From evoking mysteries to awakening untamed desires; from pioneering possibilities to moulding values, Radico continues to produce a kaleidoscope of

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3 From evoking mysteries to awakening untamed desires; from pioneering possibilities to moulding values, Radico continues to produce a kaleidoscope of time-honoured brands, inspired by innovation of all forms and shapes. Dauntless, legendary and valued, Radico Khaitan once again emerges a true virtuoso, creating an exciting invention that blends passion and perfection into a rich aesthetic experience.

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5 Dear Friends, It gives me great pleasure to present to you our financial achievements of The past year has been rife with challenges, but India overcame them, and shone like a beacon through difficult times registering a 6.5% to 7% growth in its Gross Domestic Product. Reliable data shows investments rising from 35.9% last year to 37.1% this year. With these numbers, India s future is bright and shows unquestionable evidence of moving forward swiftly. The installation of stable Govt at the centre is huge positive development and is expected to usher in implementation of the long pending reforms and would enable the economy to achieve growth of 8.5% to 9% in coming years. With renewed focus on revival of rural economy and implementation of National Rural Employment Guarantee schemes & Bharat Nirman, more money shall be available in the hands of consumer to spend, which shall result into demand spiral across various segments of economy. During the year, company consolidated its operations, where the volumes of all main line brands grew over last financial year. Our company has shown great resilience through perseverance. We have proved ourselves once more by staying true to tradition along with being innovative and offering products that are unique. We are a force to reckon with in the domestic market; and maintain a strong presence in the international arena, taking in 75 Crores worth of business, in The recent launch of our premium brandy, Morpheus, is a richly-layered, sterling X0 brandy India s first, with an exceptional aroma and aftertaste. We have positioned ourselves in a niche market previously unexplored by any other liquor manufacturer. We entered the branded liquor business in 1998 with the now legendary 8 PM. It went on to become our best-seller, and the first millionaire brand from Radico. As an organisation, we constantly strive to create value for our customers and stakeholders through exemplary products such as Magic Moments, Royal Whytehall, Contessa Rum, Old Admiral and Bermuda Rum. Magic Moments as a brand has become a millionaire club brand and has already taken over 70% of the operating segment of Vodka and to strengthen its position we have introduced six new flavours Green Apple, Lemon, Lemon Grass & Ginger, Raspberry, Orange and Chocolate. It is our constant endeavour to give our customers products of the highest quality and build on our strong reputation in the Indian market. Cheers!!!

6 8PM Magic Moments Green Apple Orange Lemon Grass & Ginger Raspberry Lemon and Chocolate Morpheus Royal Whytehall Contessa xxx Rum Old Admiral 8PM Bermuda xxx Rum

7 The brand which continues to enhance Radico s premium offering remains unparalleled in the industry. One with a taste that is best enjoyed in solitude or with friends. This is none other than the company s flagship brand 8 PM, adjudged the fastest growing brand in regular price segment. Launched in 1998 as a millionaire brand, 8PM spearheaded the company s entry into the branded business and was an instant success. Blended with scotch and aged to the peak of perfection, 8 PM enjoys a unique balance of strength and smoothness. Still considered as the people s choice, 8 PM rules the taste buds and is loved by all. Finest quality ingredients, superior product experience and attractive packaging drive 8PM to explore different dimensions of its core promise Thaath. The brand has been positioned as a means to unwind and relax. The promise of Aath Ke Thaath encourages the audience to live life in their own style at 8 PM. No wonder, 8 PM is the first brand in the liquor industry to enter the Limca Book of Records by crossing one million cases mark in the first year of its operation. A DIFFERENT MAN, A DIFFERENT TASTE

8 Magic Moments 8PM Green Apple Orange Lemon Grass & Ginger Raspberry Lemon and Chocolate Morpheus Royal Whytehall Contessa xxx Rum Old Admiral 8PM Bermuda xxx Rum

9 Since the creation of Magic Moments, Radico has been quenching the burning zeal of love in all young at heart. The brand which continues to symbolize the zing in life has added six new flavours Orange, Green Apple, Lemongrass & Ginger, Lemon, Chocolate and Raspberry. Flavours have not only added to the Magic Moments Portfolio, but have also added freshness to the entire Magic Moment offering. Vibrant yet elegant, M2 welcomes the young in a sensual embrace of pure fun, pure luxury. The brand s uniqueness lies in its frosted bottle surface with printing on it a first-of-its-kind in India. THERE IS ZING IN EVERY HEART

10 Magic Moments Green Apple Orange Lemon Grass & Ginger Raspberry Lemon and Chocolate 8PM Morpheus Royal Whytehall Contessa xxx Rum Old Admiral 8PM Bermuda xxx Rum

11 Radico revels in the magic of going global with this popular vodka brand, now promising a burst of stimulating oranges, sweet apples, tangy gingers, lip-smacking chocolates and refreshing lemons. Magic Moments is the fastest growing vodka in the segment and is today available across 6 countries. The vodka that makes one enjoy the spirit of every evening is geared to blend the boundaries into a magical experience of purity. Since its launch, Magic Moments has recorded steady growth a success story in the semi premium segment with 75% market share in the operating category. Made from the finest, natural grain extracts, this international quality grain vodka can Zing up life in every sip, pure in form and taste. Blended to perfection and widely accepted in other countries, Magic Moments will surely add an extra Zing to the company s exports. TIME TO REVEL IN THE MAGIC OF MOMENTS

12 Morpheus 8PM Magic Moments Green Apple Orange Lemon Grass & Ginger Raspberry Lemon and Chocolate Royal Whytehall Contessa xxx Rum Old Admiral 8PM Bermuda xxx Rum

13 Radico uncorks another surprise called Morpheus in the super premium segment. This captured spirit of France in a globlet promises joie de vivre to all young achievers who love to relish every milestone with friends, fun and laughter. The new taste matrix of brandy is ready to celebrate every dreamer s aspirations, the joy of dreaming big and realizing those dreams. In every sip lies the seduction of success the desires to win every goal, to rule the world, to quench every thirst at the fountain of achievement. With the French connect and exclusive packaging, the goblet shaped bottle makes a statement in the premium segment. Appearance meets flavour and exclusivity, making Morpheus a signature choice for the sophisticated. With Morpheus beginning to outshine expectations, surely it s time for Radico to raise a toast to success! WONDERS WILL NEVER CEASE

14 Royal Whytehall 8PM Magic Moments Green Apple Orange Lemon Grass & Ginger Raspberry Lemon and Chocolate Morpheus Contessa xxx Rum Old Admiral 8PM Bermuda xxx Rum

15 Radico unveils its new Royal Whytehall Premium Deluxe Whisky bringing a new refinement to the look of its trusted brand Whytehall Classic Deluxe Whisky. Royal Whytehall is Royalty redefined. The redesigned packaging complements Whytehalls s classic image, gracing the colour of the malt inside. Repositioned as New Royalty, the brand promises sophistication and refinement. First introduced with the acquisition from Bacardi, Whytehall Classic Deluxe Whisky is a skillful blend of aged scotch malts and the finest Indian spirits. The result is a fullbodied whisky with a rich, warm taste and a lingering after-note distinctive enough to overpower the taste bud. Now revitalized with the new packaging and blend, Radico once again reinforces Royal Whytehall s quality credentials and its winning position in the market. Previously a Silver medal winner at the International Wine & Spirit Competition (U.K), Whytehall has received a gold medal at Monde Selection 2008 (Belgium) for overall quality. REFINEMENT AND ROYAL RICHNESS

16 Contessa xxx Rum 8PM Magic Moments Green Apple Orange Lemon Grass & Ginger Raspberry Lemon and Chocolate Morpheus Royal Whytehall Old Admiral 8PM Bermuda xxx Rum

17 Contessa Rum enjoys a 21% market share in the defence segment and has won the prestigious medal at the Monde Selection 2008 in Brussels for its overall quality.it is in the regular segment.this is also a millionaire brand of Radico. Contessa Rum was rewarded with Bronze medal at the International Wine & Spirit Competition 2007 held at U.K Contessa Rum has won a Silver medal at Monde Selection 2008 (Belgium) for overall quality. WE SALUTE THE FIGHTING SPIRIT

18 Old Admiral 8PM Magic Moments Green Apple Orange Lemon Grass & Ginger Raspberry Lemon and Chocolate Morpheus Royal Whytehall Contessa xxx Rum 8PM Bermuda xxx Rum

19 One of its flagship brands, Old Admiral, quite popular in South India, has received overwhelming response from the trade channel, consumers and has grown exponentially, defying the industry trends. The quality and consistency of taste is what attracts the consumers. Old Admiral delivers value through a top class blend and packaging. Old Admiral Rum has won a Bronze medal for overall quality at Monde Selection (Belgium) in THE TASTE OF LIFE WORTH PURSUING

20 8PM Bermuda xxx Rum 8PM Magic Moments Green Apple Orange Lemon Grass & Ginger Raspberry Lemon and Chocolate Morpheus Royal Whytehall Contessa xxx Rum Old Admiral

21 8 PM Bermuda Rum is an extension of our flagship whisky brand, 8 PM, into the rum segment. 8 PM is known for delivering quality and value, and these brand values find expression in 8 PM Bermuda Rum too. As the name suggests, 8 PM Bermuda Rum is a Caribbean rum, warm, full-bodied and dark, blended to perfection and matured in old oak casks. 8 PM Bermuda Rum delivers the classic Caribbean experience in every leisurely sip. It has recently won the silver medal at the prestigious Monde Selection award. THE SPIRIT OF THE CARIBBEAN

22 MAN S QUEST TO CONQUER NEVER ENDS... Radico Khaitan believes in expanding horizons and seeking new ways. It has recently set up its second grain based distillery in Aurangabad, Maharashtra. The plant with a production capacity of 30 million litres of molasses-based products will be the largest plant in Maharashtra in its category. In an endeavour to enhance the grain-based products, the company is investing in its already existing Rampur distillery.

23 Corporate Profile BOARD OF DIRECTORS: Dr. Lalit Khaitan Chairman & Managing Director Abhishek Khaitan Managing Director K.P. Singh Wholetime Director Raghupati Singhania Amit Burman Karna Singh Mehta Ashutosh Patra Sanjay Jalan Head-Legal & Company Secretary Dr. Arun Mohan Bansal REGISTERED OFFICE: Bareilly Road, Rampur UP. Phone No , Fax No rampur@radico.co.in CORPORATE OFFICE: Plot No. J-1, Block B-1, Mohan Co-operative Industrial Area, Mathura Road, New Delhi Ph.: , Fax: /42 info@radico.co.in WORKS: Rampur Distillery Bareilly Road, Rampur UP. Plot No. B-24, A-25, Shree Khatushyamji, Industrial Complex, RIICO, Reengus, Dist. Sikar, Rajasthan B-3, UPSIDC Industrial Development Area, Phase-l, Sultanpur Patti, Bajpur Dist. Udham Singh Nagar, Uttaranchal S-59, Timmapur Village, Palmakul Post Shadnagar TQ, Dist. Mehboobnagar, AP 44 KM Stone, Delhi-Rohtak Road, Village & Post, Rohad. Bahadurgarh, Distt. Jhajjar Haryana AUDITORS: M/s. V. Sankar Aiyar & Co. Chartered Accountants Satyam Cinema Building, 2nd Floor Ranjit Nagar Commercial Complex New Delhi INTERNAL AUDITORS: Grant Thornton Member of Grant Thornton International L 41 Connaught Circus New Delhi , India BANKERS AND FINANCING INSTITUTIONS: AXIS Bank Ltd. ABN AMRO Bank Bank of India ING Vysya Bank Indian Overseas Bank Punjab National Bank State Bank of India State Bank of Travancore Standard Chartered Bank State Bank of Hyderabad State Bank of Mysore State Bank of Indore State Bank of Patiala Yes Bank Ltd. OUR WEBSITE:

24 Directors Report Your Directors are pleased to present their 25 th Annual Report together with the audited statement of accounts of the company for the year ended 31 st March, FINANCIAL RESULTS: (Rs. in Million) Sales (including sales from arrangements with other Distilleries / bottling units) Gross Profit (before depreciation and tax) Profit before tax Profit after tax Prior period adjustments Surplus brought forward from last year Profit available for appropriation Transfer to General Reserve Proposed Dividend and tax thereon Balance carried forward OPERATIONS: was a year of consolidation for the Company in all its business segments. Keeping in view of its strategy to mainly focus on growth of its mainline brands, your company closed the year with Sales volume of close to 13 million cases, where sales of all the key brands grew over the last fiscal. Due to significant fall in sugarcane production in the country and increase in crude oil prices, cost of our main raw material, molasses and cost of glass containers saw an unprecedented increase. Despite the tough working environment, the company was able to clock net sales growth of 9% to a level of Rs.933 crores, including sales from contract bottling units. During the year the company was able to put the 8 PM whisky back on growth path. Company has achieved another milestone on account of its Magic Moments brand in the Vodka segment touching volume of 1 million cases in its 3 rd year of its launch. In the last one decade, Company was able to create 4 millionaire brands in its branded portfolio. The other flagship brand of the Company, Old Admiral Brandy achieved sales of 2 million cases with growth of 37%. Your company also took innovative steps to redesign and refurbish its 8 PM whisky brand with new look packaging & Royale Whytehall whisky was re-launched in Key markets with Blue mono-carton pack. Both these initiatives are well received in the market. To meet the aspirations of young consumers, Company launched six new flavours in the Magic Moments Vodka category i.e. Chocolate, Green Apple, Lemon, Lemon Grass & Ginger, Orange and Raspberry, where each flavour has the potential to become a separate vertical in itself. Company has created a new price point for its flavoured Vodka and has high growth expectations in the coming years. The youth icon of Indian Bollywood industry - Hrithik Roshan is the brand Ambassador. The Company continues to be a one of the major player in the Canteen Stores Department (CSD) market. During the year the Company has introduced Magic Moments in CSD. Contessa Rum remains one of the highest selling products in the rum category and is highly established brand in the defense forces. Strategy of establishing the grain ENA plant in Rampur is now yielding expected results in view of the increasing prices of Molasses and is also acting as a hedge. Company has also implemented dual feed technology in its Grain Alcohol plant at Rampur, which has enabled the company to leverage the product mix, depending upon the cost benefit analysis proposition as per the market situation. CAPITAL PROJECTS: During the year your Company has incurred Rs Million on the various capital projects, It includes additional Molasses storage capacity, Bio gas Digesters, Printing Machines at bottle Printing Unit and Malt Maturation facility. Moreover Looking at the increasing acceptability of the Pet bottles in the liquor, Company has increased its Pet bottle manufacturing capacity from 850 lacs bottles to more than 1500 lacs bottles at its most modernized & State of Art plant, located in the tax holiday State of Uttaranchal. A sum of Rs Million is capitalized pursuant to the amendment by way of addition of Para 46 to AS-11. Your Joint Venture Company, Radico NV Distilleries Maharashtra Ltd. has successfully commissioned 36 million litres Distillery in Maharashtra in December Now your Company has two of its own distilleries in major sugar producing belts of Uttar Pradesh and Maharashtra, having total alcohol manufacturing capacity of 146 million litres of Alcohol, including 29 million litres of grain alcohol & malt spirit. FUTURE STRATEGY AND GROWTH: Liquor Industry in India is growing around 12% annually for last 5 years with major growth coming in the white spirits segment and in the category of premium and semi premium space. Company plans to capture significant volumes into the high liquor consuming markets like Kerala, Tamil Nadu, Andhra Pradesh and also to increase its market share in the other existing markets. Company aims to achieve sales volume of more than 20 million cases per year in next 2 years. With the change in state policy recently, the Company has entered into bottling arrangement with a bottler in Tamil Nadu and production has started in May, Production is expected to go into full stream in next six months. Company has also re-launched its Royale Whytehall whisky in new pack in the key markets. Company believes that its branded portfolio constitutes significant value creation for its shareholders. 22

25 Looking to the potential of the market in the Brandy segment and consistent with its policy of premiumisation of brands, Company has recently launched, the Morpheus brandy in the Premium category. Results are encouraging and your company expects to get good response in the coming years. Company also plans to launch new Brand in premium / semi premium space to capitalize on the rapidly growing segment. Your Directors are fully confident that execution of these initiatives will put the company in high growth mode. FUNDING THROUGH ISSUE OF FCCBs/CCPs/GDRs /ADRs: The company has raised USD 50 million through an issue of FCCBs on 26 th July 2006 (USD 40 million) and 25 th August 2006 (USD 10 million on exercise of green shoe option). The FCCBs are convertible into equity shares of the company at the option of the bondholder at a conversion price of Rs per shares (original conversion price being Rs reset on 6 th August 2008 pursuant to clause 6.4 of the subscription agreement). The FCCBs carry a coupon rate of 3.50% per annum with a maturity of five years and one day from the date of issue and are listed on the Singapore stock exchange. Post buy back, the balance FCCBs unless previously converted, redeemed or cancelled are liable to be redeemed on the maturity date at a premium of % of the principal amount. FCCB BUYBACK Pursuant to RBI circular dated 8 th December 2008, your Company has repurchased/bought back the FCCBs to the extent of USD 14 million of the face value on a significant discount, leaving a balance outstanding as on 31 st March 2009 of USD 36 million. EMPLOYEE STOCK OPTION SCHEME: Your Company has always believed in rewarding the employees for their continuous hardwork, dedication and support, which has led the Company on a growth path. To enable the employees to have a sense of participation in the Company ESOP Scheme was implemented in the year The Compensation Committee, at its meeting held on 31 st October 2008, granted 4,32,500 equity stock options to the eligible employees, as per the Employees Stock Option Scheme These options are granted at an exercise price based on the closing price of the shares of your Company on the National Stock Exchange of India Ltd. on the 30 th October 2008 i.e. the last available closing price prior to the meting of the Compensation Committee and shall be vested with the concerned employees in three tranches. The particulars of the option as required by SEBI (employee stock option scheme and employee purchase scheme) employee purchase scheme guidelines, 1999 are appended as Annexure A and forms part of this report. DIVIDEND: Your directors are pleased to recommend a 15% on the paid-up capital of the Company i.e. Rs.0.30 per equity share of Rs.2/- each (face value) to be appropriated from the profits of the year subject to the approval of the shareholders at the ensuing Annual General Meeting. DEMATERIALISATION: More than 95.28% of the shares of the Company have now been dematerialized. Your Directors would request all the members who have not yet got their holdings dematerialized to do so to enable easy trading of the shares, as SEBI has made it compulsory for the shares of the Company to be in dematerialized form for trading. PUBLIC DEPOSITS: During the year under review, your Company has neither invited nor accepted any fixed deposits from the public. SUBSIDIARY COMPANIES: During the year under review, the Company has no subsidiary Company. TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND: Pursuant to Section 205A of the Companies Act, 1956, as amended by the Companies (Amendment) Act, 1999, unclaimed dividend for the financial year ended 31 st December, 1996, 31 st December 1997, 31 st December 1998, 31 st December 1999 and 31 st December 2000 have been transferred to the Investors Education and Protection Fund established by Central Government under Sub Section (1) of Section 205 (C) during August, 2004, July 2005, August 2006, July 2007 and July 2008 respectively. Further, unclaimed dividend for the financial year ended will be transferred to the said fund with in the stipulated time as prescribed in the Companies Act, 1956 read with rules made thereunder. DIRECTORS: Mr. Sanjay Jalan and Mr. Raghupati Singhania shall retire by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offer themselves for reappointment. Both Mr. Sanjay Jalan and Mr. Raghupati Singhania do not hold any shares in the company. AUDITORS: M/s. V. Sankar Aiyar & Co., Chartered Accountants, the auditors of the company, retire at the conclusion of the ensuing 23

26 annual general meeting and being eligible, offer themselves for re-appointment. AUDIT REPORT FOR THE YEAR ENDED The managerial remuneration paid to the Chairman & Managing Director, Managing Director and Whole Time Director is subject to the approval of the Central Government. Other observations made in the Auditors Report are self explanatory and therefore do not call for any further comments under Section 217 (3) of the Companies Act, COST AUDITOR: During the year under review, your directors had with the approval of the central government, appointed Mr. S.N. Balasubramanian, cost auditor, to carry out the cost audit in respect of the distillery units of the Company for the year The cost audit for the year shall be completed within stipulated time as prescribed in the Companies Act, 1956 read with Cost Audit (Report) Rules, AWARDS AND RECOGNITION: Radico has received a series of awards and recognitions for achievements in the business and operations. Dr. Lalit Khaitan was awarded the Inspirational Life Time Achievement Award by Alcobev Magazine for The Magic Moments was awarded best packaging innovation for the year by Alcobev. Mr. Abhishek Khaitan was conferred the top entrepreneur of the year by Ambrosia Indspirit In the same event, the Magic Moments Vodka was awarded the best marketing initiative of the year. In the Monde Selection 2009, the following awards were conferred: Magic Moments Premium Grain Vodka - Gold Medal Magic Moments Flavored Green Apple Vodka Bronze Medal Magic Moments Flavored Lemongrass & Ginger Vodka Gold Medal. ENVIRONMENTAL PROTECTION MEASURES TAKEN BY THE COMPANY: In view of the Corporate Responsibility on Environmental Protection company has adopted number of measures to improve in the field of environment, safety and Health. Measures like Standard operating Procedures, Training programmers for all levels of employees regarding resource conservation, house keeping, Green Belt development, onsite emergency plan etc. have been taken. Treatment of Liquid effluents- All the liquid effluent ( Spent wash) is treated in Bio Digesters wherein pollutants are converted into Bio-Gas which is burn in the boilers to produce steam and power for plant operations. Effluent coming out of these digesters is passed through Reverse Osmosis Filtration plant to reduce the quantity of effluent to about 50%. The remaining effluent is converted into Bio-Compost by mixing it with Press Mud purchased from sugar mills. The Bio-Compost is then sold to farmers as Bio- Manure. Air pollutants- Out of our two operating boilers, one boiler is operating at 100% bio-gas fuel, which is a clean fuel. However we have installed highly efficient Electro Magnetic Precipitator (ESP) for control of suspended particles from the boiler wherein Rice Husk is used in combination with Bio-Gas in order to eliminate the possibility of any kind of pollution from boiler flue gases. The company is complying with all the prevailing environmental protection guide lines of Pollution control boards and consent for the year has already been obtained from State Pollution control Board. CORPORATE SOCIAL RESPONSIBILITY (CSR): Events organized by Radico, Rampur in the Year under Corporate Social Responsibility: 1. Three Eye Check-up Camps were organized by Radico through K D Dalmia Eye Hospital at three places (Ajitpur, Chamrava & Nagar Palika Parishad). Approx 1200 patients were benefited through these Camps. 2. Blood Donation Camp was organized in factory premises. 3. Academic Excellence Awards are awarded to the District Toppers for every Education Session. 4. Two Primary Schools are being run by the Company at Panwaria Village & Baalmiki Mandir near City Ramlila Ground, Koshi Mandir Road, Rampur. 5. Medicines & other facilities are provided to the Kustha Ashram. 6. Woolen pullovers & other amenities were provided to the Orphan House, Rampur. Blankets were distributed to the poor people of nearby area of Rampur during the Winter Season. Company also arranged Bonfire at 18 different roadside places in Rampur City for the poorer section of society. 7. Financial help was provided at Ajitpur Village for a concrete road in the interiors of Ajitpur Village, Rampur. 8. Tree Plantation was carried out in & around 2 KM of the Factory Area. DIRECTORS' RESPONSIBILITY STATEMENT: In terms of provisions of Section 217 (2AA) of the Companies Act, 1956 (Act), your Directors confirm that: (i) In the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures, wherever applicable. (ii) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give 24

27 a true and fair view of the state of affairs of the Company, as at the end of the accounting year and of the profit of the Company for that period. (iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. (iv) The Directors have prepared the annual accounts on a going concern basis. PARTICULARS OF EMPLOYEES: In accordance with the provisions of Section 217 (2A), read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the Directors Report, as an addendum thereto. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Report and accounts, as therein set out, are being sent to all members of the /Company excluding the aforesaid information about the employees. Any member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Office of the Company. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: As required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, the relevant information and data is given at Annexure B. under the Listing Agreement with the Stock Exchanges is enclosed and forms part of this report. CORPORATE GOVERNANCE REPORT FOR THE YEAR : Report on Corporate Governance along with the certificate of statutory Auditors, M/s. V. Sankar Aiyar & Co., confirming compliance of conditions of Corporate Governance, as stipulated under Clause 49 of the Listing Agreement, forms part of the Annual Report. ACKNOWLEDGEMENTS: Your Directors would like to express their sincere appreciation to the investors and bankers for their continued support during the year. Your Directors extend their sincere gratitude to all the Regulatory Authorities like SEBI, Stock Exchanges and other Central & State Government authorities / agencies, Registrars for their support. Your Directors also place on record their appreciation for the dedicated services rendered by the employees at various levies and look forward to their continued support in the future as well. We also take this opportunity to thank all the valued customers who have appreciated our products and have patronized them For & on behalf of the Board MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR : Management Discussion and Analysis Report, as required Place : New Delhi Date : 30 June 2009 Sd/- Dr. Lalit Khaitan Chairman & Managing Director 25

28 ANNEXURE-A Disclosure as required under SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 as on March 31, 2009 Particulars ESOP Scheme 1 Number of options granted 2,590, The Pricing Formula First Grant (for current eligible employees) who would have completed at least one year of service as on the date of the grant Per Option 30% discount to the lower of (a) latest available closing price, prior to the date of the meeting of the Compensation Committee in which options are granted, on the Stock Exchange on which the shares of the Company are listed and on which there is highest trading volume on the said date. (b) average of the weekly high and low prices of the equity shares of the Company during 2 weeks preceding the date of grant of option on the Stock Exchanges of which the shares are listed and on which there is highest trading volume on the said date. Subsequent Grants (for future / new eligible employees) Per option 15% discount to the latest available closing price, prior to the date of the meeting of the Compensation Committee in which options are granted, on the Stock Exchange on which the shares of the Company are listed and on which there is highest trading volume on the said date. 3. Number of options vested 366,306 4 Number of options exercised 246,003 5 Total number of shares arising as a result of exercise of options 246,003 6 Number of options lapsed 741,225 7 Variation in the terms of options NA 8 Money realised by exercise of options (Rs. In Million) Total Number of Options in force 1,602,772 B. Employee-wise details of options granted to: NA (i) Senior managerial personnel Name No. of options granted (ii) Employees who were granted, during any one year, options amounting to 5% or more of the options granted during the year Name No. of options granted MR. RAMESH KHATANHAR MR.RAJEEV JAIN MR. ARUN MOHAN BANSAL 30,000 (iii) Identified employees who were granted option, during any one year, equal or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant NA 26

29 Name No. of options granted C. Diluted Earnings Per Share pursuant to issue of shares on exercise of options calculated in accordance with Accounting Standard (AS) D. The impact on the profits and EPS of the fair value method is given in the table below - (Rs. 000) Profit as reported 65,363 Add - Intrinsic Value Cost 23,573 Less - Fair Value Cost 30,053 Profit as adjusted 58,883 Earning per share (Basic) as reported 0.64 Earning per share (Basic) adjusted 0.57 Earning per share (Diluted) as reported 0.64 Earning per share (Diluted) adjusted 0.57 E. Weighted average exercise price of Options whose (a) Exercise price equals market price Nil (b) Exercise price is greater than market price Nil (c) Exercise price is less than market price Weighted average fair value of options whose (a) Exercise price equals market price Nil (b) Exercise price is greater than market price Nil (c) Exercise price is less than market price F. Method and Assumptions used to estimate the fair value of options granted during the year: The fair value has been calculated using the Black Scholes Option Pricing model The Assumptions used in the model are as follows: Date of grant 31-Oct Risk Free Interest Rate 7.06% % 2. Expected Life years 3. Expected Volatility 48.58% % 4. Dividend Yield 0.47% 5. Price of the underlying share in market at the time of the option grant (Rs.)

30 ANNEXURE-B Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo: The particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under 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, are as under: A. Conservation of Energy: (a) Energy conservation measures taken 1. Improvement of Power factor through installation of AFCR Panel with capacitor bank. 2. Power saving by changing the Cooling Tower Aluminum Casted fan blades to Aerodynamically designed FRP blades and Hub Assembly at Old Cooling Tower. 3. Modification in Fuel (Rice Husk) Feeding System in Boiler in Grain Spirit Plant by providing FD Fan Hot Air through nozzles which has improved the burning efficiency of highly moist Rice Husk resulting in improvement in evaporation ratio specially in rainy season. 4. Saving of approx 3% of total power at generation by reduction of frequency from 50.4 Hz to 49.5 Hz for TG. 5. Recovery of spent lees heat to preheat DM water for boiler in order to reduce steam consumption in preheating the boiler feed water. 6. Saving of power by replacing magnetic ballast light fittings with electronic ballast fittings. 7. Saving of power by replacing old inefficient electric motors with new highly energy efficient motors. (b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy 1. It is proposed to improve final steam temperature of TBW Boiler to improve the specific steam consumption of Turbine by modifying the flue gas path towards the Super Heater Coils. 2. Modification in under bed Biogas Firing System is proposed for CBL Boiler to improve the capacity of Biogas utilization through under bed burners in CBL Boiler. 3. To run two K- 09 machines with one oven with modification in out feed conveyors of both Machines. By doing this we can save power consumption (160 KW), one oven cost & better utilisation of space at Bahdurgarh bottle printing Unit. 4. After having successful trail of replacement of Cooling Tower Aluminum Casted fan blades to Aerodynamically designed FRP blades and Hub Assembly at Old Cooling Tower in RDL it proposed to Replace at all the Cooling Towers IN RDL & GSP Plants. (c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods. 1. By improvement of Power factor through installation of capacitor bank in substation saving of approximate Rs. 2.5 lacs in year & estimated saving potential for next year is Rs Lacs. 2. By reducing the Turbine frequency from 50.4 Hz to 49.5 Hz, the estimated saving potential for the next year is expected to increase further by Rs Lacs. B. Technology Absorption: Process Improvement : 1) Increase in the alcohol % in fermentation house by improving the process parameters in the liquefaction & saccharification process regarding DS & Starch % & maintaining highest standards of hygienic condition at fermentation house resulting in better fermentation efficiency and higher production. 2) Optimised impure cut to 3.5% saving approx lac for the year while it is planned to bring it below for 2.0% in the next financial year resulting in further increase in saving. 3) Reduced steam consumption in grain spirit process while it is proposed to bring it down further in the next year. Also reduced steam consumption in molasses Spirit process saving approx lac for the year ) Reduced power consumption in grain Spirit production process resulting in total saving of approx. Rs lac for the year C. Foreign Exchange earning and outgo: Particulars of earnings and outgo of foreign exchange are given in Notes on Accounts in Schedule 20 (i) of the accounts. Place : New Delhi Date : 30 June 2009 Sd/- Dr. Lalit Khaitan Chairman & Managing Director 28

31 MANAGEMENT DISCUSSIONS AND ANALYSIS FOR THE YEAR GLOBAL SPIRITS MARKET OVERVIEW With stagnating growth in developed markets, emerging markets like India will serve as the stimulant for global alcohol consumption. Key Trends in the Global Spirits Market, Global Spirits Sales Trend The spirits market is in a transitional phase, with many emerging trends that are reshaping the global spirits market landscape and forcing producers to constantly change and tailor their strategies on various geographic, demographic and cultural lines. Increasing sales of alcohol through supermarkets/ hypermarkets The growing strength of supermarkets/hypermarkets are helping these mega-retailers establish themselves as the major channel of distribution for alcoholic beverages as well as spirits. MARKET OVERVIEW BY REGION North America - One of the most premium spirits region in the world in terms of consumer spend on per unit of spirits. Growth is driven by increase in consumption in younger consumers as a result of successful marketing and innovation by manufacturers who positioned spirits as a fashionable alternative. Growth in sale value was achieved due to a shift towards premium products. Latin America - One of the fastest growing segments in terms of value. Heightened economic activity in the region has doubled the Latin American market size over the last five years. This growth has primarily been led by sale of high value spirits with volume consumption growing by c. 22% during Western Europe - Market maturity and a shift towards lower alcohol content products due to increased health awareness led to stagnant volume sales in this region. However, the development of a trend towards premium products led to robust growth in sales value. Eastern Europe - Eastern Europe witnessed decline in volume sales of spirits but in value of the spirits sale increased over the period This has been led by increasing shift towards premium segment Africa and Middle East - This region remains the smallest market for spirits and is dominated by South Africa since consumption in other areas of this region suffer from low levels of income, poor distribution systems and religious beliefs (Islam prohibits consumption of alcohol) Asia-Pacific - By far the largest spirits market in the world in volume terms, accounting for nearly half of global sales. The size of the spirits market in this region is driven mainly from the popularity of inexpensive, local products. In line with the global trend of consumers moving towards premium spirits, Asia-Pacific also witnessed c. 60% value growth and c. 10% volume growth in spirits Australia - With a strong bias towards beer and wine, this market continues to suffer from a lack of interest in spirits GLOBAL SPIRITS MARKET OUTLOOK Branding and product innovation growing in importance Growth despite constraints Forcast global spirits sales by volume ( ) The global spirits market is forecasted to show growth from 2008 to Stricter regulations to curb drink-driving and excessive drinking will negatively affect sales. However, as manufacturers continue to introduce new products and promote brands targeted at capturing the interest of fashionconscious younger consumers and new, contemporary drinking trends, volume sales is likely to continue to grow. Furthermore, consumer's increasing sensitivity to status associated with brands will bolster the trend towards premiumisation. This is expected to contribute to increasing value of sales. INDIAN INDUSTRY STRUCTURE AND OVERVIEW The Indian Spirits Industry is poised for robust growth ahead, riding on the underlying macro-economic scenario. The current slowdown hiccups notwithstanding, the India growth story is very much alive and kicking. This is especially true of the IMFL (India Made Foreign Liquor) segment, which is set to see a surge in consumption in the next few years. While the spirits industry is set for strong growth across all categories -- with whisky, rum and brandy expected to grow in double digits despite their large base - smaller segments like vodka are likely to rise meteorically at about 25% in volume over the period The whisky segment, which currently accounts for 57.8% by volume (FY09), will continue as the market leader and is expected to grow rapidly in view of premiumisation and finer slicing within the segment. HOW THE INDIAN ALCOHOLIC BEVERAGES MARKET IS SPLIT The Indian liquor industry can be broadly classified into five major categories: IMFL, beer, bottled at origin, wine and country liquor. The country liquor segment, which has for long dominated the market and is still the largest at about 225 million cases, has been stagnant over the past couple of years. This segment is expected to either remain stagnant or decline as the growing economic prosperity across India is making more and more people trade up to IMFL on a more regular basis. On the contrary, the IMFL segment has registered a volume CAGR of 12% over the past five years and is the fastest growing and most profitable segment in the alcoholic beverages industry. Another important trend witnessed in this segment is the premiumisation in brandy, whisky and vodka - accounting for both value and volume growth in the segment. The IMFL market's rapid growth is a result of several factors, 29

32 including the overall economic growth, increase in population of the young, easier availability of liquor at a growing number of retail points, increase in on-premise consumption, transition of liquor consumption from an addictive or male viewpoint into a broader milieu of social drinking, rise in female participation, product innovation, consumer specialization, and increasing restrictions on country liquor. Another key factor in the growth of IMFL is the provisioning of consumer items for armed forces by the Government of India's Canteen Stores Department (CSD). Liquor, especially rum, is a major item among provisions. Rum is consumed by defence personnel. Radico is a prominent player in this segment. It may be noted that there are high entry barriers for introduction in the CSD market. For one, extensive screening makes entry of a player very difficult. And even though CSD offers lifetime registration, brands have to maintain a certain value/volume. KEY DRIVERS FOR GROWTH OF LIQUOR CONSUMPTION IN INDIA Economic expansion and increasing urbanization is driving the emergence of a larger middle class that increasingly appreciates and is willing to pay for premium goods and services, including high-end spirits. India is one of the fastest growing economies in the world, with GDP growth of 9% in and an impressive-despiteslowdown rate of 6.79% in With a stable government at the centre and further liberalization of the economy, the GDP growth over the next five years can reasonably be expected to be around 8% to 9%. The economic growth is leading to higher per capita income and a growing proportion of the 'consuming class' in the overall population. The per capita income has increased from US$450 in FY01 to an estimated US$781 in FY09. The number of middle-high income households in the country is likely to double during the next decade. We expect the growth in per capita income to increase the disposable income at a much higher pace than the GDP growth, boosting demand for lifestyle products, including premium alcoholic beverages. The demographic mix of India's population also points to the high potential for growth of the IMFL segment. More than 60% of India's population is in the age group of years. While nearly 850 million people come under the drinking age (the legal age for consumption of alcohol varies in India from among various states), another 100 million are likely to be added to this target population in the next five years. Following these favourable demographics, the demand for alcoholic beverages is set to rise in the country. Another statistic that indicates further growth potential of the Indian market is the fact that the per capita consumption of alcoholic beverages in India is one of the lowest in the world (at 0.86 litre, India was ranked 150th among 184 countries as per a World Health Organisation Report on Alcohol in 2004). This may have increased marginally at present, but even a small further increase in per capita consumption could significantly alter industry growth, given the large population base and the new additions to the drinking age population. In addition to the demographic and economic factors, several soft factors such as the growing acceptability of consuming alcohol in the Indian society in the wake of globalization; greater social acceptability of drinking among women; and more exposure of the youth and urban residents to western media and lifestyle will help boost demand for liquor products in the country. The market scenario is also conducive for growth of the liquor industry, which has been witnessing hectic merger and acquisition activities for the past few years. The M&As are consolidating the industry structure and benefiting the market as a whole. As per a WTO agreement, the Government of India has lowered import duties on liquor, which has led to introduction of some global liquor brands in India. Prices of imported super premium liquors and scotch have also come down. This has resulted in better choice for consumers, particularly at higher prices. OUTLOOK FOR THE INDIAN SPIRITS INDUSTRY The outlook for the industry continues to remain robust, with further move towards premiumisation. Since the Indian consumer is aspirational, consumption is fast moving to premium segments across all product categories and flavours. The current demographic profile and increased spending power will drive the transition to whisky. At present, whisky is the biggest sub-segment in IMFL and will continue to be prominent in the next few years, with premium whisky witnessing major growth. Another trend in the whisky market is the continued shift from molasses-based to grain-based products. Besides, whisky will move to a demand pull, with a greater role for branding and attractive packaging. In the Vodka category, there will continue to be a meteoric growth - on account of a smaller base as well as the changing tastes of the Indian youth, who is more receptive to different types of alcoholic beverages. With innovative packaging and marketing, coupled with the fact that there are inbuilt product benefits greatest of them being mix ability and hence can be used in a variety of cocktails, Vodka is appealing to an ever wider audience (across men and women). The brandy sub-segment grew at 102% in FY08 (semipremium brandy). This strong growth is expected to continue in premium brandy as it is considered aspirational. The rum category, too, will continue to appeal to a growing section of people and maintain its stronghold in the defence segment. Overall, the liquor industry in India is set for high-spirited times ahead. BUSINESS STRATEGY: The company would remain as a focussed and preferred quality product provider. Company s aim is to gain significant market share in brown spirit and fastest growing white spirit segments in the semi premium and premium category. Innovation in product launch by doing extensive cosumer and market reaserch to meet growing aspiration of the young consumers is our special forte and same shall get further demonstrated in future by launch of more quality brands at various price points. Our vision is to consolidate our market share and achieve sale volume of more 20 Million c/s by Company shall fully capitalize on its strong pan 30

33 India distribution net work & manufacturing network of five owned & thirty contract manufacturing units across the country. We hope to build a strong portfolio of brands in all the preferred categories to create value for all our stake holders. Thrust for export shall be given in the continents like Africa, South East Asia & Europe. KEY INITIATIVES UNDERTAKEN: The business has become more robust.in the last year, company has taken several measures on cost optimization, value engineering overhead control and has put the best management practices. We have adequate manufacturing infrastructure in place to take the benefit of increased volumes in the coming years. REVIEW OF OPERATIONS: During the year, the company achieved sales of Rs million from its own operations. The sales of the company's products through arrangements with other distilleries / bottling units spread all over the country stood at Rs million for the year The company's latest brand launch Magic Moments Vodka, in a brief span of around 24 months, have already become one of the fastest growing liquor brand in India with more than 41% sales growth over previous year. The company continues to strengthen its position as a major player in Indian liquor industry. AWARDS AND RECOGNITIONS: Awards received by Magic Moments Vodka in 2008: Monde Selection 2008 Magic Moments Vodka - Gold Medal International Spirits Challenge 2008 Magic Moments Remix Orange Vodka-Silver Medal International Wine & Spirits Competition 2008 Magic Moments Vodka- Silver Magic Moments Flavoured Orange Vodka- Silver Magic Moments Flavoured Green Apple Vodka Silver (Best in Class) Magic Moments Vodka- Best Packaging Innovation- Alcobev-2008 Awards received by Magic Moments Vodka in 2009: Monde Selection 2009 Magic Moments Premium Grain Vodka - Gold Medal Magic Moments Flavored Green Apple Vodka - Bronze Magic Moments Flavored Lemongrass & Ginger Vodka - Gold FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE: The details of the financial performance of the Company are appearing in the Balance Sheet, Profit & Loss Account and other financial statements attached with these accounts. Please refer to the Directors' Report for highlights. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: The Company has put in place adequate internal control systems and procedures at all levels. Internal Control Systems are continuously strengthened through an ongoing review through highly qualified and experienced professionals in all fields including technical. The report of Internal audit is regularly discussed with the management and corrective measures, wherever required, are taken and continuously monitored. The management is reasonably satisfied about the adequacy of these internal control systems. The Audit Committee of the Board meets regularly to review the adequacy of internal controls, internal audit findings with action taken reports and to advise the management with the corrective policies to be adopted by the company, if necessary. HUMAN RESOURCE AND INDUSTRIAL RELATIONS: The Company is putting unremitting efforts to employ professionally qualified personnel in different hierarchy of administration. Further, requisite training is given to employees at different levels by identifying the needs. The Company has an extremely low labor turn over and continues to enjoy a healthy and productive relationship with its employees. There are no financial or commercial transactions that can have a potential conflict of interest between personnel in the management and the Company. OPPORTUNITIES AND THREATS: The liquor industry is a regulated and highly taxed industry. Since, excise duty on liquor is a State subject, multiplicity of laws and regulations legislated by different State governments, have contributed to an environment with different requirements across different states. The liquor market is growing rapidly owing to favorable demographics and rapid economic growth. With over 50% of country's population below 25 years of age, the long term outlook for liquor consumption in India is positive. Increasing social acceptance of liquor consumption and greater western influence have combined with rising disposable incomes in the hands of the population to drive a substantial pull in demand for IMFL. Exposures to western culture and habits through electronic media have contributed to the changed scenario. India's per capita consumption of alcoholic beverages is one of the lowest in the world. According to industry data, per capita consumption of 'Indian made foreign liquor' (IMFL) is 0.8 litres / p.a. compared with the global alcohol beverage consumption average of 3.1 litres / p.a. Even a small increase in per capita consumption could positively and significantly alter the growth of the Indian industry, given its large population base. The key drivers for growth of the company in future would be launching of new brands and increase in the volumes in various markets, acquisitions of brands and creation of own production facilities for bottling, major thrust to exports including bottling arrangements abroad, driving operational efficiencies and expanding spirit capacities. 31

34 RISK AND CONCERNS/OPPORTUNITIES AND THREATS INDUSTRY RISK Liquor business in general is not sensitive to the overall economic environment. India is amongst the lowest per capita consumer of Alcoholic beverages. Favourable demographies, increasing prosperity coupled with disposable income augur well for the future of Industry. With Aam Admi focus of the Central Govt, the rural economy is going to see growth in the coming years, which would translate into more spending power of the consumer thus benefiting the Industry in the long term. Increasing consumer awareness through electronic media and desire for higher levels of standard of living is also propelling demand for premium products. Due to WTO commitments, Central Govt has been consistently reducing the custom duties on Bottled in Origin spirits(bio). However the same is somewhat cushioned with State Governments levying counterveiling duties on Bottled in Origin products, thus offering some measure of protection for the domestic Industry. Since these BIO products are in the higher MRP range, hence our Company is not likely to face any major risk. Industry also suffers from high levels of duties and taxes, which is evident from the fact that for every bottle of liquor, which is sold from a retail outlet, almost two third goes to the exchequer in the form of various levies. Despite this, the industry is growing at a steady pace of around 10% every year. Higher prices of Molasses, a key input for producing spirit, is one of the risk factor. Lower Cane acerage due to drought conditions in some part of the UP has affected the Sugar Production with corresponding effect on Molasses output. Company has been constantly monitoring the situation and has installed a Dual feed Grain Spirit Plant at its Rampur Factory to contain this risk. Recently, Company has also got price increase in some of the Key states for its IMFL products to protect its margins. GEOGRAPHIC RISK Company s business is well diversified and multi locational and as such there is no specific geographic risk, which the Company faces. Company is making all out efforts to improve its export performance in the coming years. CURRENCY RISK Your company also has a portfolio of foreign currency debt, in respect of which it faces exposure to fluctuations in currency as well as interest rate risk. The company adheres to sound risk management practices for its forex exposure. CAUTIONARY STATEMENT: Statements in this Management Discussion and Analysis describing the Company's objectives, projections, estimates and expectations may be forward looking statements within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied important developments that could affect the Company's operations include unavailability of finance at competitive rates - global or domestic or both, reduction in number of viable infrastructure projects, significant changes in political and economic environment in India or key markets abroad, tax laws, litigation, exchange rate fluctuations, interest and other costs. For and on behalf of the Board Sd/- Place : New Delhi Dr. Lalit Khaitan Date : 30 June, 2009 Chairman & Managing Director 32

35 Corporate Governance Report for the year A. COMPANY S PHILOSOPHY ON THE CODE OF GOVERNANCE: Radico philosophy of Corporate Governance is aimed at safeguarding and adding value to the interest of the various stakeholders of the Company including shareholders, lenders, employees and public at large. Emphasis is laid on striking a balance between individual interests & corporate goals while operating within accepted norms of propriety, equity, fair plan and sense of justice. Under good Corporate Governance we are committed to ensure that all functions of the Company are discharged in a professionally sound, accountable and competent manner. Over the years, governance processes and systems have been strengthened at Radico. In addition to complying with the statutory requirements, effective governance systems and practices towards improving transparency, disclosures internal controls and promotion of ethics at work place have been institutionalised. Keeping in line with the above philosophy, the company has implemented the requirements of the code of corporate governance, as stipulated in clause 49 of the listing agreement. Given below are the requisite information relating to corporate functions of your company for the purpose of due transparency on this aspects. B. BOARD OF DIRECTORS: (a) Composition, Meetings and Attendance during the financial year : During the year , the Board of Directors of Radico Khaitan Ltd. comprised of eight Directors. Dr. Lalit Khaitan, an Executive Promoter Director, who was the Managing Director of the Company, was the Chairman of the Board. During the said period, out of eight Directors, five Directors were Non-executive Independent directors, being more than half of the Board. As on , the total numbers of Independent directors were five. The composition of the Board of Directors met the stipulated requirements of the Clause 49 of the Listing Agreement. During the financial year , six Board Meetings of RKL were held on , , , , and The Board of RKL was presented with all relevant information well in advance before each meeting on various matters affecting the working of the Company, as well as those that require deliberation at the highest level. 33

36 The Board s composition and categories were as under: - Sl. Category Name No. of No. of Board No. of Whether Shares No. Director- Committee Board attended held ships Memberships Meetings last in other in other attended AGM companies companies Number % 1. Executive Dr. Lalit Khaitan Nil Nil 4 No Promoter Chairman & Managing Director 2. Executive Mr. Abhishek Khaitan Nil Nil 5 No Promoter Managing Director 3. Executive Non Mr. K.P. Singh 1 Nil 3 Yes Nil - Independent Whole time Director 4. Non-executive Mr. K.S. Mehta 11 Nil 3 No Nil - Independent Chartered Accountant 5. Non-executive Dr. Raghupati Singhania 8 Nil 1 No Nil - Independent Industrialist 6. Non-executive Mr. Ashutosh Patra Nil Nil 6 No Nil - Independent Solicitor & Legal Expert 7. Non-executive Mr. Sanjay Jalan Independent Chartered Accountant Nil Nil 6 No Nil - 8. Non-executive Mr. Amit Burman Independent Industrialist 5 Nil 1 No Nil - (1) Private Limited Companies, Foreign Companies and companies under Section 25 of the Companies Act, 1956 are excluded for the above purposes. (2) Only Audit Committee and Shareholders Grievance Committee are considered for the purpose of Committee position as per Listing Agreement. (3) None of the Directors was a Member in more than 10 Committees nor a Chairman in more than five Committees across all companies in which he was a Director. (b) Code of Conduct for Board of Directors and Senior Management Personnel: The Board had at its meeting held on July 29, 2005, approved the Code of Conduct for Board of Directors and Senior Management Personnel of the Company. This code has been displayed on the Company s website viz. (c) Pecuniary relationships of transaction with the Company of Non-executive directors: The Non-executive directors had no pecuniary relationship or transactions with the Company in their personal capacity during the financial year

37 (d) Details of remuneration to all the directors in the financial year : (1) Executive Directors: - (Rs. in lacs) Sl. Name of Director Salary Commission Perquisites and Retiral Stock Tenure No. Allowances Benefits* Options** 1. Dr. Lalit Khaitan NIL NIL 5 Years 2. Mr. Abhishek Khaitan NIL NIL 5 Years 3. Mr. K.P. Singh NIL Years * Contributions to Provident Fund and Superannuation Fund. ** Will be granted over the period of 4 years, 33% granted in 1 st year, 22% granted (during the year) and balance 44% equally in next 2 years. (2) Non-Executive Directors: Sl. No. Name Sitting Fees (in Rs.) 1. Mr. K.S. Mehta 30,000/- 2. Mr. Ashutosh Patra 1,60,000/- 3. Dr. Raghupati Singhania 10,000/- 4. Mr. Sanjay Jalan 1,60,000/- 5. Mr. Amit Burman 10,000/- Non-executive directors were paid sitting fees of Rs.10,000/- for attending each meetings of the Board and Committees thereof and reimbursement of local conveyance. Non executive directors were not paid any amount by way of salary, perquisites and other benefits including stock options except the above mentioned sitting fees. (3) Reappointment of Directors retiring by rotation: Mr. Sanjay Jalan and Dr. Raghupati Singhania retire by rotation at the ensuing Annual General Meeting of the Company and being eligible offers themselves for reappointment. A brief resume of Directors seeking appointment / re-appointment in the forthcoming AGM in terms of Clause 49 VI (A) of Listing Agreement is given below: Name Mr. Sanjay Jalan Mr. Raghupati Singhania Date of Birth Date of Appointment Expertise in special functional areas Expert in the field of Finance & Accounts Industrialist with over 32 years of experience Qualifications B. Com, F.C.A. B.Sc. FBIM (LON), F.Ins.D (LON) List of outside directorship as on NIL (1) Fenner (India) Ltd. 31 st March, 2009 (2) JKI Employees Welfare Association Ltd. (3) J.K. Tyre & Industries Ltd. (4) J.K. Lakshmi Cement Ltd. (5) J.K. Agri Genetics Ltd. (6) D.CM. Engineering Ltd. (7) Henry F. Cockill & Sons Ltd. (8) Bengal & Assam Company Ltd. Chairman / Member of the other Nil J.K. Lakshmi Cement Ltd. companies as on 31 st March, 2009 No. of shares held Nil Nil (1) Private Limited Companies, Foreign Companies and companies under Section 25 of the Companies Act, 1956 are excluded for the above purposes. (2) Only Audit Committee and Shareholders Grievance Committee are considered for the purpose of Committee position as per Listing Agreement. 35

38 (3) None of the Directors was a Member in more than 10 Committees nor a Chairman in more than five Committees across all companies in which he was a Director. C. COMMITTEES OF THE BOARD DURING THE FINANCIAL YEAR : (1) AUDIT COMMITTEE: The Audit Committee of the Board of Directors of RKL was constituted in conformity with the requirements of Clause 49 of the Listing Agreement, as well as Section 292 A of the Companies Act, The terms of reference and the role of the Audit Committee was to overview the accounting systems, financial reporting and internal control of the Company. The power and role of the Audit Committee were as set out in the Listing Agreement and Section 292A of the Companies Act, (a) Composition, Name of Members and Chairperson, meetings and attendance during the year: Sl. No. Name Chairman/Member/Others No. of meetings Attended 1. Mr. Sanjay Jalan Chairman of the Committee 6 2. Mr. Ashutosh Patra Member 6 3. Mr. Raghupati Singhania Member - Permanent Invitees: 4. Mr. Mukesh Agarwal Internal Advisor 5. Representatives of M/s. V. Sankar Aiyar & Co., External Auditors Chartered Accountants 6. Mr. S.N. Balasubramanian Cost Auditors (b) All members of the Audit Committee are Independent, Non executive directors. By definition both Mr. Sanjay Jalan and Dr. Raghupati Singhania shall be considered to be persons having Accounting or related Financial Management expertise and Mr. Ashutosh Patra being a Legal expert, shall be considered as financially literate. (c) Six Audit Committee Meetings were held during the year. i.e. on , , , , and (d) (e) (f) The meetings were scheduled well in advance. In addition to the Members of the Audit Committee, the meetings of Audit Committee were attended by Heads of Finance and Internal Auditors, Statutory Auditors and Cost Auditors and other Executives, who were considered necessary for providing inputs to the Committee. Quorum: Two independent Directors. Secretary to the Committee: The Company Secretary acted as the Secretary to the Committee. (2) NOMINATION COMMITTEE: Nomination Committee of the Board of Directors of RKL was constituted in order to lay down the guidelines for appointment / reappointment of Directors on the Board of the Company. (a) Terms of reference: To lay down the criteria/ guidelines for the appointment/ re-appointment of the Directors on the Board of Radico Khaitan Ltd. and deciding about the age limit, professional qualifications and experience, credentials and background etc. To recommend the induction of the Board Members to various committees. To decide about the sitting fees to be paid to the Directors for attending the Board Meetings and Committee Meetings from time to time. To scrutinize the candidature of various professionals/ experts and recommend their appointment/ reappointment to the Board from the point of view of inducting new Directors and raising the profile of the Board. 36

39 (b) Composition, Chairman, Meetings and Attendance during the year : (c) (d) The Nomination Committee consisted of the following Members: - No meeting of the Committee was held during the year. Quorum: Two Directors. (3) SHAREHOLDERS GRIEVANCES COMMITTEE: Shareholders Grievances Committee of the Board of Directors of RKL was constituted to look into the redressal of shareholders and investors complaints. (a) Terms of Reference: The Terms of Reference of Shareholders Grievances Committee included investigation into any matter relating to redressal of shareholders / investors complaints pertaining to transfer of shares, non-receipt of Balance Sheet, non receipt of declared dividend, duplicate share certificates, dematerialisation / rematerialisation of shares etc. (b) Composition, Chairman, Meetings and Attendance during the year : The Shareholders Grievances Committee was composed of the following directors: Sl. No. Name Chairman/Member No. of meetings attended 1. Mr. Ashutosh Patra Chairman 4 2. Mr. Sanjay Jalan Member 4 3. Mr. K.P. Singh Member 2 (c) Four meetings of the Committee were held during the said year on , , and (d) Sl. No. Name Chairman/Member/Others 1. Dr. Lalit Khaitan Chairman 2. Mr. Ashutosh Patra Member 3. Mr. K.S. Mehta Member Quorum: Two Directors. (4) COMPENSATION COMMITTEE: a) Terms of Reference: The Terms of Reference of Committee of Directors included grant of stock options to the eligible employees, allotment of shares to employees on exercise of their stock options, ratifying the compensation to Executive Directors etc. b) Composition as of March 31, 2009 Sl. No. Name Chairman/Member No. of meetings attended 1. Mr. Ashutosh Patra Chairman 1 2. Mr. Sanjay Jalan Member 1 3. Mr. K.P. Singh Member 0 c) One meetings of the Committee was held during the year on (5) NAME AND DESIGNATION OF THE COMPLIANCE OFFICER: Dr. Arun Mohan Bansal Head Legal & Company Secretary Radico Khaitan Limited Plot No. J-1, Block B-1, Mohan Co-operative Industrial Area, Mathura Road, New Delhi Tel. Nos /444/500/555, Fax Nos bansala@radico.co.in 37

40 (6) SHAREHOLDER SERVICES, ENQUIRIES, COMPLAINTS: It is the endeavor of the Company to provide prompt, efficient and satisfactory services to its esteemed Shareholders. It takes special care in answering the queries of Shareholders within the shortest possible time frame in collaboration with the registrars M/s. Mas Services Ltd. The Company provided Shareholder services in the following time frame: - Sl. No. Nature of Query No. of days for disposal 1. Share Transfers 15 days 2. Demat of Shares 15 days 3. Dividend revalidation/issue of Dividend Drafts 7 days 4. Change of Address/Bank Mandate 2 days 5. General queries 2 days (7) No. of shareholders complaints received during the year : 38 (8) Total no. of complaints not resolved to the satisfaction of the shareholders: NIL (9) No. of pending Shares Transfers as on 31st March 2009: NIL (10) War arning against Insider Trading: Comprehensive guidelines advising and cautioning the Management and staff on the procedure to be followed while dealing with the shares of Radico Khaitan Ltd. are in place, in light of SEBI (Insider Trading) Amendment Regulations, The Code of Conduct and corporate disclosure practices framed by the company helps in ensuring compliances with the said Regulations. Distribution of Investors Communication received by the Company during the Financial year D. GENERAL BODY MEETINGS: GENERAL BODY MEETINGS OF RKL: (a) Annual General Meetings (last three): Sl. No. Date of AGM Location Time No. of special resolutions passed Rampur Distillery, Bareilly Road 12 noon NIL Rampur (U.P.) do p.m. NIL do p.m. 2 38

41 (b) No Postal Ballots were used / invited for voting in above meetings. (c) It is not proposed to pass any special resolution by Postal Ballot in the forthcoming Annual General Meeting of the Company. E. DISCLOSURES: (a) Related party transactions: The Company has not entered into any transaction of material nature with promoters, directors or the management, their subsidiaries or relatives etc. that may have potential conflict with the interests of the Company at large. Disclosure of related party transactions as per Accounting Standard 18 is given in Note No.13 of Notes forming part of Annual Accounts. All the transactions covered under related party transactions were fair, transparent and at arms length. (b) Compliances by the Company: The Company has complied with the requirements of the Stock Exchanges, SEBI and other statutory authorities on all matters related to capital markets during last 3 years. There were no non-compliance remarks by Stock Exchanges or SEBI or any statutory authority on any matter relating to capital markets during the last three years. F. MEANS OF COMMUNICATION: (a) Quarterly Results: Quarterly results of RKL were taken on record by the Board of Directors within one month of the close of the quarter and were submitted to the Stock Exchanges in terms of the requirements of the Clause 41 of the Listing Agreement. Quarterly results of RKL have been displayed on the Company s web site Quarterly results taken on record and published in the newspapers during : Quarter ended Date of Board Date of Publication in Newspapers Meetings Business Standard (English) Amar Ujala (Hindi) New Delhi edition Moradabad edition 30th June, th September, st December, (b) Abstract of the terms of variation in remuneration of and re-appointment of Dr. Lalit Khaitan, Chairman & Managing Director, Mr. Abhishek Khaitan, Managing Director and Mr. K.P. Singh, Whole time Director of the Company were circulated to the Members pursuant to the provisions of Section 302 of the Companies Act (c) Presentations were made to institutional investors / analysts during the year about the activities of the Company and its financial performance. Corporate presentation is displayed on the Company s website. (d) Management Discussion and Analysis Report for the year has been reviewed by the Audit Committee at its meeting held on and approved by the Board at its meeting held on and forms part of the Annual Report. G. GENERAL SHAREHOLDER INFORMATION (a) Annual General Meeting: 15 th September, 2009 at p.m. at Rampur Distillery, Bareilly Road, Rampur (U.P.). (b) Financial calendar for : (i) Proposed Board Meetings for taking on record quarterly financial results in the year Quarter ending 3rd/4th week of June 2009 July, 2009 September 2009 October, 2009 December 2009 January, 2010 March 2010 May, 2010 (Audited) 39

42 (ii) Book Closure dates: September 8, 2009 to September 15, 2009 (both days inclusive). (iii) Dividend payment date: On or before October 14, (c) Listing on Stock Exchanges and Stock Codes: The Equity shares of RKL continue to be listed on the following Stock Exchanges with following stock codes: Sl. No. Stock Exchange where listed Stock Code / Symbol 1. Bombay Stock Exchange Ltd.(BSE) National Stock Exchange of India Ltd. (NSE) RADICO The listing fees for the year to BSE and NSE has been paid in the month of April (d) Market Price Data: Performance of RKL shares at Bombay Stock Exchange Ltd. and National Stock Exchange of India Ltd.: Year Mumbai Stock Exchange National Stock Exchange Price (Rs.) Price (Rs.) High Low Volume High Low Volume April, May, June, July, August, September, October, November, December, January, February, March, Performance of RKL Scrip vis-a-vis BSE Index 40

43 The shares of RKL are traded in the B1 category at BSE and are also actively traded on NSE. (f) Registrar and Transfer Agents: In terms of the SEBI Order no. D&CC/FITTC/CIR-15/2002 dated December 27, 2002 for having a common agency for share transfer work and electronic connectivity and in terms of the directive of the Stock Exchanges, the company had appointed M/s. Mas Services Ltd., T-34, 2nd Floor, Okhla Industrial Area, Phase-2, New Delhi , as the Registrar and Share Transfer Agents of the Company since March, For the sake of the convenience of the investors / shareholders, the Company shall continue to receive requests for share transfers and Demat of shares at its Corporate office at New Delhi. (g) Share Transfer System: With a view to expedite process of share transfer, the Board of Directors has delegated the power of share transfer to Dr. Arun Mohan Bansal, Head Legal & Company Secretary or Mr. Amit Manchanda, AGM Legal & Secretarial, who have been authorised by the Board to supervise and approve share transfer / dematerialisation of the shares of the company and to sign endorsement on the reverse of the share certificates documents and other papers in relation thereto in conjunction with Registrar and Share Transfer Agent, M/s. Mas Services Ltd. The Company Secretary being the Compliance Officer, monitors the share transfer process in coordination with the Registrars and Share Transfer Agents and presents the report to the Company s Board in each of its meetings, wherein the Board ratifies the transfers/ dematerialisation of shares as approved by the Company Secretary. The transfers are processed at an interval of every 15 days. (h) Distribution of Shareholding of RKL as on 31st March, 2009: Share Holding of Nominal Value of Shareholders Shares % Total Rs. Rs. Number % to Total Physical Dematerialised Total % to shares shares shares Total Upto ABOVE Total

44 (i) Shareholding Pattern as on 31st March, 2009: Sl. No. Category No. of Shares % of Holding 1. Promoters Mutual Funds & UTI Insurance Companies, Banks, State Financial Corporation FIIs Private Corporate Bodies Indian Public NRIs/OCBs Others Total (j) Dematerialisation of Shares: The Company s shares are tradable only in demat / electronic form in the depository system of National Securities Depository Ltd. (NSDL) and Central Depository Services (India) Ltd. (CDSL). As on 31 st March, 2009, 9,76,01,973 equity shares of the Company, amounting to 95.26% of the equity capital, already existed in the electronic form. Those shareholders who have still not got their shares dematerialised are advised to do so, as soon as possible, in view of a many advantages that exist therein and mandatory trading in shares of the Company in Demat form only. (k) (l) International Security Identification No.: NSDL and CDSL INE944F01028 Outstanding GDRs / ADRs / Warrants or any Convertible instruments, conversion date and likely impact on equity: (a) The company has raised USD 50 million through an issue of FCCBs on 26 th July 2006 (USD 40 million) and 25 th August 2006 (USD 10 million on exercise of green shoe option). The FCCBs are convertible into equity shares of the company at the option of the bondholder at a conversion price of Rs per shares (original conversion price being Rs reset on 6 th August 2008 pursuant to clause 6.4 of the subscription agreement). The FCCBs carry a coupon rate of 3.50% per annum with a maturity of five years and one day from the date of issue and are listed on the Singapore stock exchange. Post buy back, the balance FCCBs unless previously converted, redeemed or cancelled are liable to be redeemed on the maturity date at a premium of % of the principal amount. (b) Employee Stock Options: During the year a total of 4,32,500 options have been granted under the Employees Stock Option Scheme Each option, upon exercise of the same, would give rise to one equity share of Rs.2/- each, fully paid up. The exercise would be made at the market price prevailing as on the dates of the grant plus applicable taxes as may be levied on the Company in this regard. These options will vest every year in proportion depending upon specified criteria. 42

45 (c) Equity share warrants: A total of 69,40,000 warrants were forfeited on non subscription by the promoter group in accordance with SEBI (Disclosure and Investor Protection) Guidelines, (m) Plant Locations (n) Registered Office (o) Address for correspondence: (1) Rampur Distillery Bareilly Road Rampur (U.P.). (2) Plot No.B-24, A-25, Shree Khatushyamji Industrial Complex RIICO, Reengus Dist. Sikar, Rajasthan. (3) B-3, UPSIDC Industrial Development Area Phase I, Sultanpur Patti Bajpur, Dist. Udham Singh Nagar, Uttaranchal. (4) S. No. 59 Timmapur Village Palmakul Post Shadnagar Tq. Mahaboobnagar Dist. Hyderabad, Andhra Pradesh. (5) 44 KM Stone Delhi Rohtak Road Village & Post Rohad, Bahadurgarh, Dist. Jhajjar Haryana. Bareilly Road Rampur (U.P.). (1) For Retail Investors Dr. Arun Mohan Bansal Head - Legal & Company Secretary Plot No. J-1, Block B-1 Mohan Co-operative Industrial Area, Mathura Road New Delhi Tel No.: bansala@radico.co.in (2) For Institutional Investors Mr. Mukesh Agarwal AVP Finance & Treasury Plot No.J-1, Block B-1 Mohan Co-operative, Industrial Area Mathura Road New Delhi Tel. No: agarwalm@radico.co.in Place : New Delhi Date : For and on behalf of the Board Sd/- Dr. Lalit Khaitan Chairman & Managing Director 43

46 AUDITORS REPORT ON CORPORATE GOVERNANCE to the shareholders of Radico Khaitan Limited 1. We have examined the compliance of conditions of Corporate Governance by Radico Khaitan Limited for the year ended 31 st March 2009, as stipulated in Clause 49 of the listing agreement of the said Company with stock exchanges. 2. The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the Financial Statements of the Company. 3. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned listing agreement. 4. We state that in respect of investor grievances received during the year ended 31 st March 2009, no investor grievances are pending for a period exceeding one month against the Company as per the records maintained by the Company. 5. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company. For V. Sankar Aiyar & Co. Chartered Accountants Place : New Delhi Date : 30th June, 2009 Sd/- V. Rethinam Partner Membership No

47 Auditors Report To the Shareholders of Radico Khaitan Limited 1. We have audited the attached Balance Sheet of RADICO KHAITAN AN LIMITED as at 31 st March, 2009 and also the annexed Profit and Loss Account and the Cash flow statement of the Company for the year ended on that date. These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted the audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditors Report) Order, 2003 issued by the Department of Company Affairs, Government of India in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order on the basis of such checks as we considered appropriate and according to the information and explanations given to us. 4. Further to our comments in the annexure referred to in paragraph 3 above, we report that: - (a) We have obtained all the information and explanations, which to the best of our knowledge and belief, were necessary for the purposes of our audit; (b) In our opinion, proper Books of Accounts as required by law have been kept by the Company so far as appears from our examination of the books; (c) The Balance Sheet, Profit and Loss Account and cash flow statement dealt with by this Report are in agreement with the Books of Account; (d) In our opinion, the Balance Sheet, Profit & Loss Account and cash flow statement dealt with by this report comply with the accounting standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 to the extent applicable, except that information relating to previous year required in note 11 of Schedule 18 B to the Accounts regarding AS15 on gratuity, being not available. (e) On the basis of written representations received from directors, as on 31 st March, 2009 and taken on record by the Board of Directors, we report that none of the directors of the Company is, disqualified as on 31 st March, 2009 from being appointed as a director in terms of section 274(1)(g) of the Companies Act, 1956; (f) Attention is drawn to the following: i) Note No.6(iii) dealing with the buyback of FCCBs resulting in a gain of Rs lakhs; ii) Note No.7 regarding change in the method of treatment of foreign exchange fluctuation consequent to adopting para-46 of AS-11 on the Effects of Changes in Foreign Exchange Rates. (g) In our opinion and to the best of our information and according to the explanations given to us, the accounts, subject to note 16 regarding managerial remuneration exceeding the limit and requiring the approval of the Central Government and read with the notes on accounts, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 st March, 2009; ii) in the case of Profit and Loss Account, of the profit for the year ended on that date; and iii) in the case of Cash Flow Statement, of the cash flow for the year ended on that date. For V.Sankar Aiyar & Co. Chartered Accountants Sd/- (V.Rethinam) Place: New Delhi Partner Date: 30th June, 2009 M.No ANNEXURE REFERRED TO IN PARA 3 OF OUR REPORT OF EVEN DATE TO THE SHAREHOLDERS OF RADICO KHAITAN LTD. 1. (a) The The Company has maintained proper records, showing full particulars including quantitative details and situation of fixed assets. (b) We are informed that major part of the fixed assets located at the distillery at Rampur were physically verified once during the year. The assets in other locations including Delhi Office have not been physically verified. The assets physically verified are under reconciliation with the book records and discrepancies, if any, can be ascertained only after reconciliation is complete. 45

48 (c) Since there is no substantial disposal of fixed assets during the year, the preparation of financial statements on a going concern basis is not affected on this account. 2 (a) On the basis of information and explanations obtained, stocks of finished goods and raw materials of the distillery at all its locations have been under physical check by the Excise Department in coordination with the company s supervisory staff at frequent intervals. Stocks at other locations, stores and spares have been physically verified by the management during the year at reasonable intervals. (b) The procedures of physical verification of stocks followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business. (c) The Company is maintaining proper records of inventory. Discrepancies noticed on verification between the physical stock and book records were not material. 3 (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained u/s.301 of the Companies Act, (b) In respect of loans taken, the Company, under a specific manufacturing and selling arrangement with a joint venture company covered in the register required to be maintained u/s.301 of the Act, is provided with interest-free working capital advance. This varies depending on the business requirement through the year. The amount outstanding at the year end was Rs lakhs. The terms and conditions of the advance availed by the Company are not prejudicial to its interest. 4 In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods. To the best of our knowledge, no major weaknesses in internal control systems were either reported or noticed during the course of our audit. 5 a) We are informed that the contracts or arrangements that are required to be entered into the register in pursuance of Sec.301 of the Act have been entered. b) In our opinion and according to information and explanations given to us, the transactions made in pursuance of contracts or arrangements referred to in (a) above and exceeding the value of Rs.5 lakhs are for the specific requirements of the Company for which suitable alternative sources are not available for comparison of prevailing market prices. 6. The Company has not accepted deposits from public within the meaning of Sec.58A/ 58AA of the Companies Act, 1956 or any other relevant provisions of the Act and the rules framed thereunder. 7. During the year, outside Consultants have carried out internal audit and submitted their reports. In our opinion, the company has an internal audit system commensurate with its size and nature of its business. 8. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been maintained and the required statements are in the process of compilation. However, we have not made a detailed examination of the records with a view to determine whether they are accurate or complete. 9.(a) According to the records of the Company, the Company has been generally regular in depositing with appropriate authorities the statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales tax, Wealth-tax, Service tax, Customs duty, Excise duty, Cess and other statutory dues. According to the information and explanations given to us, there are no undisputed amounts payable in respect of the aforesaid statutory dues, which have remained outstanding as at for a period of more than 6 months from the date they became payable. (b) As regards dues not deposited on account of disputes, the position as explained by the Company is as under: i. Sales Tax S. No. Year Amount Rupees Forum where in thousands pending & 127 Revision before Allahabad High Court Trade Tax Tribunal, Moradabad Writ petition before Allahabad High Court (Bank Guraantee issued for Rs. 20 lakhs) ii. Excise Duty S. No. Year Amount Rupees Forum where pending in thousands Allahabad High Court Lucknow Bench to 9238 Allahabad High Court Lucknow Bench 2005 (Bank Guarantee issued) to 4867 Allahabad High Court Lucknow Bench The Company has no accumulated losses at the end of the financial year. The Company has not incurred cash losses either in the current year or in the immediately preceding financial year. 11. On the basis of the verification of records and information and explanations given by the management, the Company has not defaulted in repayment of dues to financial institutions and banks. There are no debentures outstanding either at the beginning or at the end of the year. 46

49 12. The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures or other securities. 13. The Company is not a chit fund/ nidhi/ mutual benefit fund/ society. Therefore, the provisions of clause 4 (xiii) of the Order are not applicable 14. As regards dealing or trading in shares, securities, debentures and other investments, proper records have been maintained of the transactions and contracts and timely entries made therein. The shares, securities, debentures and other investments have been held by the Company in its own name except to the extent mentioned in note no.4 of Schedule 7 of the Balance Sheet and to the extent of the exemption, granted under section 49 of the Act. 15. The Company has an outstanding guarantee of USD 2.08 million to Standard Chartered Bank on behalf of Radico International DMCC and Rs crores to State Bank of India on behalf of Radico NV Distilleries Maharashtra Ltd for loan facilities granted to them. On the basis of information and explanations given to us, in our opinion, the terms and conditions whereof, prima-facie, are not prejudicial to the interest of the Company. 16. According to the records of the Company, term loans taken during the year have been applied for the purpose for which they were obtained. 17. According to the cash flow statement and other records examined by us and information and explanations given to us, on an overall examination of the balance sheet of the Company, we report that funds raised on short terms basis during the year have not been used for long term investment. 18. On the basis of information and explanations given to us, during the year, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act. 19. Since no secured debentures have been issued during the year, question of creating securities does not rise. 20. Since there was no public issue of securities by the Company during the year, verification of the end-use of the money does not arise. 21. Based on the audit procedures performed and the representation obtained from the management, we report that no fraud on or by the Company has been noticed or reported during the year under audit. Place: New Delhi Date : For V. Sankar Aiyar & Co. Chartered Accountants Sd/- (V. Rethinam) Partner M.No

50 Balance Sheet as at 31st March, 2009 SCHEDULE Rs. in 000 Rs. in 000 NO. AS AT AS AT SOURCES OF FUNDS 1. SHAREHOLDERS FUNDS SHARE CAPITAL 1 204, ,924 RESERVES AND SURPLUS 2 REVALUATION RESERVE 94,103 94,739 OTHER RESERVES 2,007,190 2,101,293 2,095,889 2,190,628 EMPLOYEES STOCK OPTIONS OUTSTANDING 50,580 62,315 LESS: DEFERRED EMPLOYEE COMPENSATION 19,901 30,679 37,261 25,054 SHARE APPLICATION MONEY (SEE NOTE 5) 0 113, LOAN FUNDS SECURED 3 4,002,532 2,109,839 UNSECURED 4 3,001,106 3,290,451 7,003,638 5,400, DEFERRED TAX BALANCE (SEE NOTE 8(e)) 367, ,700 TOTAL 9,707,534 8,256,065 APPLICATION OF FUNDS 1. FIXED ASSETS 5 GROSS BLOCK 5,119,182 4,417,998 LESS: DEPRECIATION TO DATE 1,112, ,774 NET BLOCK 4,006,997 3,472,224 CAPITAL WORK IN PROGRESS 6 769,772 4,776, ,164 3,881, INVESTMENTS 7 525, , FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT (SEE NOTE 7) 45, CURRENT ASSETS, LOANS & ADVANCES 8 a) ACCRUED INCOME 156, ,047 b) INVENTORIES 1,084, ,850 c) SUNDRY DEBTORS 1,700,268 1,389,748 d) CASH & BANK BALANCES 419, ,461 e) LOANS & ADVANCES 2,357,300 2,222,811 5,718,375 5,332,917 LESS: CURRENT LIABILITIES AND PROVISIONS LIABILITIES 9 866, ,571 PROVISIONS , ,382 1,358,817 1,293,953 NET CURRENT ASSETS 4,359,558 4,038,964 TOTAL 9,707,534 8,256,065 SIGNIFICANT ACCOUNTING POLICIES AND NOTES 18 ANNEXURE TO OUR REPORT OF DATE For V. Sankar Aiyar & Co. Dr. Arun Mohan Bansal Dr. Lalit Khaitan Abhishek Khaitan Chartered Accountants Head Legal & Company Secretary Chairman & Managing Director Managing Director V. Rethinam Partner M. No Place : New Delhi Ajay K. Agarwal Dilip K. Banthiya Sanjay Jalan Dated : June 30, 2009 Sr. Vice President (Finance & Accounts) Chief Financial Officer Director 48

51 Profit and Loss Account for the year ended 31st March, 2009 SCHEDULE Rs. in 000 Rs. in 000 NO. CURRENT PREVIOUS YEAR YEAR INCOME SALES & INCOME FROM OPERATIONS 11 11,747,266 12,281,871 LESS: EXCISE DUTY 4,786,975 4,187,747 6,960,291 8,094,124 OTHER INCOME , ,023 ACCRETION/DECRETION TO STOCKS ,338 46,500 7,416,615 8,281,647 EXPENDITURE PURCHASES AND MATERIALS 14 3,426,564 4,507,452 SALARIES, ALLOWANCES AND BENEFITS , ,471 OTHER EXPENSES 16 2,631,247 2,352,769 FINANCIAL EXPENSES , ,696 7,061,733 7,700,388 PROFIT BEFORE DEPRECIATION AND TAXATION 354, ,259 DEPRECIATION FOR THE YEAR 231, ,475 LESS:TRANSFER FROM REVALUATION RESERVE , ,839 PROFIT BEFORE TAXATION 123, ,420 PROVISION FOR TAXATION : CURRENT TAX ,000 DEFERRED TAX -SEE NOTE: 8 (e) 45,300 57,500 FRINGE BENEFIT TAX 13,000 13,500 58, ,000 LESS:MAT CREDIT AVAILABLE FOR SET OFF ,300 66,300 60,700 PROFIT AFTER TAXATION 65, ,720 ADD:SURPLUS BROUGHT FORWARD FROM LAST YEAR 236, ,844 LESS:TAX PAYMENTS ON THE BASIS OF ITSC ORDER (SEE NOTE 8 (d)) 0 236,298 65, ,524 PROFIT AVAILABLE FOR APPROPRIATION 301, ,244 TRANSFERS TO: GENERAL RESERVE 5, ,000 DIVIDEND ON : PREFERENCE 6.75% 0 35,042 PROVISION OF TAX ON ABOVE 0 5,955 PROPOSED DIVIDEND ON : FOR PREVIOUS YEAR 66 0 EQUITY 15% (PREVIOUS YEAR 25%) 30,739 51,231 PROVISION OF TAX ON ABOVE 5,224 8,718 36, ,946 BALANCE CARRIED TO BALANCE SHEET (SCHEDULE 2) 260, ,298 EARNING PER SHARE OF FACE VALUE Rs 2/- (SEE NOTE 15) BASIC & DILUTED : -BEFORE PRIOR PERIOD & EXTRA ORDINARY ITEMS AFTER PRIOR PERIOD & EXTRA ORDINARY ITEMS *SALES THROUGH OTHER DISTILLERIES/BOTTLING UNITS UNDER ARRANGEMENT RS.46, LACS (PREVIOUS YEAR Rs.45, LACS) NOT INCLUDED IN THE ABOVE. (REFER NOTE 22 OF SCHEDULE DURING THE PERIOD to , AS PER THE POLICY OF THE STATE GOVERNMENT OF UTTAR PRADESH, THE SALE OF COUNTRY LIQUOR WERE REQUIRED TO BE ROUTED THROUGH A DESIGNATED AGENCY, RESULTING IN INCREASE OF BOTH SALES & PURCHASES BY Rs LACS, HAVING AN IMPACT ON COMPARATIVES. ANNEXURE TO OUR REPORT OF DATE For V. Sankar Aiyar & Co. Dr. Arun Mohan Bansal Dr. Lalit Khaitan Abhishek Khaitan Chartered Accountants Head Legal & Company Secretary Chairman & Managing Director Managing Director V. Rethinam Partner M. No Place : New Delhi Ajay K. Agarwal Dilip K. Banthiya Sanjay Jalan Dated : June 30, 2009 Sr. Vice President (Finance & Accounts) Chief Financial Officer Director 49

52 Schedules to Statement of Accounts Rs. in 000 Rs. in 000 AS AT AS AT SHARE CAPITAL AUTHORISED 170,000,000 EQUITY SHARES OF Rs 2 EACH 340, ,000 6,000,000 PREFERENCE SHARES OF RS 100 EACH 600, , , ,000 ISSUED AND SUBSCRIBED 102,462,219 EQUITY SHARES OF RS 2 EACH, FULLY PAID UP 204, ,924 (PREVIOUS YEAR 102,462,219) 204, ,724 Note : In terms of a scheme of rehabilitation of Abhishek Cement Ltd.(ACL) approved by BIFR vide order dated , the then Radico Khaitan Ltd. was merged with ACL and on merger, the latter was renamed as Radico Khaitan Ltd. Post merger, the then existing share holders of Radico Khaitan Ltd. were issued shares of the amalgamated company aggregating to Rs 191,716 thousands. AS AT AS AT ADDITIONS DEDUCTIONS RESERVES AND SURPLUS REVALUATION RESERVE 94, ,103 CAPITAL RESERVE * (SEE NOTE BELOW) 7, , ,368 SHARE PREMIUM ACCOUNT # 649, , ,896 GENERAL RESERVE 1,200,000 5, ,708 1,066,292 PREFERENCE SHARES REDEMPTION RESERVE 2, ,002 1,954, , ,138 1,840,661 SURPLUS 236, ,632 2,190,628 2,101,293 * NOTE : ADDITION ON ACCOUNT OF FORFEITURE OF APPLICATION MONEY. (SEE NOTE 5) # DEDUCTION ON ACCOUNT OF PREMIUM ON FCCBs. 3. SECURED LOANS 1. TERM LOANS - FROM FINANCIAL INSTITUTIONS/BANKS i). AXIS BANK LTD. (SEE NOTE 1 BELOW) 125, ,257 ii). G.E.CAPITAL SERVICES INDIA (SEE NOTE 7 BELOW) 0 5,000 iii). BANK OF INDIA,LONDON (FOREIGN CURRENCY LOAN) (SEE NOTE 1 BELOW) 49, ,477 iv). STANDARD CHARTERED BANK LTD.(FOREIGN CURRENCY LOAN) (SEE NOTE 1 BELOW) 60,865 95,928 v). STATE BANK OF INDIA (SEE NOTE 1 BELOW) 504,505 0 vi). STATE BANK OF HYDERABAD (SEE NOTE 1 BELOW) 399,997 0 vii). STATE BANK OF PATIALA (SEE NOTE 1 BELOW) 149,999 0 viii).state BANK OF TRAVENCORE (SEE NOTE 1 BELOW) 151, TERM LOANS - OTHERS BHW HOME FINANCE LIMITED (SEE NOTE 4 BELOW) 0 1, OTHER THAN TERM LOANS - FROM BANKS (SECURED BY HYPOTHECATION OF INVENTORIES AND BOOK DEBTS) (NOTE 3 BELOW) 2,561,033 1,646,437 4,002,532 2,109,839 NOTES: 1. SECURED BY A PARI-PASSU FIRST CHARGE ON GROSS BLOCK OF THE FIXED ASSETS OF THE COMPANY, BOTH PRESENT AND FUTURE. 2. SECURED IN ADDITION BY SECOND CHARGE ON CURRENT ASSETS OF THE COMPANY. 3. SECURED IN ADDITION BY SECOND CHARGE ON FIXED ASSETS OF THE COMPANY. 4. TO BE SECURED BY DEPOSIT OF TITLE DEED OF PROPERTY. 5. NON FUND BASED FACILITIES PROVIDED BY BANKS ARE ALSO SECURED BY A SECOND CHARGE ON THE FIXED ASSETS OF THE COMPANY. 6. AMOUNT DUE WITHIN ONE YEAR- Rs LACS (PREVIOUS YEAR Rs LACS) 7. SECURED BY FIRST CHARGE ON MALT SPIRIT PLANT. 50

53 Rs. in 000 Rs. in 000 AS AT AS AT UNSECURED LOANS SHORT TERM - ( EXCEPT ITEM NO. (vii) - FCCB) (i) STATE BANK OF HYDERABAD 99, ,991 (ii) BANK OF RAJASTHAN LTD. 199,929 0 (iii) SBI FACTORS & COMMERCIAL SERVICES PVT. LTD. 120,538 71,655 (iv) COMMERCIAL PAPER 0 100,000 (v) ING-VYSYA BANK LTD ,305 (vi) TAMILNAD MERCANTILE BANK LTD. 97, ,000 (vii) FOREIGN CURRENCY CONVERTIBLE BONDS (SEE NOTE 6) 1,825,920 1,998,500 (viii)yes BANK LTD ,000 (ix) STATE BANK OF MYSORE 252, ,000 (x) AXIS BANK LTD 404,756 0 (GUARANTEED BY CHAIRMAN AND MANAGING DIRECTOR-SINCE 3,001,106 3,290,451 REPAID AND GUARANTEE STANDS CANCELLED) 5. FIXED ASSETS Rs. in 000 DESCRIPTION OF COST/REVALUATION DEPRECIATION NET BLOCK ASSETS AS ON ADDITIONS DEDUCTIONS AS ON UPTO FOR THE WRITTEN UPTO AS ON AS ON YEAR BACK INTANGIBLE ASSETS BRANDS & TRADE MARKS 500, ,470 84,375 24, , , ,095 GOODWILL 95, ,500 19,100 4, ,875 71,625 76,400 TANGIBLE ASSETS FREEHOLD LAND 192,182 1, , , ,182 LEASEHOLD LAND 194, , , ,861 67,792 68,670 BUILDINGS 388,994 95,246 8, ,240 45,463 13, , , ,531 PLANT & MACHINERY 2,843, ,442 86,382 3,465, , ,658 56, ,843 2,750,322 2,239,960 FURNITURE & FITTINGS 39,688 1, ,147 14,587 2, ,909 24,238 25,101 VEHICLES 92,089 6,111 17,257 80,943 25,686 8,009 8,482 25,212 55,731 66,403 LEASEHOLD IMPROVEMENTS 71, ,315 27,433 9, ,825 34,490 43,882 TOTAL 4,417, , ,640 5,119, , ,855 65,444 1,112,185 4,006,998 3,472,224 PREVIOUS YEAR 3,606, ,682 11,760 4,417, , ,475 6, ,774 3,472,224 2,844,754 NOTES: 1. VALUES WRITTEN UP ON REVALUATION: (BASED ON APPROVED VALUERS REPORT) AS ON / AS ON FREEHOLD LAND 85,422 - LEASEHOLD LAND 122,828 - BUILDING - 15,292 (WDV Rs 9915 Thousands) PLANT & MACHINERY - 8,709 (WDV Rs NIL) TOTAL 208,250 24, ADDITIONS INCLUDE Rs. 194,091 THOUSANDS ON ACCOUNT OF ADJUSTMENT OF FOREIGN EXCHANGE FLUCTUATION LOSS. (REFER NOTE NO 7) 3. VALUATION WAS MADE AT THE THEN FAIR MARKET VALUE - NO INDICES ATTACHED TO THE REPORT. Rs. in 000 Rs. in 000 AS AT AS AT CAPITAL WORK IN PROGRESS (AT COST) (i) PLANT & MACHINERY 73,926 12,566 (ii) ADVANCES TO VENDORS/CONTRACTORS (UNSECURED) (CONSIDERED GOOD) : (INCLUDING FOR ACQUISITION OF PROPERTY) 695, , , ,164 51

54 Rs. in 000 Rs. in 000 AS AT AS AT INVESTMENTS-LONG TERM (AT COST) (EXCEPT WHERE STATED OTHERWISE) FULLY PAID UP SHARES IN FACE VALUE No. of FACE VALUE No. of BODIES CORPORATE. Per Share (Rs.) Shares Rs. IN 000 Shares (A) TRADE - UNQUOTED - EQUITY 1. RADICO GLOBAL LTD - (SEE NOTE 5 BELOW) (INCORPORATED IN JEBEL ALI FREE ZONE,DUBAI) 103, ,045 89,964 SHARES OF AED 100 EACH (PREVIOUS YEAR 89,964) 2. RADICO NV DISTILLERIES MAHARASHTRA LTD ,750 81, , (INCLUDING 298,125 BONUS SHARES RECEIVED DURING THE YEAR) 3. DIAGEO RADICO DISTILLERY P LTD. 10 7,500,000 75, ,750,000 17,500 (B) TRADE - UNQUOTED - PREFERENCE SHARES RADICO NV DISTILLERIES MAHARASHTRA LTD 100 2,000, , % CUMULATIVE - NON CONVERTIBLE PREFERENCE SHARES (REDEEMABLE AFTER ) 459, ,545 (ii) NON-TRADE - QUOTED (SHORT TERM) 1. ADANI ENTERPRISES LTD ADITYA BIRLA NUVO LTD AIA ENGINEERING LTD ALSTOM PROJECTS (INDIA) LTD APTECH LTD , BHARTI AIRTEL LIMITED BASF INDIA LTD BILCARE LTD ,500 2, BEML LTD BHARAT HEAVY ELECTRICALS LTD CAIRN INDIA LTD , CENTURY TEXTILES & INDUSTRIES LTD ,500 1, CONTAINER CORPORATION OF INDIA LTD COROMANDEL FERTILIZERS LTD , CROMPTON GREAVES LTD DISH TV INDIA LTD ,000 1, DLF LTD ,665 2, HINDUJA FOUNDRIES LTD. 10 1, ,000 1, EDUCOMP SOLUTIONS LTD EVINIX.ACCESSORIES LTD. 1 10, ,920 1, GAMMON INDIA LTD GMR INFRASTRUCTURE LTD. 2 2, ,000 2, GREAT EASTERN SHIPPING COMPANY LTD GREAT OFFSHORE LTD MAHINDRA LIFESPACE DEVELOPERS LTD HOUSING DEVELOPMENT FINANCE CORPORATION LTD HOUSING DEVELOPMENT & INFRASTRUCTURE LTD HAVELLS INDIA LTD ,000 3, HINDUSTAN DORR-OLIVER LTD , HINDUSTAN PETROLEUM CORPORATION LIMITED HMT LTD. 10 1, ,000 3, HDFC BANK LTD ITC LIMITED ICICI BANK LTD INDIABULLS REAL ESTATE LTD. 2 1, ,000 7, INDIABULLS FINANCIAL SERVICES LTD. 2 6,200 5, ,000 9, ION EXCHANGE (INDIA) LTD ,000 2, INDIA CEMENTS LTD IFCI LTD ,000 1, IDBI BANK LTD ,500 2, INFRASTRUCTURE DEVELOPMENT FINANCE COMPANY LTD ,900 1, INDIA INFOLINE LTD ,000 1, ICRA LTD JAI CORP LTD. 1 14,500 6, ,865 8, J K CEMENT LTD ,000 1, JAIPRAKASH HYDRO-POWER LTD. 10 5, ,000 3, JAIPRAKASH ASSOCIATES LTD. 2 2, ,450 11, MPHASIS LIMITED K.S. OILS LTD. 1 6, , KARUTURI GLOBAL LTD. 1 8, , KEC INTERNATIONAL LTD LARSEN & TOUBRO LTD MOSER BAER INDIA LTD

55 FACE VALUE No. of FACE VALUE No. of Per Share (Rs.) Shares Rs. IN 000 Shares 54. MCLEOD RUSSEL (INDIA) LTD NAVIN FLUORINE INTERNATIONAL LTD NETWORK18 MEDIA & INVESTMENTS LTD , OIL & NATURAL GAS CORPORATION LTD PARSVANATH DEVELOPERS LTD , PATEL ENGINEERING LTD PRAJ INDUSTRIES LTD. 2 2, ,970 2, PUNJ LLOYD LTD ,000 2, POWER GRID CORPORATION OF INDIA LTD , RELIANCE COMMUNICATIONS LTD , RELIANCE INDUSTRIAL INFRASTRUCTURE LTD ,500 8, RELIANCE INDUSTRIES LTD ,346 9, RELIANCE PETROLEUM LTD. 10 4, ,000 17, RELIANCE CAPITAL LTD ,880 7, RELIANCE INFRASTRUCTURE LTD ,340 13, RELIANCE POWER LTD. 10 7,000 1, RURAL ELECTIFICATION CORPORATION LTD RELIANCE NATURAL RESOURCES LTD. 5 1, ,000 4, SIEMENS LTD. 2 1, ,110 2, SESA GOA LTD , SHREE RENUKA SUGAR LTD. 1 4, LANCO INFRATECH LTD. 10 3,000 1, MERCATOR LINES LTD. 1 8, UNITED BREWERIES (HOLDINGS) LTD. 10 1, ,750 4, UNITED SPIRITS LTD UNITED PHOSPHOROUS LTD WELSPUN GUJARAT STAHL ROHREN LTD YES BANK LTD , GUJARAT NRE COKE LIMITED (BONUS SHARES) 10 1, , ,165 ((B) NON-TRADE - UNQUOTED (i) UNITS OF MUTUAL FUNDS No. of Units No. of Units 1. HDFC PREMIER MULTICAP FUND 448,935 8,328 50,099 1, FRANKLIN INDIA BLUE CHIP FUND 50,264 8,339 7,174 1, TEMPLETON FLOATING RATE INCOME FUND RELIANCE VISION FUND RETAIL PLAN 36,788 8,328 4,774 1, RELIANCE LIQUID FUND GROWTH 1, RELIANCE GROWTH FUND 567 1, RELIANCE LIQUID FUND WEEKLY DIVIDEND-RELIANCE PMS 58, , SBI MAGNUM EQUITY FUND DIVIDEND 34,781 8,335 34,781 1, SBI MAGNUM INSTA CASH FUND-DIVIDEND (ii) NONCONVERTIBLE REDEEMABLE DEBENTURES : -CITICORP FINANCIAL INDIA LTD ,000 4, ,000 4,000 - SAI RAYALASEEMA PAPER MILLS LTD , , (iii) FULLY PAID UP EQUITY SHARES OF NEW URBAN COOPERATIVE BANK LTD. 25 2, , C. NATIONAL SAVINGS CERTIFICATES (Face Value Rs. 153,000) LODGED WITH GOVERNMENT DEPARTMENTS AS SECURITY 40,255 9, , ,713 AGGREGATE VALUE OF INVESTMENTS: BOOK VALUE MARKET VALUE BOOK VALUE MARKET VALUE QUOTED 26,566 8, , ,317 UNQUOTED 463, ,964 0 UNITS OF MUTUAL FUND (NAV Rs THOUSANDS, PREVIOUS YEAR Rs 4450 THOUSANDS) 35, , ,866 8, , ,317 NOTE: (1) NO INVESTMENT IS HELD IN BODIES CORPORATE UNDER THE SAME MANAGEMENT. (2) INVESTMENTS ACQUIRED AND SOLD DURING THE YEAR. (SEE SCHEDULE 7-A) (3) PROVISION OF Rs 30,414 THOUSANDS ( PREVIOUS YEAR Rs THOUSANDS) IS HELD FOR DECLINE IN VALUE OF SHORT TERM INVESTMENTS. (4) INVESTMENTS HELD BY THIRD PARTY IN THEIR NAME UNDER PORTFOLIO MANAGEMENT: COST Rs 6,411 THOUSANDS (PREVIOUS YEAR Rs 8666 THOUSANDS).- SINCE STANDS CLOSED (5) NO PROVISION HAS BEEN MADE FOR DIMINUTION IN THE VALUE OF INVESTMENTS IN DIAGEO RADICO DISTILLERIES PVT. LTD., RADICO GLOBAL LTD. AND RADICO NV DISTILLERIES MAHARASHTRA LTD., AS, IN THE OPINION OF THE MANAGEMENT, THE INVESTMENTS HAVE BEEN MADE ON A LONG TERM BASIS AND THE DIMINUTION IS CONSIDERED TEMPORARY. 53

56 NAME FACE NO OF PURCHASE VALUE SHARES COST PER SHARE Rs. in A DETAILS OF SECURITIES PURCHASED AND SOLD DURING THE YEAR AAB LIMITED ABAN OFFSHORE LIMITED 2 1,357 3,823 ADANI ENTERPRISES LIMITED 1 1,800 1,147 ADLABS FILMS LIMITED 5 3,000 1,166 ALOK INDUSTRIES LIMITED 10 25,000 1,696 AXIS BANK LIMITED 10 3,985 3,266 BAJAJ HINDUSTAN LIMITED 1 2, BALRAMPUR CHINI MILLS LIMITED 1 5, BHARAT EARTH MOVERS LIMITED BHARAT HEAVY ELECTRICAL LIMITED ,523 CAIRN INDIA LIMITED 10 12,000 3,449 CROMPTON GREAVES LIMITED DIVI S LABORATORIES LIMITED 2 2,000 3,087 DLF LIMITED EDUCOMP SOLUTIONS LIMITED ,109 ENNORE COKE LIMITED EVINIX ACCESSORIES LIMITED 1 4, GUJRAT NRE COKE LIMITED 10 8, HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED HBL POWER SYSTEMS LIMITED HOUSING DEVLOPMENT & INFRASTRUCTURE LIMITED 10 2, ICICI BANK LIMITED 10 2,651 2,288 INFRASTRUCTURE DEVELOPMENT FINANCE CORPORATION LIMITED 10 1, INDIA INFOLINE LIMITED 2 3, INDIABULLS REAL ESTATE LIMITED 2 3, INFOSYS TECHNOLOGIES LIMITED JAIPRAKASH ASSOCIATES LIMITED JINDAL SAW PIPE LIMITED KARUTRI GLOBAL LIMITED 1 12, LANCO INFRATECH LIMITED 10 4, LARSEN & TOUBRO LIMITED 2 1,706 3,031 MCLEOD RUSSEL INDIA LIMITED MERCATOR LINES LIMITED 1 2, NAVIN FLOURINE INTERNATIONAL LIMITED OIL AND NATURAL GAS CORPORATION LIMITED POWER FINANCE CORPORATION LIMITED 10 1, PRAJ INDUSTRIES LIMITED 2 9,315 1,820 PUNJ LLOYD LIMITED 2 3, PUNJAB NATIONAL BANK RELIANCE CAPITAL LIMITED 10 2,455 3,289 RELIANCE COMMUNICATIONS LIMITED 5 2, RELIANCE INFRASTRUCTURE LIMITED RELIANCE INDUSTRIES LIMITED 10 2,286 5,239 RELIANCE POWER LIMITED 10 3, RELIANCE PETROLEUM LIMITED 10 11,000 1,889 RURAL ELECTRIFICATION CORPORATION LIMITED 10 1, SESA GOA LIMITED 1 7,575 1,880 SHREE RENUKA SUGAR LIMITED 1 6, SIEMENS LIMITED 2 2, STATE BANK OF INDIA TATA STEEL LIMITED UNITED PHOSPHOROUS LIMITED 2 1, UNITED SPIRITS LIMITED 10 2,250 3,304 WELSPUN GUJARAT STAHL ROHREN LTD NO. OF UNITS OF VARIOUS MUTUAL FUND SCHEMES PURCHASED AND REDEEMED DURING THE YEAR NAME FACE NO OF PURCHASE VALUE UNITS COST Rs. in 000 RELIANCE LIQUIDITY FUND GROWTH ,933 7,272 FRANKLINE FLOATING RATE INCOEM ,300 7,292 SBI MAGNUM INSTA FUND ,910 7,292 BIRLA SUN LIFE LIQUID PLUS - INSTL. - DAILY DIVIDEND - REINVESTMENT 10 25,046, ,636 RELIANCE- LIQUID FUND- CASH PLAN (G) 10 9,079, ,000 RELIANCE LIQUID FUND WEEKLY DIVIDEND ,841 2,494 Rs. in 000 Rs. in 000 AS AT AS AT CURRENT ASSETS, LOANS AND ADVANCES (a) ACCRUED INCOME INTEREST ACCRUED ON INVESTMENT AND FIXED DEPOSITS 12,090 32,761 ACCRUED INCOME 144,598 88, , ,047 54

57 Rs. in 000 Rs. in 000 AS AT AS AT b) INVENTORIES (i) MATERIALS (AT LOWER OF COST OR NET REALISABLE VALUE) RAW MATERIALS 416, ,672 PACKING MATERIALS 129, ,006 STORES & SPARE PARTS 50, ,531 38, ,342 TOOLS (AT COST) (ii) STOCK IN TRADE (AT LOWER OF COST AND NET REALISABLE VALUE) FINISHED GOODS 408, ,872 STOCK IN PROCESS 78, ,518 50, ,180 1,084, ,850 c) SUNDRY DEBTORS (UNSECURED) DEBTS OUTSTANDING FOR A PERIOD EXCEEDING SIX MONTHS CONSIDERED GOOD 416, ,583 CONSIDERED DOUBTFUL 53,596 23,625 LESS : ADJUSTED AGAINST PROVISIONS 48,085 5,511 21,227 2,398 OTHER DEBTS CONSIDERED GOOD 1,277, ,767 1,700,268 1,389,748 d) CASH AND BANK BALANCES CASH IN HAND 4,800 2,240 CHEQUES IN HAND ,747 BALANCE WITH SCHEDULED BANKS : CURRENT ACCOUNTS 147, ,029 DEPOSIT ACCOUNTS * 266, ,407 SAVINGS BANK ACCOUNTS (EMPLOYEES SECURITY DEPOSIT) , ,461 *(i) UNDER LIEN WITH GOVERNMENT DEPARTMENT AND BANKS AS SECURITY. 11,862 12,041 (ii) WITH BANK OF INDIA, LONDON (UNUTILISED PROCEEDS OF FCCB) 0 677,192 e) LOANS AND ADVANCES (UNSECURED-CONSIDERED GOOD, UNLESS OTHERWISE STATED). INTER CORPORATE LOANS 0 33,500 SHARE APPLICATION MONEY - DIAGEO RADICO DISTILLERIES PVT. LTD. 0 57,500 SHARE APPLICATION MONEY - RADICO NV DISTILLERIES 99,000 0 MAHARASTHRA LTD. (SINCE ALLOTED) ADVANCES RECOVERABLE IN CASH OR IN KIND OR FOR VALUE TO BE RECEIVED: CONSIDERED GOOD* 1,912,915 1,771,248 CONSIDERED DOUBTFUL 2,535 9,057 LESS : ADJUSTED AGAINST PROVISIONS 2, ,057 0 CLAIMS AND DUTIES RECOVERABLE FROM EXCISE DEPARTMENT EXCISE AND OTHER DEPOSITS 152, ,130 INCOME TAX PAYMENTS (NET OF PROVISIONS) 191, ,097 SALES TAX PAID UNDER PROTEST 1,637 1,205 2,357,300 2,222,811 * INCLUDES RADICO NV DISTILLERIES MAHARASHTRA LTD., Rs 88,866 THOUSANDS. (PREVIOUS YEAR 38,107 THOUSANDS) 9. CURRENT LIABILITIES CREDITORS (DUE TO MICRO & SMALL ENTERPRISES 0 0 (SEE NOTE NO. 9) TRADE 461, ,064 OTHERS * 313, , , ,272 SECURITY DEPOSITS FROM DEALERS 21,888 17,617 SECURITY DEPOSITS FROM OTHERS 2,504 5,131 UNCLAIMED DIVIDEND ** 7,030 6,614 OTHER LIABILITIES 44,914 23,169 INTEREST ACCRUED BUT NOT DUE 15,552 18, , ,571 * INCLUDES DIAGEO RADICO CREDIT BALANCE OF Rs THOUSANDS. **THE ACTUAL AMOUNT TO BE TRANSFERRED TO INVESTER EDUCATION AND PROTECTION FUND WILL BE DETERMINED ON THE DUE DATES. 10. PROVISIONS EQUITY DIVIDEND (INCLUDING TAX THEREON) 35,963 59,938 GRATUITY 11,919 0 LEAVE ENCASHMENT 40,469 43,106 PREMIUM ON REDEMPTION OF FCCB (SEE NOTE 6 (ii)) 295, ,400 AGST. FC GAIN ON FCCB LOAN/ BANK DEPOSITS (NET) 0 119,668 CONTINGENCIES FOR : DIMINUTION IN VALUE OF INVESTMENT 30,414 61,048 LOSS ON DERIVATIVES 0 2,486 LOSS ON PENDING FOREIGN EXCHANGE CONTRACTS 63,745 0 FOR OBSOLETE & NON MOVING INVENTORY 14,200 0 OTHERS , ,382 55

58 Rs. in 000 Rs. in 000 CURRENT YEAR PREVIOUS YEAR 11. SALES & INCOME FROM OPERATIONS RECTIFIED SPIRIT AND OTHER ALCOHOLIC PRODUCTS. 10,412,325 10,913,792 PET BOTTLES 250, ,530 JAIVIK KHAD 5,599 2,275 INCOME FROM OPERATIONS THROUGH OTHER DISTILLERIES/BOTTLING UNITS 672, ,723 EXPORT INCENTIVES 48,302 67,359 CENVAT CREDIT UTILISED 58,311 60,474 SERVICE CHARGES (TDS Rs 490 THOUSANDS PREVIOUS YEAR Rs 5508 THOUSANDS) 9,847 43,701 EXCISE REVENUE SUBSIDY INCOME 56,312 39,586 OTHERS (INCL. SALE OF PRINTED BOTTLES,BLENDS,SCRAP & OTHERS) 233, ,431 11,747,266 12,281, OTHER INCOME DIVIDEND (TDS RS NIL) - NON TRADE - SHORT TERM 1,295 3,566 EXCESS PROVISIONS WRITTEN BACK 2,011 3,869 MISCELLANEOUS INCOME CASH DISCOUNT FROM VENDORS 0 58 GAIN ON BUY BACK OF FCCBs (SEE NOTE 6 (iii)) 219,750 0 INTEREST ON DEBENTURES (TDS NIL) INTEREST ON INCOME TAX REFUNDS 5,645 0 PROVISION NO LONGER REQUIRED WRITTEN BACK (SEE NOTE 7) 119,668 0 GAIN DUE TO FOREIGN EXCHANGE FLUCTUATION 0 119,668 LESS:PROVISION ,668 0 PROFIT ON SALE OF INVESTMENTS - NON TRADE - SHORT TERM ,689 PROFIT ON SALE OF FIXED ASSETS , , ACCRETION/(DECRETION) TO STOCKS OPENING STOCK FINISHED 330, ,455 STOCK IN PROCESS 50, ,180 43, ,680 CLOSING STOCK FINISHED 408, ,872 STOCK IN PROCESS 78, ,518 50, , ,338 46, PURCHASES AND MATERIALS CONSUMED PURCHASES 56,687 1,819,245 RAW MATERIALS CONSUMED OPENING STOCK 222, ,447 ADD: PURCHASES 2,318,204 1,488,741 2,540,876 1,746,188 LESS: CLOSING STOCK 416,302 2,124, ,672 1,523,516 PACKING MATERIALS 1,134,189 1,059,558 STORES AND SPARES 111, ,133 3,426,564 4,507, SALARIES, ALLOWANCES AND BENEFITS SALARIES, WAGES & BONUS 455, ,620 GRATUITY 37,298 4,272 CONTRIBUTION TO PROVIDENT AND OTHER FUNDS 33,201 28,399 CONTRIBUTION UNDER EMPLOYEES STATE INSURANCE SCHEME 1,802 1,602 EMPLOYEES COMPENSATION (ESOP) - (SEE NOTE 10) 5,625 20,127 STAFF WELFARE EXPENSES 18,709 19, , ,471 56

59 Rs. in 000 Rs. in 000 CURRENT YEAR PREVIOUS YEAR 16. OTHER EXPENSES POWER AND FUEL 174, ,829 REPAIRS AND MAINTENANCE (INCLUDING STORES & SPARES CONSUMED) BUILDING 7,355 5,927 MACHINERY 50,494 35,115 OTHERS 7,463 65,312 7,848 48,890 MACHINERY AND OTHER HIRE CHARGES 7,187 5,766 INSURANCE 21,696 21,718 OTHER MANUFACTURING EXPENSES 22,264 44,683 RENT 21,544 21,477 RATES AND TAXES 159, ,087 SALES TAX / VALUE ADDED TAX 192, ,360 TRAVELLING EXPENSES DIRECTORS 4,022 10,042 OTHERS 66,666 70,688 92, ,472 DIRECTORS FEE PROVISION FOR DOUBTFUL DEBTS / ADVANCES 28,094 18,203 PROVISION FOR DECLINE IN THE VALUE OF CURRENT INVESTMENT 0 58,580 LOSS / (GAIN) ON FOREIGN EXCHANGE FLUCTUATION 326,269 50,007 PROVISION FOR OBSOLETE & NON MOVING INVENTORY 14,200 0 CHARITY AND DONATION 2,047 1,510 BAD DEBTS / ADVANCES WRITTEN OFF 7,758 0 LESS : ADJUSTED AGAINST PROVISION 7, SUNDRY BALANCES WRITTEN OFF 3,074 5,905 WEALTH TAX LOSS ON SALE OF SHARES (NET OF PROVISION OF Rs THOUSANDS THEIR AGAINST, ADJUSTED) 48,828 0 LOSS ON SALE OF ASSETS 27,790 2,963 BANK CHARGES AND INCIDENTAL EXPENSES 32,499 28,013 OTHER OVERHEADS 157, ,342 SELLING AND DISTRIBUTION EXPENSES: FREIGHT OUTWARDS 260, ,196 SUPERVISION CHARGES-AFTER SALES 64, ,589 SUPERVISION CHARGES TO SUPERVISORS 152, ,768 DISTRIBUTABLE SURPLUS PAID 30,511 90,592 REBATE DISCOUNT AND ALLOWANCE 190, ,262 ADVERTISEMENT & SALES PROMOTION 557, ,137 1,254,691 1,308,544 2,631,247 2,352, FINANCIAL EXPENSES INTEREST ON: -TERM LOANS 148, ,879 -OTHERS 376, , , ,312 LESS: INTEREST ON # 33,796 42,571 LESS: INTEREST ON BANK # 40,036 75, ,470 INCLUDES TAX DEDUCTED AT SOURCE 8,069 8,902 # HAVING NEXUS TO BORROWINGS 57

60 Schedules to the Balance Sheet & Profit and Loss Account 18. Significant Accounting Policies and Notes on Accounts (A) Significant Accounting Policies 1. Basis of Accounting The financial statements are prepared under historical cost convention, on a going concern basis in accordance with the applicable accounting standards prescribed in the Companies (Accounting Standards) Rules,2006 issued by the Central Government. 2. Use of Estimates The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialise. 3. Valuation of Fixed Assets Fixed Assets are stated at cost except to the extent revalued. Borrowing costs attributable to the qualifying assets and all significant costs incidental to the acquisition of assets are capitalised. Freehold and Leasehold land at Rampur have been revalued by an approved valuer as on 1st January, 1999.Building, Plant & Machinery relating to Distillery Unit acquired/installed upto Dec, 1984 have been revalued as on 31st Dec Depreciation a) Cost of Leasehold land and leasehold improvements are amortised over the period of lease. b) Depreciation is charged for the year on straight line method at the rates and in the manner specified in Schedule XIV of the Companies Act,1956 c) On additions costing less than Rs. 5000, depreciation is provided on pro rata basis. d) Depreciation on amount added on revaluation of assets is transferred from Revaluation Reserve. e) The life of Brands of the value of Rs crores and Goodwill of Rs crores arising out of merger during the year are taken to be 20 years and amortised. 5. Investments Investments are valued at Cost. Provision for diminution in value of long term investment is considered, if in the opinion of management, such a decline is considered other than temporary and in the case of current investments, provision is made for the shortfall. 6. Inventories Finished Goods and Stock in process are valued at lower of cost or net realisable value.cost includes cost of conversion and other expenses incurred in bringing the goods to their location and condition.raw materials,packing Materials,Stores and spares are valued at lower of cost or net realisable value. Cost is ascertained on moving average basis for all inventories. 7. Revenue recognition Sales are recognised on delivery or on passage of title of the goods to the customers.they are accounted net of trade discounts and rebates but inclusive of excise duty and sales/trade tax.excise revenue subsidy is accounted for based on the policy of the State Government of Uttar Pradesh.Duty draw back is accounted for on the basis of export sales effected during the year. Interest income is accounted on time proportion basis. Dividend income is accounted, when the right to receive is established. 8. Excise Duty In respect of stocks covered by central excise, excise duty is provided on closing stocks and also considered for valuation. In respect of other stocks, keeping in view that State excise duty payable on finished products is not determinable, as it varies depending on the places to which they are despatched. The excise duty on such stocks lying in factory is accounted for on clearances of such goods.the method of accounting has no impact on the results of the year. 9. Transfer pricing of Bio-Gas / Power Since it is not possible to compute the actual cost, inter unit transfer of bio-gas & power have been valued on the basis of savings in direct fuel cost / prevailing purchase price of power. The same has been considered for valuation of inventoreis. 10. Treatment of Employee benefits The Company makes regular contributions to duly constituted funds set up for Provident Fund, Family Pension Fund, Employees state insurance,superannuation and Gratuity, which are charged to revenue.the employees are allowed the benefit of leave encashment as per the rules of the Company,for which provision for accruing liability is made on actuarial valuation carried out at the end of the year. Contribution to gratuity is also determind on actuarial basis. 11. Impairment : At each Balance Sheet date, the Company reviews the carrying amount of its fixed assets to determine whether there are any indication that those assets have suffered an impairment loss. If any such indication exists, recoverable amount of the assets is estimated in order to determine the extent of impairment loss. 12 Foreign Currency Transactions Transactions in foreign currencies are accounted for at the exchange rate prevailing on the day of the transaction. The outstanding liabilities/receivables are translated at the year end rates. The resultant gain or loss are adjusted to the Profit & Loss Account. Non-monetary items denominated in foreign currency, (such as fixed assets) are valued at the exchange rate prevailing on the date of transaction. Any gain or losses arising due to exchange differences arising on translation or settlement are accounted for in the Profit and Loss Account. In case of forward exchange contracts, the premium or discount arising at the inception of such contracts, is amortised as income or expense over the period of contract and exchange difference on such contracts, i.e. difference between the exchange rate at the reporting / settlement date and the exchange rate on the date of inception / the last reporting date, is recognized as income / expenses for the period. 13 Derivative Transactions These transections have been undertaken to hedge the cost of borrowing and comprise of principal / interest rate swaps.the income / expenses are recognised when earned / incurred. In case of outstanding derivative contract at the year end date, loss is determined on marked to market (MTM) basis and provision made. 14 Provisions, Contingent Liabilities and Contingent Assets Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes to accounts. Contingent assets are neither recognized nor disclosed in the financial statements. 15 Research and Development Fixed assets used for Research and Development are depreciated in the same manner as in the case of similar assets; the revenue expenses are charged off in the year of incurrance. 16 Taxation Deferred tax is recognised, subject to consideration of prudence, on timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. 58

61 Rs. in 000 Rs. in 000 CURRENT YEAR PREVIOUS YEAR (B) Notes on Accounts 1. Estimated amount of Capital commitments (Net of advances) 129, , Contingent Liabilities not provided for: i) Claims against the Company, not acknowledged as debts (a) Disputed liability relating to ESI Contribution (b) Disputed liability relating to PF contribution of contractor labour 3,244 3,304 (c) Disputed liability relating to payment of late re-calibration fees on verification and stamping of manufaturing vats/tanks installed at distillery. 8,480 8,480 (d) Disputed claim relating to molasses purchased on credit (include interest of Rs.437,868) (e) Disputed claim by APO for non - supply of rum 1,292 1,292 (f) Disputed claim relating to refund of export duty on rectified spirit 1, g) Disputed Entry Tax demand-matter under appeal 2,298 15,360 (h) Disputed Penalty U/S 10 for purchase of HSD ( Diesel) -matter under appeal (i) Disputed Excise matters 16,305 11,505 (j) Disputed Stamp duty claim arising out of amalgamation, being contested 8,000 0 (k) Winding up petition filed by a UK company for enforcing an alleged guarantee given on behalf of Radico SPS UK Ltd. (Since liquidated) disputed and being contested. 82, ,141 41,453 In respect of the items above, future cash outflows are determinable only on receipt of judgements / decisionspending at various forums/authorities. ii) Guarantee given to a Bank on behalf of : (a) Radico International DMCC for loan facilities (USD 2.08 million - Previous year USD 5.0 million). 105, ,850 (b) Radico NV Distilleries Maharashtra Ltd. 414, ,000 iii) iv) The The Company has entered into an agreement dated 23rd February, 2007 with Fortune Brand Promotion and Management Trust (the Trust), (of which the Company is the Settlor) for carrying out brand management services. In consideration of the same, the Company is required to pay brand management fee to the Trust. Sales promotion expenses of the year include Rs lacs (Previous year Rs lacs) paid to the Trust on the basis of their invoices.the agreement is to continue for a period of seven years, unless terminated earlier. As per the terms of the Trust Deed and agreement, the trust fund is held for the benefit of the lenders in respect of their outstanding dues and the brand owners (the Company) in respect of residual interest. On termination of the agreement at any time, the Company will be liable to pay to the trust of its outstanding borrowing, as reduced by the funds available to the Trust and also the other costs and expenses towards closing of the Trust. As security, charge by way of hypothecation has been created on the trade marks and copy rights of two self generated brands of the Company in favour of Bank and registered in the office of Registrar of Companies as per section 125 of the Companies Act On the basis of information from the Trust, the outstanding loan as on the Balance Sheet date is Madhya Pradesh State Industrial Development Corporation Ltd. has demanded a sum of Rs lacs besides unspecified expenses arising out of the alleged non compliance of conditions relating to its holding of shares in Abhishek Cement Ltd. prior to the merger of Radico Khaitan Ltd. in the year Its action has resulted in a sum of Rs lacs held in State Bank of India being attached. The recovery proceedings initiated by local Collector Office are stayed under the Orders of the Madhya Pradesh High Court. The Company is taking suitable steps to contest the recovery proceedings. 3. The share purchase agreement dt with the erstwhile shareholders (JM group) of Anab-e-Shahi Wines & Distilleries Ltd.,inter alia, provides that in the event of the actual liability for sales tax dues is less than Rs. 180 lacs provided in the books of accounts,the difference shall be refundable to the erstwhile shareholders with of 10% p.a w.e.f. Ist July 2004, besides payment 10% p.a on the amount payble to the sales tax authorities till the date of actual discharge of the liability. In the event of the actual liabilty is in excess of Rs 180 lacs, the excess shall be met by the erstwhile shareholders and documentory evidence provided to the Company.Against the demand 471, ,200 59

62 notice of Rs lacs in March 2006, on appeal, the Appelate Tribunal decided the matter in Company s favour. Meanwhile, Andhra Pradesh Beverage Corporation Ltd., a state government owned company deducted a sum of Rs lacs from the Company s receivable and remitted to the State Government. The Company is taking steps to claim back the Amount. 4 In the opinion of the Management and to the best of their knowledge and belief, the value on realisation of current assets, loans and advances in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet. 5 The shareholders in the Extra Ordinary General Meeting held on 11th day of August, 2007 approved the issue of 69,40,000 share warrants on preferential basis to two of the promoter companies.considering the economic meltdown and present market scenario, the promoters of the Company decided not to subscribe to the preferential warrants, convertible into equity shares at a conversion price of Rs each. A sum of Rs lacs being 10% as application money received towards the said warrants stands forfeited by the Company in terms of Clause (c) of SEBI (Disclosure & Investor Protection) Guidelines, 2000 and taken to Capital Reserve. 6 (I) The Company has raised USD 50 million through an issue of FCCBs on 26th July 2006 (USD 40 million) and 25th August 2006 ( USD 10 million on exercise of green shoe option by the manager to the issue). The FCCBs will be convertible into equity shares of the Company at any time during the currency of the bonds at the option of the bondholders at a conversion price of Rs per share (orginal conversion price being Rs per share reset on 6th August 2008 pursuant clause 6.4 of the subscrption agreement).these are listed on the Singapore Stock Exchange. They carry a coupon rate of 3.50% per annum and have a maturity of five years and one day from the date of issue. (ii) The FCCBs unless previously converted,redeemed, or cancelled, are liable to be redeemed on the maturity date at a premium of % of the principal amount. The premium payable on redemption has been provided proportionately (over the life of bonds) and accordingly, Rs lacs for the year (out of the total redemption premium of Rs lacs) on this account has been debited to Share Premium account. (iii) Pursuant to RBI circular dated 8th December 2008, the Company has repurchased / bought back the FCCBs to the extent of face value of USD 14 million till 31st March 2009 and cancelled in the record of the Trustee to the issue, leaving a balance outstanding of USD 36 million. The gain on re-purchase of bond has been credited to profit & loss account. The Company has been advised that this gain is not exigible to income tax liability under normal computation. 7 Upto , the Company was charging foreign exchange differences arising on long-term foreign currency items (LTFC) ( I.e., items having a term of twelve months or more at the time of origination) to profit and loss account (though considering the uncertainties of rupee-dollar exchange rate in regard to FCCBs and Fixed Deposits with bank of unutilised FCCBs, as a matter of prudence, a net provision of Rs lacs comprising of Rs lacs credit for loans and Rs lacs debit for deposits was made in the previous year). Pursuant to the amendment by way of addition of para 46 to AS-11 on effect of changes in foreign exchange rates, the Company has excercised the option of deferring the foreign exchange fluctuation gain/loss in respect of the accounting periods commencing from Further, such foreign exchange differences relating to acquisition of depreciable capital assets have been adjusted to the cost of such assets and to be depreciated over the balance life of the assets. As a result, foreign exchange gain of the financial year of Rs lacs relating to acquisition of depreciable capital assets and Rs lacs on other items have been adjusted from the general reserve. Out of the foreign currency monetary items translation difference account of Rs lacs, a sum of Rs lacs has been amortised during the year. The balance of Rs lacs would be amortised over the next two financial years. In view of the amendment to AS-11, provision for foreign currency gain of Rs lacs made as a matter of prudence in the previous year to meet the future liability, is no longer considered necessary and therefore has been written back to profit and loss account. 60

63 Had the Company continued the earlier basis of accounting for foreign exchange differences arising on long term foreign currency items, the profit after tax for the current year would have been lower by Rs lacs, general reserve would have been higher by Rs lacs, the net block of fixed assets would have been lower by Rs lacs. 8. Income Tax - a ) Provision for Income Tax for the year has been made on book profits (MAT) under section 115 JB of the Income Tax Act, Advances recoverable includes Rs lacs on account of MAT credit available for set off, which the company can avail within the period provided in law. b ) In respect of assessment years and the demands aggregate to Rs lacs.in view of the expected relief in appeals, no provision is considered necessary for the demand. However,these have been adjusted in full by the department against TDS/Advance tax refunds due to the Company. c ) The Company filed revised returns for the assessment years to , arising out of the merger of the then RKL with Abhishek Cements Ltd.. The assessments are pending as on date. d ) The Deputy Commissioner of Income Tax, while giving effect to the order of Income Tax Settlement Commission for the assesment years to has vide order dated 29th April,2008 charged penal interest under relevant provisions of the Income Tax Act 1961 aggregating to Rs lacs. This has been recovered out of the refunds due to the company. The Company has not accepted the levy of interest and no provision has been made therefore. The Company has filed a special leave petition before the Hon ble Supreme Court of India, which is pending. e) Deferred tax liability (Net) Deferred Tax Current year Deferred Tax Liability/(Asset) Charge/(Credit) Liability/(Asset) as at as at Deferred Tax Liability Difference between Book and Tax Depreciation 345, , ,427 Total 345, , ,427 Deferred Tax Assets I) FCCB adjustment 0 (65,971) (65,971) II) Provision for leave encashment (14,618) (3,222) (17,840) III) Disallowance under section 40(a) (ia) 0 (1,462) (1,462) IV) Provision for doubtful debts and others (8,869) (8,237) (17,105) Total (23,487) (78,892) (102,379) Net 321,745 45, ,047 Rounded off (Rs. lakhs) 3, ,670 In line with the Accounting Standard AS-22, deferred tax in respect of timing differences, which orginate and likely to be reversed during the tax holiday period under chapter VI A of the Act have not been recognised. 9. The Company has not received information from suppliers or service providers, whether they are covered under Micro, Small and Medium Enterprises (Development) Act, 2006 and hence it has not been possible to give the required information relating to amounts unpaid,if any, as at year end together with interest paid or payable to them. 10 The Company established Employee Stock Options Plan, duly approved by the shareholders in the meeting held on 25th May, 2006, which has become effective from 25th July, 2006.Accordingly, the Company has granted 2,157,500 equity options upto 31st March 2008 (at weighted average exercise price of Rs ) and also 432,500 equity options during (at exercise price of Rs ), to the eligible employees as per the recommendations of the Compensation Committee, which will get vested over a period of 4 years from the date of the grant. The employees have the options to exercise the right within a period of 3 years from the date of vesting. The compensation cost of stock options granted to employees are accounted by the Company using the intrinsic value method. Summary of Stock Option No. of stock option Option granted 2,590,000 Options forfieted upto March ,225 Options exercised upto March ,003 Option outstanding on ,602,772 In respect of Options granted under the Employee Stock Options plan, in accordance with the guidelines issued by SEBI, the accounting value of the options is accounted as deferred employee compensation, which is amortized on a straight line basis over the period between the date of grant of options and eligible dates for conversion into equity shares. Consequently the schedule of salaries & benefits includes Rs lakhs (Previous year Rs lakhs) being the amortisation of deferred employee compensation. 61

64 11. Employees Benefits : AS-15 (I) The Company has taken a policy with Life Insurance Corporation of India (LIC) for meeting the accruing liability on account of gratuity. The premium, actuarialy ascertained by LIC, is charged to the Profit and Loss account. The amount debited to profit & loss account is Rs lacs (includes Rs lakhs relating to previous year). (ii) In respect of leave encashment, provision is made based on the actuarial valuation by an independent Actuary. The following information as required under AS-15 are based on the report of the Actuary / L.I.C. In respect of gratuity similar information is not available for the previous year and hence not given. LEAVE ENCASHMENT A Economic assumptions 31/03/ /03/2008 i) Discounting rate 8.00% 8.00% ii) Future salary increase 5.50% 5.50% iii) Expected rate of return on plan assets 0.00% 0.00% B Break up of expenses a) Current service cost 5,391,071 5,275,863 b) Interest cost 3,452,648 2,592,615 c) Net actuarial (gain)/ loss recognized in the period (1,203,163) 7,880,467 d) Expenses recognized in the statement of profit & loss 7,640,556 15,748,945 C Change in present value of obligation a) Present value of obligation as at the beginning of the period 01/04/ ,158,097 32,407,698 b) Interest cost 3,452,648 2,592,615 c) Current service cost 5,391,071 5,275,863 d) Benefits paid (10,330,048) (5,050,754) e) Actuarial (gain)/loss on obligation (1,203,163) 7,880,467 f) Present value of obligation as at the end of period 31./03/ ,468,605 43,105,889 GRATUITY A Economic assumptions 31/03/2009 i) Discounting rate 8.00% ii) Future salary increase 7.00% iii) Expected rate of return on plan assets 9.10% B Break up of expenses a) Current service cost 4,760,054 b) Interest cost 3,623,496 c) Expenses return on plan assets (1,827,120) d) Net actuarial (gain)/ loss recognized in the period 5,718,393 e) Expenses recognized in the statement of profit & loss 12,274,823 C Change in present value of obligation a) Present value of obligation as at the beginning of the period 01/04/ ,293,696 b) Interest cost 3,623,496 c) Current service cost 4,760,054 d) Benefits paid (5,081,711) e) Actuarial (gain)/loss on obligation 5,718,393 f) Present value of obligation as at the end of period 31./03/ ,313,928 D Change in fair value of plan assets a) Fair value of plan assets at the beginning of the year 20,088,187 b) Expected return on plan assets 1,827,120 c) Contributions 25,560,992 d) Benefits paid (5,081,711) e) Fair value of plan assets at the end of the year 42,394,588 f) Liability recognised in the balance sheet 11,919,340 (iii) The Company in addition has recognised as expense the following:- 1 Contribution to recognised Provident Fund Trust. 21,972,019 18,868,955 2 Contribution to LIC towards Superannuation. 11,228,905 9,529,649 3 Farewell gifts to retired employees. 20,850 67,757 4 Medical insurance premium. 7,619,134 6,166, Segment reporting : Based on the guideline in Accounting Standard on segment reporting (AS- 17), the Company s primary business segment is manufacture and trading in liquor. The liquor business incorporates the product groups, namely, rectified spirit, country liquor and IMFL which mainly have similar risks and returns. Therefore, segment reporting is not applicable. 13. Related party disclosure as per Accounting Standard -18 : A Related parties and their relationship : I Enterprises that directly, or indirectly through one or more intermediaries,control, or are controlled by, or are under common control with, the reporting enterprise: (1) Saphire Intrex Ltd. II Associates and joint ventures (1) Diageo Radico Distilleries Private Limited (2) Radico NV Distilleries Maharashtra Limited (3) Radico Global Limited (an associate) 62

65 III Key Manangement personnel : (1) Dr. Lalit Khaitan, Chairman & Managing Director (2) Mr. Abhishek Khaitan, Managing Director (3) Mr. K.P. Singh, Whole Time Director Relatives : (1) Mrs. Deepshikha Khaitan (wife of Mr. Abhishek Khaitan) (2) Mrs. Sheela Singh (wife of Mr. K.P. Singh) IV Enterprises over which key manangement personnel are able to exercise (1) Abhishek Fiscal Services Pvt. Ltd. significant influence : (2) Elkay Fiscal Services Pvt. Ltd. (3) Smita Fiscal Pvt. Ltd. B Transaction with above in the ordinary course of business : Rs. in 000 Transactions with related parties: Key Management Enterprise in which Total Joint Venture Personnel & their Key Management Subsidiaries & Associates relatives have Personnel significant influence Remuneration 44,975 44,975 (32,846) (32,846) Sale of Goods 0 51,317 51,317 (173,876) (5,706) (179,582) Rent paid 381 6,000 6,381 (762) (6,000) (6,762) Interest received 0 0 (1,059) (1,059) Service Charges received 9,847 9,847 (47,311) (47,311) Royalty paid 30,511 30,511 (90,592) (90,592) Investment in share capital 0 293, ,500 (58,091) (0) (58,091) Share application money paid 99,000 99,000 (57,500) (57,500) Loans given 0 0 (20,000) (20,000) Loans given - repaid 0 0 (40,000) (40,000) Outstanding balances as at Loans / Advances 88,866 88,866 (38,107) (38,107) Debtors 0 2,764 2,764 (159,642) (65,961) (225,603) Payables 55,866 55,866 (102,663) (102,663) 14. The details of the Company s interest in its Joint Ventures, having Joint Control, as per the requirements of AS-27 on Financial Reporting of Interest in Joint Ventures are as under : Particulars Diageo Radico Radico NV Distilleries Pvt. Ltd. Distilleries Maharashtra Ltd. % Ownership Interest 50.00% 36.00% a Assets 60, ,446 (89,251) (177,092) b Liabilities 265, ,449 (238,685) (145,555) c Income 21,517 82,100 (64,908) (432) d Selling & Distribution Expenses 26,493 22,585 (225,718) (0) e Other Expenses 50, ,944 (32,980) (3,619) f Contingent Liabilities 0 3,243 (0) (0) g Capital Commirments 0 1,833 (0) (190,034) 63

66 Rs. in Earnings per share (EPS) as per Accounting Standard - 20 : Current Year Previous Year Profit after tax attributable to equity share holders (after deucting prior period and extra ordinary items, preference dividend and tax thereon 65, ,720 Weighted average no. of equity shares of Rs. 2/- each 102,462,219 97,157,466 Basic earning per share (Rs.) Since the potential equity on account of ESOP, FCCB are anti dilutive, the diluted earning remains the same (Rs.) Basic earning per share before prior period and extra ordinary items (Rs.) i) Managerial Remuneration * Remuneration to Mr. L. K. Khaitan, Chairman & Managing Director Salary and Allowances 14,250 8,803 Contribution to Provident and other Funds. 3,240 2,377 Value of benefits, calculated as per Income Tax Rules. 2,984 3,052 ii) Remuneration to Mr. Abhishek Khaitan, Managing Director Salary and Allowances 11,400 7,469 Contribution to Provident and other Funds 2,592 2,017 Value of benefits, calculated as per Income Tax Rules. 2,600 2,250 iii) Remuneration to Mr. K.P.Singh, Wholetime Director Salary and Allowances 4,690 4,033 Contribution to Provident and other Funds Value of benefits, calculated as per Income Tax Rules. 1,707 1,336 44,169 31,920 *(1) Excluding contribution to gratuity and provision for leave encashment, which are provided on actuarial basis for the Company as a whole. Hence, no separate figures are available. *(2) Since the remuneration exceeds the limit of 10% for all the working directors put together, the Company will be making necessary application to the central government for approval and waiver of the excess amount paid. (3) Computation of net profit under the Companies Act,1956 for managerial Remuneration. In the absence of commission based on net profit, the computatation is not given. 17. Remuneration to Auditors Audit Fee 1,530 1,100 Certification of Statements Service tax Expenses for audit and other work In the opinion of the management, there is no impairment of assets requiring provision in accordance with AS Previous year figures have been re-grouped, wherever necessary, to correspond to current year figures. 20. Quantitative and other information a) Particulars of Capacity and Production Licensed Installed* Unit Capacity per annum Production 1. Rectified spirit KL 75,000 75,000 55,362 (75,000) (75,000) (65,118) 2. Bio gas 000 M3 No licence required 38,203 (42,770) 3. Pet bottles NOS./1000 No licence required 153, ,421 (85,103) (78,402) 4. Malt Spirit KL (460) (460) (570) 5. Grain Spirit KL 27,000 27,000 24,380 (27000) (27000) (17,007) * As certified by the Management and not verified by the Auditors. Rs. in 000 b) Opening Stock, Closing Stock & Turnover OPENING STOCK CLOSING STOCK TURNOVER Unit QUANTITY VALUE (RS.) QUANTITY VALUE (RS.) QUANTITY VALUE (RS.) 1. Alcohol products (a) Rectified spirit KL/AL , ,906 7, ,627 (848) (17,219) (842) (15,670) (10,620) (195,176) (b) Silent spirit KL/AL 2,649 60,332 2,088 57,872 22, ,790 (1,067) (26,392) (2,649) (60,332) (24,314) (629,669) (c) Cane juice spirit KL/AL 106 5,039 (114) (3,375) (d) Malt spirit KL/AL , , ,960 (630) (55,932) (747) (60,950) (152) (17,300) (e) Grain spirit KL/AL 1,541 45,063 2,578 86,248 13, ,201 (1,695) (50,689) (1,541) (45,063) (7,535) (209,779) (f) Ethanol KL/AL , ,783 10, ,403 (440) (9,675) (818) (16,568) (11,488) (252,809) 64

67 Rs. in 000 OPENING STOCK CLOSING STOCK TURNOVER Unit QUANTITY VALUE (RS.) QUANTITY VALUE (RS.) QUANTITY VALUE (RS.) 2. Other alcohol products (a) Denatured spirit KL/AL (5) (117) (1) (29) (3) (125) (b) Indian made foreign liquor AL 837,788 82, ,800 90,150 19,197,111 5,358,601 (594,416) (53,390) (837,788) (82,684) (18,485,269) (4,908,894) (c) Country liquor AL 156,262 38,585 30,815 1,976 8,018,821 3,152,552 (198,851) (62,324) (156,262) (38,585) (7,545,990) (4,519,964) (d) Imported Alcoholic products BOTTLES 16,743 5,784 20,740 6,424 30,509 11,928 (Beer & Wine) (32,003) (13,625) (16,743) (5,784) (38,099) (15,963) 3. Pet bottles NOS. 856,249 1,819 3,040,462 4,922 65,140, ,767 (328,771) (959) (856,249) (1,819) (43,290,100) (185,907) 4. Jaivik Khad Qtls 55,787 3, ,648 13, ,373 5,599 (11,800) (1,133) (55,787) (3,388) (39,837) (2,275) 5. Others 233,982 (154,431) 7. Other operating income 845,329 (1,022,843) 330, ,606 11,554,814 Total (excluding sales tax) (291,455) (330,872) (12,118,511) CURRENT YEAR PREVIOUS YEAR Unit Quantity Value Quantity Value c) 1. Purchases: - Denatured spirit AL Indian Made Foreign Liquor CASES 77,187 53, Country Liquor AL 0 0 5,281,977 1,817,456 - Imported Liquors (Wine & Beer) BOTTLES 34,800 2,966 22,908 1,789 56,687 1,819,245 d) Consumption of raw materials (i) Molasses Qtls 2,832,300 1,294,084 3,272, ,033 (ii) Cane juice Qtls 11,058 2,790 7,591 1,305 (iii) Barley Malt Qtls 17,910 40,757 18,356 30,821 (iv) Sorghum Qtls ,224 54,975 (v) Wheat ( Damaged) Qtls ,155 12,470 (vi) Broken Rice Qtls 116, , (vii) Millet (Bajra) Qtls 435, , , ,762 (viii) Maiz Qtls (ix) Malt /Malt Scotch/Grape/Graip Spirits 20,998 27,012 (x) Rectified spirit / Extra Neutral Alcohol 95,688 81,602 (xi) Resin KG 3,426, ,750 2,441, ,459 (xii) Others 23,491 32,077 2,124,574 1,523,516 e) Value of imports calculated on CIF basis: Raw materials 30,487 17,389 Components & spare parts 6, Purchases (Wine & Beer) 2,966 1,789 Capital goods 161,568 48,657 f) Expenditure in foreign currency on account of Foreign travel & subscriptions 5,671 7,265 Interest/Financial exp. on ECB/FCCB 94, ,106 Professsional fee Investment in a foreign entity 0 58,091 Commission paid 2,182 2,254 Others 467 3,911 g) Value of imported and indigenous raw materials, RAW MATERIAL OTHERS spare parts components and stores consumed VALUE % OF TOTAL VALUE % OF TOTAL during the year CONSUMPTION CONSUMPTION Imported 30, ,881 1 (17,389) (1) (271) (0) Indigenous 2,094, ,238, (1,506,127) (99) (1,164,420) (100) 2,124, ,245, (1,523,516) (100) (1,164,691) (100) 65

68 h) Remittance in foreign currency (NIL)/ or to the mandate banks on account of dividends to non residents Equity shares (i). Number of non resident shareholders 29 (29) (ii). Number of shares held by them 28,000 (28,000) (iii). Dividend ( Rs in thousands ) 14 (14) (iv). Year to which the dividend relates ( ) i) Earnings in foreign exchange- Export of goods on FOB basis. 612,996 (564,712) - Interest on Bank deposits 26,140 (74,541) 21 Foreign currency exposure a Hedged by way of forward exchange contracts: i) ECB (Bank of India) US$: NIL (Previous year US$ 2,946,525) ii) Export Receivables- US$ NIL (Previous year US$ 8,000,000) iii) Balance with banks - US$ NIL (Previous year US$ 6,500,000) b Not hedged: CurrencyAmount (Million) Currency Amount (Million) Borrowings - FCCB US$ US$ Interest payable on FCCB / ECB US$ 0.31 US$ 42 Borrowings - Others US$ US$ Export Receivables US$ 5.89 US$ Balance with banks US$ 0.23 US$ Interest receivable from banks US$ - US$ c There are no derivative contracts outstanding as on the balance sheet date. 22. The Company has entered into arrangements with certain distilleries and bottling units in other states for manufacture and marketing of its own IMFL brands. The manufacture under the said arrangement, wherein each party s obligations are stipulated, is carried out under it s close supervision. The marketing is entirely the responsiblity of the Company and consequently the Company is required to bear bad debts arising on sales. The Company is also required to ensure adequate finance to the distilleries, where required. Accordingly, it is considered appropriate to disclose the following quantitative and value information for the year,as applicable to such activities. i) Income from operations through other distilleries / bottling units (Schedule-11) reflects the net contribution from the sales made by these Units and is detailed as under : Rs. in 000 CURRENT YEAR PREVIOUS YEAR Gross Sales 4,677,748 4,567,425 Net Sales 3,038,850 3,129,957 Cost of Sales 2,105,247 2,082,677 Gross Profit 933,604 1,047,280 Expenses 261, ,557 Income 672, ,723 ii) Quantitative information for operations under arrangements. (Unaudited) Current Year Previous Year Quantity Value Quantity Value (Cases) Rs. 000 (Cases) Rs. 000 Potable Alcohol a) Production 7,635,478 8,109,210 b) Sales 7,646,666 4,677,748 8,086,950 4,567,425 c) Closing Stock 204,385 73, ,573 71,123 iii) The balance due from distilleries under the arrangement, Rs thousands (Previous year Rs thousands) is included under advances recoverable. This is on account of the financing by the company of inventories,debtors and other current assets net of current liabilities on behalf of the Units. Note: Figures in brackets are those of previous year. For V. Sankar Aiyar & Co. Dr. Arun Mohan Bansal Dr. Lalit Khaitan Abhishek Khaitan Chartered Accountants Head Legal & Company Secretary Chairman & Managing Director Managing Director V. Rethinam Partner M. No Place : New Delhi Ajay K. Agarwal Dilip K. Banthiya Sanjay Jalan Dated : June 30, 2009 Sr. Vice President (Finance & Accounts) Chief Financial Officer Director 66

69 CASH FLOW FOR THE YEAR ENDED 31ST MARCH, (Rs. 000) (Rs. 000) A. CASH FLOW FROM OPERATING ACTIVITIES NET PROFIT BEFORE PROVISION FOR TAX 123, ,420 ADD: DEPRECIATION 231, ,839 INTEREST ON BORROWINGS 525, ,312 EMPLOYEES COMPENSATION ( ESOP ) 5,625 20,127 LOSS ON SALE OF ASSETS 27,790 2,963 LOSS ON SALE OF SHARES 48,828 0 PROVISION FOR NON MOVING STOCK 14,200 0 PROVISION FOR DECLINE IN VALUE OF CURRENT INVESTMENTS 0 58,580 PROVISION FOR GAIN ON FOREIGN EXCHANGE FLUCTUATION 0 852, , , ,627 1,243,909 LESS: INTEREST INCOME 79, ,616 DIVIDEND ON INVESTMENTS 1,295 3,566 PROFIT ON SALE OF ASSETS WRITE BACK OF PROVISION FOR GAIN ON FOREIGN EXCHANGE FLUCTUATION 119,668 0 PROFIT ON SALE OF INVESTMENT 317 (201,488) 132,689 (254,058) OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 775, ,851 ADJUSTMENT FOR WORKING CAPITAL CHANGES: (INCREASE)/DECREASE IN INVENTORIES (316,501) (29,950) (INCREASE)/DECREASE IN TRADE RECEIVABLES (310,520) (93,938) (INCREASE)/DECREASE IN OTHER RECEIVABLES (35,641) 2,854 ADJUSTMENT RELATING TO FCMITD A/C. (129,169) 0 (INCREASE)/DECREASE IN LOANS AND ADVANCES (128,369) (317,209) (DECREASE)/INCREASE IN TRADE AND OTHER PAYABLES 101, ,439 (818,687) (326,804) (43,548) 663,047 LESS: DIRECT TAX & FBT PAYMENTS DURING THE YEAR 11, ,315 NET CASH FROM OPERATING ACTIVITIES (54,668) 516,732 B. CASH FLOW FROM INVESTING ACTIVITIES ADDITION TO: -FIXED ASSETS (INCLUDING WORK IN PROGRESS) (1,228,312) (790,530) PURCHASE OF INVESTMENTS (735,029) (696,731) APPLICATION MONEY FOR INVESTMENTS (99,000) (57,500) (INCREASE)/ DECREASE IN LOANS GIVEN 33,500 46,500 SALE OF FIXED ASSETS 18,938 2,961 SALE OF INVESTMENTS 553, ,597 INTEREST INCOME 79, ,616 DIVIDEND INCOME 1,295 3, , ,240 NET CASH GENERATED (USED) IN INVESTING ACTIVITIES (1,375,067) (627,521) C. CASH FLOW FROM FINANCING ACTIVITIES INCREASE/(DECREASE) IN SHARE CAPITAL (INCLUDING SHARE PREMIUM) 0 136,035 SECURED LOANS 1,892,693 (673,860) UNSECURED LOANS (289,345) (28,218) 1,603,348 (566,043) INTEREST ON BORROWINGS (525,302) (461,312) DIVIDEND ON EQUITY SHARES(INCLUDING TAX) (60,004) (56,431) DIVIDEND ON PREFERENCE SHARES(INCLUDING TAX) 0 (63,776) NET CASH GENERATED (USED) IN FINANCING ACTIVITIES 1,018,042 (1,147,562) NET CHANGES IN CASH AND CASH EQUIVALENTS (411,693) (1,258,351) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS BALANCE AT THE BEGINNING OF THE YEAR 831,461 2,089,812 BALANCE AT THE END OF THE YEAR: 419, ,461 (411,693) (1,258,351) For V. Sankar Aiyar & Co. Dr. Arun Mohan Bansal Dr. Lalit Khaitan Abhishek Khaitan Chartered Accountants Head Legal & Company Secretary Chairman & Managing Director Managing Director V. Rethinam Partner M. No Place : New Delhi Ajay K. Agarwal Dilip K. Banthiya Sanjay Jalan Dated : June 30, 2009 Sr. Vice President (Finance & Accounts) Chief Financial Officer Director 67

70 BALANCE SHEET ABSTRACT AND COMPANY S GENERAL BUSINESS PROFILE AS REQUIRED IN PART IV OF SCHEDULE VI OF THE COMPANIES ACT, I. Registration Details Registration No. : State Code : 20 Balance Sheet Date : II. Capital raised during the year Public Issue : Nil Rights Issue : Nil Bonus Issue : Nil Pvt. Placement : Nil III. Position of Mobilization and Total Liabilities : Total Assets : Deployment of Funds (Rs. in thousand) Source of Funds: Paid-up Capital : Reserves & Surplus: Paid up Preference Share Capital : Nil Unsecured Loans : Secured Loans : Application of Funds: Net Fixed Assets : Investments : Net Current Assets : Misc. expenditure : Nil Accumulated Losses: Nil IV. Performance of Company Turnover and : Total Expenditure : (Amount in Rs. thousand) other Income Profit before tax : Profit after tax : Earning per share : 0.64 Dividend Rate % : 15 (in Rs). V. Generic Names of four 1. Alcohol Principal Products / Services of 2. Indian Made Foreign Liquor Company (as per monetary 3. Country Liquor terms) 4. Grain Based Vodka For V. Sankar Aiyar & Co. Dr. Arun Mohan Bansal Dr. Lalit Khaitan Abhishek Khaitan Chartered Accountants Head-Legal & Company Secretary Chairman & Managing Director Managing Director V. Rethinam Partner M. No Place : New Delhi Ajay K. Agarwal Dilip K. Banthiya Sanjay Jalan Dated : June 30, 2008 Sr. Vice President (Finance & Accounts) Chief Financial Officer Director 68

71