SKOL Breweries Limited

Board of Directors Mr. Ari Mervis - Chairman Mr. Jonathan Andrew Kirby Ms. Sue Clark Mr. T.S.R. Subramanian Mr. Richard (Pete) L Lloyd – Upto 23.02.2009 Mr. Jean-Marc Delpon de Vaux – Managing Director Statutory Auditors BSR & Co., Chartered Accountants Maruthi Info-Tech Centre 11-12/1, Inner Ring Road Koramangala, Bangalore – 560 071 Bankers Standard Chartered Bank ABN Amro Bank Citi Bank Societe Generale ICICI Bank Limited

Audit Committee Mr. Jonathan Andrew Kirby Mr. Ari Mervis Mr. Richard (Pete) L Lloyd–Upto 23.02.2009 Mr. Jean-Marc Delpon de Vaux Registered Office No.1, Mahal Industrial Estate Mahakali Road Andheri (East) Mumbai – 400 093 Corporate Office Jalahalli Camp Road Yeshwanthpur Bangalore-560 022

Share Transfer Registrar & Share Transfer Agent Sharepro Services (India) Pvt Ltd Samhita Warehousing Complex Gala No-52 to 56, Bldg No.13 A-B Near Sakinaka Telephone Exchange Andheri – Kurla Road, Sakinaka Mumbai – 400 072

Units Charminar Breweries, Medak, AP Haryana Breweries, Sonepat, Haryana Mysore Breweries, Bangalore, Karnataka Pals Distilleries, Aurangabad, Maharashtra Rochees Breweries, Neemrana, Rajasthan Central Distilleries & Breweries, Meerut, UP East Coast Breweries & Distilleries, Cuttack, Orissa Malabar Breweries, Chalakudy, Kerala SICA Breweries, Pondicherry

SKOL Breweries Limited

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

NOTES: 01. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote on a poll in his/her stead. A proxy need not be a member of the Company. Proxies in order to be effective must be deposited at the registered office of the Company not less than forty-eight hours before the meeting. A blank proxy form is enclosed. 02. The Register of Members and the Share Transfer Books of the Company will remain closed from 1st September 2009 to 15th September 2009 (both days inclusive). 03. For convenience of members an attendance slip is also annexed. Members are requested to affix their signature at the space provided therefore and hand over the same at the place of Meeting. The proxy of a member should mark on the attendance slip as Proxy. Members are also requested to bring their copies of the Annual report to the venue of the Meeting. 04. All queries relating to non-receipt of share certificates after transfer/ transmission/dematerialization/ rematerialisation, mandates, change of address, nomination etc. may be sent to the Registrar & Share Transfer Agents, M/s Sharepro Services (India) Pvt. Ltd, Samhita Warehousing Complex, Gala No-52 to 56, Bldg No.13 A-B, Near Sakinaka Telephone Exchange, Andheri –Kurla Road, Sakinaka, Mumbai-400 072, Telephone: 02267720300/67720400, Fax No: 022-28591568/28508927, E-Mail: sharepro@shareproservices.com 05. Pursuant to Section 205C of the Companies Act, 1956 all unclaimed dividends upto the Financial Year 2000-2001 have been transferred to the Investor Education and Protection Fund. Members of the erstwhile Mysore Breweries Limited who have not yet claimed their Dividend for the financial year 20012002 and thereafter, may claim from the Company before the same is transferred to the Fund. It may be noted that no claims shall lie against the Company or the Fund in respect of individual amounts which were unclaimed and unpaid for a period of 7 years and transferred to the Fund and no payment shall be made in respect of any such claim. Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956. Item Nos. 2, 4 and 5 A brief resume of the Directors offering themselves for re-election is given below: 02. Ms. Sue Clark is a Bachelor of Science (Hons) & MBA. She joined SABMiller plc in 2003 as Corporate Affairs Director. Prior to this, she held a number of senior roles in UK Companies, including Director of Corporate Affairs for Railtrack Group and Director of Corporate Affairs for Scottish Power plc. Except for Ms. Sue Clark, no other Director is interested in the aforesaid Resolution. 04. At the Annual General Meeting of the Company held on 10th September, 2008, the Members empowered the Board of Directors under Section 293(1)(d) of the Companies Act, 1956 to borrow monies for the business purposes of the Company up to a limit of Rs.1500 Crores. Keeping in view the Company’s business requirements and its investment and growth plans, it is considered desirable to increase the said borrowing limits to Rs.2000 Crores as outlined in the resolution. In terms of the provisions of Section 293 (1) (d) of the Companies Act, 1956, approval of the members is being accordingly sought through resolution under item no.04 for such increase in limits. 05. The Company proposes to issue and allot, on a preferential basis upto 50000000 equity shares of face value of Rs.10/- each to SABMiller Asia B.V. at a premium of Rs. 46/per share (based on the valuation report) which requires shareholders’ approval under Section 81 (1A) of the Companies Act, 1956. Information as required under Unlisted Public Companies (Preferential Allotment) Rules, 2003 is given below. a. The price of price band at which allotment is proposed: The Equity Shares of Rs.10/- each will be allotted at a premium of Rs.46/- per Share. b. The relevant date on the basis of which price has been arrived at: Valuation as at 31st March, 2009 and the rate of the eariler preferential accounts. c. The objects of the issue through preferential offer: To issue Equity Shares of the Company to SABMiller Asia B.V. for cash and to utilize the money received hereunder for the purpose of paying down some of its debts and for other corporate purposes.

“Children of a culture born in a water-rich environment, we have never really learned how important water is to us. We understand it, but we do not respect it.”

SKOL Breweries Limited

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

Pre Issue % 99.22 99.22

Post Issue No of Shares 279384473 279384473 % 99.36 99.36

“There are a number of ways to save water, and they all start with you.”

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

Directors’ Report
10-11 Dear Members, Your Directors have pleasure in submitting their report and the Statement of accounts for the year ended 31st March 2009. FINANCIAL RESULTS Financial Year 2008-2009 Gross Revenue Profit/(Loss) before taxation Less: Provision for taxation Profit/(Loss) after taxation Surplus/(deficit) brought forward from previous year Balance carried to Balance Sheet 2171.91 (72.57) (7.70) (64.88) (95.22) 160.09 (Rupees in Crores) Financial Year 2007-2008 1766.45 40.85 6.37 34.48 129.69 95.21

OPERATIONS OPERATIONS The turnover and volumes of your Company during the year 2008-09 has considerably increased. The turnover increased by 23% over the previous year to Rs.2172 Crores from Rs.1766 Crores. The turnover has increased by 6% as a result of entering into a lease arrangement with a brewery which earlier was a contract bottling arrangement. The Company however reports a loss for the year on account of the following: 1. A one time charge of Rs. 34 Crores due to change in accounting policy of containers. (See Significant accounting policies Note 1.5) 2. The new brewery in Haryana was commissioned at the end of last year as a result of which the depreciation charged to the Profit and Loss account has increased. 3. The Interest cost has gone up 182% due to increase in borrowings and the interest rates as compared to previous year.

4. Cost pressures on account of rising commodity prices and glass bottles. 5. Inability to price in many markets where selling prices are constrained by regulations. 6. Stand off in AP leading to stoppage of production and supply for 38 days during peak in the beginning of the financial year. A sum of Rs.411.26 Crores has been invested in upgrading existing plant and machinery and in developing capacity. There has also been continuous upgrading and implementation of best practices at all units to increase productivity and bring down the cost of production. Your Board enjoys the unqualified support of all its financiers whose confidence in the future of your Company is evidenced by the fact that all borrowings have been made without the bankers taking any charges over any of your Company’s assets. As such the majority of the borrowings are short term and renewed from year to year. Observations of the auditors are self explanatory. DIVIDEND As the Company has incurred loss during the year, the Directors do not recommend any dividend on the equity capital.

WATER MANAGEMENT IN INDIA Your Company’s commitment to sustainable development is ongoing. It is a core part of the organisation’s business. It underpins our ability to grow and our license to operate. Water is one of our top sustainable development priorities. Given the fact that this key raw material for our Industry is a stressed resource its scarcity and quality are becoming increasingly critical issues of immediate relevance to the Company. Conservation of water is one critical element of our commitment to deliver best in class performance within our sustainable development framework. The organisation is committed to sound water management practices throughout its global operations in a manner that takes account of local geographical, environmental and social factors. This is reflected in the “5 R” water management strategy adopted by the group. In India the implementation of 5R strategy has seen internal measures to reduce, recycle and reuse water at all our breweries.

“Water is life's mater and matrix, mother and medium. There is no life without water.”

availability in the region for agriculture which is the main source of livelihood for the farming community. Similarly, initiatives are on in the water stressed area of Medak District in Andhra Pradesh to build capacity of the community to develop sustainable water management practices and enhance groundwater availability through improved water use efficiency. The interventions being conducted under the leadership of ICRISAT ( International Crop Research Institute for Semi Arid Tropics) include enhancing rainwater conservation, improving water use efficiency and manage the water demand, while improving the livelihoods and promoting a shift towards less water intensive cropping patterns.

Our operations have been engaged in consistently reducing water consumption in the brewing process, year by year the trends indicate a reduction in overall water consumption from 26.2 million HL in F’08 to 23.6 million HL in F’09. This is despite growing volumes. Your Company committed to reduce water waste in our breweries and has set itself the target of reducing our water usage to 3.5 litres used to make litre of beer before the year 2015. We recognise that water issues are by nature cross-community and cross boundary, which therefore cannot be managed simply within the fence lines of our own operations. Therefore we have started external interventions in partnerships with NGOs, communities and local governments striving to build long term sustainable partnerships to address local water issues. Moving towards a country wide structured watershed mapping process to understand the water availability and quality across all our operations for future business planning, we have completed watershed mapping for three sites in India. The data will also be used to assess the opportunity to manage these watersheds for the long term sustainability of the community. Conservation through rain water harvesting is practiced inside our breweries. We have also commenced water replenishing initiatives within the communities. We have embarked upon a natural recharge initiative near our Rochees Brewery in the water stressed region of Alwar district, Rajasthan in

Northern India. The ground water recharge initiative, launched in October 2008, is currently the largest in this region. It is expected to recharge 300 million liters of water a year- the same amount as extracted by the brewery’s borewell pumps. Spread over a catchment expanse of about 120 hectares the design involves the construction of three check dams in a wasteland area to facilitate natural recharge. The key strength of the project lies in demonstrating a low cost technology enabling natural recharge (as against artificial through recharge shafts, etc). The project is being conducted in collaboration with the apex industry organisation – CII (Confederation of Indian Industry) and a partner organisation of CII, ACWADAM (Advanced Center for Water Resources Development and Management) specialising in ground water management. This recharge will augment the local groundwater resources in the region. The structures will trap the water that would otherwise have simply run off. The recharge initiative assumes a greater significance in view of the fact that the overall incidence of irrigation through groundwater has increased in the region further stressing the resource. We are conducting further studies to identify more natural recharge sites within the region to further augment the aquifer. Your Company has also built 3 water harvesting structures in the Cuttack District of Orissa, improving the water

Water harvesting at Neemrana, Rajasthan

Beneficiaries of water harvesting at Neemrana, Rajasthan

SKOL Breweries Limited

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

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

Directors’ Report
14-15 COMPANIES PAR ARTICULARS DISCLOSURE AS PER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF DIRECTORS) RULES, 1988. A. CONSERV CONSERVATION OF ENERGY Energy efficiency in breweries is achieved through a process of continuous improvement. The Company is in the process of standardizing energy efficiency measures across its breweries to further reduce the specific energy requirement in brewing.
MANUFACTURED STEAM ENERGY PER HL OF BEER MANUFACTURED 250 200 150 100 50 0.0 F’05 F’06 F’07 F’08 F’09 20 15 10 5 0.0 F’05 F’06 F’07 F’08 F’09 MANUFACTURED ELECTRICITY PER HL OF BEER MANUFACTURED

Steam Energy Requirement (MJ/HL)

Steam Energy Requirement (MJ/HL)

The Company has commissioned a state-of-the-art brewery in Haryana in F’09. This brewery marks a significant reduction in the specific energy requirement and would become the benchmark for future energy efficient breweries. While the positive trend in energy reduction thus far has been made possible by operational excellence in breweries, there is a need to adopt newer energy efficient technologies to sustain this momentum going forward. The Company is actively evaluating greener technologies for introduction in its breweries. Some of these technologies are not prevalent in Indian breweries because of various barriers, one of them being high capital cost. The possibility of availing Carbon Credits would certainly help the Company in pursuing greener technologies otherwise unsustainable due to high costs. A summary of the major measures taken by the Company at its various units are as under-

1. Aggressive target setting in breweries based on extensive benchmarking. 2. Use of methane generated from waste water treatment as boiler fuel. 3. Fuel switch from fossil fuel to biomass in selected breweries to reduce the carbon footprint. 4. Adopting a 5 R strategy in breweries aimed at Replenishment, Reduce, Reuse, Recycle and Redistribute. A rain water harvesting structure has been put up in one of the breweries in the North. This would help replenish the water table in the region. 5. Use of treated effluent for gardening of the factory campus by drain system. Use of UF & RO technology to recycle treated effluent water at strategic sites.

B. FOREIGN EXCHANGE EARNINGS AND OUTGO During the year, the Company has earned Rs.16.10 Crores in foreign exchange earnings. An amount of Rs.60.38 Crores was incurred in foreign exchange.

FOR AND ON BEHALF OF THE BOARD Jonathan Andrew Kirby Director Jean-Marc Delpon de Vaux Managing Director (Bangalore) Place: Hong Kong Dated: 8 July, 2009

“The crisis of our diminishing water resources is just as severe as any wartime crisis we have ever faced. Our survival is just as much at stake as it was at the time of any major wars or revolutions.”

SKOL Breweries Limited

Auditors’ Report
16-17

Breweries To the Members of SKOL Breweries Limited We have audited the attached balance sheet of SKOL Breweries Limited (“the Company”) as at 31 March 2009, the profit and loss account and the cash flow statement for the year ended on that date annexed thereto. 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. We conducted our 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. As required by the Companies (Auditor’s Report) Order, 2003, as amended, (“the Order”) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order. Further to our comments in the Annexure referred to above, we report that: (i) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit; (ii) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; (iii) the balance sheet, the profit and loss account and the cash flow statement dealt with by this report are in agreement with the books of account;

(iv) in our opinion, the balance sheet, the profit and loss account and the cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956; (v) on the basis of written representations received from the directors of the Company as on 31 March 2009, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31 March 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; and (vi) in our opinion and to the best of our information and according to the explanations given to us, the said 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: a. in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2009; b. in the case of the profit and loss account, of the loss of the Company for the year ended on that date; and c. in the case of the cash flow statement, of the cash flows of the Company for the year ended on that date.

for B S R & Co. Chartered accountants Zubin Shekary Partner Membership No. 48814 Bangalore 08 July 2009

Annexure to the Auditors’ report
19

Annexure referred to in the Auditors’ Report to the Members of SKOL Breweries Limited (“the Company”) for the year ended 31 March 2009. We report that: i. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification. (c) Fixed assets disposed off during the year were not substantial, and therefore, do not affect the going concern assumption. ii. (a) The inventory, except for goods-intransit and stock lying with third parties, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year-end, written confirmations have been obtained. (b) The procedures for the physical verification of inventories 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. The discrepancies noticed on verification between the physical stocks and the book records were not material.

iii. (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, paragraph 4(iii)(a), 4(iii)(b), 4(iii)(c) and 4(iii)(d) of the Order is not applicable. (b) The Company has taken a loan from Company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount outstanding during the year and the year-end balance of such loan was Rs 513,170,374 and Rs 211,624,493 respectively. (c) In our opinion, the rate of interest for the above loan taken from the Company, listed in the register maintained under Section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company. Tenure and repayment terms have not been specified for such loans. (d) According to the information and explanations given to us, the tenure and repayment terms have not been specified for the above mentioned loan. Consequently, we are unable to comment on paragraph 4(iii)(g) of the Order. iv. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to the sale of goods. We have not observed any major weakness in the internal control system during the course of the audit. v. a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that Section.

b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to above and exceeding the value of Rs. 5 lakhs with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time. vi. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58A, Section 58AA and other relevant provisions of the Companies Act, 1956 and the rules framed there under/ the directives issued by the Reserve Bank of India (as applicable) with regard to deposits accepted from the public. Accordingly, there have been no proceedings before the Company Law Board or National Company Law Tribunal (as applicable) or Reserve Bank of India or any Court or any other Tribunal in this matter and no order has been passed by any of the aforesaid authorities. vii. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business. viii. The Central Government has not prescribed the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 for any of the products manufactured by the Company.

SKOL Breweries Limited

Annexure to the Auditors’ report
18-19 ix. (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees’ State Insurance, Income-tax, Sales Tax/ Value Added Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess, and other material statutory dues have generally been regularly deposited during the year by the Company with the appropriate authorities though there has been a slight delay in a few cases. Amount due in respect of Investor Education and Protection Fund has not been regularly deposited during the year by the Company with the appropriate authorities. Name of the Statute Punjab Excise Act, 1914 Further, since the Central Government has till date not prescribed the amount of cess payable under Section 441A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the Company in depositing the same. According to the information and explanations given to us, there are no undisputed amounts payable in respect of Provident Fund, Employees’ State Insurance, Income-tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Investor Education and Protection Fund and other material statutory dues which were in arrears as at 31 March 2009 for a period of more than six months from the date they became payable. In respect of Sales Tax, the Company is in process of collecting statutory forms. Management has represented that the same would be submitted to the Amount (Rs.) 13,745,236 Period to which the amount relates 1974-75 to 1990-91 1989 Forum where dispute is pending Financial Commissioner, Haryana Orissa High Court authorities at the time of the assessment. Hence payment of differential sales tax has not been made on the statutory forms which are pending to be collected for the periods for which assessments have not been completed. (b) According to the information and explanations given to us, there are no dues of Wealth Tax and Cess which have not been deposited with the appropriate authorities on account of any dispute. The following dues of Income-tax, Sales Tax, Service Tax, Customs Duty and Excise Duty have not been deposited by the Company on account of disputes.

Nature of the Dues Duty on beer loss

Orissa and Bihar Excise Act, 1965

Interest on excise loan draw back scheme Adhesive label fees Overtime wages of excise staff

3,222,705

10,877,028 2,152,000 550,930 1,037,085

2001-02 to 2004-05 2005-06 1983-84 to 1988-89 2000-01

Orissa High Court Orissa High Court Bombay High Court Commissioner of State Excise, Maharashtra Karnataka High Court Karnataka High Court Customs Excise Service Tax Appellate Tribunal, Mumbai Sales Tax Tribunal, Orissa Sales Tax Tribunal, Orissa Assistant Commissioner of Commercial Taxes (Appeals), New Delhi

Bombay Prohibition Act, 1949

Supervision charges of excise staff Duty on expired beer

Karnataka Excise Act, 1965

Duty on breakages Overtime wages of excise staff

329,131 6,679,691 70,235,608

1997-98 to 1999-00 1998-99 to 2004-05 1996-97 to 1999-00

Central Excise Act, 1944

Central excise duty

Orissa Sales Tax Act, 1947 Orissa Entry Tax Act, 1999 Delhi Sales Tax Act, 1975

Sales Tax Sales Tax Sales Tax

92,728,022 242,508 1,260,000

1994-95 to 2000-01 2000-01 2002-03 to 2003-04

Annexure to the Auditors’ report

Name of the Statute

Nature of the Dues

Amount (Rs.)

Period to which the amount relates 1992-93 1995-96 1996-97 2001-02

Forum where dispute is pending Appellate Tribunal, Maharashtra Sales Tax Tribunal, Maharashtra Sales Tax Tribunal, Maharashtra Sales Tax Tribunal, Maharashtra Deputy Commissioner, Mumbai Joint Commissioner (Appeals), Mumbai Sales Tax Tribunal, Uttar Pradesh Commissioner of Appeals, Uttar Pradesh Andhra Pradesh High Court Assessing Authority, Pondicherry Sales Tax Tribunal, Haryana Sales Tax Tribunal, Uttar Pradesh Joint Commissioner, Meerut Additional Commissioner Sales Tax, New Delhi Deputy Commissioner, Meerut Supreme Court Chandigarh High Court Customs Excise and Service Tax Appellate Tribunal, Mumbai Customs Excise and Service Tax Appellate Tribunal, Mumbai

Bombay Sales Tax Act, 1959

Sales Tax Sales Tax Sales Tax

1,514,943 4,139,154 1,445,537 13,617,495

Bombay Sales Tax Act, 1959 & Central Sales Tax Act, 1956

Sales Tax

Sales Tax

8,050,922

2002-03

Sales Tax Uttar Pradesh Trade Tax Act, 1948 Uttar Pradesh Trade Tax Act, 1948 & Central Sales Tax Act, 1956 Andhra Pradesh General Sales Tax Act, 1957 Pondicherry General Sales Act, 1967 Haryana Sales Tax Act, 1973 Central Sales Tax Act, 1956 Penalty Sales Tax

4,984,290 185,000 4,026,568

2002-03 2003-04 2003-04

Sales Tax Sales Tax Sales Tax Sales Tax Sales Tax

3,675,677 11,982,000 5,965,472 5,428,400 51,114 137,749

1991-92 to 1992-93 1981-82 to 1984-85, 1997-98 to 1998-99 1989-90 to 1996-97, 1998-99 to 2003-04 2002-03 2006-07 2004-05

Delhi Sales Tax Act, 1975

Sales Tax

Uttar Pradesh Tax on Entry of Goods Act, 2000

Penalty

379,728

2003-04

Entry Tax Haryana Local Area Local Area Development Tax Act, 2000 Development Tax Finance Act, 1994 Service Tax and penalty

7,465,500 6,175,447 32,129,640

2003-04 to 2005-06 2000-01 to 2003-04 2006-07 to 2007-08

Customs Act, 1962

Customs Duty

261,555

2007-08

Note: The amounts paid under protest have been reduced from the amounts demanded in arriving at the aforesaid disclosure.

SKOL Breweries Limited

Annexure to the Auditors’ report
20-21 x. The Company has accumulated losses of Rs. 1,600,944,149 at the end of the financial year which is less than fifty per cent of its net worth. The Company has not incurred cash losses in the financial year and in the immediately preceding financial year. xviii. The Company has not made any preferential allotment of shares to companies/ firms/ parties covered in the register maintained under Section 301 of the Companies Act, 1956. xix. The Company did not have any outstanding debentures during the year. xx. The Company has not raised any money by public issues during the year. xxi. According to the information and explanations given to us, there was one fraud on the Company during the year where there was an allegation against an employee of the Company for colluding with a vendor involving an amount of Rs. 67,000. Services of the employee have since been terminated. According to the information and explanations given to us, no other fraud on or by the Company has been noticed or reported during the course of our audit.

xi. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to its bankers. The Company did not have any outstanding dues to any financial institutions or debenture holders during the year. xii. In our opinion the Company has maintained adequate records in cases where it has granted loans and advances on the basis of security by way of pledge of shares. The Company has not granted any loans and advances on the basis of security by way of pledge of debentures and other securities. xiii. In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. xiv. According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. xv. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. xvi. In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised. xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that funds raised on short-term basis amounting to Rs. 4,451,820,029 have been used for long-term investment in fixed assets.

for B S R & Co. Chartered accountants
Zubin Shekary Partner Membership No. 48814 Bangalore 08 July 2009

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

Balance sheet
22-23 (Rs.) Schedule SOURCES OF FUNDS Shareholders’ funds Share capital Reserves and surplus As at 31 March 2009 As at 31 March 2008

2 3

2,311,837,450 6,140,637,748 8,452,475,198

2,311,837,450 6,406,852,856 8,718,690,306

Loan funds Unsecured loans Deferred tax liability, net

4 18 (15)

6,170,031,896 14,622,507,094

3,774,422,006 63,744,036 12,556,856,348

APPLICATION APPLICATION OF FUNDS Fixed assets Gross block Less: Accumulated depreciation Less: Provision for impairment of fixed assets Net block Capital work-in-progress

5 13,556,110,406 (2,397,970,441) (143,814,725) 11,014,325,240 506,703,130 11,521,028,370 6 11,359,225 10,973,596,079 (2,074,943,657) (156,563,671) 8,742,088,751 1,491,630,978 10,233,719,729 11,359,225

Investments Current assets, loans and advances Inventories Sundry debtors Cash and bank balances Loans and advances Current liabilities and provisions Current liabilities Provisions

7 8 9 10

1,650,081,511 3,390,344,214 317,395,443 1,176,231,356 6,534,052,524 4,861,783,690 421,930,244 5,283,713,934 1,250,338,590 1,457,236,076 1,600,944,149 (1,218,399,316) 382,544,833 14,622,507,094

1,183,482,865 2,536,219,383 311,251,107 1,283,275,219 5,314,228,574 4,046,106,947 413,580,309 4,459,687,256 854,541,318 1,457,236,076 952,184,208 (952,184,208) 12,556,856,348

11 12

Net current assets
Amalgamation adjustment reserve account Debit balance in profit and loss account Less: Balance in general reserve account

3

S ignificant accounting policies Notes to the accounts

1 18

The schedules referred to above form an integral part of the balance sheet. As per our report attached for B S R & Co. for SKOL Breweries Limited Chartered Accountants Jean-Marc Delpon De Vaux Zubin Shekary Partner Managing Director Membership No. 48814 (Bangalore) Kevin Heydenrych Chief Finance Officer (Bangalore) Bangalore Hong Kong 08 July 2009 08 July 2009

Jonathan Andrew Kirby Director Pramod S M Company Secretary (Bangalore)

Profit and loss account
(Rs.) Schedule Income Sale of manufactured goods, gross Sale of traded goods, gross Less: Excise duty Less: Discounts Sales, net Income from contract bottling Other income Expenditure Cost of materials Personnel costs Other expenses Depreciation Provision for impairment of fixed assets Opening adjustment for returnable containers Borrowing cost For the year ended 31 March 2009 21,622,215,155 96,894,530 21,719,109,685 (7,518,279,022) (1,040,654,424) 13,160,176,239 143,573,120 185,950,917 13,489,700,276 6,839,899,584 974,679,780 4,982,476,471 651,299,955 (7,066,845) 340,493,099 433,651,970 14,215,434,014 (725,733,738) (48,582,678) 35,160,648 (63,744,036) 192,269 (648,759,941) (952,184,208) (1,600,944,149) For the year ended 31 March 2008 17,367,693,602 296,758,472 17,664,452,074 (6,307,912,578) (730,233,870) 10,626,305,626 219,335,661 281,767,214 11,127,408,501 3,027,155,449 804,928,296 5,757,867,250 858,090,043 117,306,243 153,515,535 10,718,862,816 408,545,685 (37,573,724) 30,320,522 70,783,158 238,542 344,777,187 (1,296,961,395) (952,184,208)

13

14 15 16 5 18 (17) 18 (2) 17

(Loss)/ profit before tax Provision for tax - current tax - pertaining to earlier years (reversal) - fringe benefit tax - deferred tax (credit)/ charge - wealth tax (Loss)/ profit after tax Debit balance in profit and loss account brought forward Debit balance in profit and loss account carried over to the balance sheet Earnings per share (par value; Rs. 10 each) - Basic earnings per share - Diluted earnings per share Significant accounting policies Notes to the accounts

18 (15)

18 (6) (2.81) (2.81) 1 18 1.52 1.49

The schedules referred to above form an integral part of the profit and loss account. As per our report attached

for B S R & Co. Chartered Accountants
Zubin Shekary Partner Membership No. 48814

for SKOL Breweries Limited
Jean-Marc Delpon De Vaux Managing Director (Bangalore) Kevin Heydenrych Chief Finance Officer (Bangalore) Jonathan Andrew Kirby Director Pramod S M Company Secretary (Bangalore)

Bangalore 08 July 2009

Hong Kong 08 July 2009

SKOL Breweries Limited

Schedules to the financial statements
24-25 1. Significant accounting policies Background SKOL Breweries Limited (“the Company” or “SKOL”) was incorporated as a public limited company under the Companies Act, 1956 on 18 November 1988. The Company is primarily engaged in the business of brewing, packaging, distribution, marketing and sale of beer. 1.1 Basis of preparation The financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting. The financial statements have been prepared to comply in all material respects with the mandatory Accounting Standards (‘AS’) prescribed by Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956, to the extent applicable. These financial statements are prepared and presented in Indian Rupees. 1.2 Going concern These financial statements have been prepared on a going concern basis, notwithstanding accumulated losses and reliance on short term borrowings due to the following considerations: - Expected steady future growth reflected in financial projections prepared by the management; - Expected continual technical and financial support by the SABMiller group. - Subsequent renewal of short term borrowings from banks. These financial statements, therefore, do not include any adjustments relating to recoverability and classification of asset amounts or to classification and amount of liabilities that may be necessary if the Company was unable to continue as a going concern. 1.3 Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles in India requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the results of operations during the reporting period end. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods. 1.4 Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be measured reliably. (i) Sale of goods Revenue from sale of manufactured and traded goods is recognised on transfer of all the significant risks and rewards of ownership to the buyer which normally takes place on despatch of goods. The amount recognised as sale is net of sales tax, sales returns and discount. Sales are presented both gross and net of excise duty. (ii) Income from contract bottling Income from contract bottling is recognised when the right to receive bottling fee is established which normally takes place on dispatch of goods by contract bottlers to its customers. (iii) Interest Interest is recognised using the time proportion basis taking into account the amount outstanding and the interest rate applicable. (iv) Sale of scrap and spent malt Revenue from sale of scrap and spent malt is recognised on transfer of all the significant risks and rewards of ownership to the buyer which normally takes place on dispatch of goods. The amount recognised as sale is net of sales tax and sales returns. (v) Gain on prepayment of deferred sales tax loan Gain on prepayment of deferred sales tax loan is recognised when the deferred sales tax loan, is settled at a discounted value as mentioned in the deferral scheme. 1.5 Fixed assets Fixed assets are carried at cost of acquisition or construction less accumulated depreciation and provision for impairment of assets. The cost of fixed assets includes freight, duties, taxes and other incidental expenses related to the acquisition or construction of the respective assets. Borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalised to the extent they relate to the period till such assets are ready to be put to use. Intangible assets are recorded at their acquisition cost. Advances paid towards the acquisition or construction of fixed assets outstanding at the balance sheet date and the cost of the fixed assets not ready for their intended use on such date, are disclosed as capital work-in-progress. Upto 31 March 2008, containers (empty bottles) were recorded as fixed assets and depreciated over a period of two years. The Company is a dominant/ key player in the Indian market and the policy of recording containers as fixed assets is more prevalent in International markets. Other Companies in India (i.e. competitors) record containers as inventories and not as fixed assets. This resulted in an issue on comparability of results and performance. In order to ensure comparability of financial performance with other Companies in India, Management, with effect from 1 April 2008, have changed the policy of recording containers as inventories which were hitherto recorded as fixed assets. Management believes that this change will result in a more appropriate presentation of the financial statements (refer note 2 of Schedule 18).

26-27

1.6 Depreciation Depreciation on fixed assets is provided on the straight-line method as per the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956 are considered as minimum rates. However, where the management’s estimate of the useful life of a fixed

asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the management’s estimate of useful life/ remaining useful life.

After recognition of impairment loss, depreciation is provided on the revised carrying amount of the asset, less its residual value (if any), over its remaining useful life. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost. An impairment loss is reversed only to the extent that the carrying amount of asset does not exceed the net book value that would have been determined; if no impairment loss had been recognised. 1.8 Borrowing costs Borrowing costs directly attributable to acquisition or construction of those fixed assets, which necessarily take a substantial period of time to get ready for their intended use, are capitalised. Other borrowing costs are accounted as an expense. 1.9 Investments Long-term investments are carried at cost less any other-thantemporary diminution in the value, as determined by management on commercial consideration determined separately for each individual investment. 1.10 Inventories Inventories are valued at lower of cost and net realisable value. Cost of inventories comprises purchase price, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Pursuant to this policy the following fixed assets are depreciated to their residual value over their estimated useful life: Class of Assets Computer equipment Furniture, fittings and office equipment Brands Buildings Computer software Vehicles Motor Vehicles Plant and Machinery - Chillers - Crates - Wooden pallets - Others Freehold land is not depreciated. Leasehold land is amortised over the lease term. Leasehold improvements are amortised over the lease term or its estimated useful life of 5 years, whichever is lower. Pro-rated depreciation is provided on all assets purchased or sold during the year. Assets, costing individually Rs 5,000 or less, are depreciated in full in the year of purchase. The useful lives of brands, which primarily represent brands purchased, have been determined based on management’s assessment of market conditions in India, intent to use and ability to maintain these assets, previous history of these brands and internationally accepted practices. 1.7 Impairment The Company periodically assesses whether there is any indication that an asset or a group of assets comprising a cash generating unit may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. For an asset or group of assets that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the profit and loss account. The recoverable amount is higher of the assets’ net selling price and value in use. 5 2 3 14-18 Years 4 6 20 28 4 10

“The wars of the twenty-first century will be fought over water.”
SKOL Breweries Limited

Schedules to the financial statements
26-27 The methods of determination of cost of various categories of inventories are as follows: Raw materials, packing materials, stores and spares and traded goods Work-in-progress and finished goods (including goods in transit) – – First-in-first-out (FIFO) method FIFO method. Production overheads are allocated on the basis of normal capacity of production facilities. commitment or a highly probable forecast transaction and that do not qualify for hedge accounting have been recorded at fair value at the reporting date and the resultant exchange loss/ (gain) has been debited/ credited to profit and loss account for the year. 1.12 Employee benefits (i) Contributions to provident funds, which is a defined contribution scheme, are charged to the profit and loss account on an accrual basis. (ii) The Company has an arrangement with Life Insurance Corporation of India to administer its superannuation scheme, which is a defined contribution scheme. The contributions to the said scheme are charged to the profit and loss account on an accrual basis. (iii) Gratuity, which is a defined benefit scheme is provided for based on an actuarial valuation carried out by an independent actuary as at the balance sheet date. Actuarial gains/ losses are recognised immediately in the profit and loss account and are not deferred. (iv) Compensated absences are provided for based on an actuarial valuation carried out by an independent actuary as at the balance sheet date. In the previous year due to adoption of the AS 15 - Employee benefits (Revised 2005), the Company has provided for long term compensated absences based on actuarial valuation. Further in accordance with the transitional provision in AS 15 Emplyoee benefits (Revised 2005), Rs. 13,670,268 (net of deferred tax

Maintenance spares, which are in regular use and are not an integral part of any fixed asset, are treated as inventory and valued at cost. The comparison of cost and net realisable value is made on an itemby-item basis. The net realisable value of work-in-progress is determined with reference to the selling prices of related finished goods in the ordinary course of business, less estimated cost of completion and estimated costs necessary to make the sale. Raw materials, packing materials and other supplies held for use in production of inventories are not written below cost except in cases where material prices have declined, and it is estimated that the cost of the finished products will exceed their net realisable value. 1.11 Foreign exchange Foreign exchange transactions are recorded at the rates of exchange prevailing on the dates of the respective transactions. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the profit and loss account for the year. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rate on that date; the resultant exchange differences are recognised in the profit and loss account. Forward contracts and other derivatives are entered into to hedge the foreign currency risk of the underlying outstanding at the balance sheet date. The premium or discount on all such contracts arising at the inception of each contract is amortised as income or expense over the life of the

contract. Any profit or loss arising on the cancellation or renewal of forward contracts is recognised as income or as expense for the period. The exchange difference on the forward exchange contract entered into to hedge the foreign currency risk of the underlying outstanding at the balance sheet date, is calculated as the difference between the foreign currency amount of the contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period, and the corresponding foreign currency amount translated at the later of the date of inception of the forward exchange contract and the last reporting date. Such exchange differences are recognised in the profit and loss account in the reporting period in which the exchange rates change. For forward exchange contracts and other derivatives that are not covered by AS 11 and that relate to a firm commitment or highly probable forecast transactions, the Company has adopted the principles of Accounting Standard (‘AS’) 30, ‘Financial Instruments: Recognition and Measurement’ with effect from April 1, 2008. Derivative financial instruments, which qualify for cash flow hedge accounting and where Company has met all the conditions of cash flow hedge accounting, are fair valued at balance sheet date and the resultant exchange loss/(gain) is debited/ credited to the hedge reserve. This loss/ (gain) would be recorded in profit and loss account when the underlying transactions affect earnings. Other derivative instruments that relate to a firm

28-29

asset of Rs. 7,039,122) has been adjusted to the general reserve. This change did not result in a material impact on the profit for the previous year. 1.13 Leases Leases where the lessor effectively retains substantially all the risks and rewards of ownership of the leased asset are classified as operating leases. Operating lease payments are recognised as an expense in the profit and loss account on a straight-line basis over the lease term. 1.14 Provisions and contingent liabilities The Company recognises a provision when there is a present obligation as a result of an obligating event that probably requires outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure of a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made. Provisions for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it, are recognised when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event, based on a reliable estimate of such obligation. 1.15 Taxation Income tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with the Income-tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is

reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carried forward business loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonably/virtually certain (as the case may be) to be realised. The Company offsets, the current (on a year on year basis) and deferred tax assets and liabilities, where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis. The Company provides for and discloses the Fringe Benefit Tax (“FBT”) in accordance with the provisions of Section 115 WC of the Income-tax Act, 1961 and the guidance note on FBT issued by ICAI. 1.16 Earnings per share

1.17 Employee stock compensation cost The Company applies intrinsic value method of accounting for stock options granted by the ultimate holding Company to the employees of the Company after 1 April 2005. The intrinsic value of the employee services received in exchange for the grant of such options is recognised as an expense. The amount recognised is spread over the vesting period which is also the period over which some of the scheme performance criteria relate. At each balance sheet date, the estimates of the number of options that are expected to become exercisable are revised. It recognises the impact of the revision of the original estimates, if any, in the profit and loss account over the remaining vesting period. The effect of uncertainty as to whether any performance criteria of share options will be met is dealt with by estimating the probability of shares vesting and therefore the cost is adjusted and readjusted for the probability of vesting in the vesting period.

The basic earnings per share is computed by dividing the net profit 1.18 Cash flow statement or loss attributable to equity Cash flows are reported using the shareholders for the year by the indirect method, whereby the net weighted average number of equity profit before tax is adjusted for the shares outstanding during the year. effects of transactions of a non-cash The number of equity shares used in nature and any deferrals or accruals of computing diluted earnings per share past or future cash receipts or comprises the weighted average payments. The cash flows from shares considered for deriving basic regular revenue generating, investing earnings per share, and also the and financing activities of the weighted average number of equity Company are segregated. shares, which would have been issued on conversion of all potentially dilutive 1.19 Amalgamation adjustment reserve equity shares. Potential dilutive equity account shares are deemed converted as of With effect from 21 May, 2003, the the beginning of the year, unless they direct and step down subsidiaries of have been issued at a later date. the Company were amalgamated in The potentially dilutive equity shares to the Company. The Company has have been adjusted for the proceeds accounted for amalgamation receivable had the shares been adjustment reserve as per the actually issued at a fair value scheme approved by the Honourable (i.e. the average market value of the High Courts. Amalgamation outstanding shares). In computing the adjustment reserve account dilutive earnings per share, only represents excess of the carrying potential equity shares that are dilutive value of investments, over the share and that either reduces the earnings capital of the Transferor Companies. per share or increases loss per share are included.

SKOL Breweries Limited

Schedules to the financial statements
28-29 (Rs.) 2. Share capital Authorised 300,000,000 (previous year: 250,000,000) equity shares of Rs. 10 each Issued, subscribed and paid up 231,183,745 (previous year: 231,183,745) equity shares of Rs. 10 each fully paid up Of the above : 1) 142,041,561 (previous year: 142,041,561) equity shares of Rs. 10 each are held by SABMiller Breweries Private Limited, the immediate holding company. 87,341,038 (previous year: 87,341,038) equity shares of Rs. 10 each are held by SABMiller Asia B.V., another group Company. SABMiller Plc is the ultimate holding Company. 2) Pursuant to a scheme of arrangement 34,636,335 (previous year: 34,636,335) equity shares of Rs. 10 each were allotted, in earlier years, for consideration other than in cash. (Rs.) As at 31 March 2008 2,000,000 As at 31 March 2009 3,000,000,000 3,000,000,000 2,311,837,450 2,311,837,450 As at 31 March 2008 2,500,000,000 2,500,000,000 2,311,837,450 2,311,837,450

3. Reserves and surplus Capital reserve Securities premium At the beginning of the year Addition during the year General reserve At the beginning of the year Less: Transitional adjustment for employee benefits (net of tax of Rs. 7,039,122) (refer to note 1.12) Less: Debit balance in profit and loss account

As at 31 March 2009 2,000,000

6,138,637,748 6,138,637,748 1,218,399,316 (1,218,399,316) 6,140,637,748

4,608,316,326 1,530,321,422 6,138,637,748 1,232,069,584 (13,670,268) (952,184,208) 266,215,108 6,406,852,856 (Rs.) As at 31 March 2008 263,732,853 2,650,010,288

4. Unsecured loans

As at 31 March 2009 415,394,900 4,834,617,711

Bank overdraft Short term bank loans Other loans External commercial borrowings from banks [Refer note (a) below] From others: - loan from holding Company [Refer note (b) below] - loan from fellow subsidiary [Refer note (b) below] - deferred sales tax loan

662,275,628 211,624,493 46,119,164 6,170,031,896

442,092,599 385,269,911 33,316,355 3,774,422,006

Notes: a) Amount repayable within a period of 12 months Rs.178,325,000 (previous year: Rs. 207,625,175). b) Tenure and terms for repayment have not been specified for loans obtained from holding company and fellow subsidiaries.

5. Fixed assets
Gross Block Accumulated Depreciation Net block

Description
Additions Deletions Charge As at 31 March 2009 As at 1 April 2008 Deletions/ adjustments As at 31 March 2009 As at 31 March 2009 As at 31 March 2008

As at 1 April 2008

Provision for impairment As at 31 March 2009 (refer note 1 below)

Tangible assets
222,449,871 721,851,226 526,912 1,912,111,548 146,976,042 53,761,057 129,687 200,607,412 11,674,312 1,699,829,824 9,698,369 488,904 1,939,674 2,428,578 7,269,791 15,831,621 4,551,264 1,014,956 5,566,220 10,265,401 405,346,807 16,600,000 388,746,807 166,296,936 11,280,357 9,209,465 1,035,344,627

Freehold land

182,896,936

Leasehold land

15,831,621

Leasehold improvements

9,698,369

Buildings

1,190,787,234

Plant and machinery 12,048,584 1,271,440 360,745 4,201,925 28,141,097 11,315,362 2,724,807 821,759 13,218,410 70,534,083 34,641,133 8,032,720 352,085 42,321,768 99,851,022 59,739,757 10,971,626 1,215,312 69,496,071 930,146 953,086 258,556 7,513,864,396 1,084,449,702 380,306,975 7,847,275 1,456,909,402 113,398,625 1,510,709,393 317,041,425 317,041,425 5,943,556,369 29,424,805 27,259,229 14,664,131 1,193,667,968 3,193,751,447 18,409,595 26,904,625 20,726,949

- Returnable containers (refer note 2 of schedule 18)

1,510,709,393

- Others 22,131,403 8,544,712 42,155

4,407,793,634

3,118,119,346

Computer equipment

78,991,059

Furniture, fittings and office equipment

62,350,116

Motor vehicles

32,300,867

Intangible assets
19,411,813 1,530,036,199 13,556,110,406 2,074,943,657 651,299,955 328,273,171 917,200 89,811,218 39,102,618 19,306,241 865,628 3,410,920,245 376,637,450 173,241,899 549,879,349 57,543,231 2,397,970,441 2,861,040,896 32,267,987 143,814,725 11,014,325,240 3,034,282,795 32,213,987 8,742,088,751

Brands

3,410,920,245

Computer software

71,316,605

Total Total

10,973,596,079

4,112,550,526

Previous year

8,795,466,503

2,813,346,689

635,217,113

10,973,596,079

1,525,150,636

858,090,043

308,297,022

2,074,943,657

156,563,671

8,742,088,751

Note 1: Provision for impairment (Also refer note 17 of Schedule 18): (Rs.)

Provision for impairment
Charge Charge / (reversal) 3,207,747 (10,511,759) 88,439 148,728 (7,066,845) 5,682,101 5,682,101 113,398,625 930,146 953,086 258,556 143,814,725 11,674,312 16,600,000 Deletion As at 31 March 2009

Description

As at 1 April 2008

Freehold land

16,600,000

Buildings

8,466,565

Plant and machinery - others

129,592,485

Computer equipment

841,707

Furniture, fittings and office equipment

804,358

Motor vehicles

258,556

Total otal

156,563,671

SKOL Breweries Limited
117,306,243 13,266,470

Previous year

52,523,898

156,563,671

Schedules to the financial statements
30-31 (Rs.) As at 31 March 2008

6. Investments

As at 31 March 2009

Long term investments 1. Non trade - unquoted (i) Government and trust securities National Savings Certificates Indira Vikas Patra (ii) Fully paid up equity shares 1 (previous year:1) fully paid up equity shares of Rs. 10 each of MBL (AP) Breweries Limited 12,000 (previous year: 12,000) fully paid up equity shares of Rs. 10 each of Shushruta Medical Aid and Research Hospitals Limited 5,000 (previous year: 5,000) fully paid up equity shares of Rs. 10 each of Maini Granites Limited 300 (previous year: 300) fully paid up equity shares of Rs. 10 each in AP Heavy Machinery & Engineering Limited 10,000 (previous year:10,000) fully paid up equity shares of Rs. 10 each in Ramanashree Comforts Limited 10,000 (previous year: 10,000) fully paid up equity shares of Rs. 10 each in Anusha International Limited 1,700 (previous year: 1,700) fully paid up equity shares of Rs. 100 each in Maa Communication Bozel Limited 7,000 (previous year: 7,000) fully paid up equity shares of Rs. 10 each in Sachdev International Limited 12,500 (previous year: 12,500) fully paid up equity shares of Rs. 10 each in Scarlet Flowers and Agritech Limited 100 (previous year: 100) fully paid up equity shares of Rs. 10 each in Indana Spices and Food India Limited 80,000 (previous year: 80,000) fully paid up equity shares of Rs. 10 each in Vulcan Leasing and Investments Limited 5,005 (previous year: 5,005) fully paid up equity shares of Rs. 100 each in Janata Sahakari Bank Limited 295 (previous year: 295) fully paid up equity shares of Rs. 100 each in Haryana State Cooperative Bank Limited 50,000 (previous year: 50,000) fully paid up equity shares of Rs. 10 each in SDF Industires Limited (Formerly Super Star Distilleries Limited) 2. Non trade - quoted Fully paid up equity shares 15,000 (previous year: 15,000) fully paid up equity shares of Rs. 1 each in ITC Limited 400 (previous year: 400) fully paid up equity shares of Rs. 10 each in Ultratech Cement Limited 80 (previous year: 80) fully paid up equity shares of Rs. 10 each in Tata Motors Limited 15,000 (previous year: 15,000) fully paid up equity shares of Rs. 2 each in Gujarat Ambuja Cement Limited 2,000 (previous year: 1,000) fully paid up equity shares of Rs. 2 each in Larsen & Toubro Limited * 1,400 (previous year: 1,400) fully paid up equity shares of Rs. 2 each in Satyam Computers Limited 8,600 (previous year: 8,600) fully paid up equity shares of Rs. 10 each in Syndicate Bank Limited Total long term investment Less: Provision for, other than temporary, diminution in the value of investments

2,019,500 26,550 2,046,050 1 12,000 5,000 300 10,000 10,000 1,700 7,000 12,500 100 80,000 500,500 29,500 50,000 718,601

2,019,500 26,550 2,046,050 1 12,000 5,000 300 10,000 10,000 1,700 7,000 12,500 100 80,000 500,500 29,500 50,000 718,601

2,619,750 400,060 56,944 2,115,000 2,598,850 633,500 700,470 9,124,574 11,889,225 (530,000) 11,359,225

2,619,750 400,060 56,944 2,115,000 2,598,850 633,500 700,470 9,124,574 11,889,225 (530,000) 11,359,225

The aggregate book value and market value of quoted investments and book value of unquoted investments are as follows: Quoted investment Aggregate book value 9,124,574 Aggregate market value 5,876,574 Aggregate book value of unquoted investments 2,234,651 * On 3 October 2008 the Company has received bonus shares in Larsen & Tourbo Limited in the ratio of 1:1.

9,124,574 7,775,281 2,234,651

(Rs.) 7. Inventories As at 31 March 2009 558,534,061 92,353,625 182,761,543 798,896,716 15,313,095 2,222,471 1,650,081,511 As at 31 March 2008 424,926,983 61,739,226 124,986,877 560,769,112 3,372,180 7,688,487 1,183,482,865 (Rs.) As at 31 March 2008

Raw materials and packing materials Stores and spares Work-in-progress Finished goods Goods in transit - finished goods Traded goods

8. Sundry debtors

As at 31 March 2009

Unsecured Debts outstanding for a period exceeding six months - considered good - considered doubtful

16,366,113 232,378,340 248,744,453

30,028,871 210,674,357 240,703,228

Other debts - considered good - considered doubtful

Less: Provision for doubtful debts

3,373,978,101 4,823,658 3,627,546,212 (237,201,998) 3,390,344,214

2,506,190,512 88,980,586 2,835,874,326 (299,654,943) 2,536,219,383 (Rs.) As at 31 March 2008 666,437 41,338,772 246,729,811 11,864,657 9,504,220 30,000 1,117,210 311,251,107

9. Cash and bank balances

As at 31 March 2009 35,068 60,860,594 241,718,047 13,734,611 928,808 30,000 88,315 317,395,443

Cash on hand Cheques in hand Balances with scheduled banks - in current accounts - in margin money deposit accounts - in exchange earnings foreign currency (EEFC) account - in unclaimed public deposit account - in unclaimed dividend accounts

“When we save a river, we save a major part of an ecosystem, and we save ourselves as well because of our dependence—physical, economic, spiritual,—on the water and its community of life.”
SKOL Breweries Limited

Schedules to the financial statements
32-33 (Rs.) As at 31 March 2008

10. Loans and advances

As at 31 March 2009

Unsecured Considered good Advances recoverable in cash or in kind or for value to be received Prepaid expenses Inter-company deposit Rental deposits Other deposits Advance fringe benefit tax (net of provision for fringe benefit tax ) Advance tax and tax deducted at source (net of provision for income-tax) Balances with excise authorities Interest accrued but not due Considered doubtful Advances recoverable in cash or in kind or for value to be received Less: Provision for doubtful advances

397,023,049 177,816,042 22,667,915 40,989,686 130,744,750 477,793 115,372,693 288,712,959 2,426,469 1,176,231,356 236,999,042 (236,999,042) 1,176,231,356

444,740,092 133,432,402 39,174,886 133,438,135 1,264,449 135,499,862 393,797,080 1,928,313 1,283,275,219 170,218,956 (170,218,956) 1,283,275,219

Notes: Dues from Companies under the same management outstanding as at the balance sheet date is Rs. Nil (previous year: Rs. Nil). Maximum amount outstanding during the year: MBL Investments Limited SABMiller India Limited

-

128,785,130 9,560,863 (Rs.) As at 31 March 2008 19,956,173 34,630,832 750,368,959 1,008,195,088 81,907,134 11,167,966 601,678,875 302,293,444 290,387,687 944,373,579 1,117,210 30,000 4,046,106,947 (Rs.) As at 31 March 2008 47,708,072 44,489,785 96,752,121 224,630,331 413,580,309

11. Current liabilities

As at 31 March 2009

Acceptances 70,092,260 Sundry creditors - micro and small enterpises (refer note 19 of Schedule 18) 15,156,599 - others 1,747,881,276 Payable to group Companies 1,448,206,620 Deposits from customers and del credre agents 90,881,516 Book overdraft 514,838 Interest accrued but not due 20,315,815 Liability for returnable containers (refer note 2 of schedule 18) Accrual for sales schemes and discounts 252,691,379 Excise duty payable 354,692,729 Other current liabilities 861,232,343 Investor education and protection fund shall be credited by the following amounts when due: - Unclaimed dividend 88,315 - Unclaimed matured public deposit 30,000 4,861,783,690

12. Provisions

As at 31 March 2009 47,112,420 52,697,985 18,011,044 4,489,085 299,619,710 421,930,244

Provision for compensated absences Provision for gratuity Provision for income-tax (net of advance tax and tax deducted at source) Provision for fringe benefit tax (net of advance tax) Provision for claims (refer to note 13 of Schedule 18)

(Rs.) 13. Other income For the year ended 31 March 2009 For the year ended 31 March 2008 107,032,547 3,692,493 48,743,316 111,962,935 3,547,972 6,787,951 281,767,214 (Rs.) For the year ended 31 March 2008 129,050,240

Sale of spent malt and scrap 132,542,796 Interest - inter-corporate deposit [tax deducted at source Rs. Nil (previous year: Rs. 836,719 )] - fixed deposit [tax deducted at source Rs. 240,071(previous year: Rs. 10,294,726 )] 2,008,395 Profit on sale of fixed assets, net 15,004,247 Gain on prepayment of sales tax deferral loan 14,322,809 Duty draw back on export of beer 8,113,532 Royalty income 6,611,772 Dividend income 177,101 Miscellaneous income 7,170,265 185,950,917

14. Cost of materials

For the year ended 31 March 2009 77,339,029

Cost of traded goods sold Raw materials and packing materials consumed [includes cost of containers consumed Rs. 2,979,601,969 (previous year: Rs. Nil] of which stock of empty bottles on hand as at 1 April 2008 was Rs. 123,178,449 (previous year: Rs. Nil). (refer note 2 of schedule 18) Malt processing charges

6,736,736,577 110,599,032

2,869,821,961 172,798,620

Opening stock Work-in-progress Finished goods (including goods in transit) Cost of bottles included in finished goods as at 1 April 2008 (refer note 2 of schedule 18)
Less: Excise duty on opening stock

124,986,877 564,141,292 128,317,545 817,445,714 304,023,888 513,421,826

99,559,379 281,936,166 381,495,545 140,906,636 240,588,909 124,986,877 564,141,292 689,128,169 304,023,888 385,104,281 (84,775,054) 6,839,899,584 (144,515,372) 3,027,155,449 (Rs.) For the year ended 31 March 2008 729,129,579 27,672,075 10,839,791 1,625,400 35,661,451 804,928,296

(A) Closing stock Work-in-progress 182,761,543 Finished goods (including goods in transit) and cost of containers 814,209,811 996,971,354 Less: Excise duty on closing stock 398,774,474 (B) 598,196,880 (Increase) in work-in-progress and finished goods (A-B)

15. Personnel costs

For the year ended 31 March 2009 868,118,126 30,886,292 14,483,680 5,839,464 55,352,218 974,679,780

Salaries, wages and bonus Contributions to provident and other funds Gratuity expense Compensated absences Workmen and staff welfare expenses

SKOL Breweries Limited

Schedules to the financial statements
34-35 (Rs.) For the year ended 31 March 2008 1,652,361,344 599,201,681 179,930,597 641,104,558 594,402,878 579,909,782 409,179,310 220,206,608 132,552,686 68,554,855 106,170,115 102,150,451 75,261,801 12,283,695 24,739,869 25,023,663 31,940,020 21,112,274 24,455,559 16,833,319 14,296,898 11,613,540 91,521,158 8,322,007 (55,864,649) 49,754,609 120,848,622 5,757,867,250

16. Other expenses

For the year ended 31 March 2009 731,286,351 195,608,001 774,819,322 698,588,332 668,107,856 515,999,971 271,523,243 152,976,820 75,720,004 121,812,185 128,418,139 170,384,812 9,143,153 17,813,825 43,331,462 35,740,410 30,603,680 25,275,349 (62,452,945) 20,895,115 11,215,839 66,780,086 74,989,379 15,094,179 188,801,903 4,982,476,471

Cost of returnable containers (refer note 2 of schedule 18) Sales scheme expenses Commission on sales Freight outward Power and fuel Advertisement and publicity Management fees Rates and taxes Legal and professional fees Clearing and forwarding Travel and conveyance Consumption of stores and spares Rent Repairs and maintenance - buildings - plant and machinery - others Telephone and other communication Training and development Insurance Provision for doubtful debts Bad debts written off Printing and stationery Provision for doubtful loans and advances Doubtful advances written off Provision for claims, net Foreign exchange loss, net Miscellaneous expenses

17. Borrowing cost

For the year ended 31 March 2009

(Rs.) For the year ended 31 March 2008

Interest - On external commercial borrowings - On term loans - Others Bank charges

Less: Borrowing cost capitalised

35,740,247 474,026,661 45,754,180 26,457,914 581,979,002 (148,327,032) 433,651,970

29,531,653 119,327,275 17,297,303 5,348,994 171,505,225 (17,989,690) 153,515,535

“Time your shower to keep it under 5 minutes. You’ll save up to 1000 gallons a month.”

36-37

18. Notes to the accounts
1. Contingent liabilities and other commitments Particulars Claims against the Company not acknowledged as debts in respect of: a) Sales tax matters b) Excise matters c) Service tax matters d) Custom matters e) Other matters Other commitments f) Bank guarantees g) Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for (Rs.) As at 31 March 2009 57,788,606 91,641,840 32,129,640 261,555 32,379,016 31,037,612 604,587,467 As at 31 March 2008 98,512,478 91,641,840 32,379,016 16,414,057 1,243,881,396

2. In the current year, pursuant to the change in accounting policy for returnable containers, the Company has carried out the following accounting adjustments in the books of account as at 1 April 2008. Particulars Reversal of opening balance for returnable containers appearing in the financial statements as at 1 April 2008: Gross block of returnable containers Accumulated depreciation of returnable containers Containers liability Opening stock of containers as at 1 April 2008, accounted as inventories as per the revised accounting policy Finished goods 128,317,545 Packing materials 123,178,449 Total Amount (Rs)

1,510,709,393 (317,041,425) (601,678,875) 591,989,093

(251,495,994) 340,493,099

Due to the change in accounting policy for returnable containers in the current year, the loss for the year is higher by Rs. 524,241,616 as compared to the previous year, of which Rs. 340,493,099 is debited seperatly in the profit and loss account as “opening adjustment for returnable containers”. 3. Early adoption of AS 30 During the current year, the Company has early adopted the principles of AS 30 for forward exchange contracts and other derivatives that are not covered by AS 11 and that relate to a firm commitment or a highly probable forecast transaction effective 1 April 2008. In the previous year, the Company had accounted for such contracts in accordance with the guidance provided in the ICAI Announcement dated 29 March 2008. Due to the change in accounting policy in the current year, the loss for the year is lower by Rs. 2,297,633 as compared to the previous year. 4. Income from contract bottling operations pertains to the revenue share the Company has earned on sales made by the tie up units. These revenues is recorded on a net basis in order to comply with relevant statutory regulations where by tie up units raise invoices on its customers, accounts for collections in its books of accounts, discharge statutory dues and taxes and records sales on a gross basis in the financial statements. The contract bottling agreement further specifies that the dealing between the Company and the contract bottlers is on a principal to principal basis. The above practice is consistent with prevalent industry practice. 5. Auditors’ remuneration, net of service tax (included under legal and professional fees) For the year ended Particulars 31 March 2009 As auditor - Statutory audit 9,200,000 - Tax audit 1,000,000 - Agreed upon procedures Reimbursement of expenses 528,339 6. Earnings per share Particulars (Loss)/ profit for the year attributable to equity shareholders Weighted average number of equity shares of Rs. 10 each used for calculation of basic earnings per share Adjustments for dilutive effect of share application money Weighted average number of equity shares of Rs. 10 each used for calculation of diluted earnings per share Basic earnings per share Diluted earnings per share (Rs.) For the year ended 31 March 2008 8,300,000 1,000,000 1,750,000 466,327

(Figures in Rs. except number of shares) For the year ended For the year ended 31 March 2008 31 March 2009 (648,759,941) 231,183,745 231,183,745 (2.81) (2.81) 344,777,187 227,184,330 3,999,415 231,183,745 1.52 1.49

SKOL Breweries Limited

Schedules to the financial statements
36-37 18. Notes to the accounts 7. Additional information pursuant to the provisions of paragraphs 3, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956 (quantitative information has been compiled from records and technical data in respect of each class of goods manufactured/ purchased by the Company): Details of finished goods (including goods in transit) and turnover (gross) For the year ended 31 March 2009 Quantity Amount (in cases) (Rs.) 2,337,847 52,221,556 2,509,859 564,141,292 21,622,215,155 814,209,811 For the year ended 31 March 2008 Quantity Amount (in cases) (Rs.) 1,330,528 47,428,745 2,337,847 281,936,166 17,367,693,602 564,141,292

(a)

Beer Opening stock Sales (gross of excise duty and discounts)* Closing stock

* Includes 189,854 (previous year: 62,321) cases charged to consumption on account of breakages, damages and wastage.

(b) Details of traded goods For the year ended 31 March 2009 Beer Opening stock Purchases Sales (gross of excise duty and discounts)** Closing stock Quantity (in cases) 17,479 167,825 180,230 5,074 Amount (Rs.) 7,688,487 71,873,013 96,894,530 2,222,471 Quantity (in cases) 11,154 837,335 831,010 17,479 For the year ended 31 March 2008 Amount (Rs.) 2,858,364 133,880,363 296,758,472 7,688,487

** Includes 534 (previous year: 65) cases charged to consumption on account of breakages, damages and wastage.

(c) Details of capacity and production Particulars Licensed capacity # Installed capacity* Actual production For the year ended 31 March 2009 77,559,542 73,522,209 52,393,568

(in cases) For the year ended 31 March 2008 50,126,379 50,007,210 48,436,064

* Installed capacity is as certified by management and relied upon by the auditors being a technical matter. # Licensed capacity is 6,049,644 HLs (previous year: 3,909,858 HLs) which is converted in cases considering 7.8 litres per case.

(d) Consumption of raw materials and packing materials Particulars Units For the year ended 31 March 2009 Quantity Malt (Note 1) Cartons Cans Bottles Others (Note 2) Total MT Nos Nos Nos 56,555 54,346,529 109,874,866 660,535,313 Amount (Rs.) 1,490,307,345 371,018,654 664,968,771 2,979,601,969 1,341,438,870 6,847,335,609 For the year ended 31 March 2008 Quantity 55,597 43,940,130 53,451,141 Note 3 Amount (Rs.) 1,522,565,105 263,950,089 274,220,123 981,885,265 3,042,620,582

Note 1: Includes processing charges. Note 2: It is not practicable to furnish quantitative information in view of the large number of items which differ in size and nature, each being less than 10% in value of the total consumption. Note 3: Previous year details are not provided as bottles were recorded as fixed assets up to 31 March 2008.

38-39

18. Notes to the accounts (e) Consumption of imported and indigenous raw materials and packing materials Particulars For the year ended 31 March 2009 Amount (Rs.) 750,972,187 6,096,363,422 6,847,335,609 % age 11 89 100 For the year ended 31 March 2008 Amount (Rs.) 477,663,725 2,564,956,857 3,042,620,582 % age 16 84 100

Imported Indigenous Total

(f) Consumption of imported and indigenous stores and spares Particulars For the year ended 31 March 2009 Amount (Rs.) 5,556,272 122,861,867 128,418,139 % age 4 96 100 For the year ended 31 March 2008 Amount (Rs.) 1,749,696 100,400,755 102,150,451 % age 2 98 100 (Rs.) For the year ended 31 March 2009 517,290,769 7,805,209 843,645,026 1,368,741,004 For the year ended 31 March 2008 447,980,124 1,367,463 128,484,910 577,832,497 (Rs.) For the year ended 31 March 2009 11,598,125 515,999,971 35,740,247 35,866,618 4,624,002 603,828,963 For the year ended 31 March 2008 8,672,944 409,179,310 29,531,653 23,244,952 8,791,717 479,420,576

Imported Indigenous Total 8. Value of imports on CIF basis Particulars

Raw materials and packing materials Spare parts Capital goods

9.

Expenditure in foreign currency (accrual basis) Particulars Travel Management fees * Interest ** Professional and consultation fees Others Total

* Includes withholding taxes of Rs. 51,599,997 (previous year: Rs. 40,917,931) and research and development cess payable Rs. 25,799,999 (previous year: Rs. 20,458,965) **Includes withholding taxes of Rs. 1,669,945 (previous year: Rs. 2,450,361)

10. Earnings in foreign currency (accrual basis) Particulars Export sales at FOB value For the year ended 31 March 2009 161,031,946

(Rs.) For the year ended 31 March 2008 67,529,043

SKOL Breweries Limited

Schedules to the financial statements
38-39 18. Notes to the accounts 11. Gratuity The Company has a gratuity plan for the employees of the Company. Every employee who has completed 5 years or more of service is eligible for gratuity on separation, worked out at 15 days salary (last drawn salary) for each completed year of service. The obligation under the scheme is partially funded by contributions being made towards qualifying insurance policies obtained from the insurer. Profit and loss account Net employee benefit expense (recognised in personnel expenses) Particulars Current service cost Interest cost on benefit obligation Expected return on plan assets Net actuarial loss recognised for the year Net benefit expense Actual return on plan assets Balance Sheet Details of provisions for gratuity Particulars Defined benefit obligations Fair value of plan assets Plan liabilities Changes in the present value of the defined benefit obligation Particulars Opening defined benefit obligation Current service cost Interest cost Benefits paid Actuarial loss on obligation Closing defined benefit obligation Changes in the fair value of plan assets Particulars Opening fair value of plan assets Expected return on plan assets Actuarial gain/(loss) on plan assets Contributions by employer Benefits paid Closing fair value of plan assets As at 31 March 2009 75,152,540 22,454,555 52,697,985 For the year ended 31 March 2009 7,335,412 5,137,100 (1,557,617) 3,568,785 14,483,680 2,198,880 (Rs.) For the year ended 31 March 2008 6,028,085 4,503,848 (1,569,374) 1,877,232 10,839,791 1,318,667

(Rs.) As at 31 March 2008 62,980,939 18,491,154 44,489,785 (Rs.) For the year ended 31 March 2008 51,632,939 6,028,085 4,503,848 (810,458) 1,626,525 62,980,939 (Rs.) For the year ended 31 March 2008 17,982,945 1,569,374 (250,707) (810,458) 18,491,154

For the year ended 31 March 2009 62,980,939 7,335,412 5,137,100 (4,510,959) 4,210,048 75,152,540

For the year ended 31 March 2009 18,491,154 1,557,617 641,263 6,275,480 (4,510,959) 22,454,555

The Company expects to contribute Rs.10,000,000 in the qualifying insurance policy during 2009-10. Major categories of plan assets as a percentage of the fair value of total plan assets Particulars Qualifying insurance policies from the insurer

As at 31 March 2009 100%

As at 31 March 2008 100%

18. Notes to the accounts Principal assumptions used in determining gratuity benefit obligations for the Company's plan Particulars Discount rate Expected rate of return on plan assets Salary increase Employee turnover Retirement age For the year ended 31 March 2009 6.40% 7.50% 10% for Executives 7% for Workers 10% for Executives 2% for Workers 55 - 60 Years (Rs.) For the year ended 31 March 2008 7.60% 7.50% 10% for Executives 7% for Workers 10% for Executives 2% for Workers 55 - 60 Years

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. The overall expected rate of return on plan assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled. Amounts for the current and previous three periods Particulars Defined benefit obligation As at 31 March 2009 75,152,540 As at 31 March 2008 62,980,939 18,491,154 (44,489,785) (293,399) (250,707) As at 31 March 2007 51,632,939 17,982,945 (33,649,994) (904,245) 149,941 (Rs.) As at 31 March 2006 55,673,233 18,726,037 (36,947,196) (105,070)

Plan assets 22,454,555 (Deficit) (52,697,985) Experienced adjustments on plan liabilities (2,341,056) Experienced adjustments on plan assets 641,263 12. Segmental reporting

Business segments: The Company's sole business segment is 'Beer'. Consequently, the requirement for separate business segment disclosures as required under AS 17 - ‘Segment Reporting’ is not applicable. Geographical segments: The Company operates in two principal geographical areas of the world: India and rest of the world The accounting principles used in the preparation of the financial statements are also consistently applied to record income and expenditure in individual segments. Income and direct expenses in relation to segments are categorised based on items that are individually identifiable to that segment, while the remainder of costs are apportioned on an appropriate basis. Certain expenses are not specifically allocable to the individual segments as these expenses are common in nature. The Company therefore believes that it is not practicable to provide segment disclosure relating to such expenses and accordingly such expenses are separately disclosed as unallocated and directly charged against total income. Certain segment assets and liabilities are directly attributable to the segment. Segment assets include all operating assets used by the segment and consist principally of fixed assets, inventories, sundry debtors and loans and advances. Segment liabilities include trade creditors, creditors for expenses and other operating liabilities and provisions. Certain assets and liabilities that are not specifically allocable to the individual segments have been separately disclosed as unallocated.

Revenue India Rest of world

For the year ended 31 March 2009 12,999,144,293 161,031,946 13,160,176,239 As at 31 March 2009 18,060,449,424 5,990,695 18,066,440,119

For the year ended 31 March 2008 10,558,776,583 67,529,043 10,626,305,626 As at 31 March 2008 15,556,454,184 2,853,344 15,559,307,528

Segment asset India Rest of world

SKOL Breweries Limited

Schedules to the financial statements
40-41 18. Notes to the accounts 13. Provisions for claims
The provisions is utilised to settle previously anticipated and determined adverse outcomes of legal cases against the Company. The provision is based on independent advice obtained by the Company from external legal counsel. The time frame of utilisation of the provision is determined by the course of the legal proceedings.

Particulars Provision for indirect tax cases Opening balance Add: Addition during the year Less: Unused amounts reversed during the year Closing balance Provision for water charges Opening balance Add: Addition during the year Closing balance

For the year ended 31 March 2009

For the year ended 31 March 2008

171,556,592 60,416,512 231,973,104

260,118,088 (88,561,496) 171,556,592

53,073,739 14,572,867 67,646,606

20,376,892 32,696,847 53,073,739

Provision for indirect taxes Details of provisions made during the year are: (i) Demand for non-submission of statutory forms A. Excise duty: The Uttar Pradesh State Excise Department has raised a demand against non-submission of Excise Verification Certificates ("EVC") for the years 2002-03 to 2007-08. The EVCs' are required to be submitted to the authorities within 90 days from the date of sale. Based on an assessment of the possibility of collection of the forms the Company has provided Rs. 19,264,044 against the said liability. B. Sales tax: Based on an assessment of the possibility of collecting of forms the Company has made the following provisions: a) The Maharashtra Sales Tax Authorities have raised a demand under Bombay Sales Tax Act and Central Sales Tax Act for the year 2002-03 for non-submission of forms. The Company has challenged the alleged order before the Maharashtra Sales Tax Tribunal and the matter has been remanded back for fresh hearing. The Company has provided Rs. 9,150,922 in the current year. b) The Maharashtra Sales Tax Authorities have raised a demand under Bombay Sales Tax Act and Central Sales Tax Act for the year 2002-03 on account of non-submission of forms. An appeal has been filed before the Joint Commissioner (Appeals) and the matter is pending for hearing. The Company has provided Rs. 4,984,290 in the current year. c) The Company has assessed the status of pending statutory C forms and accordingly created provision of Rs. 6,760,859 based on the ageing of the pending statutory forms to be collected. d) The Karnataka Commercial Tax authorities have raised a demand for the years 2002-03 and 2003-04 for nonsubmission of statutory forms and tax on purchases from unregistered dealers. The Company has provided Rs.1,895,250 in the current year. (ii) Local Area Development Tax ("LADT"): The Haryana Sales Tax Authorities have raised a demand towards LADT for the years 2000-01 to 2003-04 for purchases made. An appeal has been filed before the Joint Excise and Taxation Commissioner (Appeals) and the same is pending for hearing. The Company had provided Rs. 4,695,960 in the earlier years. During the current year the Company has made an additional provision of Rs. 5,354,466. The Company assesses the probability of an adverse outcome of the case and accordingly has made a provision against this case. (iii) For various other miscellaneous matters, the Company has provided Rs. 13,006,681 during the current year. Provision for water charges The Maharashtra Industrial Development Corporation ("MIDC") had, vide order no EE/E&M/785/2005 dated 25 May 2005, made a demand for increase in water charges with retrospective effect from 1 Nov, 2001. Waluj Industries Association of which the Company is a member has filed a writ petition against such demand in the Honourable High Court of Aurangabad. The Honourable High Court has given a stay order against such increase in water charges. However, the Company provides for the differential rate levied from 25 May 2005 (i.e. date of order) in the books pending final outcome of the writ petition.

18. Notes to the accounts 14. Related parties (i) Names of related parties and description of relationship with the Company:

Enterprises where control exists
Ultimate holding Company SABMiller plc Holding Company SABMiller Breweries Private Limited Significant influence SABMiller Asia & Africa BV Names of other related parties with whom transactions have taken place during the year 1. Fellow subsidiaries MBL Property Developers Limited S.p.A. Birra Peroni MBL Investments Limited (Up to 30 September 2007) SABMiller India Limited SABMiller International BV SABMiller Management (IN) BV SABMiller Asia BV SABMiller Africa & Asia (Pty) Limited SABMiller Vietnam 2. Key managerial personnel (ii) Related party transactions Particulars SABMiller Breweries Private Limited Income from contract bottling Purchase of traded goods and raw materials Interest expense Reimbursement of expenses incurred on behalf of the Company Reimbursement of expenses incurred on behalf of other Companies Loan repaid, net Loan taken, net Sale of fixed assets SABMiller Asia & Africa BV Reimbursement of expenses incurred on behalf of the Company Reimbursement of expenses incurred on behalf of other Companies SABMiller plc Reimbursement of expenses incurred on behalf of other Companies MBL Property Developers Limited Interest expense SABMiller Management (IN) BV Management fees S.p.A. Birra Peroni Purchase of traded goods and raw materials MBL Investments Limited Refund of inter corporate deposit given Purchase of investment Interest income For the year ended 31 March 2009 73,147,185 84,587,436 16,267,273 59,519,691 6,383,899 173,645,418 13,204,232 3,594,927 8,378,547 2,822 515,999,971 1,405,874 Jean-Marc Delpon De Vaux, Managing Director (Rs.) For the year ended 31 March 2008 83,191,895 41,910,792 2,758,904 58,634,966 12,115,883 205,825,649 1,352,663 17,437,179 2,730,681 503,570 409,179,310 1,681,630 108,697,878 9,313,175 3,444,182

SKOL Breweries Limited

Schedules to the financial statements
42-43 18. Notes to the accounts Particulars SABMiller India Limited Interest expense Loan taken, net Reimbursement of expenses incurred on behalf of other Companies Interest income Refund of inter corporate deposit given SABMiller Asia BV Reimbursement of expenses incurred on behalf of the Company Reimbursement of expenses incurred on behalf of other Companies SABMiller Africa & Asia (Pty) Limited Purchase of traded goods and raw materials Purchase of fixed assets SABMiller Vietnam Reimbursement of expenses incurred on behalf of the Company Reimbursement of expenses incurred on behalf of other Companies SABMiller International BV Reimbursement of expenses incurred on behalf of the Company Key managerial personnel Remuneration (iii) Amount outstanding as at the balance sheet date: Particulars SABMiller Breweries Private Limited: Unsecured loan SABMiller plc Receivable from group Companies SABMiller Asia & Africa BV Payable to group Companies SABMiller India Limited Unsecured loan SABMiller Management (IN) BV: BV: Payable to group Companies S.p.A. Birra Peroni Creditors SABMiller International BV Payable to group Companies SABMiller Africa & Asia (Pty) Limited Payable to group Companies For the year ended 31 March 2009 575,342 46,119,164 4,911,927 7,107,664 870,604 85,957 688,142 20,819,277 For the year ended 31 March 2008 1,895,208 248,311 9,249,723 108,761,522 738,310 217,094 18,219,410 (Rs) As at 31 March 2008 385,269,911 1,001,003 12,953,750 982,643,160 1,334,068 1,290,001 9,974,109

As at 31 March 2009 211,624,493 1,872,054 1,163,486 46,119,164 1,447,043,134 476,747 -

(iv) The Company has obtained unsecured loans from its holding Company and a fellow subsidiary for which no terms and tenure for repayment have been specified. The loan from the fellow subsidiary is interest free. No interest rate is specified for the loan obtained from the holding Company, however, the holding Company recovers the actual interest cost incurred by it from the Company on the loan given. (v) Corporate guarantee has been given by SABMiller plc for loan facility obtained by the Company as at balance sheet date amounting to Rs. 2,364,241,360 (previous year: Rs. 600,600,334).

(vi) SABMiller plc operates a variety of equity-settled share-based compensation plans for few select employees of the Company. (Refer note 20 below for further details).

18. Notes to the accounts 15. Deferred tax assets/ (liabilities) P articulars Deferred tax assets Investments Debtors Loans and advances Provision for retirement benefits Provision for claims Others Unabsorbed depreciation Total Deferred tax liabilities Fixed assets Total Deferred tax liabilities, net As at 31 March 2009 180,147 72,926,057 73,825,954 33,925,557 54,242,838 3,511,469 956,544,840 1,195,156,862 1,195,156,862 1,195,156,862 (Rs.) As at 31 March 2008 180,147 94,153,813 51,127,403 31,571,602 52,349,240 7,681,544 728,559,450 965,623,199 1,029,367,235 1,029,367,235 (63,744,036)

In view of the accumulated losses and in accordance with AS 22 - "Accounting for taxes on income", deferred tax assets on unabsorbed depreciation and other temporary timing differences have been recognised only to the extent of those timing differences, the reversal of which will result in sufficient taxable income. 16. Derivative instruments and un-hedged foreign currency exposure Derivative instruments Particulars Forward contract Forward contract Currency swap contract Currency swap contract Purpose Towards repayment of foreign currency loan Towards repayment of sundry creditors Towards repayment of foreign currency loan Towards repayment of foreign currency loan As at 31 March 2009 USD 3,320,407 EURO 835,842 USD 3,500,000 JPY 933,000,000 As at 31 March 2008 JPY 113,010,836 USD 7,500,000 JPY 260,000,000

Particulars of un-hedged foreign currency exposure as at the balance sheet date Underlying asset / liability As at March 2009 Foreign currency amount USD 18,230 JPY 23,425,801 USD 117,580 USD 36,743 USD 2,496,972 EURO 1,378,691 USD 152,521 JPY 806,296 ZAR 215,604 Amount in Rs. 928,808 12,150,963 5,990,695 1,872,054 (127,220,744) (93,034,069) (7,770,948) (418,226) (1,163,486) (208,664,953) As at March 2008 Foreign currency amount USD 237,368 JPY 111,163,791 USD 71,262 USD 645,120 EURO 950,423 USD 266,437 ZAR 2,635,493 USD 5,409 Amount in Rs. 9,504,220 44,474,410 2,853,344 (25,830,605) (54,009,069) (10,668,131) (12,953,750) (216,587) (46,846,168)

Bank balance Sundry debtors Receivable from group Companies Sundry creditors Interest accrued but not due Payable to group Companies Total

SKOL Breweries Limited

Schedules to the financial statements
44-45 18. Notes to the accounts 17. Provision for impairment of fixed assets The impairment loss amounting to Rs. 117,306,243 for the year ended 31 March 2008 represents the write down of certain fixed assets to their recoverable amount. These fixed assets have been rendered as redundant / idle as a result of significant capacity expansion at certain breweries and have been identified as such based on the physical verification conducted by the management during previous year. 18. Managerial remuneration The details of remuneration paid to the managing director are as follows: Particulars Salary and allowance Contribution to Provident Fund Stock Compensation Cost Perquisites Total For the year ended 31 March 2009 14,795,083 630,654 5,127,931 265,609 20,819,277 (Rs.) For the year ended 31 March 2008 15,210,325 – 2,018,039 991,046 18,219,410

Note: As the liability for gratuity and leave encashment is provided on an actuarial basis for the Company as a whole, the amount pertaining to managing director is not ascertainable and, therefore not included above.

19. 19 Based on the confirmations received from the suppliers who provide goods and services to the Company regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006, the Company has prepared the following disclosure as required under the said Act. The Company however has not received any claim for interest from any supplier under the said Act. (Rs.) As at Particulars As at 31 March 2009 31 March 2008 (i) The principal amount remaining unpaid to any 14,096,363 34,095,709 supplier as at the end of each accounting year; (ii) The amount of interest paid by the Company along with the amounts of the payment made to the supplier beyond the appointed day during the year; (iii)The amount of interest due and payable for the period 525,113 191,971 of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under this Act; (iv)The amount of interest accrued and 1,060,236 535,123 remaining unpaid at the end of the year (v) The amount of further interest remaining due and 535,123 343,152 payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise. 20. Operating leases The Company is obligated under non-cancellable operating leases for a brewing facility and other office premises which are renewable at the option of the lessor and lessee. The total lease rental expense under non-cancellable operating leases amounted to Rs.71,318,214 (previous year: Rs. 8,260,160) for the year ended 31 March 2009. Future minimum lease payments under non-cancellable operating leases are as follows: (Rs.) As at Period As at 31 March 2008 31 March 2009 Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years 67,342,145 56,886,147 16,336,414 32,588,625 -

The Company is also obligated under cancellable lease for residential, vehicles and office premises, which are renewable at the option of both the lessor and lessee. The total rental expense under cancellable operating lease entered amounted to Rs. 99,066,598 (previous year: Rs. 67,001,641) for the year ended 31 March 2009. 21. Employee stock compensation cost Guidance Note on "Accounting for Employee Share Based Payments" issued by the ICAI ('the Guidance Note') establishes financial and reporting principles for employees share based payments plans. The Guidance Note applies to employee share based payment plans, the grant date in respect of which falls on or after 1 April 2005. SABMiller plc ('the Group') operates a variety of equity-settled share-based compensation plans for the employees of the Company.

18. Notes to the accounts (i) During the year ended 31 March 2009, the Group had the following share-based payment arrangements for the employees of the Company. As at 31 March 2009 16 May 2008 137,550 Equity 10 years 3 years Achievement of a target growth in earnings per share

Executive Share Option Scheme [Approved and (No 2) Scheme] Particulars Date of grant Number of shares granted Method of settlement Contractual life Vesting period Vesting conditions As at 31 March 2008 18 May 2007 92,200 Equity 10 years 3 years Achievement of a target growth in earnings per share

International Performance Share Award Sub-Scheme Particulars Date of grant Number of shares granted Method of settlement Contractual life Vesting period Vesting conditions (ii) As at 31 March 2009 16 May 2008 9,000 Equity 10 years 3 years Achievement of a target growth in earnings per share As at 31 March 2008 18 May 2007 7,000 Equity 10 years 3 years Achievement of a target growth in earnings per share

The details of the activity of shares issued after 1 April 2005 under Executive Share Option Scheme [Approved and (No 2) Scheme] are as follows: 31 March 2009 Number of Options Weighted average exercise price (Rs) 866 1,036 986 661 950 661 31 March 2008 Number of Options 125,677 92,200 3,950 38,750 217,877 Weighted average exercise price (Rs) 801 942 794 779 866 -

Particulars

Outstanding at the beginning of the year Granted during the year Lapsed during the year Exercised during the year Transferred during the year * Outstanding at the end of the year Exercisable at the end of the year

217,877 137,550 48,550 29,050 277,827 21,700

* The options transferred represents options relating to employees transferred to other companies within the SABMiller Group during the pervious year.
The weighted average share price at the date of exercise for stock options exercised during the year was Rs. 1,001 (previous year: Rs. Nil). The options outstanding as at 31 March 2009 had a weighted average remaining contractual life of 8.1 years (previous year: 8.3 years).

The details of the activity of shares issued after 1 April 2005 under International Performance Share Award Sub-Scheme are as follows: Particulars 31 March 2009 Number of Options Outstanding at the beginning of the year Granted during the year Outstanding at the end of the year Exercisable at the end of the year 7,000 9,000 16,000 Weighted average exercise price (Rs) 31 March 2008 Number of Options 7,000 7,000 Weighted average exercise price (Rs) -

The weighted average share price at the date of exercise for stock options exercised during the year was Rs. Nil (previous year: Rs. Nil). The options outstanding as at 31 March 2009 had a weighted average remaining contractual life of 8.7 years (previous year: 9.1 years).

SKOL Breweries Limited

46-47

Schedules to the financial statements Schedules to the financial statements
18. Notes to the accounts (iii) The weighted average fair value of stock options granted during the year is Rs. 362 (previous year: Rs. 327). The estimate of fair value on the date of the grant was made using the Binomial model valuation and Monte Carlo model with the following assumptions: Particulars Share price at the grant date Exercise price at the grant date Expected volatility Contractual life (vesting and exercise period) in years Expected dividends Average risk-free interest rate For the year ended 31 March 2009 Rs. 1,051 Rs. 1,036/ Rs. Nil 25% 10 years 2.11% 4.74% For the year ended 31 March 2008 Rs. 961 Rs. 942/ Rs. Nil 22.5% 10 years 2.11% 4.48%

The expected volatility was determined based on historical daily share price volatility of SABMiller plc share price over the last 6 years. (iv) Since the Company used the intrinsic value method the impact on the reported net profit and earnings per share is computed by applying the fair value based method. The Guidance Note requires the Proforma disclosures of the impact of the fair value method of accounting of employee stock compensation accounting in the financial statements. Applying the fair value based method defined in the said Guidance Note, the impact on the reported net profit and earnings per share would be as follows: (Rs.) Particulars Net (loss)/ income as reported Add: Employee stock compensation under intrinsic value method Less: Employee stock compensation under fair value method Proforma net income Earnings per share as reported - Basic - Diluted Proforma earnings per share - Basic - Diluted For the year ended 31 March 2009 (648,759,941) (32,765,238) (681,525,179) (2.81) (2.81) (2.95) (2.95) For the year ended 31 March 2008 344,777,187 (18,391,746) 326,385,441 1.52 1.49 1.44 1.41

22. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income-tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by September 2009 as required under law. Management is of the opinion that its international transactions are at arm's length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation. 23. The comparative figures have been regrouped/ reclassified, wherever necessary, to conform to the current year's presentation.

for SKOL Breweries Limited
Jean-Marc Delpon De Vaux Managing Director (Bangalore) Kevin Heydenrych Chief Finance Officer (Bangalore) Hong Kong 08 July 2009 Jonathan Andrew Kirby Director Pramod S M Company Secretary (Bangalore)

“Water is the most critical resource issue of our lifetime and our children’s lifetime.The health of our waters is the principal measure of how we live on the land.”
SKOL Breweries Limited

Cash flow statement
48-49 (Rs.) For the year ended 31 March 2008 408,545,685 117,306,243 858,090,043 153,515,535 (52,435,809) (111,962,935) (36,484,812) 1,336,573,949 (1,051,637,153) (233,978,153) (408,963,371) 856,462,005 498,457,278 (46,116,860) 452,340,418 (3,489,529,623) 179,184,235 117,947,601 52,367,945 (9,181,175) (3,149,211,017) 20,516,944,296 (21,374,219,612) (183,562,500) (740,705) (1,041,578,521) 2,237,372 (3,736,211,748) 4,047,462,855 311,251,107 (3,736,211,748)

Particulars Cash flows from operating activities (Loss)/ Profit before tax Adjustments: Provision for impairment of fixed assets Opening adjustment for returnable containers Depreciation Dividend income Interest and financing charges Interest income Gain on prepayment of sales tax deferral loan (Profit) on sale of fixed assets/ assets discarded Unrealised foreign exchange difference Operating cash flows before working capital changes (Increase) in sundry debtors Decrease/ (Increase) in loans and advances (Increase) in inventories Increase in current liabilities and provisions Cash generated from operations Taxes paid Net cash provided by operating activities Cash flows from investing activities Purchase of fixed assets Proceeds from sale of fixed assets Inter-corporate deposits, net Dividend income Interest received Purchase of investments Net cash used in investing activities Cash flows from financing activities Proceeds from borrowings Repayment of borrowings Prepayment of sales tax deferral loan Interest and financing charges paid Unclaimed dividend paid Net cash provided by/ (used in) by financing activities Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Net increase in cash and cash equivalents*

For the year ended 31 March 2009 (725,733,738) (7,066,845) 340,493,099 651,299,955 (177,101) 433,651,970 (2,008,395) (14,322,809) (15,004,247) 8,506,675 669,638,564 (853,425,251) 169,888,453 (215,102,652) 1,263,286,554 1,034,285,668 (40,108,406) 994,177,262 (2,746,590,974) 17,417,206 177,101 1,510,239 (2,727,486,428) 41,731,939,081 (39,399,711,294) (18,993,546) (572,831,153) (1,028,895) 1,739,374,193 79,309 6,144,336 311,251,107 317,395,443 6,144,336

a

b

c d a+b+c+d

* Includes Rs. 13,734,611 (previous year: Rs. 11,864,657) in margin money deposit account.

As per our report attached

for B S R & Co. Chartered Accountants
Zubin Shekary Partner Membership No. 48814

for SKOL Breweries Limited

Jean-Marc Delpon De Vaux Managing Director (Bangalore) Kevin Heydenrych Chief Finance Officer (Bangalore)

Jonathan Andrew Kirby Director Pramod S M Company Secretary (Bangalore)

Bangalore 08 July 2009

Hong Kong 08 July 2009

Additional information pursuant to Part IV of Schedule VI of the Companies Act, 1956.
COMPANY’S BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE I Registration Details Registration No : Balance Sheet Date: II 49687 31-Mar-09 State Code :11

Capital Raised during the year (Amount In Rs Thousands) Public Issue Nil Bonus Issue Nil Rights Issue Nil Private Placement Nil

III

Position of Mobilisation and Deployment of Funds (Amount In Rs Thousands) Total Liabilities 11,453,746 Total Assets 11,453,746

Sources of Funds
Paid - up Capital 2,311,837 Secured Loans 0 Reserves and Surplus 6,140,638 Unsecured Loans 6,170,032

Application of Funds
Net Fixed Assets 11,014,325 Net Current Assets 1,250,339 Accumulated Losses 382,545 IV Performance of the Company (Amount In Rs Thousands) Turnover * 13,303,749 Profit/(Loss) Before Tax (725,734) Earnings Per Share in Rs (2.81) V Total Expenditure 14,215,434 Profit/ Loss After Tax (648,760) Dividend Rate % 0 Investments 11,359 Misc Expenditure 1,457,236

Generic Names of Three Principal Products/ Services of the Company (as per monetary terms) Item code No [ITC Code] Product Description 220300 Beer

for SKOL Breweries Limited
Jean-Marc Delpon De Vaux Managing Director (Bangalore) Kevin Heydenrych Chief Finance Officer (Bangalore) Hong Kong 8 July 2009 Jonathan Andrew Kirby Director Pramod S M Company Secretary (Bangalore)

SKOL Breweries Limited

“Do one thing each day in the refrigerator instead “Keep a pitcher of waterthat will save water. Even if savings are small, drinks, so counts.” of running the tap for coldevery drop that every drop goes down you not the drain.”

SKOL BREWERIES LIMITED Regd. Office: No.1, Mahal Industrial Estate, Mahakali Road, Andheri (East), Mumbai-400093

PROXY FORM
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

I/We
○ ○

as my/our proxy to attend and vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held at M.C. Ghia Hall, Bhogilal Hargovindas Building, 2nd Floor, 18/20, K. Dubash Marg, behind Prince of Wales Museum, Kala Ghoda, Mumbai – 400 001 on Tuesday, the 15th September 2009 at 3.00 p.m. and at any adjournment thereof. Signed this day of
○ ○ ○ ○ ○ ○ ○

N.B.: This Proxy form must reach the Registered Office of the Company not less than 48 hours before the time of holding the meeting. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Please cut along this line- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - SKOL BREWERIES LIMITED Regd. Office: No.1, Mahal Industrial Estate, Mahakali Road, Andheri (East), Mumbai-400093 ATTENDANCE SLIP Please complete this Attendance Slip and hand it over at the entrance of the Meeting Hall. SKOL Breweries Limited No.1, Mahal Industrial Estate, Mahakali Road, Andheri (East), Mumbai-400093 I hereby record my presence at the Annual General Meeting of the Company to be held at M.C. Ghia Hall, Bhogilal Hargovindas Building, 2nd Floor, 18/20, K. Dubash Marg, behind Prince of Wales Museum, Kala Ghoda, Mumbai – 400 001 on Tuesday, the 15th September 2009 at 3.00 p.m. Member’s Name (in Block Capitals): Share Ledger Folio No. : DP ID No. Client ID No. Member’s/Proxy’s Signature:

Signed by the said

SKOL Breweries Limited

of

(or failing whom)

of

being a Member(s) of the above named Company hereby appoint

of

“Water, like religion and ideology, has the power to move millions of people.”

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