Project On

UNITED SPIRITS LTD

Submitted by

Deepak MD

MBA Department

Sree Narayana Guru Institute of Science & Technology

N.Paravur, Ernakulam

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INTRODUCTIONThe UB Group is one of India’s largest conglomerates with annual revenues in

excess of US$ 2 billion, and with diverse interests in brewing, distilling, real estate,

engineering, fertilizers, biotechnology, information technology and aviation. It is also

the largest Indian manufacturer of beverage alcohol (beer and spirits). Dr. Vijay

Mallya is the Chairman of the Group. United Breweries Ltd (UBL), the flagship

company of the UB Group, is the largest brewing company in India with a national

market share of 50 percent. Its flagship brand, Kingfisher, boasts a 40 percent

national market share. The brand is currently available in 52 countries outside India

and leads the way amongst Indian beers in the international market.

UBL owns 16 breweries strategically located all over India, where stringent brewing

quality specifications are adhered to. UBL has entered into a strategic alliance with

Scottish & Newcastle Plc, UK, who holds a 37.5 percent stake in the company. This

alliance will ensure that the Kingfisher beer brand receives a significant boost in

overseas markets through S&N’s wide distribution network.

The UB Group's spirits business, with 145 brands including 15 millionaire brands

makes it the world's 3rd largest drinks group.

Some of the most popular brands from the UB stable are Bagpiper Whisky, the

largest selling in India and also the largest selling whisky in the world; McDowell’s

No.1 Brandy, the largest selling brandy in the world; and McDowell’s No.1

Celebration Rum, which is the 2nd largest selling rum in the world. United Spirits

Limited (USL), Kumbalgodu is one among UB group’s profit making units.

Alcoholic Beverage:An alcoholic beverage is a drink containing ethanol, commonly known as alcohol.

Alcoholic beverages are divided into three general classes’ beers, wines, and spirits.

They are legally consumed in most countries, and over 100 countries have laws

regulating their production, sale, and consumption. In particular, such laws specify

the minimum age at which a person may legally buy or drink them. This minimum

age varies between 16 and 25 years, depending upon the country and the type of

drink. Most nations set it at 18 years of age.

The production and consumption of alcohol occurs in most cultures of the world,

from hunter-gatherer peoples to nation-states. Alcoholic beverages are often an

important part of social events in these cultures. In many cultures, drinking plays a

significant role in social interaction mainly because of alcohol’s neurological effects.

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

Types of alcoholic beverages available:

Because India has great variety in topography, climate, vegetation, culture, and

traditions it is unsurprising hundreds of kinds of alcoholic beverages are made and

consumed. All of them however can be grouped into the following four broad

categories:

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

western-style hard liquors such as whisky, rum, vodka, etc., which are manufactured

in India. A common characteristic of many IMFLs, distinct from spirits elsewhere in

the world, is that irrespective of the final product the starting ingredient is a neutral

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spirit distilled from molasses, a by-product of the sugar industry. For example,

whereas a whisky in most countries would be distilled from grain, Indian whisky is

made by adding whisky-like flavouring and colouring to neutral spirit obtained from

molasses. The same applies to other IMFL spirits, like rum or vodka. However some

recent entrants distil spirits per traditional methods even when manufacturing in

India. So far India does not have any world popular liquor brand.

Country Liquor:These distilled alcoholic beverages are made from any cheap raw materials

available locally, example sugarcane, rice or grains. Country liquor is produced in

licence distillery and sold from authorised outlets within the same district. Common

varieties of country liquor are arrack, sharab, and tari (toddy). Excise duties are paid,

but since production costs are low the retail prices are also low. The licensing

system and some governmental monitoring of the production process ensure a

uniformity in alcohol content (around 40%) and basic safe guards against

adulteration with other harmful intoxications.

Illicit Liquor:Besides licensed distilleries, a number of small production units operate

clandestinely. The raw materials they use are similar to those in country liquor, but

since they evade legal quality controls the alcohol concentration in their products

varies and adulteration is frequent. It is common to find samples containing up to

56% alcohol. One dangerous adulterant is industrial methylated sprit, which

occasionally causes mass poisoning of consumer who lost lives or suffer irreversible

eye damage. Since no government revenues are paid, illicit liquor is considerer ably

less expensive licensed country liquor, and thus finds a ready market among poor.

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

beverages; it is the third most popular drink overall, after water and It is produced by

the brewing and fermentation of starches, mainly derived from cereal grains—most

commonly malted barley, although wheat, maize (corn), and rice are widely used.

Most beer is flavoured with hops, which add bitterness and act as a

natural preservative, though other flavourings such as herbs or fruit may occasionally

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be included. Some of humanity's earliest known writings refer to the production and

distribution of beer: the Code of Hammurabi included laws regulating beer and beer

parlours, and "The Hymn to Ninkasi", a prayer to the Mesopotamian goddess of

beer, served as both a prayer and as a method of remembering the recipe for beer in

a culture with few literate people. Today, the brewing industry is a global business,

consisting of several dominant multinational companies and many thousands of

smaller producers ranging from brewpubs to regional breweries.

The strength of beer is usually around 4% to 6% alcohol by volume though may

range from less than 1% to over 20% in rare cases.

Company Profile

United Breweries Group or UB Group, based in Bangalore, is a conglomerate of different companies with a major focus on the brewery (beer) and alcoholic

beverages industry. The company markets beer under the Kingfisher brand and has also launched Kingfisher Airlines, an airline service in India, with international flights operating recently. United Breweries is India's largest producer of beer with a market share of around 48% by volume.[1] Its owned by Vijay Mallya who is also a member of the Indian Parliament. United Breweries now has greater than a 40% share of the

Indian brewing market with 79 distilleries and bottling units across the world. Recently UB financed a takeover of the spirits business of the rival Shaw-

Wallace company giving it a majority share of India's spirits business. The group owns the Mendocino Brewing Company in the United States.

History:The UB Group was founded by a Scotsman, Thomas Leishman, in 1857. The Group

took its initial lessons in manufacturing beer from South India based

British breweries. At the age of 22, Vittal Mallya was elected as the company's first

Indian director in 1947. After a year, he replaced R G N Price as the chairman of the

company.

United Breweries made its initial impact by manufacturing bulk beer for the British

troops, which was transported in huge barrels or "Hogsheads". Kingfisher, the

group's most visible and profitable brand, made a modest entry in the sixties. During

the 1950s and 60s, the company expanded greatly by acquiring other breweries.

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First was the addition of McDowell as one of the Group subsidiaries, a move which

helped United Breweries to extend its portfolio to wines and spirits business.

Strategically, the Group moved into agro-based industries and medicines when

Mallya acquired Kissan Products and formed a long-term relationship with Hoechst

AG of Germany to create the Indian pharmaceutical company now known as Aventis

Pharma, the Indian subsidiary of the global pharma major Sanofi-Aventis.

The logo

The Pegasus, which is the symbol of the United

Breweries, first found its place as the Group logo in 1940. Then, the Helladic horse –

associated with beer and nectar in Greek mythology – carried a beer cask between

the wings, ostensibly because beer formed the core operations of the Group. Later,

the beer cask was removed to represent the Group's multifaceted operations. Now, it

is just the Pegasus.

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Branches of UB Group:

Kingfishers Airlines

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

House in Vile Parle (East), Mumbai. Kingfisher Airlines, through its parent

company United Breweries Group, has a 50% stake in low-cost carrier Kingfisher

Red.

Kingfisher Airlines is one of the seven airlines to be ranked as a 5-star airline by the

independent research consultancy firm Skytrax. Kingfisher operates more than 375

daily flights to 71 destinations, with regional and long-haul international services. In

May 2009, Kingfisher Airlines carried more than a million passengers, giving it the

highest market share among airlines in India.

Kingfisher Airlines is also the sponsor of F1 racing outfit, Force India, which Vijay

Mallya also owns.

History:

Kingfisher Airlines was established in 2003. It is owned by

the Bangalore based United Breweries Group. The airline started commercial

operations in 9 May 2005 with a fleet of four new Airbus A320-200s operating a flight

from Mumbai to Delhi. It started its international operations on 3 September 2008 by

connecting Bangalore with London.

On 7 June 2010 Kingfisher became a member elect of the one world airline

alliance when it signed a formal membership agreement. A firm date to join the

alliance will be announced once the implementation process is underway, it possibly

may take 18 to 24 months.

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Destinations:Kingfisher Airlines serves 63 domestic destinations and 8 international destinations

in 8 countries across Asia and Europe. Kingfisher's short haul routes are mostly

domestic apart from some cities in South Asia, Southeast Asia and Western Asia. All

short haul routes are operated on the Airbus A320 family aircraft. ATR 42s and ATR

72s are used mainly on domestic regional routes. Kingfisher has its medium, long-

haul destinations in East Asia, Southeast Asia, and Europe. Its first long haul

destination was London, United Kingdom which was launched in September 2008. It

has plans to launch new long haul flights to cities in Africa, Asia, Europe, North

America and Oceania with deliveries of new aircraft. All long haul routes are

operated on the Airbus A330-200.

Code share agreement

Kingfisher has code share agreements with:

American Airlines

British Airways

Philippine Airlines

Mangalore Chemicals & Fertilizers:

Mangalore Chemicals & Fertilizers is a Fertilizer Production factory located

in Mangalore, India. It is situated opposite to the New Mangalore Port on the other

side of the national highway NH-17.The company produces fertilizers

like urea, DAP and special nutrients and chemicals under the brand name

of Mangala.The company was started by government of Karnataka. The company's

management was subsequently sold to Vijay Mallya's UB Group during tenure

of Veerendra Patil's as Karnataka's chief minister

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Overview of MCF1. In 1990 Government of Karnataka select the UB group to take over MCF, potential

sick unit, with losses of 600 million rupees.

2. Now MCF with a turnover of over Rs.1625 Crore.

3. With 9 % growth over previous year.

4. The only manufacturer of chemical fertilizers in the state of Karnataka.

5. The factory is strategically located at Panambur, 9 km north of Mangalore City.

6. The Company is a part of the UB Group with Group shareholding of 30%.

7. The Company has capacity to manufacture 2,17,800 MT Ammonia (intermediate

product), 3,80,000 MT Urea, 2,60,000 MT Phosphatic Fertilizers (DAP & NP

20:20:00:13), 13,860 MT Ammonium Bi-Carbonate (ABC) and 33,000 MT Sulphuric

Acid (SAP) annually.

8. The design and engineering of the Ammonia/Urea plants was done by Humphreys

& Glasgow Limited, London, a leading international firm in the fertilizer field and their

associates, Humphreys & Glasgow Consultants Pvt. Ltd., Bombay. 10. The

Phosphatic plant is designed and engineered by Toyo Engineering Corporation,

Japan. PDIL and Furnace Fabrica the Indian firms were involved in the construction

of ABC and SAP respectively.

United Spirits:

United Spirits Limited (USL) is the largest spirits company in the world by volume,

selling 114 million cases for the fiscal ending March 21, 2011.

Besides Whyte & Mackay and Bouvet Ladubay being 100% subsidiaries of USL, the

company has 21 millionaire brands (selling more than a million cases a year) in its

portfolio and enjoys a strong 59% market share for its first line brands in India.

United Spirits' brands have won the most prestigious awards for flavours, ranging

from Mondial to International Wine and Spirit Competition (IWSC) to International

Taste & Quality Institute (ITQI); more than 115 awards & certificates. 

The Company is known to be an innovator in the industry and has several firsts to its

credit like the first pre-mixed gin, the first Tetra pack in the spirits industry in India,

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first single malt manufactured in Asia and the first diet versions of whisky and vodka

in India.

USL has a global footprint with exports to over 37 countries. It has a sizeable

presence in India with distilleries and sales offices all across the country, and a

committed team of over 7500 people dedicated to the fulfilment of the company's

mission. It has established manufacturing and bottling plants in every state of India.

In addition, to deliver its products to customers located anywhere in India, USL has

established a robust distribution network covering the whole country.

Particulars Total Number Comments

Brands 140 19 of these are millionaire

brands and there are

about 151 brand variants

SKUs 2992Distillery-State-Brand-Pack combinations

Distilleries / Bottling Units 7930 Owned Manufacturing facilities;49 contract manufacturing units

Depots 48Break-bulk points for finished goods distribution

Retail Outlets 64000Inclusive of both on and off premise outlets

A brief overview of company: UB group gives a new look to No.1 McDowell’s its flagship in the prestige

segment of the whisky market. Forges alliances with US, Australia and French Cos. For bulk wine import. Phipson Distillery becomes a wholly owned subsidiary of McDowell & Co. Acquires 85% equity stake of Triumph Distilleries & Vintners Pvt ltd. Triumph Distilleries and Vinters becomes a subsidiary of McDowell. 2003 –Rolls out its new Whisky brand, ‘Derby Special Whisky’ in Andhra

Pradesh Market. Increase its exposure in Indian as well as in Hollywood films.

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No 1 Celebration rum crosses sales over 3 million during the year. 2004 McDowell & Co launches Old Cask Rum, in the Karnataka market 2006 –United Sprits is likely to declare the acquisition of Whyte & Mackay by

January 2007 –United sprits Ltd has appointed Mr. Sudhinar Kirishna Khanna as an

Additional Director of the company with effect from June 01,2007 2008 –The company has introduced rum and whisky in 90 and 60 ml PET

High-end Whiskies single-use packs, in Karnataka and Maharashtra respectively, on a

test basis last week, reports Economic Times. The company has said on Dec. 01, 2008 that its board has approved the

merger of Balaji Distilleries, into USL in an all stock deal. The merger will be effective from Apr. 01, 2009

2009 –United Spirits Ltd sells 90 million cases in 2008-2009; Narrows the gap to no 1 Position in global spirits market.

Nature of business carried:

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

Our clients:We have a wide based clientele all over the globe. Our quality products have clinched us a set of satisfied high profile clients with whom we have a developed a strong bond. United spirits ltd maintain a long term relationship with their clients who reflects company’s commitment and diligence. Some of our clients are

KSBCL- Karnataka civil BSF- Bangalore KSBC- Kerala civil CSD(Kerala, Karnataka, Tamilnadu, Andhra Pradesh) Pondicherry

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MAHE ANIIDCO

Our Vision:

Dedicated and commitment to the vision of becoming the world’s no 1 in spirits industry.

Our mission:

“To be the most admired global leader in the spirits industry by creating unique high quality brands for consumers, driven by highly motivated employees and supported by best in class processes and continued innovations.

United Spirits is and will continue to be responsible towards its stakeholders and the society”

Steps taken to achieve the mission:

We are focused on assuming leadership in all our target markets. We seek to be the most preferred employer wherever we operate. We recognize that our organization is built around people who are our most

valuable asset. We will always be the partner of choice for customers, suppliers and other

creators of innovative concepts.

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We will continually increase the long term value of our Group for the benefit of our shareholders.

We will operate as a decentralised organisation and allow each business to develop within our stated values.

We will be a major contributor to our National Economy and take full advantage of our strong resource base.

We commit ourselves to the ongoing mission of achieving scientific Excellence.

Building quality into our workplace, products and service is essential to a successful future for our customers, employees, suppliers communities and shareholders.

The USL will work to provide products and service that always meet to exceed expectation.

Quality policy:

Quality leadership is vital to long term success of the USL in increasingly competitive marketplace.

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

Products/service profile:

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

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USL Brands

Whisky

Royal Challenge

Dalmore

Jura

Whyte & Mackay

Black Dog whisky

Antiquity rare

Antiquity blue

Signature

McDowell's No.1

McDowell's No.1 Platinum

Bagpiper Whisky

Bagpiper Gold

Director’s Special

Old Tavern

Haywards

McDowell’s Green Label

Gold Riband

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Brandy

McDowell’s No.1

Honey Bee

John Exshaw

Mr Shah Brandy

Rum

Celebration Rum

Old Cask Rum

Old Adventurer RumGin

Blue RibandVodka

Romanov

White Mischief

Pinky

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Black dog:

Largest selling Premium Scotch with 45% market share

USP: 123 year brand heritage Authenticity consistent quality

Antiquity Blue Rare Premium Whisky:

Finest and most expensive Indian Whisky

Won several Blend awards

USP: Finest Indian Whisky with world class credentials, specially imported blue

bottle in line with brands super premium image.

McDowell’s No. 1:

4th largest selling whisky in the world

Market leader with 60% market share

India’s favourite whisky, constant innovations in packaging, marketing, promotions

and consumer events has helped maintain leadership.

Signature:

One of the fastest growing brands in USL portfolio

Exquisite whiskies from Scotland have been combined perfectly with finest aged Indian malts

Bagpiper:

World’s largest whisky

Market leader with 29% market share

30 year old flagship brands of USL

McDowell’s Brandy:

World’s largest selling brandy

With 40% market share in India

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Royal Challenge:

Largest selling premium whisky in India

24year Heritage

Market share with 33% market share

Director’s Special Whisky :

Second largest selling regular whisky

With 7% market share

White Mischief:

Market leader

Fastest growing vodka

Five year CAGR of 34%

Blue Riband Gin;

Market leader

Has been delighting customer for 47 years

Recently launched in new and contemporary packaging

McDowell’s No.1 Celebrations Rum:

4th largest rum in the world

Market leader

Area of operation – global/national/regional:

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

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Ownership pattern:

Names DesignationVijay Mallya Chairman/Chair Person

V K Rekhi President, spirit division

Deepak Anand President, Fertilizer division

Sudhindar Krishan Khanna

Director

S R Gupte Vice Chairman

Kalyan Ganguly President, Breweries division

Ravi Nedungadi President & CFO

Vijay Mallya:

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

MP. The son of industrialist Vittal Mallya, he is the Chairman of the United Breweries

Group and Kingfisher Airlines, which draws its name from United Breweries Group's

flagship beer brand, Kingfisher.

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He also owns the Formula One team Force India, the Indian Premier

League team Bangalore Royal Challengers, and the I-League team East Bengal FC

and Mohun Bagan AC.

According to Forbes.com, as of March 2010, Mallya is worth US $1 billion. He is

ranked 937 in The Forbes World Billionaires Ranking (2010). He receives substantial

press coverage that focuses on his lavish parties, villas, automobiles, Force

India, Royal Challengers Bangalore and his yacht, the Indian Empress.

Personal Life:

Mallya was born into a Konkani family which originally from the town of Bantwal,

near Mangalore, in Karnataka and belongs to the Goud Sarswat Brahmin caste. He

is the son of Vittal Mallya and Lalitha Ramaiah. He was educated at La Martiniere for

Boys School, Calcutta and completed his degree at St. Xavier's College, Calcutta.

He later set up business ventures in Dubai, United Arab Emirates. Mallya is married

twice. His first wife was Sameera and they have a son together, named Sidharth

Mallya. Sidhartha was educated at Wellington College in Crowthorne followed by

Queen Mary's College in the University of London. Later on, he married Rekha and

has two daughters Laila and Tanya Mallya and one son.

Business:

Breweries

Mallya took over as Chairman of United Breweries Group in 1984 from his father

Vittal Mallya. Since then, the group has grown into a multi-national conglomerate of

over sixty companies, with an annual turnover which increased by 63.9% over 15

years to US$11.2 billion in 1998-1999. The focal business areas of the group

encompass alcoholic beverages, life

sciences, engineering, agriculture, chemicals, information technology, aviation and

leisure.

In May 2007, United Breweries Group announced the all-cash acquisition of scotch

whisky maker Whyte & Mackay for £595 million (approximately Rs 6000 crore). In

2005 he took over Millennium Breweries Ltd (formerly known as Inertia Industries

Ltd), which owned the two premium beer brands named Sandpiper and Zingaro.

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Airlines

In 2006, Mallya established Kingfisher Airlines. At present, the airline connects 32

cities. Kingfisher Airlines obtained a 26% stake in Air Deccan, a low cost Indian

airline which Mallya later acquired fully and rebranded as Kingfishers Red. Vijay

Mallya and his Jet Airways counterpart Naresh Goyal announced an alliance after a

marathon meeting on 13 October 2008 at Mumbai, India.

Investment In Sports:

Formula One:

In 2007, Mallya and the Mol family from The Netherlands bought the Spyker F1 team

for 88 million Euros. The team changed its name to Force India F1from the 2008

Season. Team's car VJM-01 was named after its owners Vijay Mallya, Jan Mol

and Michiel Mol.

Mallya also represents India in the FIA World Motor Sport Council, where he has a

seat from 2009 to 2013.

Football

Mallya's United Breweries sponsors the East Bengal and Mohun Bagan football

clubs in Kolkata where Mallya spent his childhood.

He also was part of the consortium that acquired Queens Park Rangers FC; the

consortium also included Bernie Ecclestone, Flavio Briatore and Lakshmi Mittal.

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Vijay Mallya has recently indicated his intention to buy AS Bari, a football team which

plays in the Italian Series A.

Cricket:

Vijay Mallya is the owner of Royal Challengers IPL team through his flagship firm UB

Group. Mallya wanted to associate one of his top-selling liquor brands, either

McDowell's No. 1 or Royal Challenge with the team.[8] The latter was chosen, hence

the name. The jersey colours of the team are red and golden yellow, the same as the

Karnataka state flag,[9] and the logo consists of the RC emblem with "Royal

Challengers Bangalore" in standard format.

Political Career:

Mallya entered politics in 2000 and replaced Subramanian Swamy as the president

of the Janata Party. His party contested almost all of the 224 seats during

the Karnataka State legislative election. He campaigned vigorously through the

media, but his party failed to make any impact and did not win a single seat.

Following the party's failure in the elections, it has been largely ignored by the

media, although Mallya recently became an MP independently.

Share Holding Pattern – United Spirits Ltd

Shareholding pattern - United Spirits Ltd.

Holder's Name No of Shares % Share Holding

Promoters 36640760 28.01%

Foreign Institutions 65839632 50.34%

General Public 12088115 9.24%

Foreign Ocb 5224585 3.99%

Other Companies 4543053 3.47%

N Banks Mutual Funds 3822683 2.92%

Foreign NRI 915220 0.70%

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Others 910077 0.70%

Financial Institutions 142708 0.11%

Central Govt 7521 0.01%

Competitors Information:

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

Domestic competition:

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

Global Competition:

Bacardi Limited:

Bacardi is a family-controlled spirits company, best known as a producer of rums,

including Bacardi Superior and Bacardi 151. The company sells in excess of 200

million bottles per year in nearly 100 countries. The company's sales in 2007 were

US$5.5 billion, up from $4.9 billion in 2006.

Bacardi is headquartered in Hamilton, Bermuda and has a 16-member board of

directors led by the original founder's great-great grandson, Facundo L. Bacardí. The

President Bernard F. Ramírez and Co-President Charles M. Hernández, also play a

large part in production and sales.

Pernord Ricardo:

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

company's eponymous products, Pernod Anise and Ricard Pastis, are both anise-

flavoured liqueurs and are often referred to simply as Pernod or Ricard. The

company also produces several other types of pastis.

After the banning of absinthe, Pernod Ricard was created from the Pernod

Files company, which had produced absinthe. It is now a worldwide conglomerate.

Pernod Ricard owns the distilled beverage division of the former

corporation Seagram, along with many other holdings. In 2005, the company

acquired a British-based competitor, Allied Domecq plc.

In 2008, Pernod Ricard announced its acquisition of Swedish-based V&S Group,

which produces Absolute Vodka.

Diageo:

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

Achievement/Awards if any:

United Spirits ltd has achieved around 108 awards. Some of the awards are shown below:

1. Mundusvini international spirits awards 2007-Silver2. World beverage competition 2006-Gold3. International review of spirits, Chicago-Bronze4. Institute of economic studies excellence award5. Asian Packaging Federation 20066. Superior Taste Award7. International wine and spirits award8. Mondiel de bruxellus 20059. India institute of packaging award

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10.World star packaging award

Infrastructure Facility:

1. Bottlery Plant(It contains production line 1-5)2. Re-distillation plant3. Tetra plant(It contains production line 6-7 and also has a flour for carton

storage)4. EBG(Empty Bottle Godown)5. IMFL(Indian Made Foreign Liquid godown)6. Scrap Yard7. Boilers(Husk Boilers)8. ETP(Effluent treatment Plant)9. Water treatment plant10.Excise superintendent office11.Time Office(To control man Power)12.Main Office13.Security check post

Marketing Strategy of UB group:

Beverage market leaders UB group promotes its brand Kingfisher by associating itself with sponsorship of tennis tournaments and Formula One. More, the supermodel and star studded Kingfisher calendar is another form of surrogate advertising for this line of UB group beverages. Another UB group liquor brand Royal Challenge promotes itself through golf tournaments and recently through IPL cricket team Bangalore Royal Challengers. On the other hand, Smirnoff markets itself under an apple juice product and White Mischief associates itself with tourism and hospitality for its marketing.

 The spirits division of the UB Group is planning to invest around Rs 50 crore in the company's whisky brands to boost sales to around 30 million cases in two years. Alok Gupta, divisional vice-president, UB Group, said the division had chalked out major promotion campaigns for its core whisky brands, which include Blackdog, McDowell Signature, McDowell No 1, Bagpiper, Gold Ribbon and Diplomat. "Each of these brands makes a statement and we have

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tried to create excitement around these brands through new ad campaigns," Gupta said. For example, McDowell No 1, UB's largest selling whisky brand, which also happens to be the eight largest selling whisky brand in the world, has newer advertisement campaigns. The brand will also have a slogan contest and separate packaging for every festive occasion. McDowell's whisky was launched as an extension of the successful No 1 McDowell's brandy. "McDowell No 1 customer profile is that of a trendy but conservative person," Gupta said. The brand sells over 3.5 million cases and is growing at the rate of 20 per cent. It expects sales to cross 4 million cases by the end of the current fiscal. Signature rare whisky is blend of Indian malts and rare aged Scotch. It is currently the fastest growing brand in the McDowell portfolio, selling 1.5 lakh cases. The brand has grown five times over in the last two years and expects to carve out a market share of 17 per cent by the end of the current fiscal. Blackdog, a 12-year-old Scotch has two-thirds of the market share. In the regular segment, Bagpiper whisky has recently been launched in a new packaging and is also available in halves and quarters of its classic quart bottles.

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

Marketing through sports:

The group, which signed on Mahendra Singh Dhoni to promote McDowell's soda, will come out with a television commercial featuring Dhoni.

Incidentally, Vijay-Mallya's UB group owns the Royal Challengers Bangalore IPL team and Dhoni is the captain of the Chennai Super Kings team. “Dhoni is a cricketer and we are using him to endorse our product. In any case, to avoid any clash of interests, we have obtained the permission of CSK as a safety net and they have given us clearance,” said Mr Ashok Capoor, Deputy President, United Spirits, the Rs 5,700-crore spirits arm of the UB Group.

On whether the company did not release the TVC during the World Cup given the confusion and controversy surrounding ambush marketing, Mr Capoor said, “We are not even ready with the commercial now. The TVC will be released post the World Cup and it will tie in with the IPL.”

The TVC, which is currently being shot in the country, will showcase the unique leadership style of the Indian captain. The advertising agency for the commercial is Mudra, Bangalore.

Apart from the advertisement, the company plans to use Dhoni in ‘meet-and-greet' programmes with consumers. “While Dhoni would promote McDowell's No. 1 Platinum Soda, this is bound to have a rub-off effect on other brands in the McDowell's portfolio (which includes No. 1 whisky and Celebration rum) as well. We

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expect the signing of Dhoni to give a big lift to the McDowell's brand,” said Mr Capoor.

The McDowell's portfolio contributes to over 30 per cent of United Spirits' total volumes

Among other things, the UB Group owns the Royal Challengers Indian Premier League (IPL) franchise. Earlier, Castellino was Emerging Media CEO. The company owns the Rajasthan Royals IPL franchise, which came out on top in the inaugural edition of the IPL.

The UB Group also owns the Mohun Bagan and East Bengal soccer teams. It is also present in F1 through its team Force India. The UB Group also runs the Kingfisher Cricket Academy in Bangalore.

Castellino will be responsible for all commercial, administrative and sponsor-promotion activities while each team will retain its sporting management organisation as currently existing. The marketing divisions responsible for The UB Group's brand association with such sporting activities shall remain unchanged.

UB Group chairman Dr Vijay Mallya says, "The UB Group has significant interests in various sports and with the appointment of Fraser, we hope to significantly enhance the value of the sporting activities in which we, currently, have interests. The UB Group companies are committed to building superior brand value using sports as an effective platform."

NDTV Good Times: A Unique Co- branding:

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

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ActivitiesInterests &Opinions (AIO).Truly like this concept, Good Times is all about activities, opinions and interests. The channel devotes its time to Health, Fashion, Food, Luxury, Technology , Chats with celebrities, life of rich and the famous etc. The channel also wants to create a class of its own by roping in HOT Properties to anchor respective shows. These include the actor Rajat Kapoor, Chef Manju Malhi, Techie Rajiv Makhni etc. The channel is full of aspirational lifestyle programs and contains about 50-60 original programs per week.The channel is looking at the target market comprising of socially upbeat 20-40 yr old SEC A viewers.The questions arise as to the benefit of these two different brands coming together in a channel. For NDTV, the brand association with Kingfisher gives it the revenue cushion. According to Agency faqs, UB group has committed around Rs 100 crore worth of ads in the next five years. For NDTV this takes away the risk of launching a lifestyle channel with is at most a Niche. Kingfisher will provide the much needed ad revenue till the channel began to attract other advertisers.

For UB Group, its a boon. We know that Indian law does not permit Kingfisher Beer to advertise. The rules are getting stricter day by day. Hence there is nothing better than a channel that carries your tagline and the mascot. Besides that every businessman knows the power of having a media under its fold. UB Group may not have the capability to run a media, so why not associate with the best brand in the media domain NDTV. Also Kingfisher as a brand epitomizes lifestyle positioning. Whether its the beer or the airlines, Mallya has built the brand on lifestyle platform. Hence Co-branding with a lifestyle channel makes perfect sense.

But things are not as rosy as it seems. This whole concept will work only if NDTV can bring in quality content to the channel. NDTV has proved its capability in the news front but entertainment is a different ballgame altogether. Right now cost of the new launch may not be a headache since NDTV has its processes and systems in place. What is going to make or break this channel is the quality of programming and the innovation that this channel will bring in to get the eyeballs sticking. For NDTV , Good Times is testing waters since it plans to roll out an entertainment channel in collaboration with the ace director Karan Johar. For Kingfisher, its a promotional expenditure ( nobody ever has perfectly measured the effectiveness of advertising as yet !!!). I feel that Good Times channel will be an integral part of in-flight

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

Surrogate Marketing:

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

United Breweries is the group which has really exploded the restrictions, expanding surrogate methods of branding in all directions imaginable. Let’s list down where all they are present:

a) KingfisherKingfisher has the most diverse set of surrogates floating around: a) Kingfisher Airlines (even though it is a full fledged business with a monetary interest); b) Kingfisher Calendar; c) Kingfisher bird as a part of the logo of NDTV Good Times (co-branding) d) shows on ‘making of the calendar‘ on NDTV Good Times etc. Vijay Mallya himself is a popular brand ambassador now for the company.

b) BagpiperA host of ads on Bagpiper soda, featuring Akshay Kumar and a few others, with the now-famous tagline: ‘khoob jamega rang jab mil baithenge 3 yaar – aap, main aur bagpiper‘ – again, promoting Bagpiper soda.

c) Royal Challenge: A major property in the form of Royal Challengers Bangalore playing in IPL.

d) Whyte and Mackay: Nothing notable apart from being present on the RCB IPL jerseys

e) White Mischief: An indirect promotion through the White Mischief holidays, and also through the RCB cheerleadersSo the above was a snapshot on what all the liquor companies are doing in India, trying to spread awareness about their brands through indirect means and mechanisms. Of these, some are full fledged business interests, such as Kingfisher

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airlines, RCB in IPL, White Mischief Holidays etc (this seems to be Mallya’s promotion strategy).

Surrogate marketing is definitely here to stay, because the prohibition is unlikely to be removed any time soon, and alcohol companies would likely never cease to exist. And as long as both business interests and restrictions remain, surrogate marketing will thrive.

HR department:

Functions of HR Department:

Function 1: Manpower planning

Understaffing loses the business economies of scale and specialization, orders, customers and profits.

Overstaffing is wasteful and expensive, if sustained, and it is costly to eliminate because of modern legislation in respect of redundancy payments, consultation, minimum periods of notice, etc. Very importantly, overstaffing reduces the competitive efficiency of the business.

Future staffing needs will derive from:

Sales and production forecasts The effects of technological change on task needs Variations in the efficiency, productivity, flexibility of labour as a result of training,

work study, organizational change, new motivations, etc. Changes in employment practices (e.g. use of subcontractors or agency staffs,

hiving-off tasks, buying in, substitution, etc.) Variations, which respond to new legislation, e.g. payroll taxes or their abolition, new

health and safety requirements Changes in Government policies (investment incentives, regional or trade grants, etc

Function 2: Recruitment and selection of employeesRecruitment of staff should be preceded by:An analysis of the job to be done (i.e. an analytical study of the tasks to be performed to determine their essential factors) written into a job description so that the selectors know what physical and mental characteristics applicants must possess, what qualities and attitudes are desirable and what characteristics are a decided disadvantage;

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In the case of replacement staff a critical questioning of the need to recruit at all (replacement should rarely be an automatic process).

Effectively, selection is 'buying' an employee (the price being the wage or salary multiplied by probable years of service) hence bad buys can be very expensive. For that reason some firms (and some firms for particular jobs) use external expert consultants for recruitment and selection.

Equally some small organizations exist to 'head hunt', i.e. to attract staff with high reputations from existing employers to the recruiting employer. However, the 'cost' of poor selection is such that, even for the mundane day-to-day jobs, those who recruit and select should be well trained to judge the suitability of applicants.

Function 3: Employee motivationTo retain good staff and to encourage them to give of their best while at work requires attention to the financial and psychological and even physiological rewards offered by the organization as a continuous exercise.Basic financial rewards and conditions of service (e.g. working hours per week) are determined externally (by national bargaining or government minimum wage legislation) in many occupations but as much as 50 per cent of the gross pay of manual workers is often the result of local negotiations and details (e.g. which particular hours shall be worked) of conditions of service are often more important than the basics. Hence there is scope for financial and other motivations to be used at local levels.As staffing needs will vary with the productivity of the workforce (and the industrial peace achieved) so good personnel policies are desirable. The latter can depend upon other factors (like environment, welfare, employee benefits, etc.) but unless the wage packet is accepted as 'fair and just' there will be no motivation.

Function 4: Employee evaluation:An organization needs constantly to take stock of its workforce and to assess its performance in existing jobs for three reasons:

To improve organizational performance via improving the performance of individual contributors (should be an automatic process in the case of good managers, but (about annually) two key questions should be posed:

** What has been done to improve the performance of a person last year?o And what can be done to improve his or her performance in the year to come?). To identify potential, i.e. to recognize existing talent and to use that to fill vacancies

higher in the organization or to transfer individuals into jobs where better use can be made of their abilities or developing skills.

To provide an equitable method of linking payment to performance where there are no numerical criteria (often this salary performance review takes place about three months later and is kept quite separate from 1. and 2. but is based on the same assessment).

Function 5: Industrial relationsGood industrial relations, while a recognizable and legitimate objective for an organization, are difficult to define since a good system of industrial relations involves complex relationships between:(a) Workers (and their informal and formal groups, i. e. trade union, organizations and their representatives);

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(b) Employers (and their managers and formal organizations like trade and professional associations);(c) The government and legislation and government agencies l and 'independent' agencies like the Advisory Conciliation and Arbitration Service.

Function 6: Provision of employee servicesAttention to the mental and physical well-being of employees is normal in many organizations as a means of keeping good staff and attracting others.The forms this welfare can take are many and varied, from loans to the needy to counselling in respect of personal problems.Among the activities regarded as normal are:

Schemes for occupational sick pay, extended sick leave and access to the firm's medical adviser;

Schemes for bereavement or other special leave; The rehabilitation of injured/unfit/ disabled employees and temporary or permanent

move to lighter work; The maintenance of disablement statistics and registers (there are complicated legal

requirements in respect of quotas of disabled workers and a need for 'certificates' where quota are not fulfilled and recruitment must take place);

Provision of financial and other support for sports, social, hobbies, activities of many kinds which are work related;

Provision of canteens and other catering facilities; Possibly assistance with financial and other aid to employees in difficulty

(supervision, maybe, of an employee managed benevolent fund or scheme); Provision of information handbooks, Running of pre-retirement courses and similar fringe activities; Care for the welfare aspects of health and safety legislation and provision of first-aid

training.

The location of the health and safety function within the organization varies. Commonly a split of responsibilities exists under which 'production' or 'engineering' management cares for the provision of safe systems of work and safe places and machines etc., but HRM is responsible for administration, training and education in awareness and understanding of the law, and for the alerting of all levels to new requirements.

Function 7: Employee education, training and developmentIn general, education is 'mind preparation' and is carried out remote from the actual work area, training is the systematic development of the attitude, knowledge, skill pattern required by a person to perform a given task or job adequately and development is 'the growth of the individual in terms of ability, understanding and awareness'.Within an organization all three are necessary in order to:

Develop workers to undertake higher-grade tasks; Provide the conventional training of new and young workers (e.g. as apprentices,

clerks, etc.); Raise efficiency and standards of performance; Meet legislative requirements (e.g. health and safety);

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Inform people (induction training, pre-retirement courses, etc.);

From time to time meet special needs arising from technical, legislative, and knowledge need changes. Meeting these needs is achieved via the 'training loop'

We constitute a large global group based in India and associate with world leaders in order to adopt technologies and processes, which will enable a leadership position in a large spectrum of activities. At UB, we take great care in how we attract and hire the best talent as we recognize that our organization is built around people, who are our most valuable assets.

UB Group is an employer of choice for aspiring professionals who like challenges no matter what the field or function.We endeavour to be the most preferred employer wherever we operate. 

RECRUTMENT AND SELECTION

The recruitment process is basically divided into 3 these are

Casual (Temporary) workers Staff level workers Executive level workers

Casual (temporary) workers:

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

Staff level workers:

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

Executive level

The executive category’s recruitment and selection is done at the Head Office in Mangalore. In this category the company has a structured procedure for doing

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aptitude test, group discussion, physical examination, and personal interview. Company is also following the campus recruitment mode. These selected executives are been placed in different companies at various posts

The Recruitment has a wealth of experience in recruiting technical personnel across

country’s key industrial sectors. Since its inception UB Group has developed an

impressive database of qualified personnel.

Clients are kept informed of progress throughout the recruitment process and each

permanent placement is tailored to the specific needs of both the client and the role.

Rather than adhering to a structured process, UB consultants draw upon a range of

tools, techniques and processes to successfully place candidates, ensuring that

clients are presented with the best available candidates within the required

timeframe, including:

Candidate sourcing strategies

Tailored screening methods

One-on-one interviewing

Suitability testing tools

Referencing and verification

Negotiations and finalisation

Ongoing follow up services

Training and Development: 

The training and development function gives employees the skills and knowledge to

perform their jobs effectively. In addition to providing training for new or

inexperienced employees, organisations often provide training programmes for

experienced employees whose jobs are undergoing change. Large organisations

often have development programmes which prepare employees for higher level

responsibilities within the organisation. Training and development

programmes provide useful means of assuring that employees are capable of

performing their jobs at acceptable level

Performance Appraisal: 

This function monitors employee performance to ensure that

it is at acceptable levels. Human resource professionals are usually responsible for

developing and administering performance appraisal systems, although the actual

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Appraisal of employee performance is the responsibility of supervisors and

managers.

Besides providing a basis for pay, promotion, and disciplinary action, performance

Appraisal information is essential for employee development since knowledge of

Results (feedback) are necessary to motivate and guide performance improvements.

Record-keeping: 

The oldest and most basic personnel function is employee record- keeping. This

function involves recording, maintaining, and retrieving employee- related

information for a variety of purposes. Records which must be maintained include

application forms, health and medical records, employment history (jobs held,

promotions, transfers, lay-offs), seniority lists, earnings and hours of work, absences,

turnover, tardiness, and other employee data. Complete and up-to-date employee

records are essential for most personnel functions. More than ever employees today

have a great interest in their personnel records. They want to know what is in them, why

certain statements have been made, and why records may or may not have been

updated.

Personnel records provide the following:

i) A store of up-to-date and accurate information about the company’s

employees.

ii) A guide to the action to be taken regarding an employee, particularly by

comparing him with other employees.

iii) A guide when recruiting a new employee, e.g. by showing the rates of pay

received by comparable employees.

iv) A historical record of previous action taken regarding employees.

v) The raw material for statistics which check and guide personnel policies.

vi) The means to comply with certain statutory requirements.

Skills:

“An organisations dominant capabilities and competency.”

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

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

Management style:

“Managers collectively spend their time and attention to achieve their objectives. The Acts is more important than what it.” The company follows both styles such as

Top down/bottom up Authoritarian/participative

1. TOP DOWN/BOTTOM UP

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

2. AUTHORITARIAN/PARTICIPATIVE

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

Production Department

United Spirits Limited (USL) is the largest Spirits Company in India and among the top three spirits companies in the world.

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

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to International Taste & Quality Institute (ITQI); more than 99 awards & certificates.

The Company is known to be an innovator in the industry and has several firsts to its credit like the first pre-mixed gin, the first Tetra pack in the spirits industry in India, first single malt manufactured in Asia and the first diet versions of whisky and vodka in India.

USL has a global footprint with exports to over 18 countries. It has a sizeable presence in India with distilleries and sales offices all across the country, and a committed team of over 7500 people dedicated to the fulfilment of the company's mission. It has established manufacturing and bottling plants in every state of India. In addition, to deliver its products to customers located anywhere in India, USL has established a robust distribution network covering the whole country.United Spirits Limited (United Spirits or "the company") is engaged in the manufacture, purchase, and sale of alcoholic beverages in India and international markets. The company primarily operates in India where it is headquartered in Bangalore and employs about 7,500 people.

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

TechnologyInitially, McDowell & Co. Ltd. Kumbalgodu had its distillation technology from the

French company, Sawalle. McDowell & Co. Ltd. improved its technology both in

distillation and production fields. Now Kumbalgodu is one of the pioneer distillers in

its group to introduce instrumentation in its group to introduce instrumentation in its

distillation plants with fully computerized remote controlled operational systems.

Hence it is going on with out saying that the quality of the spirit produced in the plant

has the unique character incomparable to any other unit. The high quality Extra

Neutral Alcohol (ENA) when blended with Indian and foreign ingredients, maturated

malt ad grape spirit, scotch whiskies, wines and sherries impacts very good

fragrance to its products, i.e. why people think of high quality spirits, while on

McDowell & Co.Ltd.

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The production in United Spirits ltd can be divided into two

Bottlery plan Tetra plant

Bottlery Plant

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

Bottling

During bottling the different blends are filled in their respective bottles. Company is

using four

Different sizes of bottle for bottling, which are as follows:

180ml- Quarter

375ml- Pint

500ml- Half

750ml- Full

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

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

Production Process

Production department is headed by the Distillery manager who looks after the

Distillery section, Bottlery section, Quality Control section and Effluent Treatment

Plant for the company. Each day 350 trucks pass through the gates of the 52

manufacturing units of UB group’s spirits division. This is a milestone that is not

within the reach of any competitor in the country. Each of the group’s owned units

are ISO 9001 certified and maintain the highest standards of Quality

2.5lacs of cases is the average monthly production unit of Kumbalgodu (ENA is the

basic component of liquor and is produced in distillery)

Raw materials for ENA production

In the past period the company had used raw materials like starchive materials,

saccharine materials and cellulose materials. But the company is currently using the

saccharine materials, mainly ‘molasses’ for the production of ENA, because of the

costly nature of Starchive and cellulose materials. Molasses is the waste from sugar

mills.

The company has got out 3000 casks filled with malt and grape spirit of different

ages and wooden tanks of 3600 litres to 5,000 litres to accommodate malt grape rum

spirits. The company has devised its on blending procedure where by imported and

Indian ingredients malts spirits of different age’s water produced from its own

dematerialized water plant and the experience of the chemists clubbed together

makes miracle in the industry and this given astonishment to the common man.

When the blended liquor is bottled in the fully automatic plant and when comes out

with proper dressing and packing, a thrill is given to the people to insist on

McDowell’s.

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Production Process:

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

Distillation

↓

Blending

↓

Bottling

↓

Despatching

Distillation

Distillation process plays a vital role in the production of branded liquor. ENA is the

basic component for liquor. ENA is produced from distilling molasses. In the

distillation process, first stage is fermenting the molasses with the media of yeast.

For fermentation, company uses continuous fermentation system

Continuous Fermentation System

Fermentation is a process by which converting the sugar in molasses into alcohol.

Molasses is a waste from sugar factory. The molasses is in a liquid form. This liquid

contains

around 12%-14%, which is in non-crystallized form, but fermentable. This

fermentable sugar can be converted into ENA by the way of yeast fermentation.

For the fermentation process this molasses is been pumped to the tank, which is

situated in the plant as per requirement. In plant there is a molasses weighing

system, is an electronic system placed for computing the quantity of molasses is

been taken from the main storage tank. The company having 3 culturing vessels and

yeast is been in these vessels.

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The cultured yeast is moved to yeast activation tank (Y AT). When Y A T is

Ready, the weighed molasses is passes to 5 huge fermentation tanks namely

FRMNTR I,

FRMNTR II, FRMNTR III, FRMNTR IV, FRMNTR V. Then Cultured yeast is been

pumped to the fermentation tanks. In each of these tanks the “molasses is treated

along with water. Molasses is the main food of yeast. In the fermentation process

certain factor needs to be assured- Sugar concentration level, Ph level (Hydrogen

iron concentration) and temperature level. Ph level can be maintained by adding

sulphuric acid. For the further growth of yeast in the fermentation tank certain

additional ingredience like antifoam, nutrients, and process water to be added.

Minimum

26 hours required for the completion of the fermentation process. While the

fermentation, the

sugar will be converted into Ethyl Alcohol (wash) and Carbon dioxide. CO2 will be

escaped to the atmosphere. Then the remaining Ethyl Alcohol, Yeast contents, water

and other ingredients moves to the Yeast Activation Tank (YST), here yeast settles

down because of the continuous process. Overflow happens wash and other

impurities moves to Wash Settlement Tank (WST). Here the sludge settles down and

it passes to the Sludge Mixing Tank (SMT) and the remaining wash moves to the

clarified wash tank and is being pumped to the distillation plant. In the SMT, sludge

mixes with water and is pumped to the Sludge Settlement Tank (SST) and is been

carries to ETP. The plant doing optimum utilization of resources. For the same, in

YST the settled yeast is been pumped to the Yeast Holding Tank (YHT) and passes

to the Yeast Treatment Tank (YTT). Here the yeast is well treated with water and

passes to the Yeast Activation Tank (Y A T) as energetic yeast for further

fermentation without wasting yeast, because entire performance of plant is depends

on an atom of YEAST.

Distillation

Distillation is being separated by the use of steam. After the fermentation

process the resultant is wash, which contains 6-7% alcohol is pumped to

Plate Heat Exchanger (PHE) and spent wash is separated to ETP. The

ENA is produced through 7 columns. The liquid alcohol is separated in 15t

column is called Analyzer Column. Then is passes through the Degasified

Column, in this column the fusel oil is being separated and it moves to

Fuse Oil Column. Then the liquid alcohol passes through Purifier Column,

Rectifier Column, and Refining Column and finally spirit is extracted. In

between each of these columns two condensers are fixed to cool the

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steam. There is one head concentration column- is used to separate the”

heads or technical alcohol (highly poisonous) from liquid alcohol.

Process water tank is used

for providing necessary water to each section. Through distillation two

items-Fuses I and other impurities are getting separated. For the entire

operation company is using processed water. Distillation plant is fully

controlled by instrumentation and computers.

Blending

Blending is a process where different proportion of constituents is mixed up to

produce wide range of products. In this process variety of products are produced by

mixing of

ENA and other ingredients in varying proportions. The main ingredients are ENA,

malt spirit,

grape spirit, rum spirit, imported Scotch whisky and caramel for different products.

Contents of each product are as follows:

Brandy-ENA+ grape spirit+ caramel+ essence

Whisky-ENA+ malt spirit+ caramel+ essence

Rum -ENA+ rum spirit+ caramel+ essence

Gin - ENA+ essence

Vodka - ENA+ essence

Effluent Treatment Plant (ETP)

ETP is also a part of the production department. It is waste management system of

the company. The waste generated from the alcohol distillation plant is been dumped

in this

plant. This waste, known as spent wash is an organic pollutant that can prove

destructive to the aquatic life if disposed without proper effluent treatment.

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Stores and Purchase Department

This department headed by the manager looks after the procurement of raw

materials, its storing and maintenance. The management has given 3 month rolling

plan to the department. The department is responsible to purchase and store the

materials foe production and maintain the records for the same and to prepare GRN

and GRR.

The stores and the purchase department can reject the purchased materials if so

required, after it has been checked by the quality department. The department has a

sufficient warehouse facility for storing both purchased material and finished goods.

For storing the finished goods there is an IMFL go-down with capacity of

40000 cases and which is nearby the department. One case carries 9 litres of blend.

Molasses is being purchased from different parts of India such as Up, Maharashtra,

Tamil Nadu, Andrapradesh, Karnataka, and the company also has an overseas

contract with Iran. Furnace oil is purchased from Indian Oil Corporation. Scotch is

imported from United Distilleries, Scotland. Grape spirit for the production of whisky

is purchased from Goa, Baramathi Distilleries, Maharashtra and the most of other

purchases are localized.

FIFO method is used for dealing the stock. The firm allows a normal loss of 3% for

bottles and 1% for molasses. The unit has a central Materials Management Division

(MMD) at Mangalore to control all purchases of raw materials and packing materials

for united spirits limited. The company purchased the generators from Kirloskar India

Ltd., boilers from Westor works, Mumbai and water treatment plant from ION

Exchange India Ltd.

Major factories, which supply Bottles, Labels, Mono carton, PP caps to the company

are as follows:-

PP caps: Oriental Containers ltd, Metal Closures, Mumbai. Mono Cartons: Manohar Packaging Glass Bottles: Tantra Glass Ltd, Mahalakshmi Glass Ltd, Mangalore Labels (Stickers): Paper products Ltd, Alert Packing House, Mumbai

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Finance Department

Finance is life-blood of any business. Finance department Is headed by the Finance

Manager, who looks after the financial dealings of the company.th department is in

charge of maintaining all financial documents such as journals, ledgers, income

statement, balance sheet.

The company, besides growing revenues, showed an improved profitability ratio as

in obvious from the ratio of earnings before interest & tax (EBIT) to sales growing

from 3.9% to 4.61%.

The steady improvement in the fixed asset turnover is a measure of the efficiency

with which fixed assets are employed. On an increasing revenue base, the gross

block of assets has remained more or less constant over the last four years. The

company has shown a turnover of Rs 62 crores last year

Balance Sheet

Source of Fund Mar-10 Mar-11

Total Share Capital 100.16 125.59

Equity Share Capital 100.16 125.59

Share Application Money 7.75 0.00

Preference Share Capital 0.00 0.00

Reserve 3,001.94 4,660.19

Revaluation Reserves 0.00 0.00

Net worth 3,109.48 4,785.78

Secured Loans 1,306.48 2,589.25

Unsecured Loans 616.37 926.82

Total Debt 1,922.70 3,516.07

Total liabilities 5,032.70 8,301.85

Application Of Funds

Gross Block 787.62 928.86

Less: Accum. Depreciation 194.99 222.21

Net Block 592.63 706.65

Capital Work In Progress 28.26 39.58

Investments 2,051.48 1,254.00

Inventories 653.97 829.19

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Sundry Debtors 665.04 946.16

Cash And Bank Balance 40.00 946.16

Total Current Assets 1,359.01 1,977.52

Loans And Advances 1,933.55 5,417.36

Fixed Deposits 44.86 44.30

Total CA, Loans &

Advances

3,337.42 7,439.18

Differed Credit 0.00 0.00

Current Liabilities 908.78 1088.15

Provisions 68.31 81.78

Total CL & Provisions 977.09 1,169.93

Net Current Assets 2,360.33 6,269.25

Miscellaneous Expenses 0.00 32.36

Total Assets 5,032.70 8,301.84

Contingent Liabilities 3,294.15 207.27

Book Value (Rs) 309.70 381.05

Profit & Loss A/C

Income Mar-10 Mar-11

Sales Turnover 7,470.72 9,205.97

Excise Duty 3,389.23 4,277.06

Net Sales 4,081.49 4,928.91

Other Incomes 39.08 79.75

Stock Adjustments 199.22 163.18

Total Income 4,319.79 5,171.84

Expenditure

Raw Materials 2,492.03 2,894.06

Power & Fuel Cost 19.68 19.34

Employee Cost 264.11 295.57

Other Manufacturing Cost 13.07 14.35

Selling And Admin

Expenses

796.02 1,018.80

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Miscellaneous Expenses 52.38 51.31

Preoperative Exp

Capitalized

0.00 0.00

Total Expenses 3,637.29 4,293.33

Operating Profit 643.42 798.76

PBDIT 682.50 878.51

Depreciation 36.16 38.63

Other Written Off 0.00 0.00

Profit Before Tax 445.49 524.81

Extra-ordinary items 13.66 18.86

PBT(Post Extra-ord Items) 459.15 543.67

Tax 162.50 167.65

Reported Net Profit 296.66 376.02

Total Value Addition 1,145.25 1,399.25

Preference Dividend 0.00 0.00

Equity Dividend 21.58 31.40

Corporate Dividend Tax 3.67 5.22

Per Share

Data(annualized)

Shares in Issue (lakh) 1,001.63 1,255.94

Earning Per Share (Rs) 29.62 29.94

Equity Dividend (%) 20.00 25.00

Interest 200.85 315.07

PBDT 481.65 563.44

Book value (Rs) 309.70 381.05

Interpretation:

In case of comparison between current assets and advances of the year of 2010 with

that of 2011 there is increase in value of the current assets so it is profitable in

nature.

Current Asset ratio = current asset/current liability

2011 = 1,977.52/8,301.84 =0.24

2010 = 1,359.01/5,032.70 = 0.27

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

2011= (524.81/9,205.97)*100 = 5.70

2010= (445.49/7,470.72)*100 = 5.96

The above calculated ratio shows the profitability of the company.

Statement of Significant Accounting Policy

1. Basis of preparation of Financial Statements

The Financial Statements of the Company are prepared under historical cost

convention, except as otherwise stated, in accordance with the Generally Accepted

Accounting Principles (GAAP) in India, the Accounting Standards issued by the

Institute of Chartered Accountants of India and the relevant provisions of the

Companies Act, 1956.

2. Fixed Assets

(a) Fixed assets are stated at their original cost of acquisition and subsequent

improvements thereto including taxes, duties, freight and other incidental expenses

related to acquisition and installation of the assets concerned, except amounts

adjusted on revaluation and amalgamation. Interest on borrowings attributable to

qualifying assets are capitalised and included in the cost of fixed assets as

appropriate.

(b) The costs of Fixed Assets acquired in amalgamations are determined at their fair

values, on the date of acquisition or nearer thereto, or as approved under the

schemes of amalgamation.

(c) Assets held for disposal are stated at their net book value or estimated net

realisable value, whichever is lower.

3. Leases

Assets acquired under Leases where the Company has substantially all the risks and

rewards of ownership are classified as finance leases. Such leases are capitalised at

the inception of the lease at lower of the fair value or the brsent value of the

minimum lease payments and a liability is created for an equivalent amount. Each

46

lease rental paid is allocated between the liability and the interest cost, so as to

obtain a constant periodic rate of interest on the outstanding liability for each period.

Assets acquired as leases where a significant portion of the risk and rewards of

ownership are retained by the lesser are classified as operating leases. Lease

rentals are charged to the Profit and Loss Account on accrual basis. 

4. Depreciation and Amortisation

a) Depreciation is provided on the Straight Line Method, including on assets reviled,

at rates described in Schedule XIV to the Companies Act, 1956 except for the

following, which are based on management's estimate of useful life of the assets

concerned:

i) Computers and Vehicles over a period of three and five years respectively;

ii) In respect of certain items of Plant and Machinery eligible for triple shift allowance,

depreciation is provided for the full year on triple shift basis.

b) Fixed assets acquired on amalgamation over the remaining useful life computed

based on rates described in Schedule XIV to the Companies Act, 1956, as below:

Buildings 1 to 30 years

Plant & Machinery 1 to 20 years

Vehicles 1 to 4 years

Computers 1 to 2 years

c) Assets taken on finance lease are prepared over their estimated useful lives or the

lease term, whichever is lower.

d) Leasehold Land are not amortised.

e) Goodwill arising on amalgamation is charged to the Profit and Loss Account in the

year of amalgamation.

Depreciation charged as above is not less than the minimum specified as per

Schedule XIV of the Companies Act, 1956.

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5. Impairment

Impairment loss, if any, is provided to the extent the carrying amounts of assets

exceed their recoverable amount.

Recoverable amount is higher of the net selling price of an asset and its value in use.

Value in use is the present value of estimated future cash flows expected to arise

from the continuing use of an asset and from its disposal at the end of its useful life.

6. Investments

Long-term Investments are stated at cost to the Company' Provision for diminution in

the value is made to recognise a decline, other than temporary, in the value of long-

term investments.

Current investments are valued at cost or market value, whichever is less.

7. Inventories

Inventories are valued at lower of cost and net realisable value. The costs are, in

general, ascertained under Weighted Average Method. Finished goods and Work-in-

Progress include appropriate manufacturing overheads and borrowing costs, as

applicable. Excise/Customs duty payable on stocks in bond is added to the cost. Due

allowance is made for obsolete and slow moving items.

8. Revenue Recognition

Sales are recognised when goods are despatched from distilleries / warehouses of

the Company in accordance with the terms of sale except where such terms provide

otherwise, where sales are recognised based on such terms. Gross Sales are

inclusive of excise duty but are net of trade discounts and sales tax, where

applicable.

Income arising from sales by manufacturers under "Tie-up" agreements (Tie-up

units) and income from brand franchise are recognised in terms of the respective

contracts on sale of the products by the Tie-up unit/ Franchisees. Income from brand

franchise is net of service tax, where applicable.

Dividend income on investments are recognised and accounted for when the right to

receive the payment is established

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9. Foreign Currency Transactions

Transactions in foreign currency are recognised at the rates of exchange brvailing on

the dates of the transactions.

Liabilities/ assets in foreign currencies are reckoned in the accounts as per the

following principles:

Foreign currency liabilities contracted for acquiring fixed assets from a country

outside India are restated at the rates ruling at the year end and all exchange

differences arising as a result of such restatement are adjusted to the cost of fixed

assets.

Exchange differences arising on a monetary item that, in substance, forms part of an

enterprise's net investment in a non-integral foreign operation is accumulated in a

foreign currency translation reserve in the enterprise's financial statements until the

disposal of the net investment.

10. Employee Benefits

a) Defined-contribution plans

These are plans in which the Company pays br-defined amounts to separate funds

and does not have any legal or informal obligation to pay additional sums. These

comprise of contributions to the employees' provident fund with the government,

superannuation fund and certain state plans like Employees' State Insurance and

Employees' Pension Scheme. The Company's payments to the defined contribution

plans are recognised as expenses during the period in which the employees perform

the services that the payment covers.

b) Defined-benefit plans

Gratuity:

The Company provides for gratuity, a defined benefit plan (the Gratuity Plan), to

certain categories of employees. Liability with regard to gratuity plan is accrued

based on actuarial valuation, based on Projected Unit Credit Method, carried out by

an independent actuary, at the Balance Sheet date. Actuarial Gains and Losses

comprise experience adjustments and the effect of changes in the actuarial

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assumptions and are recognised immediately in the Profit and Loss Account as

income or expense.

Provident Fund:

Company's Provident Funds administered by trusts set up by the Company where

the Company's obligation is to provide the agreed benefit to the employees and the

actuarial risk and investment risk fall, in substance, on the Company are treated as a

defined benefit plan. Liability with regard to such provident fund plans are accrued

based on actuarial valuation, based on Projected Unit Credit Method, carried out by

an independent actuary, at the balance sheet date. Actuarial Gains and Losses

comprise experience adjustments and the effect of changes in the actuarial

assumptions and are recognised immediately in the Profit and Loss Account as

income or expense.

Death Benefit:

Death Benefit payable at the time of death is actuarially ascertained at the year-end

and provided for in the accounts.

Other long term employee benefits:

Compensated absences which are not expected to occur within twelve months after

the end of the period in which the employee renders the related services are

recognised as a liability at the present value of the defined benefit obligation at the

balance sheet date based on actuarial valuation carried out at each balance sheet

date.

Short term employee benefits:

Undiscounted amount of short term employee benefits expected to be paid in

exchange for the services rendered by employees is recognised during the period

when the employee renders the services. These benefits include compensated

absences such as paid annual leave and performance incentives.

11. Expenditure on account of Voluntary Retirement Scheme

Expenditure on account of Voluntary Retirement Scheme of employees is expensed

in the period in which it is incurred.

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12. Research and Development

Revenue expenditure on research and development is charged to Profit and Loss

Account in the period in which it is incurred. Capital Expenditure is included as part

of fixed assets and depreciated on the same basis as other fixed assets.

13. Taxes on Income

Provision for income tax comprises current taxes and deferred taxes. Current tax is

determined as the amount of tax payable in respect of taxable income for the period.

Deferred tax is recognised on timing differences between the accounting income and

the taxable income for the year and quantified using the tax rates and laws enacted

or substantively enacted as on the Balance Sheet date.

Deferred tax assets are recognised and carried forward to the extent that there is a

reasonable / virtual certainty that sufficient future taxable income will be available

against which such deferred tax asset can be realised.

Fringe Benefit Tax is determined at current applicable rates on expenses falling

within the ambit of "Fringe Benefit" as defined under the Income Tax Act. 1961.

14. Earnings per Share

Earning per equity share (basic/diluted) is arrived at based on Net Profit after

taxation available to equity shareholders to the basic/weighted average-number of

equity shares.

15. Provisions

A provision is recognised when an enterprise has a resent obligation as a result of a

past event and it is probable that an outflow of resources will be required to settle the

obligation, in respect of which a reliable estimate can be made. Provisions, other

than employee benefits, are not discounted to their present value and are

determined based on management, estimate required to settle the obligation at the

balance sheet date. These are reviewed at each balance sheet date and adjusted to

reflect the current management estimates.

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16. Contingencies

Liabilities which are material and whose future outcome cannot be ascertained with

reasonable certainty are treated as contingent and, to the extent not provided for, are

disclosed by way of notes on the accounts.

17. Share / Foreign Currency Convertible Bonds [FCCB] issue expenses and

Premium on Redemption of FCCB :

Share/ Foreign Currency Convertible Bonds issue expenses incurred are expensed

in the same year and premium payable on FCCBs is expensed over the currency of

FCCBs. Both are adjusted to the Securities Premium Account as permitted by

Section 78(2) of the Companies Act, 1956.

18. Expenditure

Expenses are net of taxes recoverable, where applicable.

SWOT ANALYSIS

Strength and weakness are essential internal to the organisation and relate to the

matter concerning resources, programmers and organisation in key areas such as:

Productivity

Sales

Capacity

Size & Segment

Competition

Growth Pattern and maturity

STRENGTH:

Company is World no 2 in the spirit production volume.

Company has a high market share

Company maintain good employee-employer relation

Company promotes employees in participating in managements.

Well established due to long time.

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The company has wide distribution network.

Better quality control system.

The welfare measures taken by USL are highly appreciable

Company has high skilled and experienced human resource.

Company is using SAP system for accurate maintenance of accounts.

WEAKNESS:

Company does not have any defined appraisal system for its workmen and

staff category.

Company is using traditional technology in Bottlery.

There is no specific tool for calculating inventory.

No clear job description for various levels resulting in dual reporting

relationship.

Existence of the Labour Union resists the changes brought to the company.

Work area is comparatively small.

OPPORTUNITIES:

Availability of man power for vacant positions.

High market opportunity.

Improvement in quality of production / operations / services through systems

approach.

Groundwork for implementation of new concepts, an ISO 9001:2000

standards is been made to put the above theory into practice.

To capture foreign market.

Further automation can be done.

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THREATS:

Increase in cost due to increase in man power.

Illicit liquors and beer.

Change in excise policy.

Healthy competition within the group in terms of quality /quantity / cost / price.

Decline economy of manufacturing sector in general.

Foreign liquors.

Change in taste and preference of consumers.

Government policy towards spirit industries.

INFERENCEOver the last two years USL has shown a significant increase in its profits as well as

the global and Indian liquor market. The company has taken all round measures

including new product initiatives, maintaining and improving its product quality, cost

controlling measures and various other mergers and acquisitions. USL has all-

through maintained an efficient team of motivated and delighted employees which

adds to its major strength. However, the company has to look into the various issues

like; the labour union, job description etc.

54

CONCLUSIONUB makes the world’s largest selling whisky and it has 15 millionaire brands. UB

Group is the largest brewing company in India with a national market share of 60 per

cent. The project entitled “An Organizational Study on McDowell & Co. Ltd,

Kumbalgodu, Bangalore”, was undertaken by the objective to create the

idea about the functions of the management of business firms. McDowell

& Co. has a successful part build-up on its glorious past. The company is

expected to come up in flying colours in the coming years. Majority of the

people in USL are happy with motivational technique provided by the company and

the superiors. When we see the age and length of service of employees in USL we

can find that people don’t want to change the organization that means they are

happy with the environment and motivational technique given by the company. By

the advancement it shall acquire in its technology and satisfaction among its

customers.

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Bibliography:1. www.unitedspirits.com

2. www.ubgroup.com

3. www.wikipedia.com

4. www.clubmcdowell.com

5. Information provided by the company.

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