoverable amount. Recoverable amount is higher of the net selling price of an asset and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use o f an asset and from its disposal at the end of its useful life.
6. Investments

Long-term Investments are stated at cost to the Company' Provision for diminution in the value is made to recognise a decline, other than temporary, in the value of long term investments. Current investments are valued at cost or market value, whichever is less.
7. Inventories

Inventories are valued at lower of cost and net realisable value. The costs are, in general, ascertained under Weighted Average Method. Finished goods and Work-inProgress include appropriate manufacturing overheads and borrowing costs, as applicable. Excise/Customs duty payable on stocks in bond is added to the cost. Due allowance is made for obsolete and slow moving items.
8. Revenue Recognition

Sales are recognised when goods are despatched from distilleries / warehouses of the Company in accordance with the terms of sale except where such terms provide otherwise, where sales are recognised based on such terms. Gross Sales are inclusive of excise duty but are net of trade discounts and sales tax, where applicable. Income arising from sales by manufacturers under "Tie -up" agreements (Tie-up units) and income from brand franchise are recognised in terms of the respective contracts on sale of the products by t he Tie-up unit/ Franchisees. Income from brand franchise is net of service tax, where applicable. Dividend income on investments are recognised and accounted for when the right to receive the payment is established
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9. Foreign Currency Transactions

Transactions in foreign currency are recognised at the rates of exchange brvailing on the dates of the transactions. Liabilities/ assets in foreign currencies are reckoned in the accounts as per the following principles: Foreign currency liabilities contracted for acquiring fixed assets from a country outside India are restated at the rates ruling at the year end and all exchange differences arising as a result of such restatement are adjusted to the cost of fixed assets. Exchange differences arising on a monetary item that, in substance, forms part of an enterprise's net investment in a non -integral foreign operation is accumulated in a foreign currency translation reserve in the enterprise's financial statements until the disposal of the net investment.
10. Employee Benefits a) Defined-contribution plans

These are plans in which the Company pays br -defined amounts to separate funds and does not have any legal or informal obligation to pay additional sums. These comprise of contributions to the employees' provident fund with the government, superannuation fund and certain state plans like Employees' State Insurance and Employees' Pension Scheme. The Company's payments to the defined contribution plans are recognised as expenses during the period in which the employee s perform the services that the payment covers.
b) Defined-benefit plans Gratuity:

The Company provides for gratuity, a defined benefit plan (the Gratuity Plan), to certain categories of employees. Liability with regard to gratuity plan is accrued based on actuarial valuation, based on Projected Unit Credit Method, carried out by an independent actuary, at the Balance Sheet date. Actuarial Gains and Losses comprise experience adjustments and the effect of changes in the actuarial
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assumptions and are recogni sed immediately in the Profit and Loss Account as income or expense.
Provident Fund:

Company's Provident Funds administered by trusts set up by the Company where the Company's obligation is to provide the agreed benefit to the employees and the actuarial risk and investment risk fall, in substance, on the Company are treated as a defined benefit plan. Liability with regard to such provident fund plans are accrued based on actuarial valuation, based on Projected Unit Credit Method, carried out by an independent actuary, at the balance sheet date. Actuarial Gains and Losses comprise experience adjustments and the effect of changes in the actuarial assumptions and are recognised immediately in the Profit and Loss Account as income or expense.
Death Benefit:

Death Benefit payable at the time of death is actuarially ascertained at the year -end and provided for in the accounts.
y Other long term employee benefits:

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability at the present value of the defined benefit obligation at the balance sheet date based on actuarial valuation carried out at each balance sheet date.
y Short term employee bene fits:

Undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the services. These benefits include compensated absences such as paid annual leave and performance incentives.
11. Expenditure on account of Voluntary Retirement Scheme

Expenditure on account of Voluntary Retirement Scheme of employees is expensed in the period in which it is incurred.
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12. Research and Development

Revenue expenditure on research and development is charged to Profit and Loss Account in the period in which it is incurred. Capital Expenditure is included as part of fixed assets and depreciated on the same basis as other fixed assets.
13. Taxes on Income

Provision for income tax comprises current taxes and deferred taxes. Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets are recognised and carried forward to the extent that there is a reasonable / virtual certainty that suffic ient future taxable income will be available against which such deferred tax asset can be realised. Fringe Benefit Tax is determined at current applicable rates on expenses falling within the ambit of "Fringe Benefit" as defined under the Income Tax Act. 1 961.
14. Earnings per Share

Earning per equity share (basic/diluted) is arrived at based on Net Profit after taxation available to equity shareholders to the basic/weighted average -number of equity shares.
15. Provisions

A provision is recognised when an e nterprise has a resent obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions, other than employee benefits, are not discounted to their present value and are determined based on management, estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.

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16. Contingencies

Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty are treated as contingent and, to the extent not provided for, are disclosed by way of notes on the accounts.
17. Share / Foreign Currency Co nvertible Bonds [FCCB] issue expenses and Premium on Redemption of FCCB :

Share/ Foreign Currency Convertible Bonds issue expenses incurred are expensed in the same year and premium payable on FCCBs is expensed over the currency of FCCBs. Both are adjusted to the Securities Premium Account as permitted by Section 78(2) of the Companies Act, 1956.
18. Expenditure

Expenses are net of taxes recoverable, where applicable.

SWOT ANALYSIS
Strength and weakness are essential internal to the organisation and relate to the matter concerning resources, programmers and organisation in key areas such as:
y y y y y y

Productivity Sales Capacity Size & Segment Competition Growth Pattern and maturity

STRENGTH: y y y y y

Company is World no 2 in the spirit production volume. Company has a high market share Company maintain good employee -employer relation Company promotes employees in participating in managements. Well established due to long time.
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y y y y y

The company has wide distribution network. Better quality control system. The welfare measures taken by USL are highly appreciable Company has high skilled and experienced human resource. Company is using SAP system for accurate maintenance of accounts.

WEAKNESS: y y y y y y

Company does not have any defined appraisal system for its workmen and staff category. Company is using traditional technology in Bottlery. There is no specific tool for calculating inventory. No clear job description for various levels resulting in dual reporting relationship. Existence of the Labour Union resists the changes brought to the co mpany. Work area is comparatively small.

OPPORTUNITIES: y y y y y y

Availability of man power for vacant positions. High market opportunity. Improvement in quality of production / operations / services through systems approach. Groundwork for implementation of new concepts, an ISO 9001:2000 standards is been made to put the above theory into practice. To capture foreign market. Further automation can be done.

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THREATS: y y y y y y y y

Increase in cost due to increase in man power. Illicit liquors and beer. Change in excise policy. Healthy competition within the group in terms of quality /quantity / cost / price. Decline economy of manufacturing sector in general. Foreign liquors. Change in taste and preference of consumers. Government policy towards spirit industries.

INFERENCE
Over the last two years USL has shown a significant increase in its profits as well as the global and Indian liquor market. The company has taken all round measures including new product initiatives, maintaining and improving its product quality, cost controlling measures and various other mergers and acquisitions. USL has all through maintained an efficient team of motivated and delighted employees which adds to its major strength. However, the company has to look into the various issues like; the labour union, job description etc.

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CONCLUSION
UB makes the worlds largest selling whisky and it has 15 millionaire brands. UB Group is the largest brewing company in India with a national market share of 60 per cent. The project entitled An Organizational Study on McDowell & Co. Ltd, Kumbalgodu, Bangalore , was undertaken by the objective to create the idea about the functions of the management of business firms. McDowell & Co. has a successf ul part build -up on its glorious past. The company is expected to come up in flying colours in the coming years. Majority of the people in USL are happy with motivational technique provided by the company and the superiors. When we see the age and length of service of employees in USL we can find that people dont want to change the organization that means they are happy with the environment and motivational technique given by the company. By the advancement it shall acquire in its technology and satisf action among its customers.

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Bibliography:
1. www.unitedspirits.com 2. www.ubgroup.com 3. www.wikipedia.com 4. www.clubmcdowell.com 5. Information provided by the company.

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