NAME: RISHITHA MB

SEM: 2nd SEM

BRANCH: B.COM
SUBJECT: MANAGEMENT ACCOUNTING

RESEARCH PROJECT
United Spirits
 ABSTRACT

A major participant in the alcohol sector, United Spirits Limited (USL),

has strong financial results that are supported by important financial
ratios, tactical tools, and clear financial statements. Numerous ratios
are frequently used to assess a company's financial health in order to
gain insight into its profitability, efficiency, and leverage. In order to
assess USL's efficiency in producing returns for its shareholders and
controlling operating expenses, metrics including return on
investment (ROI), return on equity (ROE), and gross profit margin are
frequently examined. USL's liquidity position is shown by metrics
such as the current ratio and quick ratio, which show the company's
ability to pay short-term obligations without using a lot of inventory.
Regarding solvency, the Debt-to-Equity Ratio provides insight into the
percentage of debt utilized to fund the business's activities,
impacting the stability and risk of its finances. Financial tools with
strategic intent are essential to United Spirits' success The company's
sales, costs, and profits over a given time period are shown in the
Income Statement, which also highlights how efficiently it operates.
USL's assets, liabilities, and equity are listed on the balance sheet,
which also shows the company's financial status at any one time. The
cash inflows and outflows from the company's financing, investing,
and operating operations are shown in the cash flow statement,
which helps to further clarify the liquidity of the business.
 INTRODUCTION

United Spirits (USL) is the second-largest spirits firm in the world by

volume and an Indian manufacturer of alcoholic beverages. With its
headquarters located in Bangalore, Karnataka, India's UB Tower. USL
manufactures a large selection of whiskies, brandies, gins, vodkas,
and other types of spirits under both Indian and foreign labels. USL's
range of brands bears witness to its dedication to providing an
unmatched libation experience. Well-known companies like
McDowell's No. 1, Royal Challenge, Signature, and Antiquity have
come to represent excellence in design and manufacture. USL's
position as a dominant force in the world spirits market has been
strengthened by these products, which have not only won over
Indian consumers' hearts but have received praise from other
countries. USL's creative and visionary leadership has been
instrumental in determining the company's course. The management
team has effectively navigated market hurdles, seized opportunities,
and promoted an innovative culture within the company thanks to a
strategic vision. USL's persistent endeavours to launch novel products
and adjust to evolving consumer inclinations are indicative of its
progressive methodology. United Spirits Limited is a well-known and
powerful force in the world of alcoholic beverages, known for its
legacy of innovation, excellence, and service. Founded in 1826, the
company has developed throughout time to become a prominent
manufacturer and producer of premium spirits, with a varied
portfolio that includes well-known brands that appeal to a broad
spectrum of customer tastes.
 BACKGROUND OF THE COMPANY

United Spirits Limited (USL) is a significant Indian alcoholic beverage

company known for its varied array of premium spirits. Angus
McDowell, an entrepreneur, founded McDowell & Company distillery
in Kasauli, Himachal Pradesh, in 1826. Over the years, the company
had various changes in ownership and strategic direction, ultimately
transforming into the present-day United Spirits Limited. One of the
important turning moments in the history of the corporation
happened in 1951 when McDowell & corporation combined with
Shaw Wallace & the business, becoming McDowell Shaw Limited.
This merger signified the amalgamation of multiple distilleries and
breweries, becoming a dominant participant in the Indian alcoholic
beverages sector. The company continues to grow and diversify its
product portfolio, becoming a prominent player in the spirit’s sector.
In 1983, the firm changed the name Shaw Wallace & firm Limited,
emphasizing its dedication to establishing strong brands and
extending its market presence. In 2005, the landscape of the
company changed radically when the global spirits giant Diageo plc
purchased a large stake in Shaw Wallace. This acquisition cleared the
stage for the future merger of USL into the Diageo family. In 2013,
Diageo purchased further shares, gaining majority authority over
United Spirits Limited. As a result, USL became an affiliated company
of Diageo, a British multinational alcohol firm. Today United Spirits
Limited is located in Bangalore, Karnataka, and acts as a prominent
player in the Indian alcoholic beverages market. The company's
brand portfolio includes well-known trademarks such as McDowell's
No. 1, Royal Challenge, Signature, Antiquity, and a lot more. USL's
focus on quality, innovation, and ethical business conduct has
secured its position as a leader in the Indian spirits sector, catering to
the different tastes and preferences of consumers around the
country.
Alcoholic Beverages Industry Overview:
The alcoholic beverages industry is very dynamic and impacted by
factors such as consumer preferences, regulatory regimes, economic
conditions, and cultural trends. It encompasses several categories,
including spirits, beer, wine, and other alcoholic beverages.

Market Positioning and Competition:

United Spirits is a key player in the spirits area of the alcoholic
beverages industry in India. The corporation confronts competition
from domestic as well as global brands. Key challengers include other
widely recognized Indian spirits businesses and foreign players with a
foothold in the Indian market.

Market Growth and Trends:

The alcoholic drinks sector in India has undergone tremendous
expansion in recent years, driven by factors such as increased
disposable incomes, changing lifestyles, and an increasing taste for
premium and high-quality spirits. There is an increasing trend
towards experimentation with numerous kinds of spirits and an
emphasis on premiumization of goods.

Regulatory Environment:
The alcoholic beverages business is subject to tight laws, including
license requirements, advertising prohibitions, and taxation rules.
Changes in government laws and regulations can have a direct impact
on the business's operations and profitability.
Consumer Preferences and Innovation:
Consumers in India are growing more discerning, leading to a desire
for creative and premium items. United Spirits focuses on product
innovation to satisfy changing consumer tastes and preserve a
competitive edge. Trends such as the growth of craft spirits and the
quest for healthier alternatives to alcohol also influence the sector.

Distribution and Retail Landscape:

The distribution and retail channels for alcoholic beverages in India
are various, ranging from traditional liquor stores to modern retail
locations. Companies typically need to traverse complex distribution
networks to reach consumers effectively. Online shopping sites are
also playing an expanding role in alcohol retail.

Global Economic Factors:

Global economic factors, such currency exchange rates and
international trade policies, can affect the cost of raw materials and
overall profitability for companies like United Spirits, which may
import particular ingredients or rely on worldwide supply chains.

Corporate Social Responsibility (CSR) and Sustainability:

Increasingly, customers are considering the ethical and
environmental activities of organizations. USL's dedication to
corporate social responsibility and environmental activities can
favourably influence brand perception and consumer loyalty.
COVID-19 Impact:
The COVID-19 pandemic has had various consequences on the
alcoholic beverages sector. While the closure of bars and restaurants
during lockdowns hampered on-trade sales, off-trade sales (sales
through retail shops) experienced increasing demand. The recovery
of the industry hinges on the pace of the economic reopening and
trust among customers.

Industry Overview:
Market size: The Indian alcoholic beverage market is estimated to be
valued over US$60 billion, with annual growth surpassing 5%.
Segments: The market is led by Indian-made foreign liquor (IMFL),
followed by beer and country liquor.
Growth drivers: Rising disposable income, increased urbanization,
and changing consumer tastes towards branded alcohol drive market
growth.
Problems: Regulatory constraints, taxation laws, and social stigma
remain important problems.

Financial Overview of United Spirits Company (USL)

United Spirits Limited (USL) is the top participant in the Indian
alcoholic beverage sector, with a solid financial performance and
wide portfolio. Here's an overview of its important financial metrics:
Revenue: USL's overall income for FY23 stood at Rs. 30,325 crores,
representing a moderate gain of 4.6% compared to the previous year.
Profitability: The company's net profit for FY23 was Rs. 1,957 crores,
marking a significant increase of 23.5% year-on-year.
Market Share: United Spirits participates in a highly competitive
market, and its market share is influenced by the success of its
brands, marketing strategies, and competition with other alcoholic
beverage firms. Gaining or sustaining market share is generally a
significant goal for organizations in this field.
Debt: As of FY23, USL's total debt amounted at Rs. 10,930 crores,
indicating a debt-to-equity ratio of 0.68. Measuring the company's
debt levels is critical to assess its financial leverage. High levels of
debt could increase financial risk, especially if economic conditions or
industry dynamics change unfavourably.
Global Presence: United Spirits may have a global reach through its
partnership with Diageo, a worldwide alcoholic beverage
corporation. Regional performance and market navigation might
affect the company's financial health.
Future Outlook: USL is hopeful about the Indian alcoholic beverage
market's expansion due to increased disposable income and
premiumization. To grow, the company will improve its core brands,
expand distribution, and enter artisan spirits.
Challenges: USL struggles with regulations, hefty alcohol taxes, and
rising local and international competition. The company's growth
depends on addressing alcohol-related social issues.
 REVIEW OF LITERATURE

1. TJ Cleophas - Biomedicine & pharmacotherapy, 1999 – Elsevier

Alcohol has beneficial and harmful effects on health at the same
time. Wine may be more beneficial for the heart than other types of
alcoholic beverages. To assess the current status of knowledge
regarding the relationship between death and alcohol consumption.
To assess the relationship between myocardial infarction (MI) and
consumption of different types of alcoholic beverages, both low
doses (1-4 drinks a day), and high doses.
2. T Norström, T Norström, M Ramstedt… - … and alcohol review,
2005
This review's objective was to examine the literature on the
connection between public alcohol use and health, namely death.
The review is based mainly on publications found through Medline
that were published in international journals between 1994 and
February 2005. Most studies employ time-series analysis based on
modelling autoregressive integrated moving averages (ARIMAs). The
majority of the 14 EU members in 1995, as well as Canada and the
US, were included in the study. There wasn't much evidence available
for Eastern Europe. In most cases, the post-war era was the study
period. In every country, there existed a statistically significant
correlation between the per capita use of alcohol and the mortality
rate from liver cirrhosis and other related disorders.
3. LG Riachi, A Santos, RFA Moreira, CAB De Maria - Food Chemistry,
2014
Brazilian sugarcane spirits include sixteen polycyclic aromatic
hydrocarbons (PAHs) detected in them. Petroleum derivatives and
sugarcane that is burned before harvest are the sources of
contamination. Spirits made from burned cane have a 2-3 times
greater concentration of PAHs than those made from unburned cane.
Because benzo(a)pyrene (BaP) is present in less than 1% of cachaça,
it cannot be used as a typical marker of PAH contamination. It is
possible to manufacture ethyl carbamate (EC) via distillation as well
as fermentation. Cupric ions may catalyse the transformation of
cyanide into EC during the distillation process. When cachaça is
bottled using the heart fraction, its concentration is significantly
reduced due to discontinuous distillation. It is strongly advised to
connect cooling mechanisms and reflux systems to the column for
distillation in continuous processes where distillate is not separated.
Chachaça exposes consumers more to the European Community than
any other spirit.
4. J Rehm, OSM Hasan - Alcohol, 2020
Most epidemiological research on alcohol as a risk factor assumes
that outcomes are linked to pattern and level of alcohol exposure,
where different beverages are transformed into grams of ethanol.
This review investigates the basic notion that alcohol affects each
beverage equally. Comparative research on beverage-specific alcohol
exposure and outcomes was systematically searched. Research was
categorized by method (survey, case–control, cohort, time-series,
interventional). Many studies reported higher risks for spirits than
beer or wine, but most did not control for variables like drinking
behaviours. There is no conclusive evidence that spirits are more
harmful than alcohol, given the same pattern and level of alcohol
exposure, but rapid ethanol intake and intoxication may increase the
risk of injuries and poisonings. Taxation methods that encourage
lower-alcohol drinks may lessen alcohol-related harm.

Methodology
Indian alcoholic beverage firm United Spirits Limited (USL), a
subsidiary of Diageo plc, has a comprehensive methodology to
maintain its market leadership. The company's approach includes
product innovation, marketing, operational efficiency, sustainability,
and CSR. United Spirits prioritizes product innovation. Research and
development are ongoing to provide innovative and exciting
beverages that meet changing consumer tastes. This drive to
innovation helps USL stay ahead of industry trends, diversify its
product offering, and attract a wide spectrum of consumers.
Operational efficiency is another cornerstone of United Spirits'
methodology. The company adopts best practices in manufacturing,
supply chain management, and distribution to optimize processes
and reduce costs.
 Analysis
Table Representing Statement of the Balance sheet of united spirits Company
 CONCLUSION
United Spirits Limited, a Diageo plc company, is a major player in the
Indian alcoholic beverages sector with brands like McDowell's No. 1,
Royal Challenge, and Signature. As of 2022, the corporation focused
on revenue generation and market share retention in a competitive
market. With an international footprint through its relationship with
Diageo, United Spirits has experienced obstacles influenced by
regulatory regimes and market forces. The company's financial
health, encompassing factors of profitability, debt management, and
global market plans, is vital for stakeholders. For the most accurate
and recent insights into United Spirits Limited's performance,
including its 2023 financials, stakeholders should refer to the latest
official reports, investor presentations, and reputable financial news
sources for a comprehensive understanding of the company's
standing in the evolving alcoholic beverages landscape.

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