Let’s celebrate these moments! - Radico Khaitanradicokhaitan.com/images/pdf/Annual Report -...

Let’s celebrate these moments!

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Hirthik Roshan,our Brand Ambassador for Magic Moments Vodka,shaking hands with Abhishek Khaitan, M.D.

From L to RDr. Lalit KhaitanChairman & Managing Director, Radico Khaitan Ltd. and

Mr. Abhishek Khaitan, Managing Director

From L to RDr. Lalit KhaitanChairman & Managing Director, Radico Khaitan Ltd. and

Mr. Abhishek Khaitan, Managing Director

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BOARD OF DIRECTORS:

Dr. Lalit KhaitanChairman & Managing DirectorAbhishek KhaitanManaging DirectorK.P. SinghWholetime DirectorRaghupati SinghaniaAmit BurmanKarna Singh MehtaAshutosh PatraSanjay Jalan

Head-Legal & Company SecretaryDr. Arun Mohan Bansal AUDITORS:

M/s. V. Sankar Aiyar & Co.Chartered AccountantsSatyam Cinema Building, 2nd FloorRanjit Nagar Commercial ComplexNew Delhi - 110 008

INTERNAL AUDITORS:M/s. Ernst & Young Pvt. Ltd.B-26, Qutub Institutional Area,New Delhi - 110 016

BANKERS AND FINANCINGINSTITUTIONS:Punjab National Bank, State Bank ofIndia, ICICI Bank Ltd.,Bank of India, AXIS Bank Ltd.,State Bank of Travancore,Yes Bank Ltd., ABN AMRO Bank,Standard Chartered Bank,ING Vysya Bank,State Bank of Hyderabad,State Bank of MysoreSBI Factors & Commercial,Services Private Limited.,Rabo India Finance Private LimitedState Bank of IndoreBank of Rajasthan Limited

OUR WEBSITE:www.radicokhaitan.com

REGISTERED OFFICE:Bareilly Road, Rampur – 244 901 UP.Phone No. 0595-2350601, 2350602Fax No. 0595-2350009E-mail: [email protected]

CORPORATE OFFICE:Plot No. J-1, Block B-1, MohanCo-operative Industrial Area,Mathura Road, New Delhi - 110 044Ph.: 26975403–26975409.Fax: 26975339/40E-mail: [email protected]

WORKS:Rampur DistilleryBareilly Road, Rampur – 244 901 UP.

Plot No. B-24, A-25,Shree Khatushyamji,Industrial Complex,RIICO, Reengus,Dist. Sikar, Rajasthan

B-3, UPSIDC IndustrialDevelopment Area, Phase-I,Sultanpur Patti, BajpurDist. Udham Singh Nagar, Uttaranchal

S-59, Timmapur Village,Palmakul Post – 509 325Shadnagar TQ, Dist. Mehboobnagar, AP

Corporate Profile

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NoticeFor the 23rd Annual General Meeting

Notice is hereby given that the 23rd Annual General Meeting of the Members of Radico Khaitan Limited (RKL), will be held on Wednesday, 26September 2007 at 12.30 p.m. at the registered office of the Company at Rampur Distillery, Bareilly Road, Rampur (U.P.) 244 901 to transactthe following business:

Ordinary Business:

1. To receive, consider and adopt the Audited Accounts of the Company consisting of the Balance Sheet as at 31st March 2007 and theProfit and Loss Account for the year ended on that date including Notes thereto together with Reports of the Directors and Auditorsthereon.

2. To declare dividend.

3. To appoint a director in place of Mr. Ashutosh Patra, who retires by rotation and being eligible, offers himself for re-appointment.

4. To appoint a director in place of Mr. K.S. Mehta, who retires by rotation and being eligible, offers himself for re-appointment.

5. To appoint Auditors and to fix their remuneration.

Special Business:

6. To consider and if thought fit, to pass, with or without modification(s), the following as Ordinary Resolution:

“RESOLVED that consent of the Company be and is hereby accorded in terms of Section 293 (1) (a) and other applicable provisions,if any, of the Companies Act, 1956 or any modification or re-enactment thereof and shall always be deemed to have been accorded tomortgaging and / or charging by the Board of Directors of the Company by way of equitable and / or legal mortgage of the immoveableand moveable fixed assets of the Company, both present and future, to or in favour of –

(1) State Bank of Mysore (SBM) for its enhanced working capital limits of Rs.2500 lacs

(2) Punjab National Bank (PNB) for its enhanced working capital limits of Rs.8300 lacs

(3) State Bank of India (SBI) for its enhanced working capital limits of Rs.5700 lacs

(4) ABM AMRO BANK N.V. (ABN AMRO) for its short term loan facilities of Rs.1500 lacs

(5) YES Bank Ltd. (YES BANK) for its working capital facilities of Rs.1800 lacs.

(6) ING Vysya Bank Ltd. (ING VYSYA) for its working capital limits of Rs.1200 lacs

(7) UTI Bank Ltd. (UTI) for its working capital facility of Rs.1700 lacs.

by way of 2nd pari passu charge to secure the above mentioned Working Capital facilities / Short Term Loan facilities granted to theCompany together with interest at the agreed rate(s), liquidated damages, front end fees, premia on prepayment, costs, charges,expenses and all other moneys payable by the Company under the Loan Agreement, Deed of Hypothecation and other documentsexecuted by the Company in respect of the above mentioned Working Capital facilities / Short Term Loan facilities of the abovementioned Banks.”

“RESOLVED further that the Board of Directors be and is hereby authorised and shall always be deemed to have been authorised todo all acts, deeds and things in connection therewith and incidental thereto.”

By order of the Boardfor Radico Khaitan Limited

Sd/-Place : New Delhi Dr. Arun Mohan BansalDate : 30.06.2007 Head - Legal & Company Secretary

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NOTES

(a) Proxy:

A member entitled to attend the meeting and vote thereat is entitled to appoint a proxy to attend and vote instead of himself and theproxy need not be a member of the Company. Proxies in order to be effective should be duly stamped, completed and signed andmust be deposited at the Registered office of the Company not less than 48 hours before the meeting.

(b) Change of Address:

Shareholders may notify CHANGE OF ADDRESS, if any, with Pin Code and bank mandate to the Company’s Corporate Office at PlotNo.J-1, Block B-1, Mohan Co-operative Industrial Area, Mathura Road, New Delhi – 110 044 or to the Registrars and Share TransferAgents, M/s. Mas Services Pvt. Ltd., AB 4, Safdarjung Enclave, New Delhi - 110 029.

(c) Dividend:

Dividend as recommended by the Company, if declared at the Annual General Meeting will be paid those shareholders whose namesare borne on the Register of Members as on 26.09.2007 being the date of the Annual General Meeting of the Company.

(d) Nomination facility:

Pursuant to Section 109 A of the Companies Act, 1956 individual Shareholders holding Shares in the Company singly or jointly maynominate an individual to whom all the rights in the Shares of the Company shall vest in the event of death of the sole / all jointShareholders. Members may kindly get in touch with the Secretarial Department at the Company’s Corporate office at New Delhi, forinquiries in this regard.

(e) Inspection of Documents:

Copies of all relevant documents and papers are kept open for inspection at the Registered Office of the Company between10.00 a.m. and 12.00 noon on any working day prior to the date of the Meeting.



ANNEXURE TO THE NOTICE

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956

Item No.6

Members are informed that subsequent to the last Annual General Meeting, the Company has availed / proposes to avail the followingWorking Capital limits from various Banks, as given below: -

(1) State Bank of Mysore (SBM) - Rs.2500 lacs

(2) Punjab National Bank (PNB) - Rs.8300 lacs

(3) State Bank of India (SBI) - Rs.5700 lacs

(4) ABN AMRO Bank N.V. (ABN AMRO) - Rs.1500 lacs (STLF)

(5) YES BANK Ltd. (YES BANK) - Rs.1800 lacs

(6) ING Vysya Bank Ltd. (ING VYSYA) - Rs.1200 lacs

(7) UTI Bank Ltd. (UTI) - Rs.1700 lacs

The aforesaid Working Capital limits / Short Term Loan facilities are required to be secured by way of 2nd pari passu charge on the immoveableand moveable fixed assets of the company.

As per the provisions of Section 293 (1) (a) of the Companies Act, 1956, approval of the shareholders is required for mortgaging immoveableand moveable fixed assets of the Company in favour of the aforesaid Banks.

Your directors recommend the passing of the Ordinary resolution in this regard as proposed.

None of the Directors shall be deemed to be concerned or interested in the resolution.



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Your Directors are pleased to present their 23rd Annual Reporttogether with the audited statement of accounts of thecompany for the year ended 31st March, 2007.

FINANCIAL RESULTS:

(Rs. in Million)

2006-2007 2005-2006

Sales (including sales from arrangements

with other Distilleries / bottling units) 13657.92 11353.98

Gross Profit (before depreciation and tax) 722.48 634.57

Profit before tax 567.42 521.94

Profit after tax 452.52 450.34

Prior period adjustments (66.35) (49.38)

Surplus brought forward from last year 283.65 134.48

Profit available for appropriation 669.82 535.44

Transfer to General Reserve 200.00 185.20

Proposed Dividend and tax thereon 83.82 54.99

Balance carried forward 386.00 295.26

OPERATIONS:

Your company completed a highly successful and eventfulyear of operations in 2006-2007 and continued to makestrides in consolidating its position in the market.

The company clocked overall gross sales of Rs. 13657.92million from its operations; Rs. 9173.41 million own operations(excluding income from arrangements with other distilleries /bottling units) plus Rs. 4484.51 million through sucharrangements in the year 2006-2007 against Rs.11353.98million (Rs.7674.44 million from own operations plusRs. 3679.54 million through such arrangements) achieved in2005-2006, thereby registering a growth of 20% over last year.The profit after tax, though was at same levels as of last year,due to increase in sales and promotion expenses on accountof brand promotion expenditure of Company’s newly launchedsuccessful brands.

The company continued cost reductions and cost savingsexercises during the year in all spheres of its activity.

The Company’s flagship brand, “8 PM” whisky continued toexpand and crossed new milestones in volumes in 2006-2007.Last year your company successfully launched “MAGICMOMENTS vodka” which proved to be a runaway successduring the current year. Vodka segment in India is growing at40% per annum, and Magic Moments brand is positioned asTripled distilled Grain based Vodka, coupled with internationalclass packaging, targeting aspirational level of youngconsumers.

“CONTESSA” rum, “OLD ADMIRAL VSOP” brandy, “8 PMBERMUDA XXX” rum, “WHYTEHALL” whisky and “SPECIALAPPOINTMENT” whisky continued to be popular with thediscerning customers.

During the year your Company’s continued to successfullyexport its products in many foreign markets like Africa, MiddleEast, Eastern Europe etc.

CAPITAL PROJECTS:

During the year, the company executed capital projects tothe tune of Rs. 431.65 million, including those related to theexpansion of facilities at distillery unit of the company atRampur by installation of a Grain based distillery with 27 millionliters capacity and acquisition of brands from BrihanMaharashtra Sugar Syndicate Ltd.

SUBSIDIARY COMPANIES:

RADICO GLOBAL LIMITED (RGL) & RADICO

INTERNATIONAL DMCC (RIDMCC)

RGL & RIDMCC are wholly owned subsidiaries, of thecompany, operating out of Dubai, UAE. RGL is an investmentarm of the company with the objective of promotinginternational business of the company.

The Central Government vide its letter No. 47/281/2007-CL-III dated 27 July 2007 has under section 212(8) of theCompanies Act, 1956, exempted Radico from attaching acopy of balance sheet, profit and loss account, auditor’s reportand directors’ report of its subsidiary companies and otherdocuments required to be attached under Section 212(1) ofthe Act to the balance sheet of the Company.

However, the annual accounts of subsidiaries companies willbe available for inspection by any investor at its head office.Key information as to the capital, reserves, total assets/liabilities, investments, turnover and profit has been shownseparately.

FUTURE STRATEGY AND GROWTH:

Plans are being chalked out for both organic, as well asinorganic growth. The organic growth is planned by way ofsetting up own green field units and creation of new brandsand inorganic growth is planned by way of acquisition ofbrands and bottling units / distilleries. While the creation andacquisition of brands will add to the sales volumes, theacquisition of bottling units in different parts of the countrywould help the company to affect the savings on account ofmanufacturing operations and would help to service the localconsumer in a more efficient manner.

Packaging material forms a substantial part of the cost of theproduct of the Company. In order to improve the quality andalso arrest the increasing prices of the packaging material, adetailed strategy has been drawn up for backward integrationby building own capacity for the manufacture of inputpackaging material.

The company shall continue its efforts towards up gradationof technology and further expansion and modernization of itsexisting facilities.

Directors’ Report

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FUNDING THROUGH ISSUE OF FCCBs / CCPs /

GDRs / ADRs:

In order to raise funds for the Company’s growth plans ofexpanding capacities, investing in new projects, creating andacquiring new brands, facilities and companies and alsooverseas acquisitions and investment in overseas JointVentures / wholly owned subsidiaries and to partly repay thehigh cost debt of the company, the Company has raised USD50 million through an issue of FCCBs on 26th July 2006 (USD40 million) and 25th August 2006 (USD 10 million on exerciseof green shoe option by the manager to the issue). The FCCBswill be convertible into equity shares of the Company at theoption of the bond holders at a conversion price of Rs.172.50per share. These are listed on the Singapore Stock Exchange.They carry a coupon rate of 3.50% per annum and have amaturity of five years and one day from the date of issue. TheFCCBs unless previously converted, redeemed, or cancelled,are liable to be redeemed on the maturity date at a premiumof 30.3961% of the principal amount.

During the year the Company has, on 24th August 2006 issuedand allotted 57,68,276, 6.75% Cumulative CompulsorilyConvertible Preference Shares (CCPSs) of Rs.100/- each ata premium of Rs.59.50 per share to Foreign Investors for anaggregate amount of USD 20 million on the terms andconditions, as approved by the Board and the Shareholders.Each CCPSs shall be convertible at the sole option of theholder of the Preference Shares at any time within a period of18 months from the date of issue and allotment, into one fullypaid equity share of Rs.2/- each, at a premium of Rs.98/- pershare. Any CCPSs that remain unconverted within the said18 months period shall be compulsorily converted by theCompany at the end of the said period at the same price.

EMPLOYEE STOCK OPTION SCHEME:

Your company has always believed in rewarding theemployees for their continuous hard work, dedication andsupport, which has led the Company on a growth path. Toenable the employees to enjoy the fruits of the phenomenalgrowth that the Company has witnessed in the recent past,last year it was proposed to implement ESOP Scheme in theCompany.

Taking forward last year’s proposal, during the year thecompany implemented Employee Stock Option Scheme“RADICO ESOP 2006” for the benefit of permanent employeesand Directors of the Company and such other persons /entities as may be prescribed by SEBI from time to time andin accordance with the provisions of prevailing ESOPGuidelines.

The Particulars of option issued under the said plan asrequired by SEBI (Employee Stock Options Scheme andEmployee Purchase Scheme) Guidelines, 1999 are appendedas Annexure A and form part of this report.

DIVIDEND:

Your directors are pleased to recommend equity dividend of25% for the financial year ended 31st March, 2007.

TRANSFER TO INVESTOR EDUCATION &

PROTECTION FUND:

Pursuant to Section 205A of the Companies Act, 1956, asamended by the Companies (Amendment) Act, 1999,unclaimed dividend for the financial year ended 31st

December, 1996, 31st December 1997 and 31st December1998 have been transferred to the Investors Education andProtection Fund established by Central Government underSub Section (1) of Section 205 (C) during August, 2004, July2005 and August 2006 respectively. Further, unclaimeddividend for the financial year ended 31.12.1999 will betransferred to the said fund with in the stipulated time asprescribed in the Companies Act, 1956 read with rules madethereunder.

DIRECTORS:

Mr. Ashutosh Patra and Mr. K.S. Mehta shall retire by rotationat the forthcoming Annual General Meeting of the Companyand being eligible, offer themselves for re-appointment. BothMr. Ashutosh Patra and Mr. K.S. Mehta do not hold any sharesin the company.

AUDITORS:

M/s. V. Sankar Aiyar & Co., Chartered Accountants, theauditors of the company, retire at the conclusion of the ensuingAnnual General Meeting and being eligible, offer themselvesfor re-appointment.

AUDIT REPORT FOR THE YEAR ENDED 2006-07

The Auditors have drawn attention to note 9 (d) of the AuditedAccounts for the year 31.03.2007 regarding the Company’spetition before the Income Tax Settlement Commission (ITSC)for the settlement of the liabilities relating to the assessmentyears 2000-01 to 2006-07. The petition before the ITSC ispending for admission. The estimated liability of Rs.567.26lacs excluding interest will be provided for out of carry forwardsurplus when finally determined.

COST AUDITOR:

During the year under review, your directors had with theapproval of the Central Government, appointed Mr. S.N.Balasubramanian, cost auditor, to carry out the cost audit inrespect of the distillery unit of the Company at Rampur for theyear 2006-2007. The cost audit for the year 2006-2007 shallbe completed within stipulated time as prescribed in theCompanies Act, 1956 read with Cost Audit (Report) Rules, 2001.

DIRECTORS’ RESPONSIBILITY STATEMENT:

In terms of provisions of Section 217 (2AA) of the CompaniesAct, 1956 (Act), your Directors confirm that:

(i) In the preparation of the annual accounts, the applicableaccounting standards have been followed, along withproper explanation relating to material departures,wherever applicable.

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(ii) The Directors have selected such accounting policiesand applied them consistently and made judgements andestimates that are reasonable and prudent so as to givea true and fair view of the state of affairs of the Company,as at the end of the accounting year and of the profit ofthe Company for that period.

(iii) The Directors have taken proper and sufficient care forthe maintenance of adequate accounting records inaccordance with the provisions of this Act forsafeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities.

(iv) The Directors have prepared the annual accounts on agoing concern basis.

PARTICULARS OF EMPLOYEES:

As required by the Companies (Disclosure of Particulars inthe Report of Board of Directors) Rules 1988, the relevantinformation and data is given at Annexure – B.

ENERGY CONSERVATION, TECHNOLOGY

ABSORPTION AND FOREIGN EXCHANGE

EARNINGS AND OUTGO:

As required by the Companies (Disclosure of Particulars inthe Report of Board of Directors) Rules 1988, the relevantinformation and data is given at Annexure – C.

MANAGEMENT DISCUSSION AND ANALYSIS REPORTFOR THE YEAR 2006-2007:

Management Discussion and Analysis Report, as requiredunder the Listing Agreement with the Stock Exchanges isappended and form part of this report.

CORPORATE GOVERNANCE REPORT FOR THE

YEAR 2006-2007:

Report of Corporate Governance along with the certificate ofStatutory Auditors, M/s. V. Sankar Aiyar & Co., confirmingcompliance of conditions of Corporate Governance, asstipulated under Clause 49 of the Listing Agreement, formpart of the Annual Report.

ACKNOWLEDGEMENTS:

Your directors wish to place on record their appreciation ofthe timely support provided by your company’s bankers andfinancing institutions.

We deeply acknowledge the dedication and commitment ofthe employees at all levels. We also take this opportunity tothank all the valued customers who have appreciated ourproducts and have patronized them.

Your directors convey their grateful thanks to the governmentauthorities (central & states), shareholders, manufacturingpartners, distributors and dealers for their continuedassistance, co-operation and patronage.

For & on behalf of the Board

Sd/-Place : New Delhi Dr. Lalit KhaitanDate : 30 June 2007 Chairman & Managing Director

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ANNEXURE-A

Pursuant to the provisions of Guideline 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme), Guidelines, 1999, as amended, the details of stock options as on March 31, 2006 underCTEL Employee Stock Option Scheme 2006 are as under:

A. SUMMARY OF STATUS OF ESOPS GRANTED

The position of the existing scheme is summarized as under -

Particulars ESOP 2006 Scheme

1 Details of the Meeting Annual General Meeting dated 25 May 2006.

2 Approved Such number of equity shares of the Company of Rs. 2 each not exceeding 5% ofthe total paid up equity share capital of the Company at any given point of time. Ason the date of institution of scheme 48,22,397 Equity Shares of Rs. 2/- each reservedunder the scheme.

3 The Pricing Formula Grant A - (for current eligible employees) who would have completed at least oneyear of service as on the date of the grant - Per option - 30% discount to the lowerof -

(a) latest available closing price, prior to the date of the meeting of the CompensationCommittee in which options are granted, on the Stock Exchange on which theshares of the Company are listed and on which there is highest trading volume onthe said date.(b) average of the weekly high and low prices of the equity shares of the Companyduring 2 weeks preceding the date of grant of option on the Stock Exchanges ofwhich the shares are listed and on which there is highest trading volume on thesaid date.Grant B – (for future / new eligible employees) - Per option - 15% discount to thelatest available closing price, prior to the date of the meeting of the CompensationCommittee in which options are granted, on the Stock Exchange on which theshares of the Company are listed and on which there is highest trading volume onthe said date.

4 Options Granted 945,000

5 Options Vested Nil

6 Options Exercised Nil

7 Options Forfeited / Surrendered Nil

8 Options Lapsed Nil

9 Total Number of Options in force 945,000

10 Variation in terms of ESOP The Scheme was first instituted by the Compensation Committee on 26 April 2006to come into force only after the same is approved by the members of the companyin General Meeting, approved by the Board on 27 April 2006 and by Shareholderson 25 May 2006. Later the said Scheme was amended by the CompensationCommittee in terms of exercise price of the options on 12 June 2006 and theamendment approved by the shareholders on 14 July 2006.

11 Total number of shares arisingas a result of exercise of options Nil

12 Money realised by exercise ofoptions (Rs. In Lakhs) Nil

B. Employee-wise details of options granted during the financial year 2006-07 to:

(i) Senior managerial personnel

Name Exercise Price No of Options Granted

Mr. R.K. Mehrotra Rs. 91.73 70,000

Mr. K.P. Singh Rs. 91.73 70,000

Mr. Raju Vaziraney Rs. 91.73 70,000

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(ii) Employees who were granted, during any one year, options amounting to 5% or more of the options grantedduring the year : None

Name No. of options granted % to total options granted

(iii) Identified employees who were granted option, during any one year equal to or exceeding 1% of the issuedcapital (excluding outstanding warrants and conversions) of the company at the time of grant.

There were no employees who were granted option, during any one year equal to or exceeding 1% of the issuedcapital (excluding outstanding warrants and conversions) of the company at the time of grant.

C Weighted average exercise price of options granted during the year whose

(a) Exercise price equals market price NA

(b) Exercise price is greater than market price NA

(c) Exercise price is less than market price Rs.91.73

Weighted average fair value of options granted during the year whose

(a) Exercise price equals market price NA

(b) Exercise price is greater than market price NA

(c) Exercise price is less than market price Rs. 62.27

D The stock-based compensation cost calculated as per the intrinsic value method for the financial year 2006-07 is 14600000.If the stock-based compensation cost was calculated as per the fair value method prescribed by SEBI, the total cost to berecognised in the financial statements for the year 2006-07 would be Rs. 2,30,43,837. The effect of adopting the fair valuemethod on the net income and earnings per share is presented below:

Pro Forma Adjusted Net Income and Earning Per Share

Particulars Rs.

Net Income as reported 298044818.00

Add: Intrinsic Value Compensation Cost 14,600,000

Less: Fair Value Compensation Cost 23,043,837

Adjusted Pro Forma Net Income 289,600,981

Earning Per Share: Basic

As Reported 3.09

Adjusted Pro Forma 3.00

Earning Per Share: DilutedAs Reported 3.08Adjusted Pro Forma 2.99

F. Method and Assumptions used to estimate the fair value of options granted during the year:The fair value has been calculated using the Black Scholes Option Pricing modelThe Assumptions used in the model are as follows:Variables Date of Grant29-Dec-061. Risk Free Interest Rate 7.51% -8.04%2. Expected Life 2.5-5.5 years3. Expected Volatility 48.19% to 60.11%4. Dividend Yield 3.40%5. Price of the underlying share in market at the time of the option grant.(Rs.) 130.10

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COMPUTATION OF EPS

Intrinsic Value Compensation Cost 14,600,000Fair Value Compensation Cost 23,043,837

Basic EPS As ReportedProfits 298044818Pro forma income 289600981.1Number of shares outstanding 96,447,940

Number of options outstanding 945,000Average fair market value 153.60Exercise Price 91.73Dilutive Number of Options 380,656Total Number of shares for dilutive workings 96,828,596Basic EPS as reported 3.0902Basic EPS as adjusted 3.0027Diluted EPS as reported 3.0781Diluted EPS as adjusted 2.9909

ANNEXURE-B

Information as per Section 217(2A) of The Companies Act, 1956 read withCompanies (Particulars of Employees) Rules, 1975 and forming part of Directors’ Report

for the Financial Year 31st March, 2007

A) Employees employed throughout the Financial Year and in receipt of remuneration for the period in aggregate not less than rs. 24,00,000/- for the FinancialYear 2006-07

S. Name Designation Total Qualification Experience Age Date of Last employment heldNo. Remuneration in years in Commencement

(Rs.) years of employment

1 Dr. Lalit Khaitan Chairman & 12,490,981 B.com. 46 63 20.02.2003 IndustrialistManaging Director

2 Shri Abhishek Khaitan Managing Director 10,788,481 B.E.(indl. Prod.) 16 35 20.02.2003 Industrialist3 Shri K.P.Singh President (Operations) 4,644,774 B.Sc. & DIFAT 33 55 02.12.1996 Chief Executive, Kedia

& Whole time Director Distilleries Ltd.4 Shri R. K. Mehrotra President (Finance) 4,353,800 FCA, MAIMA 45 68 01.02.1991 Vice President, Apollo

Tyres Ltd.5 Shri Raju Vaziraney President 4,090,123 M.Com, MA (Eco), 26 45 15.04.2000 DGM - Sales, Shaw

(Sales & Marketing) Diploma In Business Wallace LtdAdministration

6 Shri Sanjay Lamba President (Export) 3,950,666 FCA 16 42 27.09.2004 Regional GeneralManger, Coca Cola IndiaLtd.

7 Shri K. S. Raju EVP - Manufacturing & 3,401,618 M. Com., Diploma 33 59 20.06.1997 Director, Kedia DistilleryOperations in Management Ltd.

8 Shri Jitendra Jain Vice President - 2,528,255 BE, PGDM 14 36 01.07.2004 AVP & Head Treasury -Treasury Sicom

B) Employed for part of the year and were in receipt of remuneration at the rate of not less than rs 2,00,000/- p.m. In termsof section 217(2A)(ii)

S. Name Designation Total Qualification Experience Age Date of Last employment heldNo. Remuneration in years in Commencement

(Rs.) years of employment

1 Shri Bharat Moossaddee Chief Financial Officer 434,309 FCA,MBA IIM 21 44 19.10.2005 Group Vice President,Ahmedabad Hindustan Zinc Ltd

Notes:1 All employees are non contractual except Dr. Lalit Khaitan, Chairman & Managing Director and Shri Abhishek Khaitan, Managing Director.2 Remuneration includes salary, allowances, value of perquisites and company’s contribution towards provident and superannuation funds.3 Dr. Lalit Khaitan and Shri Abhishek Khaitan are related to each other.

2323

ANNEXURE-C

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo:

The particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as requiredunder section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Boardof Directors) Rules 1988, are as under:

A. Conservation of Energy:

1. The newly set up wash to RS plant operates on 2.0 Kg / Bl steam consumption, thereby optimizing the utility cost andhence the overall manufacturing cost. This plant has optimized the process energy balance and has facilitated overallenergy conservation in the plant operation.

2. The new Digester with a holding capacity of 6500 cubic meters has resulted in increased generation of bio gas facilitatingincreased steam generation in the existing TBW Boiler leading to an increase in the capacity of power generation byanother 200 kwh, thereby further reducing fuel costs and harnessing a non-conventional source of energy.

3. Another new Digester with a holding capacity of 6500 cubic meters has been installed along with the Grain Sprit Plantresulting in increased generation of bio gas facilitating increased steam generation in the existing TBW Boiler leading toCapacity utilization of 2MW Cogen Plant, thereby further reducing fuel costs and harnessing a non-conventional source ofenergy.

B. Technology Absorption:

1. Installation of the latest Multi Pressure wash to RS distillation plant has resulted in replacement of old atmospheric distillationtechnology with the state of the art multi pressure technology, which has made the plant fully automatic.

2. Installation of the co-generation plant continues to facilitate substantial reduction in the fuel / power costs.

C. Foreign Exchange:Particulars of earnings and outgo of foreign exchange are given in Notes on Accounts in Schedule 19 of the accounts.

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INDUSTRY STRUCTURE AND DEVELOPMENTS:

Radico Khaitan Ltd. (RKL) is engaged mainly in the businessof Indian Made Foreign Liquor (IMFL), which consists ofWhisky, Rum, Brandy, Gin and Vodka. The IMFL market ismore than 125 million cases and grows at an average rate of10 to 12% per year. Whisky, with around 60% of the marketshare is the most consumed IMFL. The whisky segment isfurther classified into Scotch, Premium, Semi-Premium,Regular and Cheap segment. Regular whisky is the largestand the most competitive segment in the Whisky market.

Balance 40% market consists of brown and white spirits likerum, gin and vodka. White spirits segment, though presentlyonly 5% of market, is growing at a rate of over 40%.

The country liquor market is a regional market with smallmanufacturers spread across the country but is estimated tobe almost double the size of the IMFL market.

The industry has been witnessing hectic merger andacquisition activities in last few years, thus consolidating theindustry structure and benefiting the market.

RISKS AND CONCERNS / OPPORTUNITIES AND

THREATS / OUTLOOK:

The liquor industry is a regulated and highly taxed industry.Since, excise duty on liquor is a state subject, multiplicity oflaws and regulations legislated by different Stategovernments, have contributed to an environment withdifferent requirements across different states.

The liquor market is growing rapidly owing to favourabledemographics and rapid economic growth. With over 50% ofcountry’s population below 25 years of age, the long termoutlook for liquor consumption in India is positive. Increasingsocial acceptance of liquor consumption and greater westerninfluence have combined with rising disposable incomes inthe hands of the population to drive a substantial pull indemand for IMFL. Exposure to western culture and habitsthrough electronic media have contributed to the changedscenario.

India’s per capita consumption of alcoholic beverages is oneof the lowest in the world. According to industry data, percapita consumption of ‘Indian made foreign liquor’ (IMFL) is0.8 litres / p.a. compared with the global alcohol beverageconsumption average of 3.1 litres / p.a. Even a small increasein per capita consumption could positively and significantlyalter the growth of the Indian industry, given its largepopulation base.

The key drivers for growth of the company in future would belaunching of new brands and increase in the volumes invarious markets, acquisitions of brands and creation of ownproduction facilities for bottling, major thrust to exportsincluding bottling arrangements abroad, driving operationalefficiencies and expanding spirit capacities. In this direction,the company is already working since last year by launching

white spirit vodka brand “Magic Moments” which is doingvery well and is now the fastest growing in its segment.

REVIEW OF OPERATIONS:

During the year the company achieved sales of Rs.9173.41million from its own operations. The sales of the company’sproducts through arrangements with other distilleries / bottlingunits spread all over the country stood at Rs.4484.51 millionfor the year 2006-07.

The company has also entered into a Joint Venture Agreementwith Diageo Highlands Holding B.V. to exploit the fast growingIMFL market in India.

FINANCIAL PERFORMANCE WITH RESPECT TO

OPERATIONAL PERFORMANCE:

The operations of the company resulted in profit beforedepreciation, interest and tax (PBDIT) of Rs.999.57 million asagainst Rs.872.09 million achieved last year thus growing by14.62% over last year.

The Company continued exercises to enhance operationalefficiencies during the year in all spheres of its activity.

INTERNAL CONTROL SYSTEMS AND THEIR

ADEQUACY:

The Company has put in place adequate internal controlsystems and procedures at all levels. Internal Control Systemsare continuously strengthened through an ongoing reviewthrough highly qualified and experienced professionals in allfields including technical. The report of Internal audit isregularly discussed with the management and correctivemeasures, wherever required, are taken and continuouslymonitored. The management is reasonably satisfied aboutthe adequacy of these internal control systems.

During the year the company has also started implementationof risk analysis and control systems which is expected to befully implemented during the current year, whereby top riskwill be identified and measures to be taken to mitigate thoserisks will be ascertained and implemented on continuousbasis.

The Audit Committee of the Board meets regularly to reviewthe adequacy of internal controls, internal audit findings withaction taken reports and to advise the management with thecorrective policies to be adopted by the company, ifnecessary.

MATERIAL DEVELOPMENTS IN HUMAN

RESOURCES / INDUSTRIAL RELATIONS FRONT

INCLUDING NO. OF PEOPLE EMPLOYED:

During the year the company implemented employee stockoptions scheme to reward the employees for their pastassociation and also to motivate them to contribute in the

Management Discussion And Analysis

2525

growth and profitability of the company. The objective of thescheme to attract and retain talent in the organization. Thecompany views employee stock options as instruments thatwould enable them the employees to share the value theycreate for the company in the years to come. Annualperformance appraisal system was further strengthened toevaluate the operational performance of each employee onthe basis of the pre defined key result areas. The procedurefor recruitment, training and compensation was furtherstreamlined along the modern lines followed in the industry.

Industrial relations front continued to be peaceful with noworking day loss due to any activity.

For and on behalf of the Board

Sd/-Place : New Delhi Dr. Lalit KhaitanDate : 30 June, 2007 Chairman & Managing Director

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A. COMPANY’S PHILOSOPHY ON THE CODE OF GOVERNANCE:

Our belief :

We at Radico, understand corporate governance as an accepted standard for good and responsible corporate behaviourand leadership which takes into account all our corporate values, processes and goals that combine to serve our corporatemission. We believe that it is a continuous process of managing the business effectively in compliance with legal requirementsencompassing full regulatory disclosures, efficient operational practices, strong internal control and risk managementsystems with the ultimate aim of increasing the long term and sustained shareholder value.

Our Resolve:

We shall continue to strengthen the management and decision making processes, while enhancing effective, harmoniousand transparent functioning amongst the board of directors, its committees and executive management, to fulfill itscommitment in maximizing shareholder wealth and to carry out its responsibilities towards all the constituents of its businessi.e. investors, customers, contract bottlers, employees, suppliers and the general public.

Our Compliance:

Keeping in line with the above philosophy, the company has implemented the requirements of the code of corporategovernance, as stipulated in clause 49 of the listing agreement. Given below are the company’s corporate governancepractices.

B. BOARD OF DIRECTORS:

(a) Composition, Meetings and Attendance during the financial year 2006-2007:

During the year 2006-2007, the Board of Directors of Radico Khaitan Ltd. comprised of eight Directors. Dr. Lalit Khaitan, anExecutive Promoter Director, who was the Managing Director of the Company, was also the Chairman of the Board. Duringthe said period, out of eight Directors, five Directors were Non-executive Independent directors, being more than half ofthe Board. As on 31.03.2007, the total no. of independent directors were five. The composition of the Board of Directorsmet the stipulated requirements of the Clause 49 of the Listing Agreement.

During the financial year 2006-2007, eight board meetings of RKL were held on 27.04.2006, 09.05.2006, 19.06.2006,15.07.2006, 31.07.2006, 28.08.2006, 31.10.2006 and 30.01.2007.

The Board of RKL was presented with all relevant information well in advance before each meeting on various mattersaffecting the working of the Company, as well as those that require deliberation at the highest level.

Corporate Governance Report

2727

The Board’s composition and categories were as under: -

Sl. Name Category No. of No. of Board No. of Whether SharesNo. Director- Committee Board attended held

ships Memberships Meetings lastin other in other attended AGM

companies companies Number %

1. Dr. Lalit Khaitan Executive Nil Nil 8 No 163400 0.17Chairman & PromoterManaging Director

2. Mr. Abhishek Khaitan Executive Nil Nil 7 No 86065 0.01Managing Director Promoter

3. Mr. K.P. Singh Executive Nil Nil 3 Yes Nil -Whole time Director

4. Mr. K.S. Mehta Non-executive 10 4 4 No Nil -Chartered Accountant Independent

5. Mr. Raghupati Singhania Non-executive 7 1 2 No Nil -Industrialist Independent

6. Mr. Ashutosh Patra Non-executive Nil Nil 6 No Nil -Solicitor & Legal Expert Independent

7. Mr. Sanjay Jalan Non-executive Nil Nil 7 Yes Nil -Chartered Accountant Independent

8. Mr. Amit Burman Non-executive 7 5 3 No Nil -Industrialist Independent

(1) Private Limited Companies, Foreign Companies and Companies under Section 25 of the Companies Act, 1956 areexcluded for the above purposes.

(2) Only audit committee and shareholders’ grievance committee are considered for the purpose of committee positionas per Listing Agreement.

(3) None of the directors was a member in more than 10 committees nor a chairman in more than five committees acrossall companies in which he was a director.

(b) Code of Conduct for Board of Directors and Senior Management Personnel:

The Board had at its meeting held on July 29, 2005, approved a Code of Conduct for board of directors and seniormanagement personnel of the company.

This code has been displayed on the company’s website viz. www.radicokhaitan.com

(c) Pecuniary relationships of transaction with the Company of Non-executive directors:

The Non-executive directors had no pecuniary relationship or transactions with the company in their personal capacityduring the financial year 2006-2007.

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(Rs. in lacs)

Sl. Name of Director Salary Commission Perquisites and Retiral Stock TenureNo. Allowances Benefits* Options

1. Dr. Lalit Khaitan 84.00 NIL 18.23 22.68 NIL 5 years2. Mr. Abhishek Khaitan 72.00 NIL 16.90 19.44 NIL 5 years3. Mr. K.P. Singh 29.23 NIL 13.00 4.21 70,000** 5 years

* Contributions to Provident Fund and Superannuation Fund** Will be granted over the period of 4 years, granted one third of the above in 1st year (during the year) and

balance equally in next 3 years.

(2) Non Executive Directors:

Sl. No. Name Sitting Fees (in Rs.)

1. Mr. K.S. Mehta 20,000/-2. Mr. Ashutosh Patra 85,000/-3. Mr. Raghupati Singhania 15,000/-4. Mr. Sanjay Jalan 1,05,000/-5. Mr. Amit Burman 20,000/-

(d) Details of remuneration to all the directors in the financial year 2006-2007:

(1) Executive Directors: -

Non executive directors were paid sitting fees of Rs.5,000/- for attending each meetings of the board and committeesthereof and reimbursement of local conveyance. On 31.10.2006 the Board has increased the sitting fees fromRs.5,000/- to Rs.10,000/- for attending each board and committees meetings thereof and reimbursement of localconveyance. From the board meeting held on 30.1.2007 non executive directors were paid increased sitting fees, asstated above.

Non executive directors were not paid any amount by way of salary, perquisites and other benefits including stockoptions except the above mentioned sitting fees.

(3) Reappointment of Directors retiring by rotation:

Mr. Ashutosh Patra and Mr. K.S. Mehta retire by rotation at the ensuing Annual General Meeting of the company andbeing eligible offers themselves for reappointment.

A brief resume of directors seeking appointment / re-appointment in the forthcoming AGM in terms of Clause 49 VI(A) of Listing Agreement is given below:

Name Mr. Ashutosh Patra Mr. K.S. Mehta

Date of Birth 15.03.1946 15.01.1946Date of Appointment 28.01.2003 10.03.2003Expertise in special functional areas Legal expert Leading Chartered AccountantQualifications MA, LLM FCA, A.C.I.S. (London)List of outside directorship as on Nil (1) Prudential ICICI Asset Management. Co. Ltd., Mumbai31st March, 2007 (2) Medpat Finance Limited, Kolkata

(3) Kothari Industrial Management Company Ltd., Kolkata(4) Blue Coast Hotels & Resorts Ltd., New Delhi.(5) Transport Corporation of India Ltd. Gurgaon(6) Ayurvet Limited, New Delhi(7) Consafe Mcnullty JV Ltd.(8) Consafe Engineering Services Ltd.(9) Mcnulty Offshore Construction Ltd.(10) Mcnulty Group Holdings Limited.

Chairman / Member of the othercompanies as on 31st March, 2007 NIL NILNo. of shares held NIL NIL

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(1) Private Limited Companies, Foreign Companies and companies under Section 25 of the Companies Act, 1956 areexcluded for the above purposes.

(2) Only audit committee and shareholders’ grievance committee are considered for the purpose of committee positionas per listing agreement.

(3) None of the directors was a member in more than 10 committees nor a chairman in more than five committees acrossall companies in which he was a director.

C. COMMITTEES OF THE BOARD DURING THE FINANCIAL YEAR 2006-2007:

(1) AUDIT COMMITTEE:

The audit committee of the Board of Directors of RKL was constituted in conformity with the requirements of Clause 49 ofthe listing agreement, as well as Section 292 A of the Companies Act, 1956.

The terms of reference and the role of the audit committee was to overview the accounting systems, financial reportingand internal control of the company. The power and role of the audit committee were as set out in the listing agreement andSection 292A of the Companies Act, 1956.

(a) Composition, Name of Members and Chairperson, meetings and attendance during the year:

(b) All members of the audit committee are independent, Non executive directors, by definition both Mr. Sanjay Jalan andMr. Raghupati Singhania shall be considered to be persons having Accounting or related financial management expertiseand Mr. Ashutosh Patra being a legal expert, shall be considered as financially literate.

(c) Four audit Committee meetings were held during the year. i.e. on 06.05.2006, 29.07.2006, 27.10.2006 and 29.01.2007.

(d) The meetings were scheduled well in advance. In addition to the members of the audit committee, the audit committeeis attended by heads of finance and internal auditors, statutory auditors and cost auditors and other executives, whowere considered necessary for providing inputs to the committee.

(e) Quorum: Two independent directors.

(f) Secretary to the Committee: Company Secretary acted as the secretary to the committee.

(2) NOMINATION COMMITTEE:

Nomination Committee of the board of directors of RKL was constituted in order to lay down the guidelines forappointment/ reappointment of directors on the board of the company.

(a) Terms of reference:

• To lay down the criteria/ guidelines for the appointment/ re-appointment of the directors on the board of RadicoKhaitan Ltd. and deciding about the age bar, professional qualifications and experience, credentials andbackground etc.

• To recommend the induction of the board members to various committees.• To decide about the sitting fees to be paid to the directors for attending the board meetings and committee

meetings from time to time.

Sl. No. Name Chairman / Member / Others No. of Meetings Attended

1. Mr. Sanjay Jalan Chairman of the committee 4

2. Mr. Ashutosh Patra Member 4

3. Mr. Raghupati Singhania Member 1

Permanent Invitees:

4. Mr. Mukesh Agarwal Internal Auditor

5. Representatives of M/s. V. Sankar Aiyar & Co., External AuditorsChartered Accountants

6. Mr. S.N. Balasubramanian Cost Auditors

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• To scrutinize the candidature of various professionals/ experts and recommend their appointment/ reappointmentto the board from the point of view of inducting new directors and raising the profile of the board.

(b) Composition, Chairman, Meetings and Attendance during the year 2006-2007:The Nominatons Committee consisted of the following Members:-

(c) No meeting of the Committee was held during 1.4.2006 to 31.3.2007.

(d) Quorum: Two Directors.

(3) SHAREHOLDERS’ GRIEVANCES COMMITTEE:

Shareholders’ grievances committee of the board of directors of RKL was constituted to look into the redressal of shareholdersand investors complaints.

(a) Terms of Reference:

The terms of reference of shareholders’ grievances committee included investigation into any matter relating to redressalof shareholders’ / investors’ complaints pertaining to transfer of shares, non-receipt of balance sheet, non receipt ofdeclared dividend, duplicate share certificates, dematerialisation / rematerialisation of shares etc.

(b) Composition, Chairman, Meetings and Attendance during the year 2006-2007:

The Committee was composed of the following directors:

(c) Four meetings of the committee were held during the said period on 06.05.2006, 29.07.2006, 27.10.2006 and 29.01.2007.

(d) Quorum: Two directors.

(4) NAME AND DESIGNATION OF THE COMPLIANCE OFFICER:

Dr. Arun Mohan BansalHead – Legal & Company SecretaryRadico Khaitan LimitedPlot No. J-1, Block B-1, Mohan Co-operative Industrial Area, Mathura Road,New Delhi – 110 044.Tel. Nos.26975404-10, Fax Nos.26975339/40Email: [email protected]

(5) SHAREHOLDER SERVICES, ENQUIRIES, COMPLAINTS:

It is the endeavor of the company to provide prompt, efficient and satisfactory services to its esteemed shareholders. Ittakes special care in answering the queries of shareholders within the shortest possible time frame in collaboration withthe registrars M/s. Mas Services Pvt. Ltd. The company provided shareholder services in the following time frame: -

Sl. No. Nature of Query No. of days for disposal

1. Share Transfers 15 days2. Demat of Shares 15 days3. Dividend revalidation / issue of Dividend Drafts 7 days4. Change of Address/ Bank Mandate 2 days5. General queries 2 days

Sl. No. Name Chairman / Member / Others

1. Dr. Lalit Khaitan Chairman

2. Mr. Ashutosh Patra Member

3. Mr. K.S. Mehta Member

Sl. No. Name Chairman / Member No. of Meetings attended

1. Mr. Ashutosh Patra Chairman 3

2. Mr. Sanjay Jalan Member 4

3. Mr. K.P. Singh Member 1

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Distribution of investors’ communication received by the company during the financial year 2006-07

Sl. No. Date of AGM Location Time No. of specialresolutions passed

1. 17.07.2004 Rampur Distillery, Bareilly Road 12 noon 1Rampur – 244 901 (U.P.)

2. 16.11.2005 -do- 12 noon 3

3. 25.09.2006 -do- 12 noon NIL

(6) No. of shareholders complaints received during the year 2006-2007: 113

(7) Total no. of complaints not resolved to the satisfaction of the shareholders: NIL

(8) No. of pending shares transfers as on 31st March 2007: NIL

(9) Warning against Insider Trading:

Comprehensive guidelines advising and cautioning the management and staff on the procedure to be followed whiledealing with the shares of Radico Khaitan Ltd. are in place. In light of SEBI (Insider Trading) Amendment Regulations,2002, the code of conduct and corporate disclosure practices framed by the company helps in ensuring complianceswith the said Regulations.

D. GENERAL BODY MEETINGS:

(a) Annual General Meetings (last three):

(b) No Postal Ballots were used / invited for voting in above meetings.

(c) It is not proposed to pass any special resolution by Postal Ballot in the forthcoming Annual General Meeting of thecompany.

E. DISCLOSURES:

(a) Related party transactions:

The Company has not entered into any transaction of material nature with promoters, directors or the management, theirsubsidiaries or relatives etc., that may have potential conflict with the interests of the company at large.

(b) Compliances by the Company:

The company has complied with the requirements of the Stock Exchanges, SEBI and other statutory authorities on allmatters related to capital markets during last 3 years. No penalties or strictures have been imposed on the company bythe Stock Exchanges or SEBI or any statutory authorities relating to the above during the year 2006-2007.

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F. MEANS OF COMMUNICATION:

(a) Half yearly report

Half yearly report in the form of half yearly results of the company for the half year ended 30.9.2006 together with a detailedmessage from the Chairman was sent to all the shareholders of the company on 17 November 2006.

(b) Quarterly Results:

• Quarterly results of RKL were taken on record by the Board of Directors within one month of the close of the quarterand were submitted to the Stock Exchanges in terms of the requirements of the Clause 41 of the listing agreement.Quarterly results together with a detailed message from the Chairman were sent to all the shareholders of the Companyin August 2006 and November 2006.

• Quarterly results of RKL have been displayed on the company’s web site www.radicokhaitan.com

• Quarterly results taken on record and published in the newspapers during 2006-2007:

Quarter ended Date of Board Date of Publication in NewspapersMeetings

Business Standard (English) Amar Ujala (Hindi)New Delhi edition Moradabad edition

30th June, 2006 31.07.2006 01.08.2006 01.08.2006

30th September, 2006 31.10.2006 01.11.2006 01.11.2006

31st December, 2006 30.01.2007 31.01.2007 31.01.2007

(c) Presentations were made to institutional investors / analysts during the year 2006-2007 about the activities of thecompany and its financial performance, corporate presentation is displayed on the company’s website.

(d) Management Discussion and Analysis Report for the year 2006-07 has been reviewed by the Audit Committee at itsmeeting held on 30.6.2007 and approved by the Board at its meeting held on 30.6.2007 and forms part of the AnnualReport.

G. GENERAL SHAREHOLDER INFORMATION

(a) Annual General Meeting: September 26, 2007 at 12.30 p.m. at Rampur Distillery, Bareilly Road, Rampur – 244 901(U.P.).

(b) Financial calendar for 2007-2008:

(i) Proposed Board Meetings for taking on record quarterly financial results in the year 2007-2008.

Quarter ending Last week ofJune 2007 July, 2007September 2007 October, 2007December 2007 January, 2008March 2008 May, 2008 (Audited)

(ii) Book Closure dates: September 19, 2007 to September 26, 2007 (both days inclusive)

(iii) Dividend payment date: On or before October 25, 2007.

(c) Listing on Stock Exchanges and Stock Codes:

The equity shares of RKL continue to be listed on the following stock exchanges with following stock codes:

Sl. No. Stock Exchange where listed Stock Code / Symbol1. Bombay Stock Exchange Ltd.(BSE) 5324972. National Stock Exchange of India Ltd. (NSE) RADICO

3333

Year Mumbai Stock Exchange National Stock Exchange2006-2007 Price (Rs.) Price (Rs.)

High Low Volume High Low Volume

April, 2006 199.00 154.10 1380164 197.80 155.00 3438414May, 2006 194.90 135.00 2032889 212.00 120.00 5289406June, 2006 178.90 108.25 4297104 190.00 108.00 5075733July, 2006 154.00 127.00 267115 170.00 128.10 717300August, 2006 165.80 128.00 2426235 165.50 127.20 3843682September, 2006 156.50 138.50 1399998 158.00 138.15 1943550October, 2006 160.00 143.00 1435871 161.20 142.10 2756380November, 2006 173.85 142.35 5377630 173.85 143.00 7466631December, 2006 165.80 150.00 2143104 166.05 143.75 3767016January, 2007 176.00 152.55 1711536 175.80 153.00 2980278February, 2007 179.80 131.10 3157335 179.00 140.00 1425386March, 2007 147.95 128.00 1198440 148.00 126.00 1936124

The listing fees for the year 2007-2008 to BSE and NSE has been paid in the month of April 2007.

(d) Market Price Data:

Performance of RKL shares at Bombay Stock Exchange Ltd. and National Stock Exchange of India Ltd.:

The shares of RKL are traded in the B1 category at BSE and are also actively traded on NSE.

(f) Registrar and Transfer Agents:

In terms of the SEBI Order No. D&CC/FITTC/CIR-15/2002 dated December 27, 2002 for having a common agency forshare transfer work and electronic connectivity and in terms of the directive of the Stock Exchanges, the company hadappointed M/s. Mas Services Pvt. Ltd., AB-4, Safdarjung Enclave, New Delhi, as the Registrar and Share Transfer Agentsof the company since March, 2003. For the sake of the convenience of the investors / shareholders, the company shallcontinue to receive requests for share transfers and demat of shares at its corporate office at New Delhi.

Performance of RKL Scrip vis-a-vis BSE Index

3434

(g) Share Transfer System:

With a view to expedite process of share transfer, the board of directors had delegated the power of share transfer toDr. Arun Mohan Bansal, Head – Legal & Company Secretary, who had been authorised by the board to supervise andapprove share transfer / dematerialisation of the shares of the company and to sign endorsement on the reverse of theshare certificates documents and other papers in relation thereto in conjunction with Registrar and Share Transfer Agent,M/s. Mas Services Pvt. Ltd. The Company Secretary being the compliance officer, monitor the share transfer process incoordination with the Registrars and Share Transfer Agents and presented the report to the company’s board in each of itsmeetings, wherein the board ratified the transfers/ dematerialisation of shares as approved by the Company Secretary.The transfers were processed at an interval of every 15 days.

(h) Distribution of Shareholding of RKL as on 31st March, 2007:

Share Holdingof Nominal Value of Shareholders Shares % Total

Rs. Rs. Number % to Total Physical Dematerialised Total % toshares shares shares Total

Upto 2500 22340 90.77 3740596 3930400 7670996 7.95

2501 5000 1473 5.99 1120120 1574374 2694494 2.80

5001 10000 521 2.12 598425 1210896 1809321 1.88

10001 20000 152 0.62 185615 878545 1064160 1.10

20001 30000 28 0.11 21700 322279 343979 0.36

30001 40000 18 0.07 48050 266961 315011 0.33

40001 50000 5 0.02 0 108921 108921 0.11

50001 100000 18 0.07 31620 694917 726537 0.75

100001 ABOVE 56 0.23 0 81714521 81714521 84.72

Total 24611 100.00 5746126 90701814 96447940 100.00

(i) Shareholding Pattern as on 31st March, 2007:

Sl. No. Category No. of Shares % of Holding

1. Promoters 49870341 51.71

2. Mutual Funds & UTI 7463061 7.74

3. Insurance Companies, Banks, State Financial Corporation 515977 0.53

4. FIIs 20905491 21.68

5. Private Corporate Bodies 2110944 2.19

6. Indian Public 12984017 13.46

7. NRIs/OCBs 2506981 2.60

8. Others 91128 0.09

Total 96447940 100.00

(j) Dematerialisation of Shares:

The Company’s shares are tradable only in demat / electronic form in the depository system of National Securities DepositoryLtd. (NSDL) and Central Depository Services (India) Ltd. (CDSL).

As on 31st March, 2007, 9,07,01,814 equity shares of the company, amounting to 94.04% of the equity capital, alreadyexisted in the electronic form.

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Those shareholders who have still not got their shares dematerialised are advised to do so, as soon as possible, in view ofmany an advantage that exist therein and mandatory trading in shares of the company in demat form only.

(k) International Security Identification No.: NSDL and CDSL – INE944F01028

(l) The company has raised USD 50 million through an issue of FCCBs on 26th July 2006 (USD 40 million) and 25thAugust 2006 (USD 10 million on exercise of green shoe option by the manager to the issue). The FCCBs will beconvertible into equity shares of the company at the option of the bond holders at a conversion price of Rs.172.50 pershare. These are listed on the Singapore Stock Exchange. They carry a coupon rate of 3.50% per annum and have amaturity of five years and one day from the date of issue. The FCCBs unless previously converted, redeemed, orcancelled, are liable to be redeemed on the maturity date at a premium of 30.3961% of the principal amount.

During the year the company has, on 24th August 2006 issued and alloted 57,68,276, 6.75% Cumulative CompulsorilyConvertible Preference Shares (CCPSs) of Rs.100/- each at a premium of Rs.59.50 per share to foreign investors foran aggregate amount of USD 20 million on the terms and conditions, as approved by the board and the shareholders.Each CCPSs shall be convertible at the sole option of the holder of the Preference Shares at any time within a periodof 18 months from the date of issue and allotment, into one fully paid equity share of Rs.2/- each, at a premium ofRs.98/- per share. Any CCPSs that remain unconverted within the said 18 months period shall be compulsorily convertedby the company at the end of the said period at the same price.

(m) During the year the company also implemented Employee Stock Option Scheme “ESOP 2006” for the employees ofthe Company. The scheme is effective from 25 July 2006. The ESOP 2006 scheme is valid for the period till thequantum of the equity shares to be issued under the scheme are fully allotted, i.e. total 5% of paid up capital of theCompany to be granted to the eligible employees under the scheme.

(p) Address for correspondence:

(1) For Retail InvestorsDr. Arun Mohan BansalHead - Legal & Company SecretaryPlot No. J-1, Block B-1Mohan Co-operativeIndustrial Area, Mathura RoadNew Delhi – 110 044.Tel No.: 26976416email: [email protected]

(2) For Institutional InvestorsMr. Jitendra JainHead Treasury, Global, Markets &Institutional , Investors ServicesPlot No.J-1, Block B-1, Mohan Co-operative, Industrial Area, MathuraRoad, New Delhi – 110 044.Telephone: Mumbai - 022-5630673909821351340Delhi - 011-51678842

09818281340Email: [email protected]

(n) Plant Locations

(1) Rampur DistilleryBareilly RoadRampur – 244 901 (U.P.).

(2) Plot No.B-24,A-25, Shree KhatushyamjiIndustrial ComplexRIICO, ReengusDist. Sikar, Rajasthan.

(3) B-3, UPSIDC IndustrialDevelopment AreaPhase – I, Sultanpur PattiBajpur, Dist. Udham SinghNagar, Uttaranchal.

(4) S. No.59Timmapur VillagePalmakul Post - 509 325Shadnagar Tq.Mahaboobnagar Dist. Hyderabad,Andhra Pradesh.

(o) Registered Office

Bareilly RoadRampur – 244 901 (U.P.).

For and on behalf of the Board

Sd/-Place : New Delhi Dr. Lalit KhaitanDate : 30.06.2007 Chairman & Managing Director

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AUDITORS’ CERAUDITORS’ CERAUDITORS’ CERAUDITORS’ CERAUDITORS’ CERTIFICTIFICTIFICTIFICTIFICAAAAATE ON CORPORTE ON CORPORTE ON CORPORTE ON CORPORTE ON CORPORAAAAATE GOVERNANCETE GOVERNANCETE GOVERNANCETE GOVERNANCETE GOVERNANCEto the shareholders of Radico Khaitan Limited

1. We have examined the compliance of conditions of corporate governance by Radico

Khaitan Limited for the year ended 31st March 2007, as stipulated in Clause 49 of the

listing agreement of the said Company with stock exchanges.

2. The compliance of conditions of corporate governance is the responsibility of the

management. Our examination was limited to procedures and implementation thereof,

adopted by the company for ensuring the compliance of the conditions of corporate

governance. It is neither an audit nor an expression of opinion on the financial statements

of the company.

3. In our opinion and to the best of our information and according to the explanations

given to us, we certify that the company has complied with the conditions of corporate

governance as stipulated in the above mentioned listing agreement.

4. We state that in respect of investor grievances received during the year ended 31st

March 2007, no investor grievances are pending for a period exceeding one month

against the company as per the records maintained by the company.

5 We further state that such compliance is neither an assurance as to the future viability

of the company nor the efficiency or effectiveness with which the management has

conducted the affairs of the company.

For V. Sankar Aiyar & Co.Chartered Accountants

Sd/-Place : New Delhi V. RethinamDate : 30th June, 2007 Partner

Membership No. 10412

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1. We have audited the attached Balance Sheet of RADICOKHAITAN LIMITED as at 31st March, 2007 and also theannexed Profit and Loss Account and the cash flowstatement of the Company for the year ended on thatdate. These financial statements are the responsibility ofthe company’s management. Our responsibility is toexpress an opinion on these financial statements basedon our audit.

2. We conducted the audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financialstatements are free of material misstatement. An auditincludes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements.An audit also includes assessing the accountingprinciples used and significant estimates made bymanagement, as well as evaluating the overall financialstatement presentation. We believe that our audit providesa reasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order,2003 issued by the Department of Company Affairs,Government of India in terms of Section 227(4A) of theCompanies Act, 1956, we enclose in the annexure, astatement on the matters specified in paragraphs 4 and5 of the said Order on the basis of such checks as weconsidered appropriate and according to the informationand explanations given to us.

4. Further to our comments in the annexure referred to inparagraph 3 above, we report that: -

(a) We have obtained all the information andexplanations, which to the best of our knowledge andbelief, were necessary for the purposes of our audit;

(b) In our opinion, proper Books of Accounts as requiredby law have been kept by the company so far asappears from our examination of the books;

(c) The Balance Sheet, Profit and Loss Account and cashflow statement dealt with by this report are inagreement with the Books of Account;

(d) In our opinion, the Balance Sheet, Profit & LossAccount and cash flow statement dealt with by thisreport comply with the accounting standards referredto in subsection (3C) of section 211 of the CompaniesAct, 1956 to the extent applicable.

(e) On the basis of written representations received fromdirectors, as on 31st March, 2007 and taken on recordby the board of directors, we report that none of thedirectors of the company is, disqualified as on 31st

March, 2007 from being appointed as a director interms of section 274(1)(g) of the Companies Act,1956;

(f) Attention is invited to note no.9(d) regarding thecompany’s petition filed before the Income TaxSettlement Commission subsequent to 31.03.2007.The provision required will have the effect of reducingthe carry forward surplus and the reserves shown inthe balance sheet. Subject to this observation, In ouropinion and to the best of our information andaccording to the explanations given to us, theaccounts, read with the notes on accounts, give theinformation required by the Companies Act, 1956 inthe manner so required and give a true and fair viewin conformity with the accounting principles generallyaccepted in India:

i) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2007;

ii) in the case of Profit and Loss Account, of theprofit for the year ended on that date; and

iii) in the case of Cash Flow Statement, of the cashflow for the year ended on that date.

For V.Sankar Aiyar & Co.Chartered Accountants

Sd/-(V.Rethinam)

Place: New Delhi PartnerDate: 30th June, 2007 M.No. 010412

ANNEXURE REFERRED TO IN PARA 3 OF OUR REPORTOF EVEN DATE TO THE SHAREHOLDERS OF RADICOKHAITAN LTD.

1. (a) The Company has maintained proper records,showing full particulars including quantitative detailsand situation of fixed assets.

(b) We are informed that major part of the fixed assetslocated at the distillery at Rampur were physicallyverified once during the year. The assets physicallyverified are under reconciliation with the book recordsand discrepancies, if any, can be ascertained onlyafter reconciliation is complete.

(c) Since there is no substantial disposal of fixed assetsduring the year, the preparation of financialstatements on a going concern basis is not affectedon this account.

2. (a) On the basis of information and explanationsobtained, stocks of finished goods and raw materialsof the distillery at all its locations have been underphysical check by the Excise Department in

Auditors’ ReportTo the Shareholders of Radico Khaitan Limited

3838

coordination with the company’s supervisory staff atfrequent intervals. Stocks at other locations, storesand spares have been physically verified by themanagement during the year at reasonable intervals.

(b) The procedure of physical verification of stocksfollowed by the management are reasonable andadequate in relation to the size of the company andthe nature of its business.

(c) The Company is maintaining proper records ofinventory. The discrepancies noticed on verificationbetween the physical stock and book records werenot material.

3 (a) The Company has not granted any loans, securedor unsecured to companies, firms or other partiescovered in the register maintained u/s.301 of theCompanies Act, 1956.

(b) The Company has not taken any loans, secured orunsecured from companies, firms or other partiescovered in the register maintained u/s.301 of the Act

4 In our opinion and according to the information andexplanations given to us, there are adequate internalcontrol systems commensurate with the size of thecompany and the nature of its business for the purchaseof inventory and fixed assets and for the sale of goods.To the best of our knowledge, no major weaknesses ininternal control systems were either reported or noticedduring the course of our audit.

5 We are informed that there are no contracts orarrangements during the year that need to be enteredinto a register in pursuance of Sec.301 of the Act.

6. The Company has not accepted deposits from publicwithin the meaning of Sec.58A/ 58AA of the CompaniesAct, 1956 or any other relevant provisions of the Act andthe rules framed thereunder.

7. Outside Consultants were engaged to perform systemand process reviews for the year ended 31.03.2007 andthey have submitted their reports to the management.The scope of work includes transactions review andconsidering the same, the company has an Internal AuditSystem commensurate with the size and nature of it’sbusiness.

8. We have broadly reviewed the books of accountmaintained by the company pursuant to the rules madeby the Central Government for the maintenance of costrecords under section 209(1) (d) of the Companies Act,1956 and are of the opinion that prima facie, theprescribed accounts and records have been maintainedand the required statements are in the process ofcompilation. However, we have not made a detailedexamination of the records with a view to determinewhether they are accurate or complete.

9. (a) According to the records of the company, thecompany has been generally regular in depositingwith appropriate authorities the statutory dues

including Provident, Employees’ State Insurance,Investor Education and Protection Fund, Income tax,Sales tax, Wealth tax, Service tax, Customs duty,Excise duty, Cess and other statutory dues.According to the information and explanations givento us, there are no undisputed amounts payable inrespect of the aforesaid statutory dues, which haveremained outstanding as at 31-03-2007 for a periodof more than 6 months from the date they becamepayable.

(b) As regards dues not deposited on account ofdisputes, the position as explained by the companyis as under:

S.No.Nature of dues

i. Sales Tax

S. No. Year Amount Rupees Forum where

in thousands pending

1 1981-82 58 Trade Tax Tribunal, Moradabad

(Local)



4 2001-02 190 Trade Tax Tribunal, Moradabd

5 2002-03 174 Trade Tax Tribunal, Moradabd

6 2002-03 20,513 Writ petition pending before Allahabad

High Court and Appeal before Trade Tax

Tribunal, Moradabad.

7 2003-04 25,556 Trade Tax Tribunal, Moradabad

8. 2005-06 14,948 Writ petition pending before Allahabad

High Court.

ii. Excise Duty

S. No. Year Amount Rupees Forum where pending

in thousands

1 1981 1,805 Allahabad High Court – Lucknow Bench

2 1995 to 9,238 Allahabad High Court – Lucknow Bench

2005 (Bank Guarantee issued)

10. The company has no accumulated losses at the end ofthe financial year. The company has not incurred cashlosses either in the current year or in the immediatepreceding financial year.

11. On the basis of the verification of records and informationand explanations given by the management, the companyhas not defaulted in repayment of dues to financialinstitutions, banks and debenture holders during the year.

12. The company has not granted loans and advances onthe basis of security by way of pledge of shares,debentures or other securities.

13. The provisions of any special statutes applicable to chitsdo not apply to the company.

14. As regards dealing or trading in shares, securities,debentures and other investments, proper records havebeen maintained of the transactions and contracts andtimely entries made therein. The shares, securities,debentures and other investments, have been held bythe company in its own name except to the extent of the

3939

exemption, if any, granted under section 49 of the Act.

15. The company has given a guarantee of USD 5 million toStandard Chartered Bank on behalf of a subsidiary, theterms and conditions whereof, in our opinion, are prima-facie, not prejudicial to the interest of the company.

16. According to the records of the company, term loans takenduring the year have been applied for the purpose forwhich they were obtained.

17. According to the information and explanations given tous, and on an overall examination of the balance sheet ofthe company, we report that funds raised on short termsbasis have not been used for long term investment.

18. During the year, the company has not made anypreferential allotment of shares to parties and companiescovered in the register maintained under section 301 ofthe Act.

19. Since no secured debentures have been issued duringthe year, question of creating securities does not rise.

20. Since there were no public issues of securities by thecompany during the year, verification of the end-use ofthe money does not arise.

21. Based on the audit procedures performed and therepresentation obtained from the management, we reportthat no fraud on or by the company has been noticed orreported during the year under audit.

For V.Sankar Aiyar & Co.Chartered Accountants

Sd/-Place: New Delhi (V.Rethinam)Date : 30.06.2007 Partner

M.No. 010412

4040

For V. Sankar Aiyar & Co. Dr. Lalit Khaitan Abhishek KhaitanChartered Accountants Chairman & Managing Director Managing Director

Place : New Delhi V. Rethinam Ajay K. Agarwal Dr. Arun Mohan BansalDated : June 30, 2007 Partner Sr. Vice President (Finance & Accounts) Head-Legal & Company Secretary

M. No. 010412

Balance Sheet as at 31st March, 2007SCHEDULE Rs. in ’000 Rs. in ’000

NO. AS AT AS AT31-03-2007 31-03-2006

SOURCES OF FUNDS

1. SHAREHOLDERS’ FUNDS

SHARE CAPITAL 1 769,724 192,896

RESERVES AND SURPLUS 2

REVALUATION RESERVE 95,375 96,060

OTHER RESERVES 1,448,587 1,543,962 1,140,375 1,236,435

EMPLOYEES STOCK OPTIONS OUTSTANDING 37,329 0

LESS: DEFERRED EMPLOYEES COMPENSATION 22,729 14,600 0 0

2. LOAN FUNDS

SECURED 3 2,768,699 2,328,731

UNSECURED 4 3,333,669 1,091,085

DEFERRED CREDITS 5 0 6,102,368 15 3,419,831

3. DEFERRED TAX BALANCE 264,200 218,900

TOTAL 8,694,854 5,068,062

APPLICATION OF FUNDS

1. FIXED ASSETS 6

GROSS BLOCK 3,606,076 3,182,311

LESS: DEPRECIATION TO DATE 761,322 607,825

NET BLOCK 2,844,754 2,574,486

CAPITAL WORK IN PROGRESS 7 442,316 3,287,070 37,622 2,612,108

2. INVESTMENTS 8 252,890 72,131

3. CURRENT ASSETS,LOANS & ADVANCES 9

a) ACCRUED INCOME 123,901 2,353

b) INVENTORIES 737,900 638,388

c) SUNDRY DEBTORS 1,295,810 902,891

d) CASH & BANK BALANCES 2,089,812 42,736

e) LOANS & ADVANCES 1,816,808 1,398,848

6,064,231 2,985,216

LESS:CURRENT LIABILITIES AND PROVISIONS

LIABILITIES 10 705,749 553,555

PROVISIONS 11 203,588 76,257

909,337 629,812

NET CURRENT ASSETS 5,154,894 2,355,404

4. MISCELLANEOUS EXPENDITURE (TO THE

EXTENT NOT WRITTEN OFF OR ADJUSTED)

ADVERTISEMENT & SALES PROMOTION EXPENSES 0 28,419

TOTAL 8,694,854 5,068,062

SIGNIFICANT ACCOUNTING POLICIES AND NOTES 19

ANNEXURE TO OUR REPORT OF DATE

4141

Profit and Loss Account for the year ended 31st March, 2007



M. No. 010412

SCHEDULE Rs. in ’000 Rs. in ’000NO. CURRENT PREVIOUS

YEAR YEAR

INCOMESALES * 12 9,725,196 8,291,767LESS: EXCISE DUTY 3,886,758 3,346,657

5,838,438 4,945,110OTHER INCOME 13 114,273 51,514ACCRETION/DECRETION TO STOCKS 14 50,746 7,334

6,003,457 5,003,958EXPENDITUREPURCHASES AND MATERIALS CONSUMED 15 2,784,400 2,422,506SALARIES, ALLOWANCES AND BENEFITS 16 413,257 285,941OTHER EXPENSES 17 1,945,049 1,422,146FINANCIAL EXPENSES 18 265,354 237,480

5,408,060 4,368,073

PROFIT BEFORE DEPRECIATION AND TAXATION 595,397 635,885DEPRECIATION FOR THE YEAR 155,739 113,317LESS:TRANSFER FROM REVALUATION RESERVE 685 155,054 687 112,630

PROFIT BEFORE TAXATION 440,343 523,255PROVISION FOR TAXATION :CURRENT TAX 41,800 42,600RELATING TO EARLIER YEAR 7,300 0DEFERRED TAX -SEE NOTE 9 (c) 45,300 14,000FRINGE BENEFIT TAX 20,500 15,000

114,900 71,600

PROFIT AFTER TAXATION 325,443 451,655ADD/(LESS): PRIOR PERIOD ADJUSTMENTS & (66,354) (49,377)EXTRA ORDINARY ITEMS (SEE NOTE 17)

259,089 402,278ADD:SURPLUS BROUGHT FORWARD FROM LAST YEAR 296,574 134,483

PROFIT AVAILABLE FOR APPROPRIATION 555,663 536,761TRANSFERS TO:GENERAL RESERVE 200,000 185,200PROPOSED DIVIDEND/PARTLY PAID PREFERENCE DIVIDEND :PREFERENCE SHARES @ 6.75% 23,522 0PROVISION OF TAX ON ABOVE 3,877 0EQUITY SHARES @ 25% 48,224 48,224PROVISION OF TAX ON ABOVE 8,196 6,763

83,819 54,987

BALANCE CARRIED TO BALANCE SHEET (SCHEDULE 2) 271,844 296,574EARNING PER SHARE (SEE NOTE 13 ) BASIC & DILUTED :-BEFORE PRIOR PERIOD & EXTRA ORDINARY ITEMS 3.09 4.68-AFTER PRIOR PERIOD & EXTRA ORDINARY ITEMS 2.40 4.17* SALES THROUGH OTHER DISTILLERIES/BOTTLING UNITS UNDER ARRANGEMENT RS. 44,845.14 LACS (PREVIOUS YEAR RS. 36,795.41LACS) NOT INCLUDED IN THE ABOVE.(REFER NOTE 19 OF SCHEDULE 19 ).


4242

Schedules to Statement of AccountsRs. in ’000 Rs. in ’000

AS AT AS AT31-03-2007 31-03-2006

1. SHARE CAPITALAUTHORISED170,000,000 EQUITY SHARES OF RS 2 EACH 340,000 340,0006,000,000 PREFERENCE SHARES OF RS 100 EACH 600,000 940,000 10,000 350,000

ISSUED AND SUBSCRIBED96,447,940 EQUITY SHARES OF RS 2 EACH, FULLY PAID UP 192,896 192,8965,768,276 6.75% COMPULSORILY CONVERTIBLE 576,828 0

PREFERENCE SHARES OF RS 100 EACH, FULLY PAID UP (SEE NOTE 6) 769,724 192,896

AS AT AS AT31.03.2006 ADDITIONS DEDUCTIONS 31-03-2007

2. RESERVES AND SURPLUSREVALUATION RESERVE 96,060 0 685 95,375CAPITAL RESERVE 4,899 3,000 0 7,899SHARE PREMIUM ACCOUNT 36,900 343,212 213,270 166,842GENERAL RESERVE 800,000 200,000 0 1,000,000PREFERENCE SHARES REDEMPTION RESERVE 2,002 0 0 2,002

939,861 546,212 213,955 1,272,118SURPLUS 296,574 271,844

1,236,435 1,543,962NOTE:

(i) CAPITAL RESERVE :- ADDITION IS CAPITAL SUBSIDY FROM STATE GOVT. OF UTTRAKHAND.(ii) SHARE PREMIUM ACCOUNT :- DEDUCTION IS ON ACCOUNT OF ISSUE EXPENSES OF RS 125060 THOUSAND AND PREMIUM ON FCCBs OF RS 88210

THOUSANDS ADJUSTED.

3. SECURED LOANS

1. TERM LOANS - FROM FINANCIAL INSTITUTIONS/BANKSi) STATE BANK OF MYSORE (SEE NOTE 1 BELOW) 30,000 70,000ii) UTI BANK LTD. (SEE NOTE 1 & 2 BELOW) 300,000 0iii) INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD. (SEE NOTE 1 BELOW) 0 42,308iv) BANK OF INDIA,LONDON (FOREIGN CURRENCY LOAN) (SEE NOTE 1 BELOW) 222,475 311,472v) ICICI BANK LTD. (FOREIGN CURRENCY LOAN) (SEE NOTE 1 BELOW) 435,900 437,750vi) STANDARD CHARTERED BANK LTD.(FOREIGN CURRENCY LOAN) (SEE NOTE 1 BELOW) 130,770 132,270vii) STATE BANK OF INDIA FCNRB LOAN 0 59,987

2. TERM LOANS - OTHERSBHW HOME FINANCE LIMITED (SEE NOTE 4) 36,258 0

3. OTHER THAN TERM LOANS - FROM BANKS(FACILITIES EXTENDED BY PNB AND SBI AGGREGATING TORS 8482.77 LACS ARE GUARANTEED BY CHAIRMAN ANDMANAGING DIRECTOR (CMD) & MANAGING DIRECTOR)(SECURED BY HYPOTHECATION OF INVENTORIES AND BOOK DEBTS)(NOTE 3 BELOW) 1,613,296 1,274,944

2,768,699 2,328,731NOTES:1.SECURED BY A PARI-PASSU FIRST CHARGE ON GROSS BLOCK OF THE FIXED ASSETS OF THE COMPANY, BOTH PRESENT AND FUTURE.2. SECURED IN ADDITION BY SECOND CHARGE ON CURRENT ASSETS OF THE COMPANY ; GUARANTEED BY CMD AND MANAGING DIRECTOR OF THE COMPANY.3. SECURED IN ADDITION BY SECOND CHARGE ON FIXED ASSETS OF THE COMPANY.4. TO BE SECURED BY DEPOSIT OF TITLE DEEDS OF PROPERTY.5. IN RESPECT OF BOTH SECURED AND UNSECURED LONG TERM LOANS, AMOUNT DUE WITHIN ONE YEAR- RS.4034.40 LACS (PREVIOUS YEAR RS 2068.77 LACS)

4. UNSECURED LOANS(a) LONG TERM(I) G E CAPITAL SERVICES INDIA 15,000 25,000(ii) ZERO INTEREST DEBENTURES

ICICI BANK LTD. 3,612 7,224INDUSTRIAL DEVELOPMENT BANK OF INDIA 2,898 5,797MADHYA PRADESH STATE INDUSTRIAL DEVELOPMENT CORPORATION LTD. 1,563 8,073 3,126 16,147(REDEEMABLE IN 3 ANNUAL INSTALMENTS ,COMMENCINGFROM 30TH DECEMBER,2005)

(iii) OTHERS-RABO INDIA FINANCE PVT. LTD., NEW DELHI 88,889 133,333(GUARANTEED BY CMD AND MANAGING DIRECTOR)(SECURED BY A CHARGE ON A SELF GENERATED BRAND)

(b) OTHERS(i) STATE BANK OF HYDERABAD 100,000 100,000(ii) ABN AMRO BANK FCNRB 0 99,477(iii) STANDARD CHARTERED BANK 100,000 216,708(iv) SBI FACTORS & COMMERCIAL SERVICES PVT. LTD. 74,053 86,590(v) UTI BANK LTD.-FCNRB LOAN 0 150,000(vi) COMMERCIAL PAPER (SHORT TERM) 100,000 0(vii) ING-VYSYA BANK LTD. 200,000 174,610(viii)HDFC BANK LTD. 0 89,220(ix) FOREIGN CURRENCY CONVERTIBLE BONDS(SEE NOTE 7) 2,179,500 0(x) BANK OF RAJASTHAN LTD. 100,000 0(xi) UTI BANK LTD. (FARMERS/VLA SCHEME) 93,154 0(xii) YES BANK LTD. (SHORT TERM) 125,000 0(xiii)STATE BANK OF INDORE 150,000 0

3,333,669 1,091,085

4343

Rs. in ’000 Rs. in ’000AS AT AS AT

31-03-2007 31-03-2006

7. CAPITAL WORK IN PROGRESS (AT COST)(i) PLANT & MACHINERY 62,091 12,809(ii) ADVANCES TO VENDORS/CONTRACTORS (UNSECURED)

(CONSIDERED GOOD) :- FOR ACQUISITION OF COMMERCIAL & RESIDENTIAL PROPERTY 271,101 0- OTHERS 109,124 24,813

442,316 37,622NOTE: INCLUDING INTEREST OF RS 1404 THOUSANDS UNDER CAPITALISATION.

6. FIXED ASSETS

Rs. in ’000

DESCRIPTION OF COST/REVALUATION DEPRECIATION NET BLOCK

ASSETS AS ON ADDITIONS DEDUCTIONS AS ON UPTO FOR THE WRITTEN UPTO AS ON AS ON

01.04.2006 31.03.2007 31.03.2006 YEAR BACK 31.03.2007 31.03.2007 31.03.2006

INTANGIBLE ASSETS

BRANDS & TRADE MARKS 500,470 0 0 500,470 35,781 24,297 0 60,078 440,392 464,689

GOODWILL 95,500 0 0 95,500 9,550 4,775 0 14,325 81,175 85,950

TANGIBLE ASSETS

FREEHOLD LAND 145,501 44,538 0 190,039 0 0 0 0 190,039 145,501

LEASEHOLD LAND 180,712 13,544 0 194,256 124,527 635 0 125,162 69,094 56,185

BUILDINGS 244,014 40,574 0 284,588 26,122 8,356 0 34,478 250,110 217,892

PLANT & MACHINERY 1,885,843 284,247 234 2,169,856 369,770 103,788 59 473,499 1,696,357 1,516,073

FURNITURE & FITTINGS 32,519 3,098 87 35,530 10,202 1,975 57 12,120 23,410 22,317

VEHICLES 59,265 29,748 6,163 82,850 18,849 6,701 2,126 23,424 59,426 40,416

LEASEHOLD IMPROVEMENTS 38,487 14,500 0 52,987 13,024 5,212 0 18,236 34,751 25,463

TOTAL 3,182,311 430,249 6,484 3,606,076 607,825 155,739 2,242 761,322 2,844,754 2,574,486

PREVIOUS YEAR 2,041,751 1,185,621 45,061 3,182,311 535,330 113,317 40,822 607,825 2,574,486 1,506,421

NOTES:

1. VALUES WRITTEN UP ON REVALUATION:

(BASED ON APPROVED VALUERS’ REPORT) AS ON 31.12.1994/31.12.1998 AS ON 31.12.1985

FREEHOLD LAND 85,422 —

LEASEHOLD LAND 122,828 —

BUILDING — 15,292

PLANT & MACHINERY — 8,709

TOTAL 208,250 24,001

2. ADDITIONS TO PLANT & MACHINERY INCLUDES INTEREST OF RS. 7307 THOUSANDS CAPITALISED DURING THE YEAR.

8. INVESTMENTS – LONG TERM (AT COST) (EXCEPT WHERE STATED OTHERWISE)

A. FULLY PAID UP EQUITY SHARES IN FACE VALUE

BODIES CORPORATE. Rs. in ’000

(i) TRADE – UNQUOTED

RADICO GLOBAL LTD - ( A WHOLLY OWNED SUBSIDIARY)

(INCORPORATED IN JEBEL ALI FREE ZONE,DUBAI) 160,452 49,015

129,500 SHARES OF AED 100 EACH

DIAGEO RADICO DISTILLERY P LTD. 17,500 17,500 0

177,952 49,015

(ii) NON-TRADE - QUOTED (SHORT TERM)

-ANANT RAJ INDUSTRIES LTD. 0 2,114

-ASSOCIATED CEMENT COMPANIES LTD. 2 179

-ANSAL PROPERTIES & INFRASTRUCTURE LTD. 5 957

-ASIAN ELECTRONICS LTD. 10 518

-BAJAJ HINDUSTAN LTD. 1 307

-BHARAT EARTH MOVERS LTD. 10 1,047

-BHARAT HEAVY ELECTRICALS LTD. 4 942

5. DEFERRED CREDITSFOR ASSETS PURCHASED-UNDER HIRE PURCHASEAGREEMENTS WITH FINANCE COMPANIES/BANK 0 15

0 15

AMOUNT DUE WITHIN ONE YEAR 0 15

4444


31-03-2007 31-03-2006

-GREAT EASTERN SHIPPING CO.. LTD. 12 325

-MAHINDRA GESCO DEVELOPERS LTD. 5 502

-HAVELL’S INDIA LTD. 50 4,445

-HINDUSTAN LEVER LTD. 0 22

-INDIABULLS REAL ESTATE LTD. 60 10,546

-INDIA CEMENTS LTD.. 15 305

-I T C LTD. 1 192

-I V R C L INFRASTRUCTURES & PROJECTS LTD. 1 147

-JAI CORP LTD. 6 679

-JAIPRAKASH HYDRO-POWER LTD. 30 108

-PARSVNATH DEVELOPERS LTD. 17 794

-RELIANCE COMMUNICATIONS LTD. 54 4,213 19,104

-RELIANCE INDUSTRIAL INFRASTRUCTURE LTD. 5 451

-RELIANCE INDUSTRIES LTD. 50 6,592

-RELIANCE PETROLEUM LTD. 500 3,631

-SIEMENS LTD. 3 1,766

-S R F LTD. 9 205

-THE TATA STEEL LTD. 2 107

-VOLTAS LTD. 2 202

-WIRE AND WIRELESS (INDIA) LIMITED 1 0

-ZEE ENTERTAINMENT ENTERPRISES LTD. 1 305

-ZEE NEWS LTD. 1 0

-TITAN INADUSTRIES LTD. 0 85

39,487 21,303

B. NON-TRADE - UNQUOTED

(i) UNITS OF MUTUAL FUNDS (SHORT TERM) : No. of Units

-ABN AMRO MANAGERS FUND 250,000 2,500

-HDFC PREMIER MULTICAP FUND GROWTH 344,381 6,054

-FRANKLIN INDIA BLUE CHIP FUND GROWTH 48,204 5,919

-TEMPLETON FLOATING RATE INCOME FUND ST 167,032 1,683

-RELIANCE VISION FUND 35,617 6,039

-RELIANCE LIQUID FUND 93,343 1,056

-RELIANCE GROWTH FUND 18,653 4,000 1,600

-SBI MAGNUM EQUITY FUND (DR) 228,141 6,057

-SBI MAGNUM INSTA CASH FUND-DR 156,729 1,699

-RELIANCE FLOATING RATE FUND DR 6,341 231

FACE VALUE/Rs 1000

(ii) FULLY PAID UP EQUITY SHARES OF NEW URBAN

COOPERATIVE BANK LTD. 60 60 60

C. NATIONAL SAVINGS CERTIFICATES 153 153 153

LODGED WITH GOVERNMENT DEPARTMENTS AS SECURITY 35,451 1,813

252,890 72,131

AGGREGATE VALUE OF INVESTMENTS: BOOK VALUE MARKET VALUE BOOK VALUE MARKET VALUE

QUOTED 39,487 37,019 21,303 22,191

UNQUOTED 178,165 0 49,228 0

UNITS OF MUTUAL FUND (NAV RS 36045 THOUSANDS,

PREVIOUS YEAR RS 1981 THOUSANDS) 35,238 0 1,600 0

252,890 37,019 72,131 22,191

NOTE: (1) NO INVESTMENT IS HELD IN BODIES CORPORATE UNDER THE SAME MANAGEMENT.

(2) INVESTMENTS ACQUIRED AND SOLD DURING THE YEAR. (SEE SCHEDULE 8-A )

(3) PROVISION OF RS 2468 THOUSANDS HAS BEEN MADE FOR DECLINE IN VALUE OF SHORT TERM INVESTMENTS.

4545

Rs. in ’000AS AT

31-03-2007

8-A DETAIL OF SECURTIES PURCHASED AND SOLD DURING THE YEAR

Name Face Value No.of Shares Purchase Cost

ADLABS FILMS LTD 5 500 212

ASSOCIATED CEMENT COMPANIES LTD. 10 1,200 996

BAJAJ AUTO LTD. 10 250 711

BAJAJ HINDUSTAN LTD. 1 400 204

BHARAT HEAVY ELECTRICALS LTD. 10 300 702

CENTURY TEXTILES & INDUSTRIES LTD. 10 1,500 786

CIPLA LTD. 2 400 88

ERA CONSTRUCTION (INDIA) LTD. 10 500 155

GREAT EASTERN SHIPPING CO. LTD. 10 1,500 406

GREAT OFFSHORE LTD. 10 300 81

HAVELL’S INDIA LTD. 5 450 268

H C L TECHNOLOGIES LTD. 2 200 104

HINDUSTAN LEVER LTD. 1 100 23

INDIABULLS FINANCIAL SERVICES LTD. 2 5,000 1,803

INDIA CEMENTS LTD. 10 2,000 422

INDIAN PETRO CHEMICALS CORPN. LTD. 10 200 53

INFOSYS TECHNOLOGIES LTD. 5 350 791

I V R C L INFRASTRUCTURES & PROJECTS LTD. 2 200 58

JAI CORP LTD. 10 1,057 385

JAIPRAKASH ASSOCIATES LTD. 10 1,300 632

JAIPRAKASH HYDRO-POWER LTD. 10 2,000 72

LARSEN & TOUBRO LTD. 2 501 801

M R F LTD. 10 20 52

PUNJ LLOYD LTD. 2 200 202

RELIANCE CAPITAL LTD. 10 1,320 644

RELIANCE INDUSTRIES LTD. 10 3,300 3,084

SATYAM COMPUTER SERVICES LTD. 2 500 219

STATE BANK OF INDIA 10 1,400 1,234

SESA GOA LTD. 10 300 402

SIEMENS LTD. 2 200 204

S R F LTD. 10 1,400 408

SHREE PRECOATED STEELS LTD. 10 1,000 300

TATA MOTORS LTD. 10 300 239

THE TATA STEEL LTD. 10 400 210

VIDESH SANCHAR NIGAM LTD. 10 1,500 572

17,524

No. of units of various Mutual Fund Schemes purchased and redeemed during the year:

Name Face Value No.of Units Purchase Cost

TEMPLETON FLOATING RATE INCOME FUND ST 10 2,372,295 23,747

RELIANCE LIQUIDITY FUND 10 18,670,160 201,044

SBI MAGNUM INSTA CASH FUND-DR 10 7,234,868 23,701

RELIANCE FLOATING RATE FUND -DR 10 7,752,092 78,000

HDFC LIQUID FUND -PREMIUM PLUS PLAN- GROWTH 10 15,665,167 225,000

BIRLA CASH PLUS -INSTITUTIONAL PREMIUM PLAN- GROWTH 10 6,846,150 80,000

PRUDENTIAL ICICI INSTITUTIONAL LIQUID PLAN -GROWTH 10 16,670,953 175,000

DSP MERRILL LYNCH LIQUIDITY FUND-INSTITUTIONAL-GROWTH 1,000 30,100 30,106

836,598

Total 854,121

4646

9. CURRENT ASSETS, LOANS AND ADVANCESa) ACCRUED INCOME

INTEREST ACCRUED ON INVESTMENT AND FIXED DEPOSITS 74,013 2,353ACCRUED INCOME 49,888 0

123,901 2,353b) INVENTORIES

(i) MATERIALS (AT LOWER OF COST OR NET REALISABLE VALUE)RAW MATERIALS 257,447 270,318PACKING MATERIALS 117,321 51,435STORES & SPARE PARTS 27,804 145,125 31,341 82,776TOOLS (AT COST) 648 660

(ii) STOCK IN TRANSIT ( AT COST ) 0 700(iii) STOCK IN TRADE (AT LOWER OF COST AND NET REALISABLE VALUE)

FINISHED GOODS 291,455 242,574STOCK IN PROCESS 43,225 334,680 41,360 283,934

737,900 638,388c) SUNDRY DEBTORS (UNSECURED)

DEBTS OUTSTANDING FOR A PERIOD EXCEEDING SIX MONTHSCONSIDERED GOOD 212,393 85,952CONSIDERED DOUBTFUL 10,874 25,920LESS : ADJUSTED AGAINST PROVISIONS 5,931 4,943 23,497 2,423OTHER DEBTS CONSIDERED GOOD 1,078,474 814,516

1,295,810 902,891d) CASH AND BANK BALANCES

CASH IN HAND 3,042 4,179CHEQUES IN HAND 129 92BALANCE WITH SCHEDULED BANKS :CURRENT ACCOUNTS 145,470 27,332DEPOSIT ACCOUNTS * 1,941,134 11,097SAVINGS BANK ACCOUNTS(EMPLOYEES’ SECURITY DEPOSIT) 37 36

2,089,812 42,736

*(i) UNDER LIEN WITH GOVERNMENT DEPARTMENT AND BANKS AS SECURITY. 12,134 8,067(ii) WITH BANK OF INDIA, LONDON (UNUTILISED PROCEEDS OF FCCB) 1,874,369 0e) LOANS AND ADVANCES

(UNSECURED-CONSIDERED GOOD, UNLESSOTHERWISE STATED).INTER CORPORATE LOANS (INCLUDING RS. 20000 THOUSAND 80,000 0DIAGEO RADICO DISTILLERIES (P) LTD, A JOINT VENTURE)ADVANCES RECOVERABLE IN CASH OR INKIND OR FOR VALUE TO BE RECEIVED:CONSIDERED GOOD 1,509,622 1,229,919CONSIDERED DOUBTFUL 6,150 23,557LESS : ADJUSTED AGAINST PROVISIONS 6,150 0 23,557 0CLAIMS AND DUTIES RECOVERABLE FROM EXCISE DEPARTMENT 131 131EXCISE AND OTHER DEPOSITS 109,687 104,604INCOME TAX PAYMENTS (NET OF PROVISIONS) 115,303 62,954SALES TAX PAID UNDER PROTEST 2,065 1,240

1,816,808 1,398,848


31-03-2007 31-03-2006

4747


31-03-2007 31-03-2006

10. CURRENT LIABILITIES

CREDITORSTRADE 375,916 275,987OTHERS 251,559 627,475 200,886 476,873SECURITY DEPOSITS FROM DEALERS 17,936 38,775SECURITY DEPOSITS FROM OTHERS 7,434 5,925UNCLAIMED DIVIDEND ** 6,260 5,690OTHER LIABILITIES 23,112 20,613INTEREST ACCRUED BUT NOT DUE 23,532 5,679

705,749 553,555** THE ACTUAL AMOUNT TO BE TRANSFERRED TO INVESTOR

EDUCATION AND PROTECTION FUND WILL BE DETERMINEDON THE DUE DATES.

11. PROVISIONSEQUITY DIVIDEND (INCLUDING TAX THEREON ) 56,420 54,987PREFERENCE DIVIDEND (INCLUDING TAX THEREON ) 22,778 0PROVISION FOR LEAVE ENCASHMENT 32,416 20,534PROVISION FOR PREMIUM ON REDEMPTION OF FCCB 88,210 0CONTINGENCIES 3,764 736

203,588 76,257

Rs. in ’000 Rs. in ’000CURRENT YEAR PREVIOUS YEAR

12. SALESRECTIFIED SPIRIT AND OTHER ALCOHOLIC PRODUCTS. 8,574,219 7,455,295PET BOTTLES 136,573 98,260JAIVIK KHAD 3,338 9,441INCOME FROM OPERATIONS THROUGH OTHER DISTILLERIES/BOTTLING UNITS 850,614 617,330EXPORT INCENTIVES 61,568 26,107OTHERS 98,884 85,334

9,725,196 8,291,767

13. OTHER INCOMEDIVIDEND (TDS Rs NIL) 6,934 59EXCESS PROVISIONS WRITTEN BACK 1,142 12,754CENVAT CREDIT UTILISED 34,229 28,258INSURANCE CLAIMS 0 812MISCELLANEOUS INCOME 8,232 776CASH DISCOUNT FROM VENDORS 99 107COMMISSION RECEIVED 1,371 573SERVICE CHARGES 1,456 593EXCISE REVENUE SUBSIDY INCOME 48,700 0PROFIT ON SALE OF INVESTMENTS 12,108 3,280PROFIT ON SALE OF FIXED ASSETS 2 4,302

114,273 51,51414. ACCRETION/(DECRETION) TO STOCKS

OPENING STOCKFINISHED 242,574 236,880STOCK IN PROCESS 41,360 283,934 39,720 276,600

CLOSING STOCKFINISHED 291,455 242,574STOCK IN PROCESS 43,225 334,680 41,360 283,934

50,746 7,334

4848

Rs. in ’000 Rs. in ’000Current year Previous year

15. PURCHASES AND MATERIALS CONSUMEDPURCHASES 20,308 119,608RAW MATERIALS CONSUMED

OPENING STOCK 270,318 253,961ADD: PURCHASES 1,668,959 1,391,402

1,939,277 1,645,363LESS: CLOSING STOCK 257,447 1,681,830 270,318 1,375,045PACKING MATERIALS 986,209 894,370STORES AND SPARES 96,053 33,483

2,784,400 2,422,506

16 SALARIES, ALLOWANCES AND BENEFITSSALARIES,WAGES & BONUS 351,623 250,909GRATUITY 3,480 3,090CONTRIBUTION TO PROVIDENT AND OTHER FUNDS 26,655 18,343CONTRIBUTION UNDER EMPLOYEES STATE INSURANCE SCHEME 1,132 797EMPLOYEES COMPENSATION (ESOP) - SEE NOTE 8 14,600 0STAFF WELFARE EXPENSES 15,767 12,802

413,257 285,94117. OTHER EXPENSES

POWER AND FUEL 167,097 54,410REPAIRS AND MAINTENANCE (INCLUDING STORES & SPARES CONSUMED)BUILDING 6,453 6,393MACHINERY 29,836 20,800OTHERS 7,512 43,801 6,351 33,544MACHINERY LEASE AND OTHER HIRE CHARGES 2,766 2,047INSURANCE 19,386 16,204OTHER MANUFACTURING EXPENSES 10,919 15,663RENT 18,819 16,465RATES AND TAXES 187,236 121,497SALES TAX / VALUE ADDED TAX 126,531 146,768TRAVELLING EXPENSESDIRECTORS 11,088 6,728OTHERS 90,862 101,950 70,163 76,891DIRECTORS’ FEE 245 170BAD & DOUBTFUL DEBTS/ADVANCES WRITTEN OFF 55,384 8,548LESS: ADJUSTED AGAINST PROVISIONS 45,180 10,204 0 8,548PROVISION FOR DOUBTFUL DEBTS / ADVANCES 10,207 41,215PROVISION FOR DECLINE IN THE VALUE OF CURRENT INVESTMENT 2,468 0SETTLEMENT ARISING OUT OF CORPORATE GUARANTEEGIVEN TO A BODY CORPORATE 0 15,000CHARITY AND DONATION 941 706SUNDRY BALANCES WRITTEN OFF 1,005 1,012LOSS ON SALE OF ASSETS 2,039 2,455OTHER OVERHEADS 149,034 118,995SELLING AND DISTRIBUTION EXPENSES:

FREIGHT OUTWARDS 239,240 180,566SUPERVISION CHARGES-AFTER SALES 122,766 82,599SUPERVISION CHARGES TO SUPERVISORS 70,365 33,170ROYALTY PAID 3,391 0REBATE DISCOUNT AND ALLOWANCE 148,482 116,176ADVERTISEMENT & SALES PROMOTION 506,157 338,045

1,090,401 750,556

1,945,049 1,422,14618. FINANCIAL EXPENSES

INTEREST ON:-TERM LOANS 98,405 67,269-OTHERS 255,970 120,262

FOREIGN EXCHANGE FLUCTUATION 0 21,616BANK CHARGES AND INCIDENTAL EXPENSES 26,017 29,949

380,392 239,096LESS: GAIN ON FOREIGN EXCANGE FLUCTUATION 18,116 0LESS: INTEREST ON LOANS AND BANK DEPOSITS GIVEN @ 96,922 1,616

265,354 237,480

@ INCLUDES TAX DEDUCTED AT SOURCE 4,000 353

4949

19. Significant Accounting Policies and Notes on Accounts 2006–07

(A) Significant Accounting Policies

1. Basis of Accounting

The financial statements are prepared on historical cost convention,unless stated otherwise, on a going concern basis and in accordance with the accountingstandards issued by the Institute of Chartered Accountants of India, to the extent applicable.

2. Valuation of Fixed Assets

Fixed Assets are stated at cost except to the extent revalued. Borrowing costs attributable to the qualifying assets and all significant costs incidental to theacquisition of assets are capitalised.

Freehold and Leasehold land at Rampur have been revalued as on 1st January, 1999. Building, Plant & Machinery relating to Distillery Unit acquired/installed upto Dec, 1984 have been revalued as on 31st Dec 1985.

3. Depreciation

a) Cost of Leasehold land and leasehold improvements are amortised over the period of lease.

b) Depreciation is charged for the year on straight line method at the rates and in the manner specified in Schedule XIV of The Companies Act 1956

c) On additions costing less than Rs. 5000 , depreciation is provided on pro rata basis.

d) Depreciation on amount added on revaluation of assets is transferred from Revaluation Reserve.

e) The life of Brands of the value of Rs 21.00 crores and Goodwill of Rs. 9.59 crores arising out of merger during the year 2004-05 are taken to be 20 yearsand amortised.

4. Investments

Investments are valued at Cost. Provision for diminution in value of long term investment is considered , if in the opinion of management , such a decline isconsidered permanent and in the case of current investments, provision is made for the shortfall.

5. Inventories

Finished Goods and Stock in process are valued at lower of cost or net realisable value. Cost includes cost of conversion and other expenses incurred inbringing the goods to their location and condition. Raw materials, Packing Materials, Stores and spares are valued at lower of cost or net realisable value. Costis ascertained on “Weighted average” basis.

6. Revenue recognition

Sales are recognised on delivery or on passage of title of the goods to the customers. They are accounted net of trade discounts and rebates but inclusive ofexcise duty and sales/trade tax.

Duty draw back is accounted for on the basis of export sales effected during the year.

7. Excise Duty

Keeping in view that State excise duty payable on finished products is not determinable, as it varies depending on the places to which they are despatched , theexcise duty on the stocks lying in factory is accounted for on clearances of such goods. The method of accounting has no impact on the results of the year.

8. Transfer pricing of Bio-Gas / Power

Since it is not possible to compute the actual cost, inter unit transfer of bio-gas & power have been valued on the basis of savings in direct fuel cost / prevailingpurchase price of power. The same has been considered for valuation of inventories.

9. Treatment of Employee benefits

The Company makes regular contributions to duly constituted funds set up for Provident Fund, Family Pension Fund, Superannuation and Gratuity , whichare charged to revenue. The employees are allowed the benefit of leave encashment as per the rules of the the Company, for which provision for accuringliability is made on actuarial valuation.

10. Impairment :

At each Balance Sheet date, the Company reviews the carrying amount of its fixed assets to determine whether there are any indication that those assets havesuffered an impairment loss. If any such indication exists, recoverable amount of the assets is estimated in order to determine the extent of impairment loss.

11. Foreign Currency Transactions

Transactions in foreign currencies are accounted for at the exchange rate prevailing on the day of the transaction. The outstanding liabilities/receivables aretranslated at the year end rates or forward rate. The resultant gain or loss are adjusted to the Profit & Loss Account.

12 Derivative Transactions

These transactions have been undertaken to hedge the cost of borrowing and comprise of principal / interest rate swaps. The income / expenses are recognisedwhen earned / incurred.

13 Research and Development

Fixed assets used for Research and Development are depreciated in the same manner as in the case of similar assets; the revenue expenses are charged off inthe year of incurrance.

14 Taxation

Deferred tax is recognised, subject to consideration of prudence, on timing differences being the difference between taxable income and accounting incomethat originate in one period and are capable of reversal in one or more subsequent periods.

Schedules to the Balance Sheet & Profit and Loss Account

5050

(B) Notes on Accounts1. Estimated amount of Capital commitments ( Net of advances ) 207,185 111,054

2 Contingent Liabilities not provided for:

i) Claims against the Company , not acknowledged as debts 89,527 71,299

ii) Guarantee given to a Bank on behalf of Radico International DMCC, 217,950 0

a subsidiary for loan facilities ( USD 5 million).

iii) Madhya Pradesh State Industrial Development Corporation Ltd. has demanded a sum ofRs. 168.09 lacs besides unspecified expenses arising out of the alleged non compliance ofconditions relating to its holding of shares in Abhishek Cement Ltd. prior to the merger ofRadico Khaitan Ltd. in the year 2002-03. Its action has resulted in a sum of Rs 72.84 lacsheld in State Bank of India being attached under the Orders of the Madhya Pradesh HighCourt. The Company has taken steps to contest the aforesaid demand.

3. The share purchase agreement dt 01.04.2004 with the erstwhile shareholders ( JM group )of Anab-e-Shahi Wines & Distilleries Ltd., inter alia,provides that in the event of the actualliability for sales tax dues is less than Rs. 180 lacs provided in the books of accounts, thedifference shall be refundable to the erstwhile shareholders with interest @ of 10% p.aw.e.f. Ist July 2004, besides payment of @ 10% p.a on the amount payble to the sales taxauthorities till the date of actual discharge of the liability. In the event of the actual liabilty isin excess of Rs 180 lacs, the excess shall be met by the erstwhile shareholders and documentoryevidence provided to the Company. The holding Company received a demand notice inMarch 2006 for Rs 326.98 lacs, which is being contested in appeal.

4. a) Non Fund Based Facilities provided by Banks are also secured by a second charge on thefixed assets of the Company.

b) Provision for contingencies represents amount set apart to meet liabilities being contestedin appeals.

5. In the opinion of the Management and to the best of their knowledge and belief, the valueon realisation of current assets, loans and advances in the ordinary course of businesswould not be less than the amount at which they are stated in the Balance Sheet.

6 The Company has, on 24th August 2006 issued and alloted 57,68,276, 6.75% CumulativeCompulsorily Convertible Preference Shares (CCPSs) of Rs.100/- each at a premium of Rs59.50 per share to Foreign Investors for an aggregate amount of USD 20 million on theterms and conditions, as approved by the Board and the Shareholders. Each CCPSs shallbe convertible at the sole option of the holder of the Preference Shares at any time within aperiod of 18 months from the date of issue and allotment, into one fully paid equity shareof Rs 2/- each, at a premium of Rs 98/- per share. Any CCPSs that remain unconvertedwithin the said 18 months period shall be compulsorily converted by the Company at theend of the said period at the same price.

7 The Company has raised USD 50 million through an issue of FCCBs on 26th July 2006(USD 40 million) and 25th August 2006 ( USD 10 million on exercise of green shoeoption by the manager to the issue). The FCCBs will be convertible into equity shares of theCompany at any time during the currency of the bonds the option of the Bond holders at aconversion price of Rs. 172.50 per share. These are listed on the Singapore Stock Exchange.They carry a coupon rate of 3.50% per annum and have a maturity of five years and one dayfrom the date of issue.The FCCBs unless previously converted, redeemed, or cancelled, areliable to be redeemed on the maturity date at a premium of 30.3961% of the principalamount. The premium payable on redemption has been provided proportionately (over thelife of bonds) and accordingly, Rs 882.10 lacs (out of the total redemption premium of Rs6624.83 lacs) on this account has been debited to Share Premium account.

8 The Company has established an Employee Stock Option Plan, duly approved by theshareholders in the meeting held on 25th May 2006. This has become effective from 25July, 2006.

Accordingly the Company has granted 9,45,000 equity settled options to the eligibleemployees as per the recommendation of the Compensation Committee, which will getvested over a period of 4 years from the date of the grant. The employees have the optionsto exercise the right within a period of 3 years from the date of vesting. The earliest date ofvesting for a part of the option is 24 July, 2007. The number of options exercisable on 24July 2007 is a maximum of 1/3 rd of the options granted.

The compensation cost of stock options granted to employees are accounted by the Companyusing the intrinsic value method.


5151

Summary of Stock Option No. of stock option Weighted average

exercise price (Rs.)

Option granted during the year 945,000 92.03

Options exercised during the year NIL

Option outstanding on 31.03.2007 945,000 92.03

In respect of Options granted under the Employee Stock Options plan, in accordance withthe guidelines issued by SEBI, the accounting value of the options is accounted as deferredemployee compensation, which is amortized on a straight line basis over the period betweenthe date of grant of options and eligible dates for conversion into equity shares. Consequentlythe schedule of salaries & benefits includes Rs. 146.00 lakh being the amortisation ofdeferred employee compensation.

9 a) Income Tax Assessment-

In respect of assessment years 1993-94 and 1996-97 - the demand aggregate to Rs96.90 lacs.In view of the expected relief in appeals, no provision is considered necessaryfor the demand. However,these have been adjusted in fully by the department againstTDS/Advance tax refunds due to the Company.

b) The Company filed revised returns for the assessment years 1997-98 to 2003-04arising out of the merger of then RKL with Abhishek Cements Ltd.. The assessmentsare pending as on date.

c) Deferred tax liability ( Net) Rs. in ’000Deferred Tax Current year Deferred Tax

Liability/(Asset) Charge/(Credit) Liability/(Asset)as at 01.04.2006 as at 31.03.2007

Deferred Tax LiabilityI) Difference between Book and Tax Depreciation 229,859 48,773 278,632II) Deferred Revenue Expenditure (Advertising and sales promotion) 9,566 (9,566) 0

Total 239,425 39,207 278,632Deferred Tax Assets

I) Provision for leave encashment (6,912) (4,106) (11,018)II) Provision for doubtful debts and others (13,873) 10,404 (3,469)

Total (20,785) 6,298 (14,487)

Net 218,640 45,505 264,145

Rounded off 2,189 453 2,642

In line with the Accounting Standard Interpretation issued by the Institute ofChartered Accountants of India, deferred tax in respect of timing diffrences, whichorginate and likely to be reversed during the tax holiday period under chapter VIA of the Act have been excluded.

d) The Company’s factory premises and offices were searched by the Income TaxDepartment on 14th February, 2006. There were no seizures of cash or stocks etc.from the Company’s premises. The Department has not so far issued any demandnotices to the Company, quantifying any tax liability that may arise out of the actiontaken by them. Notices have been received from the department under section 153Aof the Income Tax Act, 1961 for assessment of cases for the assessment years 2000-01to 2005-06. The assessment proceedings are pending. The Company declaredadditional income while filing the return of income for assessment year 2006-07resulting in additional liability of Rs 73.00 lacs which has been provided for. Keepingin view the need to avoid prolonged litigation, the Company has since excercised itsstatutory right to approach the Income Tax Settlement Commission for the settlementof its cases for assessment year 2000-01 to 2006-07. The liabilities arising out of thesettlement petition filed by the Company, is estimated at Rs. 567.26 lacs (excludinginterest). The petition before Income Tax settlement commission is pending foradmission. The liability will be provided for, out of carry forward surplus when finallydetermined.

10 a) Sundry creditors (Schedule 10) include dues to Small Scale IndustrialUndertakings - Rs. 92.26 lacs. (Previous year Rs. 81.31 lacs)

b) Names of SSI parties to whom dues as on 31.03.2007 is outstanding for more than 30days :

(i) M/S C.C. Metal Caps, Delhi, (ii) Furniture Udyogic Utpadan Samitti Ltd.

(iii) M/S Krishna Packaging Industries, Bareilly, (iv) The Laxmiji Organics P Ltd., Sitapur

(v) M/s Pack Link, Moradabad, (vi) Ravi Enterprises, Meerut, (vii) Universal Laboratories,Jagadhri, (viii) M/s Modern packers, Bareilly. (ix) M/s Bhagwati Pet (I) Pvt. Ltd., Bareilly,(x) M/s Shankar Printing Works, Rampur

c) The Company is in the process of identifying the suppliers, who would be covered underthe Micro, Small and Medium Enterprises Development Act, 2006. In the circumstances,the information, if any, requiring disclosure under the said Act, is not yet ascertained.

5252

11. Segment reporting :

Based on the guideline in Accounting Standard on segment reporting ( AS- 17) issued by ICAI , the company’s primary business segment is manufacture and tradingin liquor. The liquor business incorporates the product groups , namely , rectified spirit , country liquor and IMFL which mainly have similar risks and returns.Therefore, segment reporting is not applicable.

12. Related party disclosure as per Accounting Standard–18 :

A. Related parties and their relationship :i. Enterprises that directly, or indirectly through one

or more intermediaries, control, or are controlled by,or are under common control with, the reporting enterprises :

ii. Associates and joint ventures (1) Diageo Radico Distilleries Private Limited

iii. Key Manangement personnel : Dr. Lalit Khaitan, Chairman & Managing DirectorMr. Abhishek Khaitan, Managing DirectorMr. K.P. Singh, Whole Time Director

Relatives : Mrs. Kiran Devi KhaitanMrs. Deepshikha KhaitanMrs. Sheela Singh

iv Enterprises over which key manangement personnel are able to exercise significant influence : (1) Superior Packaging Pvt. Ltd.(2) Abhishek Fiscal Services Pvt. Ltd.(3) Elkay Fiscal Services Pvt. Ltd.(4) Smita Fiscal Pvt. Ltd.

B. Transaction with above in the ordinary course of business :

Transactions with related parties: Subsidiaries Joint Ventures Key Management Which key Total& Associates Personnel & Management

their relatives Personnel havesignificant

Remuneration 28,969 28,969(17,527) (17,527)

Sale of Goods 352,540 74,292 426,831(0) (0) (0)

Purchase of Fixed Assets 21,150 21,150(0) (0)

Sale of Fixed Assets 38 38(0) (0)

Rent paid 420 6,000 6,420(420) (6,000) (6,420)

Interest received 217 217(0) (0)

Service Charges received 7,833 7,833(0) (0)

Royalty paid 3,391 3,391(0) (0)

Investment in share capital 111,437 17,500 128,937(49,015) (0) (49,015)

Loans given 20,000 20,000(0) (0)

Outstanding balances as at 31.3.2007 20,000 20,000Loans / Advances (8,049) (8,049)

Debtors 80,781 65,961 146,742(0) (0) (0)

Payables 54,409 54,409(0) (0)

13. Earnings per share ( EPS ) as per Accounting Standard - 20 : CURRENT YEAR PREVIOUS YEARProfit after tax attributable to equity share holders (after deuctingprior period and extra ordinary items,preference dividend and tax thereon 231,690 402,278Weighted average no. of equity shares of Rs. 2/- each 96,447,940 96,447,940Basic earning per share (Rs) 2.40 4.17Since the potential equity on account of ESOP,FCCB and CCPS are antidilutive,the diluted earning remains the same (Rs) 2.40 0.00Basic earning per share before prior period and extra ordinary items (Rs) 3.09 4.68

14. (i) Remuneration to Dr. Lalit Khaitan, Chairman & Managing DirectorSalary and Allowances 8,400 4,800Contribution to Provident and other Funds. 2,268 1,296Value of benefits, calculated as per Income Tax Rules. 1,823 1,958


(1) Sapphire Intrex Ltd.(2) Radico Global Ltd., (RGL) Wholly owned

subsidiary of Radico Khaitan Ltd.(3) Radico International DMCC incorporated in

Dubai in which Radico Global Ltd. holds 100%.(4) Radico SPS UK Ltd.

Rs. in ‘000

Rs. in ‘000

5353

ii) Remuneration to Mr. Abhishek Khaitan, Managing DirectorSalary and Allowances 7,200 3,300Contribution to Provident and other Funds 1,944 891 Value of benefits, calculated as per Income Tax Rules. 1,690 1,468

iii) Remuneration to Mr. K.P.Singh, Wholetime Director Salary and Allowances 2,923 1,452 Contribution to Provident and other Funds. 421 340 Value of benefits, calculated as per Income Tax Rules. 1,300 1,129

27,970 16,63415 Remuneration to Auditors

Audit Fee 1,000 850Certification of Statements 143 95Service tax 157 96Expenses for Audit and other work 128 210

16 Computation of net profit under theCompanies Act,1956 for ManagerialRemuneration. In the absence of commission based on net profit, the computatation is not given.

17 Extra ordinary items and Prior period adjustments -(i) Deferred revenue expenditure on advertisement & sales promotion 28,419 49,377(ii) Kerala turnover tax paid to a contract bottling unit relating to earlier years 37,935 0

66,354 49,377

18 Quantitative and other information

a) Particulars of Capacity and Production Licensed Installed*Unit Capacity per annum Productio

1. Rectified spirit KL 60,000 60,000 56,164(60,000) (60,000) (56,797)

2. Bio gas 000 ‘M3 No licence required 35,837(33,933)

3. Pet bottles NOS./1000 No licence required 47,377 41,067(35,040) (28,075)

4. Malt Spirit KL 460 460 510(460) (460) (579)

5. Grain Spirit KL 27,000 27,000 18,936(27000) (27000) (2,576)

* As certified by the Management and not verified by the Auditors.

b) Opening Stock, Closing Stock & TurnoverOPENING STOCK CLOSING STOCK TURNOVER

Unit QUANTITY VALUE (RS.) QUANTITY VALUE (RS.) QUANTITY VALUE (RS.)

1. Alcohol products(a) Rectified spirit KL/AL 462 8,500 848 17,219 5,227 103,722

(2,704) (68,570) (462) (8,500) (13,010) (253,335)(b) Silent spirit KL/AL 1,223 26,709 1,067 26,392 23,973 686,066

(1,935) (57,040) (1,223) (26,709) (18,155) (539,040)(c) Cane juice spirit KL/AL 122 3,400

(175) (4,470)(d) Malt spirit KL/AL 526 49,024 630 55,932 203 20,946

(402) (25,896) (526) (49,024) (167) (22,052)(e) Grain spirit KL/AL 2,509 65,251 1,695 50,689 12,966 376,804

(0) (0) (2,509) (65,251) (0) (0)(f) Ethanol KL/AL 43 860 440 9,675 6,422 127,837

(0) (0) (43) (860) (2,623) (50,508)2. Other alcohol products

(a) Denatured spirit KL/AL 0 5 5 117 0 0(1) (26) (0) (5) (4) (113)

(b) Indian madeforeign liquor AL 511,700 40,408 594,416 53,390 19,009,721 4,487,541

(537,515) (46,358) (511,700) (40,408) (17,802,877) (4,001,988)(c) Country liquor AL 95,938 31,853 198,851 62,324 7,434,393 2,501,665

(95,938) (18,310) (104,280) (31,853) (7,576,699) (2,424,126)(d) Imported Alcoholic products

(Beer & Wine) BOTTLES 37,196 14,863 32,003 13,625 98,799 28,932(52,797) (20,515) (37,196) (14,863) (68,713) (13,868)

3. Pet bottles NOS. 100,962 336 328,771 959 28,106,844 135,214(49,386) (167) (100,962) (336) (19,412,000) (97,287)

4. Jaivik Khad Qtls 71,851 4,765 11,800 1,133 35,505 3,338(0) (0) (71,851) (4,765) (100,044) (9,441)

5. Others 211,018(85,334)

7. Other operating income 912,182(643,437)

Total (excluding sales tax) 242,574 291,455 9,598,665(236,880) (242,574) (8,144,999)

Rs. in ‘000

5454

(Rs. in ’000)

Unit QUANTITY VALUE

c) 1. Purchases: - Denatured spirit AL 0 0(0) (0)

- Rectified Spirit AL 0 0(0) (0)

- Country Liquor AL 29,374 9,902(353,672) (114,095)

- Imported Liquors (Wine & Beer) BOTTLES 95,838 10,406

(37,101) (5,513)

20,308(119,608)

d) Consumption of raw materials (i) Molasses Qtls 2,578,876 1,010,934

(2,585,036) (1,038,140)(ii) Cane juice Qtls 14,275 5,244

(18,085) (4,602)(iii) Barley Malt Qtls 16,245 26,722

(18,225) (27,249)(iv) Sorghum Qtls 381,381 271,068

(63,166) (39,772)(v) Wheat ( Damaged) Qtls 87,172 44,142

(9,943) (4,322)(vi) Broken Rice Qtls 69,689 51,899

(2,565) (1,670)(vii) Millet (Bajra) Qtls 756 506

(0) (0)(viii) Malt /Malt Scotch/Grain/Grape Spirits 25,950

(48,910)(ix) Rectified spirit / Extra Neutral Alcohol 113,222

(123,944)(x) Resin KG 1,639,208 123,164

(1,123,170) (81,524)(xi) Others 8,979

(4,911)

1,681,830(1,375,045)

e) Value of imports calculated on CIF basis:Raw materials 34,579

(17,130)Components & spare parts 1,898

(0)Purchases (Wine & Beer) 10,406

(5,513)Capital goods 52,466

(10,177)

f) Expenditure in foreign currency on account ofForeign travel & subscriptions 9,580

(10,884)Interest on ECB/FCCB 96,060

(36,288)Professsional fee in connection with FCCBs/CCPs 114,750

(0)Investment in foreign subsidiary 111,437

(49,015)Others 1,099

(7,584)g) Value of imported and indigenous raw materials

spare parts components and stores consumed during the year RAW MATERIAL OTHERS

VALUE % OF TOTAL VALUE % OF TOTALCONSUMPTION CONSUMPTION

Imported 34,579 2 1,898 0(17,130) (1) (0) (0)

Indigenous 1,647,251 98 1,080,363 100(1,357,914) (99) (927,853) (100)

1,681,830 100 1,082,261 100(1,375,045) (100) (927,853) (100)

‘

5555

h) Remittances in foreign currency on account of dividends Equity shares Pref. Shares

(i) Number of non resident shareholders 29 3(34) (0)

(ii). Number of shares held by them 28,000 5,768,276(7,956) (0)

(iii). Dividend ( Rs in thousands ) 14 4,621(18) (0)

(iv). Year to which the dividend relates 2005-06 2006-07(2004-05) (0)

i) Earnings in foreign exchange- Export of goods on FOB basis. 693,783(315,782)

- Interest on Bank deposits 78,741(0)

18. Foreign currency exposurea Hedged by way of forward exchange contracts:

i) ECB (Bank of India) US$: 4,910,596ii) Export Receivables- US$ 3,000,000

b Not hedged:

31-3-2007 31-3-2006

Currency Amount (Million) Currency Amount (Million)

Borrowings - FCCB US$ 50.00 US$ -Interest payable on FCCB US$ 0.41 US$ -Borrowings - Others US$ 23.40 US$ 25.58Payable for Imports US$ - US$ -

73.81 25.58

Export Receivables US$ 3.07 US$ -Balance with banks US$ 43.42 US$ 0.01Interest receivable from banks US$ 1.81 US$ -

48.30 0.01

19 The Company has entered into arrangements with certain distilleries and bottling units in other states for manufacture and marketing of its own IMFL brands. Themanufacture under the said arrangement, wherein each party’s obligations are stipulated, is carried out under it’s close supervision. The marketing is entirely theresponsiblity of the Company and consequently the Company is required to bear bad debts arising on sales.The Company is also required to ensure adequate finance to the distilleries, where required. Accordingly, it is considered appropriate to dislcose the following quantitativeand value information for the year, as applicable to such activities.

Rs.in ‘000 i) Income from operations through other distilleries / bottling units (Schedule-12) reflects the net contribution from the sales made by these Units,

and is detailed as under: CURRENT YEAR PREVIOUS YEARGross Sales 4,484,514 3,679,541Net Sales 3,175,400 2,521,308Cost of Sales 2,061,591 1,762,483Gross Profit 1,113,809 758,825Expenses 263,195 141,495Income 850,614 617,330

ii) Quantitative information for operations under arrangements.Current Year Previous Year

Quantity Value Quantity Value(Cases) Rs.’000 (Cases) Rs.’000

Potable Alcohola) Production 7,818,663 - 6,586,545 -b) Sales 7,842,159 4,484,514 6,483,192 3,679,541c) Closing Stock 193,313 65,673 216,809 65,829

iii) The balance due from distilleries under the arrangement, Rs 1132867 thousands (Previous year Rs 988934 thousands) is included under advances recoverable.This is on account of the financing by the company of inventories, debtors and other current assets net of current liabilities on behalf of the units.

20 Previous year figures have been re-grouped, wherever necessary, to correspond to current year figures.

Note: Figures in brackets are those of previous year.



M. No. 010412

5656

CASH FLOW FOR THE YEAR ENDED 31ST MARCH, 2007 2006-07 2005-06

(Rs.’000) (Rs.’000)

A. CASH FLOW FROM OPERATING ACTIVITIES

NET PROFIT BEFORE PROVISION FOR TAX 440,343 523,255

ADD:

DEPRECIATION 155,054 112,630

INTEREST ON BORROWINGS 362,276 239,096

EMPLOYEES COMPENSATION ( ESOP ) 14,600 0

LOSS ON SALE OF ASSETS 2,039 533,969 2,455 354,181

974,312 877,436

LESS:

INTEREST INCOME 96,922 1,616

DIVIDEND ON INVESTMENTS 6,934 59

PROFIT ON SALE OF ASSETS 2 4,302

PRIOR PERIOD ADJUSTMENT 37,935 0

PROFIT ON SALE OF INVESTMENT 12,108 (153,901) 3,280 (9,257)

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 820,411 868,179

ADJUSTMENT FOR WORKING CAPITAL CHANGES:

(INCREASE)/DECREASE IN INVENTORIES (99,512) (31,750)

(INCREASE)/DECREASE IN TRADE RECEIVABLES (392,919) (287,808)

(INCREASE)/DECREASE IN OTHER RECEIVABLES (121,548) (414)

(INCREASE)/DECREASE IN LOANS AND ADVANCES (285,611) (347,483)

(DECREASE)/INCREASE IN TRADE AND OTHER PAYABLES 167,104 (3,840)

(732,486) (671,295)

87,925 196,884

LESS: DIRECT TAX PAYMENTS DURING THE YEAR 121,949 97,053

NET CASH FROM OPERATING ACTIVITIES (34,024) 99,831

B. CASH FLOW FROM INVESTING ACTIVITIES

ADDITION TO:

-FIXED ASSETS (INCLUDING WORK IN PROGRESS) (834,943) (1,049,559)

PURCHASE OF INVESTMENTS (1,056,183) (175,497)

(INCREASE)/ DECREASE IN LOANS GIVEN (80,000) 326

SALE OF FIXED ASSETS 2,205 6,086

SALE OF INVESTMENTS 887,532 106,729

CAPITAL SUBSIDY FROM STATE GOVT. OF UTTRAKHAND 3,000 0

INTEREST INCOME 96,922 1,616

DIVIDEND INCOME 6,934 59

916,593 114,816

NET CASH GENERATED (USED) IN INVESTING ACTIVITIES (974,533) (1,110,240)

C. CASH FLOW FROM FINANCING ACTIVITIES

INCREASE/(DECREASE) IN

SHARE CAPITAL (INCLUDING SHARE PREMIUM) 920,040 0

SECURED LOANS 439,968 893,323

UNSECURED LOANS 2,242,584 380,750

DEFERRED CREDITS (15) (1,323)

3,602,577 1,272,750

INTEREST ON BORROWINGS (362,276) (239,096)

ISSUE EXPENSES ADJUSTED FROM SHARE PREMIUM (125,060) 0

DIVIDEND ON EQUITY SHARES(INCLUDING TAX) (54,987) (48,389)

DIVIDEND ON PREFERENCE SHARES(INCLUDING TAX) (4,621) 0

NET CASH GENERATED (USED) IN FINANCING ACTIVITIES 3,055,633 985,265

NET CHANGES IN CASH AND CASH EQUIVALENTS 2,047,076 (25,144)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS

BALANCE AT THE BEGINNING OF THE YEAR 42,736 67,880

BALANCE AT THE END OF THE YEAR (INCLUDES FIXED DEPOSIT BANK OF 2,089,812 42,736

INDIA,LONDON OF RS 1874369 THOUSANDS BEING UNUTILISED FCCBs FUNDS)

2,047,076 (25,144)



M. No. 010412

5757

I. Registration Details Registration No. : 27278 State Code : 20Balance Sheet Date : 31.03.2007

II. Capital raised during the year Public Issue : Nil Rights Issue : NilFCCB : USD 50 million Pvt. Placement : NilCCPS : USD 20 millionBonus Issue : Nil

III. Position of Mobilization and Total Liabilities : 9604191 Total Assets : 9604191Deployment of Funds(Rs. in thousand)

Source of Funds:

Paid-up Capital : 192896 Reserves & Surplus: 1543962Paid up PreferenceShare capital : 576828Secured Loans : 2768699 Unsecured Loans : 3333669

Application of Funds:

Net Fixed Assets : 3287070 Investments : 252890Net Current Assets : 5154894 Misc. expenditure : -Accumulated Losses : Nil

IV. Performance of Company Turnover and : 5952711 Total Expenditure : 5408060(Amount in Rs. thousand) other Income

Profit before tax : 440343 Profit after tax : 325443Earning per share : 3.09 Dividend Rate % : 25(in Rs).

V. Generic Names of four 1. AlcoholPrincipal Products / Services 2. Indian Made Foreign Liquorof Company 3. Country Liquor(as per monetary terms) 4. Grain Based Vodka

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE AS REQUIRED INPART IV OF SCHEDULE VI OF THE COMPANIES ACT, 1956.



M. No. 010412

5858

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TOCOMPANY’S INTEREST IN SUBSIDIARY COMPANY

Sl. No. Particulars Radico Global Ltd.

1. The Financial year of the subsidiary Companies ended on 31st March 2007

2. Date from which they became Subsidiary Companies 15th October, 2005

3. (a) No. of Shares held by Radico Khaitan Ltd. Equity: 129500(holding Company with its nominees in the Subsidiaries of AED 100 each.at the end of the Financial year of the Subsidiary Companies).

(b) Extent of interest of Holding Co. at the end of the financial 100%year of Subsidiary Companies.

4. The net aggregate amount of the subsidiary’s Profit / (Loss)so far as it concerns the members of the holding company.

(a) Not dealt with in the holding Company’s accounts.

(1) For the financial year of the subsidiary companies AED 10450854ended 31.03.2007

(2) For the previous financial years of the Subsidiary N.A.Companies since they became the holding Company’ssubsidiaries upto 31.03.2007.

(b) Dealt with in holding Company’s Accounts:

(1) For the Financial year ended 31.03.2007 NIL

(2) For the previous Financial years of the Subsidiary NILCompanies since they became the holdingCompany’s subsidiaries

5. (i) Change in the holding companies int. in the subsidiarybetween the end of the financial year or of the list of financialyears of the subsidiaries and the end of the holding company’sfinancial year.

(ii) Details of material changes which have occurred between theend of the financial year or of the last of the financial years ofthe subsidiary and the end of the holding company’s financialin respect of –

(1) Subsidiaries Fixed Assets(2) Investments(3) Money lent by it(4) Moneys’ borrowed by it for any purpose other than

that of meeting current liabilities

6. Key Infromations(1) Reserves AED 9394697(2) Total liabilities AED 18016151(3) Turnover AED 53566141(4) Profit AED 10450854

NIL

NIL

AED 115045AED 763650––



M. No. 010412

5959

1. We have audited the attached consolidated

Balance Sheet of RADICO KHAITAN LIMITEDAND ITS SUBSIDIARY RADICO GLOBALLIMITED as at 31st March, 2007 and the annexedConsolidated Profit and Loss Account and theConsolidated Cash Flow Statement for the yearended on that date. These consolidated financialstatements are the responsibility of Radico KhaitanLimited’s management. Our responsibility is toexpress our opinion on these financial statementsbased on our audit.

2. We conducted the audit in accordance withauditing standards generally accepted in India.These standards require that we plan and performthe audit to obtain reasonable assurance aboutwhether the financial statements are free ofmaterial misstatement. An audit includesexamining, on a test basis, evidence supportingthe amounts and disclosures in the financialstatements. An audit also includes assessing theaccounting principles used and significantestimates made by management, as well asevaluating the overall financial statementpresentation. We believe that our audit provides areasonable basis for our opinion.

3. We did not audit the financial statements of thesubsidiary, whose financial statements reflect totalassets of Rs.4907.88 lakhs as at 31 March 2007and total revenue of Rs.6520.63 lakhs for the yearended on the date. The financial statements of thesubsidiary have been audited by other auditors,whose report have been furnished to us and inour opinion, insofar as it relates to the amountsincluded in respect of the subsidiary, is basedsolely on the report of the other auditors.

4. We report that the consolidated financialstatements have been prepared by themanagement in accordance with the requirementsof Accounting Standard (AS) 21-ConsolidatedFinancial Statements issued by the Institute of

Chartered Accountants of India and on the basisof the separate audited financial statements ofRadico Khaitan Limited and the Subsidiaryincluded in the consolidated financial statements.

5. Attention is invited to note no. 10(d) regarding thecompany’s petition filed before the Income TaxSettlement Commission subsequent to31.03.2007. The provision required will have theeffect of reducing the carry forward surplus andthe reserves shown in the balance sheet. Subjectto this observation, in our opinion and to the bestof our information and according to theexplanations given to us, and on the considerationof the separate audit reports on the individualaudited financial statements of Radico KhaitanLimited and the Subsidiary, the consolidatedfinancial statements, give a true and fair view, inconformity with the generally accepted accountingprinciples in India,

i) in the case of the Consolidated Balance Sheet,of the state of affairs as at 31st March, 2007;

ii) in the case of the Consolidated Profit and LossAccount, of the profit for the year ended onthat date; and

iii) in the case of the Consolidated Cash FlowStatement, of the cash flows for the year endedon that date.

For V. Sankar Aiyar & Co.Chartered Accountants

Sd/-

Place: New Delhi (V.Rethinam)Date: June 30, 2007 Partner

M.No. 010412

Auditors’ ReportTo The Board Of Directors Of Radico Khaitan Limited

6060

SCHEDULE Rs. in ’000 Rs. in ’000NO. AS AT AS AT

31-03-2007 31-03-2006

SOURCES OF FUNDS

1. SHAREHOLDERS’ FUNDS

SHARE CAPITAL 1 769,724 192,896

RESERVES AND SURPLUS 2

REVALUATION RESERVE 95,375 96,060

OTHER RESERVES 1,559,847 1,655,222 1,139,141 1,235,201

EMPLOYEES STOCK OPTIONS OUTSTANDING 37,329 0

LESS: DEFERRED EMPLOYEES COMPENSATION 22,729 14,600 0 0

2. LOAN FUNDS

SECURED 3 2,768,699 2,328,731

UNSECURED 4 3,552,745 1,091,085

DEFERRED CREDITS 5 0 6,321,444 15 3,419,831

3. DEFERRED TAX BALANCE 264,200 218,900

TOTAL 9,025,190 5,066,828

APPLICATION OF FUNDS

1. FIXED ASSETS 6

GROSS BLOCK 3,607,475 3,182,311

LESS: DEPRECIATION TO DATE 761,327 607,825

NET BLOCK 2,846,148 2,574,486

CAPITAL WORK IN PROGRESS 7 442,316 3,288,464 37,622 2,612,108

2. INVESTMENTS 8 101,724 24,307

3. CURRENT ASSETS,LOANS & ADVANCES 9

a) ACCRUED INCOME 123,901 2,353

b) INVENTORIES 737,900 638,388

c) SUNDRY DEBTORS 1,531,312 902,891

d) CASH & BANK BALANCES 2,100,858 42,947

e) LOANS & ADVANCES 2,190,745 1,445,705

6,684,716 3,032,284

LESS:CURRENT LIABILITIES AND PROVISIONS

LIABILITIES 10 846,126 554,033

PROVISIONS 11 203,588 76,257

1,049,714 630,290

NET CURRENT ASSETS 5,635,002 2,401,994

4. MISCELLANEOUS EXPENDITURE (TO THE

EXTENT NOT WRITTEN OFF OR ADJUSTED)

ADVERTISEMENT & SALES PROMOTION EXPENSES 0 28,419

TOTAL 9,025,190 5,066,828

SIGNIFICANT ACCOUNTING POLICIES AND NOTES 19


Consolidated Balance Sheet as at 31st March, 2007



M. No. 010412

6161

Consolidated Profit and Loss Account for the year ended 31st March, 2007



M. No. 010412

SCHEDULE Rs. in ’000 Rs. in ’000NO. CURRENT PREVIOUS

YEAR YEAR

INCOMESALES * 12 10,024,021 8,291,767LESS: EXCISE DUTY 3,886,758 3,346,657

6,137,263 4,945,110OTHER INCOME 13 114,972 51,514ACCRETION/DECRETION TO STOCKS 14 50,746 7,334

6,302,981 5,003,958EXPENDITUREPURCHASES AND MATERIALS CONSUMED 15 2,871,160 2,422,506SALARIES, ALLOWANCES AND BENEFITS 16 423,025 285,941OTHER EXPENSES 17 2,009,222 1,423,420FINANCIAL EXPENSES 18 277,094 237,523

5,580,501 4,369,390

PROFIT BEFORE DEPRECIATION AND TAXATION 722,480 634,568DEPRECIATION FOR THE YEAR 155,744 113,317LESS:TRANSFER FROM REVALUATION RESERVE 685 155,059 687 112,630

PROFIT BEFORE TAXATION 567,421 521,938PROVISION FOR TAXATION :CURRENT TAX 41,800 42,600RELATING TO EARLIER YEAR 7,300 0DEFERRED TAX -SEE NOTE 9 (c) 45,300 14,000FRINGE BENEFIT TAX 20,500 15,000

114,900 71,600

PROFIT AFTER TAXATION 452,521 450,338ADD/(LESS): PRIOR PERIOD ADJUSTMENTS & (66,354) (49,377)

EXTRA ORDINARY ITEMS386,167 400,961

ADD:SURPLUS BROUGHT FORWARD FROM LAST YEAR 295,257 134,483LESS: OPENING DEFICIT OF A COMPANY WHICH HAS BECOMEA SUBSIDIARY OF THE SUBSIDIARY DURING THE YEAR (11,604) 283,653 134,483

PROFIT AVAILABLE FOR APPROPRIATION 669,820 535,444TRANSFERS TO:GENERAL RESERVE 200,000 185,200PROPOSED DIVIDEND/PARTLY PAID PREFERENCE DIVIDEND :PREFERENCE SHARES @ 6.75% 23,522PROVISION OF TAX ON ABOVE 3,877

EQUITY SHARES @ 25% 48,224 48,224PROVISION OF TAX ON ABOVE 8,196 6,763

83,819 54,987

BALANCE CARRIED TO BALANCE SHEET (SCHEDULE 2) 386,001 295,257EARNING PER SHARE (SEE NOTE 10 ) BASIC & DILUTED :-BEFORE PRIOR PERIOD & EXTRA ORDINARY ITEMS (RS.) 4.41 4.67-AFTER PRIOR PERIOD & EXTRA ORDINARY ITEMS (RS.) 3.72 4.16* SALES THROUGH OTHER DISTILLERIES/BOTTLING UNITS UNDER ARRANGEMENT RS. 44,845.14 LACS (PREVIOUS YEAR RS. 36,795.41LACS) NOT INCLUDED IN THE ABOVE.(REFER NOTE 16 OF SCHEDULE 19 ).ANNEXURE TO OUR REPORT OF DATE

6262

Consolidated Schedules to Statement of AccountsRs. in ’000 Rs. in ’000

AS AT AS AT31-03-2007 31-03-2006

1. SHARE CAPITALAUTHORISED170,000,000 EQUITY SHARES OF RS 2 EACH 340,000 340,0006,000,000 PREFERENCE SHARES OF RS 100 EACH 600,000 940,000 10,000 350,000

ISSUED AND SUBSCRIBED96,447,940 EQUITY SHARES OF RS 2 EACH, FULLY PAID UP 192,896 192,8965,768,276 6.75% COMPULSORILY CONVERTIBLE 576,828 0PREFERENCE SHARES OF RS 100 EACH, FULLY PAID UP (SEE NOTE 6) 769,724 192,896

AS AT AS AT31.03.2006 ADDITIONS DEDUCTIONS 31-03-2007

2. RESERVES AND SURPLUSREVALUATION RESERVE 96,060 0 685 95,375CAPITAL RESERVE 4,899 3,000 0 7,899SHARE PREMIUM ACCOUNT 36,900 343,212 213,270 166,842GENERAL RESERVE 800,000 200,000 0 1,000,000FOREIGN EXCHANGE FLUCTUATION RESERVE 83 0 2,980 (2,897)PREFERENCE SHARES REDEMPTION RESERVE 2,002 0 0 2,002

939,944 546,212 216,935 1,269,221SURPLUS 295,257 386,001

1,235,201 1,655,222NOTE:

(i) CAPITAL RESERVE :- ADDITION IS CAPITAL SUBSIDY FROM STATE GOVT. OF UTTRAKHAND.(ii) SHARE PREMIUM ACCOUNT :- DEDUCTION IS ON ACCOUNT OF ISSUE EXPENSES OF RS 125060 THOUSAND AND PREMIUM ON FCCBs OF RS 88210

THOUSANDS ADJUSTED.

3. SECURED LOANS1. TERM LOANS - FROM FINANCIAL INSTITUTIONS/BANKS

i) STATE BANK OF MYSORE (SEE NOTE 1 BELOW) 30,000 70,000ii) UTI BANK LTD. (SEE NOTE 1 & 2 BELOW) 300,000 0iii) INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD. (SEE NOTE 1 BELOW) 0 42,308iv) BANK OF INDIA,LONDON (FOREIGN CURRENCY LOAN) (SEE NOTE 1 BELOW) 222,475 311,472v) ICICI BANK LTD. (FOREIGN CURRENCY LOAN) (SEE NOTE 1 BELOW) 435,900 437,750vi) STANDARD CHARTERED BANK LTD.(FOREIGN CURRENCY LOAN) (SEE NOTE 1 BELOW) 130,770 132,270vii) STATE BANK OF INDIA FCNRB LOAN 0 59,987

2. TERM LOANS - OTHERSBHW HOME FINANCE LIMITED (SEE NOTE 4) 36,258 0

3. OTHER THAN TERM LOANS - FROM BANKS(FACILITIES EXTENDED BY PNB AND SBI AGGREGATING TORS 8482.77 LACS ARE GUARANTEED BY CHAIRMAN ANDMANAGING DIRECTOR (CMD) & MANAGING DIRECTOR)(SECURED BY HYPOTHECATION OF INVENTORIES AND BOOK DEBTS)(NOTE 3 BELOW) 1,613,296 1,274,944

2,768,699 2,328,731NOTES:1.SECURED BY A PARI-PASSU FIRST CHARGE ON GROSS BLOCK OF THE FIXED ASSETS OF THE COMPANY, BOTH PRESENT AND FUTURE.2. SECURED IN ADDITION BY SECOND CHARGE ON CURRENT ASSETS OF THE COMPANY ; GUARANTEED BY CMD AND MANAGING DIRECTOR OF THE COMPANY.3. SECURED IN ADDITION BY SECOND CHARGE ON FIXED ASSETS OF THE COMPANY.4. TO BE SECURED BY DEPOSIT OF TITLE DEEDS OF PROPERTY.5. IN RESPECT OF BOTH SECURED AND UNSECURED LONG TERM LOANS, AMOUNT DUE WITHIN ONE YEAR- RS.4034.40 LACS (PREVIOUS YEAR Rs 2068.77 LACS)

4. UNSECURED LOANS(a) LONG TERM(i) G E CAPITAL SERVICES INDIA 15,000 25,000(ii) ZERO INTEREST DEBENTURES

ICICI BANK LTD. 3,612 7,224INDUSTRIAL DEVELOPMENT BANK OF INDIA 2,898 5,797MADHYA PRADESH STATE INDUSTRIAL DEVELOPMENT CORPORATION LTD. 1,563 8,073 3,126 16,147(REDEEMABLE IN 3 ANNUAL INSTALMENTS,COMMENCING FROM 30TH DECEMBER,2005)

(iii) STANDARD CHARTERED BANK 89,351 0(iv) OTHERS-RABO INDIA FINANCE PVT. LTD., NEW DELHI 88,889 133,333

(GUARANTEED BY CMD AND MANAGING DIRECTOR)(SECURED BY A CHARGE ON A SELF GENERATED BRAND)

(b) OTHERS(i) STATE BANK OF HYDERABAD 100,000 100,000(ii) ABN AMRO BANK FCNRB 0 99,477(iii) STANDARD CHARTERED BANK 229,725 216,708(iv) SBI FACTORS & COMMERCIAL SERVICES PVT. LTD. 74,053 86,590(v) UTI BANK LTD.-FCNRB LOAN 0 150,000(vi) COMMERCIAL PAPER (SHORT TERM) 100,000 0(vii) ING-VYSYA BANK LTD. 200,000 174,610(viii)HDFC BANK LTD. 0 89,220(ix) FOREIGN CURRENCY CONVERTIBLE BONDS(SEE NOTE 7) 2,179,500 0(x) BANK OF RAJASTHAN LTD. 100,000 0(xi) UTI BANK LTD. (FARMERS/VLA SCHEME) 93,154 0(xii) YES BANK LTD. (SHORT TERM) 125,000 0(xiii)STATE BANK OF INDORE 150,000 0

3,552,745 1,091,085

6363


31-03-2007 31-03-2006

7. CAPITAL WORK IN PROGRESS (AT COST)(i) PLANT & MACHINERY 62,091 12,809(ii) ADVANCES TO VENDORS/CONTRACTORS (UNSECURED)

(CONSIDERED GOOD) :- FOR ACQUISITION OF COMMERCIAL & RESIDENTIAL PROPERTY 271,101 0- OTHERS 109,124 24,813

442,316 37,622NOTE: INCLUDING INTEREST OF RS 1404 THOUSANDS UNDER CAPITALISATION.

6. FIXED ASSETS

DESCRIPTION OF COST/REVALUATION DEPRECIATION NET BLOCK

ASSETS AS ON ADDITIONS DEDUCTIONS AS ON UPTO FOR THE WRITTEN UPTO AS ON AS ON01.04.2006 31.03.2007 31.03.2006 YEAR BACK 31.03.2007 31.03.2007 31.03.2006

INTANGIBLE ASSETSBRANDS & TRADE MARKS 500,470 0 0 500,470 35,781 24,297 0 60,078 440,392 464,689GOODWILL 95,500 0 0 95,500 9,550 4,775 0 14,325 81,175 85,950TANGIBLE ASSETSFREEHOLD LAND 145,501 44,538 0 190,039 0 0 0 0 190,039 145,501LEASEHOLD LAND 180,712 13,544 0 194,256 124,527 635 0 125,162 69,094 56,185BUILDINGS 244,014 40,574 0 284,588 26,122 8,356 0 34,478 250,110 217,892PLANT & MACHINERY 1,885,843 284,247 234 2,169,856 369,770 103,788 59 473,499 1,696,357 1,516,073FURNITURE & FITTINGS 32,519 4,497 87 36,929 10,202 1,980 57 12,125 24,804 22,317VEHICLES 59,265 29,748 6,163 82,850 18,849 6,701 2,126 23,424 59,426 40,416LEASEHOLD IMPROVEMENTS 38,487 14,500 0 52,987 13,024 5,212 0 18,236 34,751 25,463TOTAL 3,182,311 431,648 6,484 3,607,475 607,825 155,744 2,242 761,327 2,846,148 2,574,486

PREVIOUS YEAR 2,041,751 1,185,621 45,061 3,182,311 535,330 113,317 40,822 607,825 2,574,486 1,506,421

NOTES:1. VALUES WRITTEN UP ON REVALUATION:

(BASED ON APPROVED VALUERS’ REPORT) AS ON 31.12.1994/31.12.1998 AS ON 31.12.1985FREEHOLD LAND 85,422 —LEASEHOLD LAND 122,828 —BUILDING — 15,292PLANT & MACHINERY — 8,709

TOTAL 208,250 24,001

2. ADDITIONS TO PLANT & MACHINERY INCLUDES INTEREST OF RS. 7307 THOUSANDS CAPITALISED DURING THE YEAR.

8. INVESTMENTS – LONG TERM (AT COST) (EXCEPT WHERE STATED OTHERWISE)

A. FULLY PAID UP EQUITY SHARES IN FACE VALUE

BODIES CORPORATE. Rs. in ’000

(i) TRADE - UNQUOTED

RADICO SPS UK LIMITED (INCORPORATED IN UNITED KINGDOM) 9,286 1,191

1,125 SHARES OF GBP 100 EACH

DIAGEO RADICO DISTILLERY P LTD. 17,500 17,500

26,786 1,191

(ii) NON-TRADE - QUOTED (SHORT TERM)

-ANANT RAJ INDUSTRIES LTD. 0 2,114

-ASSOCIATED CEMENT COMPANIES LTD. 2 179

-ANSAL PROPERTIES & INFRASTRUCTURE LTD. 5 957

-ASIAN ELECTRONICS LTD. 10 518

-BAJAJ HINDUSTAN LTD. 1 307

-BHARAT EARTH MOVERS LTD. 10 1,047

-BHARAT HEAVY ELECTRICALS LTD. 4 942

-GREAT EASTERN SHIPPING CO.. LTD. 12 325

-MAHINDRA GESCO DEVELOPERS LTD. 5 502

-HAVELL’S INDIA LTD. 50 4,445

-HINDUSTAN LEVER LTD. 0 22

-INDIABULLS REAL ESTATE LTD. 60 10,546

-INDIA CEMENTS LTD.. 15 305

-I T C LTD. 1 192

5. DEFERRED CREDITS

–FOR ASSETS PURCHASED-UNDER HIRE PURCHASEAGREEMENTS WITH FINANCE COMPANIES/BANK 0 15

0 15AMOUNT DUE WITHIN ONE YEAR 0 15

6464

-I V R C L INFRASTRUCTURES & PROJECTS LTD. 1 147

-JAI CORP LTD. 6 679

-JAIPRAKASH HYDRO-POWER LTD. 30 108

-PARSVNATH DEVELOPERS LTD. 17 794

-RELIANCE COMMUNICATIONS LTD. 54 4,213 19,104

-RELIANCE INDUSTRIAL INFRASTRUCTURE LTD. 5 451

-RELIANCE INDUSTRIES LTD. 50 6,592

-RELIANCE PETROLEUM LTD. 500 3,631

-SIEMENS LTD. 3 1,766

-S R F LTD. 9 205

-THE TATA STEEL LTD. 2 107

-VOLTAS LTD. 2 202

-WIRE AND WIRELESS (INDIA) LIMITED 1 0

-ZEE ENTERTAINMENT ENTERPRISES LTD. 1 305

-ZEE NEWS LTD. 1 0

-TITAN INADUSTRIES LTD. 0 85

39,487 21,303

B. NON-TRADE - UNQUOTED

(i) UNITS OF MUTUAL FUNDS (SHORT TERM) : No. of Units

-ABN AMRO MANAGERS FUND 250,000 2,500

-HDFC PREMIER MULTICAP FUND GROWTH 344,381 6,054

-FRANKLIN INDIA BLUE CHIP FUND GROWTH 48,204 5,919

-TEMPLETON FLOATING RATE INCOME FUND ST 167,032 1,683

-RELIANCE VISION FUND 35,617 6,039

-RELIANCE LIQUID FUND 93,343 1,056

-RELIANCE GROWTH FUND 18,653 4,000 1,600

-SBI MAGNUM EQUITY FUND (DR) 228,141 6,057

-SBI MAGNUM INSTA CASH FUND-DR 156,729 1,699

-RELIANCE FLOATING RATE FUND DR 6,341 231

FACE VALUE/Rs 1000

(ii) FULLY PAID UP EQUITY SHARES OF NEW

URBAN COOPERATIVE BANK LTD. 60 60 60

C. NATIONAL SAVINGS CERTIFICATES 153 153 153

LODGED WITH GOVERNMENT DEPARTMENTS AS SECURITY 35,451 1,813

101,724 24,307

AGGREGATE VALUE OF INVESTMENTS: BOOK VALUE MARKET VALUE BOOK VALUE MARKET VALUE

QUOTED 39,487 37,019 21,303 22,191

UNQUOTED 26,999 0 49,228 0

UNITS OF MUTUAL FUND (NAV RS 36045 THOUSANDS,

PREVIOUS YEAR RS 1981 THOUSANDS) 35,238 0 1,600 0

101,724 37,019 72,131 22,191

NOTE: (1) NO INVESTMENT IS HELD IN BODIES CORPORATE UNDER THE SAME MANAGEMENT.

(2) PROVISION OF Rs 2468 THOUSANDS HAS BEEN MADE FOR DECLINE IN VALUE OF SHORT TERM INVESTMENTS.


31-03-2007 31-03-2006

6565

9. CURRENT ASSETS, LOANS AND ADVANCESa) ACCRUED INCOME

INTEREST ACCRUED ON INVESTMENT AND FIXED DEPOSITS 74,013 2,353

ACCRUED INCOME 49,888 0

123,901 2,353

b) INVENTORIES

(i) MATERIALS (AT LOWER OF COST OR NET REALISABLE VALUE)

RAW MATERIALS 257,447 270,318

PACKING MATERIALS 117,321 51,435

STORES & SPARE PARTS 27,804 145,125 31,341 82,776

TOOLS (AT COST) 648 660

(ii) STOCK IN TRANSIT ( AT COST ) 0 700

(iii) STOCK IN TRADE (AT LOWER OF COST AND NET REALISABLE VALUE)

FINISHED GOODS 291,455 242,574

STOCK IN PROCESS 43,225 334,680 41,360 283,934

737,900 638,388

c) SUNDRY DEBTORS (UNSECURED)

DEBTS OUTSTANDING FOR A PERIOD EXCEEDING SIX MONTHS

CONSIDERED GOOD 291,807 85,952

CONSIDERED DOUBTFUL 10,874 25,920

LESS : ADJUSTED AGAINST PROVISIONS 5,931 4,943 23,497 2,423

OTHER DEBTS CONSIDERED GOOD 1,234,562 814,516

1,531,312 902,891

d) CASH AND BANK BALANCES

CASH IN HAND 3,051 4,179

CHEQUES IN HAND 129 92

BALANCE WITH SCHEDULED BANKS :

CURRENT ACCOUNTS 146,860 27,332

DEPOSIT ACCOUNTS * 1,941,134 11,097

USD CALL DEPOSIT ACCOUNT(NON SCHEDULED) STANDARD CHARTERED BANK,DUBAI 9,598 211

AED CALL DEPOSIT ACCOUNT(NON SCHEDULED) STANDARD CHARTERED BANK,DUBAI 49

SAVINGS BANK ACCOUNTS

(EMPLOYEES’ SECURITY DEPOSIT) 37 36

2,100,858 42,947

*(i) UNDER LIEN WITH GOVERNMENT DEPARTMENT AND BANKS AS SECURITY. 12,134 8,067

(ii) WITH BANK OF INDIA, LONDON (UNUTILISED PROCEEDS OF FCCB) 1,874,369 0

e) LOANS AND ADVANCES

(UNSECURED-CONSIDERED GOOD, UNLESS

OTHERWISE STATED).

INTER CORPORATE LOANS (INCLUDING RS 20000 THOUSAND 111,243 0

DIAGEO RADICO DISTILLERIES (P) LTD, AN ASSOCIATE)

ADVANCES RECOVERABLE IN CASH OR IN

KIND OR FOR VALUE TO BE RECEIVED:

CONSIDERED GOOD 1,852,316 1,229,919

CONSIDERED DOUBTFUL 6,150 23,557

LESS : ADJUSTED AGAINST PROVISIONS 6,150 0 23,557 0

ADVANCE TO RADICO INTERNATIONAL DMCC (UAE) 0 46,856

CLAIMS AND DUTIES RECOVERABLE FROM EXCISE DEPARTMENT 131 132

EXCISE AND OTHER DEPOSITS 109,687 104,604

INCOME TAX PAYMENTS (NET OF PROVISIONS) 115,303 62,954

SALES TAX PAID UNDER PROTEST 2,065 1,240

2,190,745 1,445,705


31-03-2007 31-03-2006

6666


31-03-2007 31-03-2006

10. CURRENT LIABILITIES

CREDITORSTRADE 377,323 275,987OTHERS 386,292 763,615 201,364 477,351SECURITY DEPOSITS FROM DEALERS 17,936 38,775SECURITY DEPOSITS FROM OTHERS 7,434 5,925UNCLAIMED DIVIDEND ** 6,260 5,690OTHER LIABILITIES 23,112 20,613INTEREST ACCRUED BUT NOT DUE 27,769 5,679

846,126 554,033** THE ACTUAL AMOUNT TO BE TRANSFERRED TO INVESTOR

EDUCATION AND PROTECTION FUND WILL BE DETERMINEDON THE DUE DATES.

11. PROVISIONSEQUITY DIVIDEND (INCLUDING TAX THEREON ) 56,420 54,987PREFERENCE DIVIDEND (INCLUDING TAX THEREON ) 22,778 0PROVISION FOR LEAVE ENCASHMENT 32,416 20,534PROVISION FOR PREMIUM ON REDEMPTION OF FCCB 88,210 0CONTINGENCIES 3,764 736

203,588 76,257

Rs. in ’000 Rs. in ’000CURRENT YEAR PREVIOUS YEAR

12. SALESRECTIFIED SPIRIT AND OTHER ALCOHOLIC PRODUCTS. 8,692,114 7,455,295PET BOTTLES 136,573 98,260JAIVIK KHAD 3,338 9,441INCOME FROM OPERATIONS THROUGH OTHER DISTILLERIES/BOTTLING UNITS 850,614 617,330EXPORT INCENTIVES 61,568 26,107OTHERS 100,777 85,334TRADING INCOME 179,037 0

10,024,021 8,291,767

13. OTHER INCOMEDIVIDEND (TDS Rs NIL) 6,934 59EXCESS PROVISIONS WRITTEN BACK 1,142 12,754CENVAT CREDIT UTILISED 34,229 28,258INSURANCE CLAIMS 0 812MISCELLANEOUS INCOME 8,931 776CASH DISCOUNT FROM VENDORS 99 107COMMISSION RECEIVED 1,371 573SERVICE CHARGES 1,456 593EXCISE REVENUE SUBSIDY INCOME 48,700 0PROFIT ON SALE OF INVESTMENTS 12,108 3,280PROFIT ON SALE OF FIXED ASSETS 2 4,302

114,972 51,51414. ACCRETION/(DECRETION) TO STOCKS

OPENING STOCKFINISHED 242,574 236,880STOCK IN PROCESS 41,360 283,934 39,720 276,600

CLOSING STOCKFINISHED 291,455 242,574STOCK IN PROCESS 43,225 334,680 41,360 283,934

50,746 7,334

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15. PURCHASES AND MATERIALS CONSUMEDPURCHASES 107,068 119,608RAW MATERIALS CONSUMEDOPENING STOCK 270,318 253,961ADD: PURCHASES 1,668,959 1,391,402

1,939,277 1,645,363LESS: CLOSING STOCK 257,447 1,681,830 270,318 1,375,045PACKING MATERIALS 986,209 894,370STORES AND SPARES 96,053 33,483

2,871,160 2,422,506

16 SALARIES, ALLOWANCES AND BENEFITSSALARIES,WAGES & BONUS 361,391 250,909GRATUITY 3,480 3,090CONTRIBUTION TO PROVIDENT AND OTHER FUNDS 26,655 18,343CONTRIBUTION UNDER EMPLOYEES STATE INSURANCE SCHEME 1,132 797EMPLOYEES COMPENSATION (ESOP) - SEE NOTE 8 14,600 0STAFF WELFARE EXPENSES 15,767 12,802

423,025 285,94117. OTHER EXPENSES

POWER AND FUEL 167,097 54,410REPAIRS AND MAINTENANCE (INCLUDING STORES & SPARES CONSUMED)BUILDING 6,453 6,393MACHINERY 29,836 20,800OTHERS 7,512 43,801 6,351 33,544MACHINERY LEASE AND OTHER HIRE CHARGES 2,766 2,047INSURANCE 19,955 16,204OTHER MANUFACTURING EXPENSES 10,919 15,663RENT 29,966 16,465RATES AND TAXES 187,236 121,497SALES TAX / VALUE ADDED TAX 126,531 146,768TRAVELLING EXPENSESDIRECTORS 11,088 6,728OTHERS 99,082 110,170 70,163 76,891DIRECTORS’ FEE 245 170BAD & DOUBTFUL DEBTS/ADVANCES WRITTEN OFF 55,384 8,548LESS: ADJUSTED AGAINST PROVISIONS 45,180 10,204 0 8,548PROVISION FOR DOUBTFUL DEBTS / ADVANCES 10,207 41,215PROVISION FOR DECLINE IN THE VALUE OF CURRENT INVESTMENT 2,468 0SETTLEMENT ARISING OUT OF CORPORATE GUARANTEE GIVEN TO A BODY CORPORATE 0 15,000CHARITY AND DONATION 941 706SUNDRY BALANCES WRITTEN OFF 1,005 1,012LOSS ON SALE OF ASSETS 2,039 2,455OTHER OVERHEADS 162,502 120,269SELLING AND DISTRIBUTION EXPENSES:

FREIGHT OUTWARDS 239,240 180,566SUPERVISION CHARGES-AFTER SALES 137,497 82,599SUPERVISION CHARGES TO SUPERVISORS 70,365 33,170ROYALTY PAID 3,391 0REBATE DISCOUNT AND ALLOWANCE 148,482 116,176ADVERTISEMENT & SALES PROMOTION 522,195 338,045

1,121,170 750,556

2,009,222 1,423,42018. FINANCIAL EXPENSES

INTEREST ON:-TERM LOANS 106,850 67,269-OTHERS 259,398 120,262

FOREIGN EXCHANGE FLUCTUATION 0 21,658BANK CHARGES AND INCIDENTAL EXPENSES 27,179 29,949

393,427 239,138LESS: GAIN ON FOREIGN EXCANGE FLUCTUATION 17,874 0LESS: INTEREST ON LOANS AND BANK DEPOSITS GIVEN @ 98,459 1,615

277,094 237,523

@ INCLUDES TAX DEDUCTED AT SOURCE 4,000 353

6868

19. Significant Accounting Policies and Notes on Accounts 2006–07

(A) Significant Accounting Policies

1. Basis of Accounting

The financial statements are prepared on historical cost convention, unless stated otherwise, on a going concern basis and in accordance with the accountingstandards issued by the Institute of Chartered Accountants of India, to the extent applicable.

2. Valuation of Fixed Assets

Fixed Assets are stated at cost except to the extent revalued. Borrowing costs attributable to the qualifying assets and all significant costs incidental to theacquisition of assets are capitalised.

Freehold and Leasehold land at Rampur have been revalued as on 1st January, 1999. Building, Plant & Machinery relating to Distillery Unit acquired/installed upto Dec, 1984 have been revalued as on 31st Dec 1985.

3. Depreciation

a) Cost of Leasehold land and leasehold improvements are amortised over the period of lease.

b) Depreciation is charged for the year on straight line method at the rates and in the manner specified in Schedule XIV of The Companies Act 1956

c) On additions costing less than Rs. 5000, depreciation is provided on pro rata basis.

d) Depreciation on amount added on revaluation of assets is transferred from Revaluation Reserve.

e) The life of Brands of the value of Rs 21.00 crores and Goodwill of Rs. 9.59 crores arising out of merger during the year 2004-05 are taken to be 20 yearsand amortised.

4. Investments

Investments are valued at Cost. Provision for diminution in value of long term investment is considered , if in the opinion of management , such a decline isconsidered permanent and in the case of current investments, provision is made for the shortfall.

5. Inventories

Finished Goods and Stock in process are valued at lower of cost or net realisable value.Cost includes cost of conversion and other expenses incurred inbringing the goods to their location and condition. Raw materials, Packing Materials, Stores and spares are valued at lower of cost or net realisable value. Costis ascertained on “Weighted average” basis.

6. Revenue recognition

Sales are recognised on delivery or on passage of title of the goods to the customers.They are accounted net of trade discounts and rebates but inclusive of exciseduty and sales/trade tax.

Duty draw back is accounted for on the basis of export sales effected during the year.

7. Excise Duty

Keeping in view that State excise duty payable on finished products is not determinable, as it varies depending on the places to which they are despatched , theexcise duty on the stocks lying in factory is accounted for on clearances of such goods.The method of accounting has no impact on the results of the year.

8. Transfer pricing of Bio-Gas / Power

Since it is not possible to compute the actual cost, inter unit transfer of bio-gas & power have been valued on the basis of savings in direct fuel cost / prevailingpurchase price of power. The same has been considered for valuation of inventories.

9. Treatment of Employee benefits

The Company makes regular contributions to duly constituted funds set up for Provident Fund, Family Pension Fund, Superannuation and Gratuity, whichare charged to revenue. The employees are allowed the benefit of leave encashment as per the rules of the the Company, for which provision for accuringliability is made on actuarial valuation.

10. Impairment :

At each Balance Sheet date, the Company reviews the carrying amount of its fixed assets to determine whether there are any indication that those assets havesuffered an impairment loss. If any such indication exists, recoverable amount of the assets is estimated in order to determine the extent of impairment loss.

11. Foreign Currency Transactions

Transactions in foreign currencies are accounted for at the exchange rate prevailing on the day of the transaction. The outstanding liabilities/receivables aretranslated at the year end rates or forward rate. The resultant gain or loss are adjusted to the Profit & Loss Account.

12. Derivative Transactions

These transactions have been undertaken to hedge the cost of borrowing and comprise of principal / interest rate swaps. The income / expenses are recognisedwhen earned / incurred.

13. Research and Development

Fixed assets used for Research and Development are depreciated in the same manner as in the case of similar assets; the revenue expenses are charged off inthe year of incurrance.

14. Taxation

Deferred tax is recognised, subject to consideration of prudence, on timing differences being the difference between taxable income and accounting incomethat originate in one period and are capable of reversal in one or more subsequent periods.

Schedules to the Balance Sheet & Profit and Loss Account

6969

Rs. in ’000CURRENT YEAR PREVIOUS YEAR

(B) Notes on Accounts

1 (a) The Consolidated Financial Statement (CFS) comprise of the financial statementof Radico Khaitan Ltd. (RKL the holding company) and its wholly owned subsidiary,Radico Global Ltd.(RGL), incorporated in UAE. Radico International DMCC(RIL DMCC) incorporated in UAE is a wholly owned subsidiary of RGL andhence its accounts are also merged in CFS. Diageo Radico Distilleries Pvt.Ltd.(DRDPL) is a joint venture in which RKL holds 50% of the equity sharecapital. The first accounting year of DRDPL since incorporation ends on 30thJune, and therefore, the accounts of DRDPL has not been considered.

(b) Consolidated Financial Statement has been prepared in accordance with AccountingStandard 21 on Consolidated Financial Statement. The CFS has been preparedbroadly using uniform accounting policies and in accordance with generally acceptedaccounting principles. The effect of intra-group transactions between RKL and itssubsidiaries have been eliminated in consolidation.

(c) The accounts of the subsidiaries, being in UAE Dirham, have been translated ona uniform rate of 1 AED equal to Rs 12.16. Though, the accounting standardrequires the profit and loss items to be translated at rate near or at the date oftransactions and the balance sheet items at the closing rates, the management is ofthe view that there is no material impact in adopting the uniform rate as mentionedabove.

2 Estimated amount of Capital commitments ( Net of advances ) 207,185 111,0543 Contingent Liabilities not provided for:

i) Claims against the Company , not acknowledged as debts 89,527 71,299ii) Madhya Pradesh State Industrial Development Corporation Ltd. has demanded a

sum of Rs. 168.09 lacs besides unspecified expenses arising out of the alleged noncompliance of conditions relating to its holding of shares in Abhishek CementLtd. prior to the merger of Radico Khaitan Ltd. in the year 2002-03. Its action hasresulted in a sum of Rs 72.84 lacs held in State Bank of India being attachedunder the Orders of the Madhya Pradesh High Court. The Company has takensteps to contest the aforesaid demand.

4 The share purchase agreement dt 01.04.2004 with the erstwhile shareholders (JM group)of Anab-e-Shahi Wines & Distilleries Ltd., inter alia, provides that in the event of theactual liability for sales tax dues is less than Rs. 180 lacs provided in the books ofaccounts, the difference shall be refundable to the erstwhile shareholders with interest@ of 10% p.a w.e.f. Ist July 2004, besides payment of @ 10% p.a on the amount paybleto the sales tax authorities till the date of actual discharge of the liability. In the event ofthe actual liabilty is in excess of Rs 180 lacs, the excess shall be met by the erstwhileshareholders and documentory evidence provided to the Company. The holdingCompany received a demand notice in March 2006 for Rs 326.98 lacs, which is beingcontested in appeal.

5. a) Non Fund Based Facilities provided by Banks are also secured by a second chargeon the fixed assets of the Company.

b) Provision for contingencies represents amount set apart to meet liabilities beingcontested in appeals.

6 In the opinion of the Management and to the best of their knowledge and belief, thevalue on realisation of current assets, loans and advances in the ordinary course ofbusiness would not be less than the amount at which they are stated in the BalanceSheet.

7 The Company has, on 24th August 2006 issued and alloted 57,68,276, 6.75%Cumulative CompulsorilyConvertible Preference Shares (CCPSs) of Rs.100/- each at apremium of Rs 59.50 per share to Foreign Investors for an aggregate amount of USD20 million on the terms and conditions, as approved by the Board and the Shareholders.Each CCPSs shall be convertible at the sole option of the holder of the PreferenceShares at any time within a period of 18 months from the date of issue and allotment,into one fully paid equity share of Rs 2/- each, at a premium of Rs 98/- per share. AnyCCPSs that remain unconverted within the said 18 months period shall be compulsorilyconverted by the Company at the end of the said period at the same price.

8 The Company has raised USD 50 million through an issue of FCCBs on 26th July2006 (USD 40 million) and 25th August 2006 ( USD 10 million on exercise of greenshoe option by the manager to the issue). The FCCBs will be convertible into equityshares of the Company at any time during the currency of the bonds at the option of theBond holders at a conversion price of Rs. 172.50 per share. These are listed on theSingapore Stock Exchange. They carry a coupon rate of 3.50% per annum and have amaturity of five years and one day from the date of issue. The FCCBs unless previously

7070

converted, redeemed, or cancelled, are liable to be redeemed on the maturity at a premiumof 30.3961% of the principal amount. The premium payable on redemption has beenprovided proportionately (over the life of bonds) and accordingly, Rs 882.10 lacs (outof the total redemption premium of Rs 6624.83 lacs) on this account has been debitedto share premium account.

9 The Company has established an Employee Stock Option Plan, duly approved by theshareholders in the meeting held on 25th May 2006. This has become effective from25 July, 2006.Accordingly the Company has granted 9,45,000 equity settled options to the eligibleemployees as per the recommendation of the Compensation Committee, which will getvested over a period of 4 years from the date of the grant. The employees have theoptions to exercise the right within a period of 3 years from the date of vesting. Theearliest date of vesting for a part of the option is 24 July, 2007. The number of optionsexercisable on 24 July 2007 is a maximum of 1/3 rd of the options granted.The compensation cost of stock options granted to employees are accounted by theCompany using the intrinsic value method.Summary of Stock Option No. of stock option Weighted average

exercise price (Rs.)Option granted during the year 945,000 92.03Options exercised during the year NILOption outstanding on 31.03.2007 945,000 92.03

In respect of Options granted under the Employee Stock Options plan, in accordancewith the guidelines issued by SEBI, the accounting value of the options is accounted asdeferred employee compensation, which is amortized on a straight line basis over theperiod between the date of grant of options and eligible dates for conversion into equityshares. Consequently the schedule of salaries & benefits includes Rs. 146.00 lakhbeing the amortisation of deferred employee compensation.

10 a) Income Tax Assessment-In respect of assessment years 1993-94 and 1996-97 - the demands aggregate to Rs96.90 lacs. In view of the expected relief in appeals, no provision is considerednecessary for the demand. However,these have been adjusted in fully by thedepartment against TDS/Advance tax refunds due to the Company.

b) The Company filed revised returns for the assessment years 1997-98 to 2003-04arising out of the merger of then RKL with Abhishek Cements Ltd. The assessmentsare pending as on date.

c) Deferred tax liability ( Net) Deferred Tax Current year Deferred TaxLiability/(Asset) Charge/(Credit) Liability/(Asset)as at 01.04.2006 as at 31.03.2007

Deferred Tax LiabilityI) Difference between Book and Tax Depreciation 229,859 48,773 278,632II) Deferred Revenue Expenditure (Advertising and sales promotion) 9,566 (9,566) 0

Total 239,425 39,207 278,632Deferred Tax AssetsI) Provision for leave encashment (6,912) (4,106) (11,018)II) Provision for doubtful debts and others (13,873) 10,404 (3,469)

Total (20,785) 6,298 (14,487)

Net 218,640 45,505 264,145Rounded off 2,189 453 2,642

In line with the Accounting Standard Interpretation issued by the Institute of Chartered Accountants of India, deferred tax in respect of timing diffrences,which originate and likely to be reversed during the tax holiday period under chapter VI A of the Act have been excluded.d).The Company’s factory premises and offices were searched by the Income Tax Department on 14th February, 2006. There were no seizures of cash orstocks etc. from the Company’s premises. The Department has not so far issued any demand notices to the Company, quantifying any tax liability that mayarise out of the action taken by them. Notices have been received from the department under section 153A of the Income Tax Act,1961 for assessment of casesfor the assessment years 2000-01 to 2005-06. The assessment proceedings are pending. The Company declared additional income while filing the return ofincome for assessment year 2006-07 resulting in additional liability of Rs 73.00 lacs which has been provided for. Keeping in view the need to avoid prolongedlitigation, the Company has since excercised its statutory right to approach the Income Tax Settlement Commission for the settlement of its cases forassessment year 2000-01 to 2006-07. The liabilities arising out of the settlement petition filed by the Company, is estimated at Rs. 567.26 lacs (excludinginterest). The petition before Income Tax settlement commission is pending for admission. The liability will be provided for, out of carry forward surpluswhen finally determined.

11 Segment reporting :Based on the guideline in Accounting Standard on segment reporting ( AS- 17) issued by ICAI , the company’s primary business segment is manufacture andtrading in liquor. The liquor business incorporates the product groups, namely, rectified spirit, country liquor and IMFL which mainly have similar risks andreturns.Therefore, segment reporting is not applicable.

12 Related party disclosure as per Accounting Standard -18 :A Related parties and their relationship :I Enterprises that directly, or indirectly through one or more intermediaries,

control, or are controlled by, or are under common control with,the reporting enterprise : (1) Sapphire Intrex Ltd.

(2) Radico SPS UK Ltd.

7171

II Associates and joint ventures (1) Diageo Radico Distilleries Private Limited

III Key Manangement personnel : Dr. Lalit Khaitan , Chairman & Managing DirectorMr. Abhishek Khaitan , Managing DirectorMr. K.P.Singh , Whole Time Director

Relatives : Mrs. Kiran Devi KhaitanMrs. Deepshikha KhaitanMrs. Sheela Singh

IV Enterprises over which key manangement personnel are able to exercise significant influence : (1)Superior Packagings Pvt. Ltd.(2)Abhishek Fiscal Services Pvt. Ltd.(3)Elkay Fiscal Services Pvt.Ltd.(4)Smita Fiscal Pvt.Ltd.

B Transaction with above in the ordinary course of business :Transactions with parties referred above :

Rs.in ‘000

Joint Ventures Key Management In Which key Total& Associates Personnel & Management

their relatives Personnel havesignificant

Remuneration 28,969 28,969 (17,527) (17,527)

Sale of Goods 74,292 74,292 (0) (0)

Purchase of Fixed Assets 21,150 21,150 (0) (0)

Sale of Fixed Assets 38 38(0) (0)

Rent paid 420 6,000 6,420 (420) (6,000) (6,420)

Interest received 217 217 (0) (0)

Service Charges received 7,833 7,833 (0) (0)

Royalty paid 3,391 3,391 (0) (0)

Investment in share capital 17,500 17,500 (0) (0)

Loans given 20,000 20,000 (0) (0)

Outstanding balances as at 31.3.2007 Loans / Advances 20,000 20,000

(8,049) (8,049) Debtors 65,961 65,961

(0) (0) Payables 54,409 54,409

(0) (0)Rs.in ‘000

13 Earnings per share ( EPS ) as per Accounting Standard - 20 : CURRENT YEAR PREVIOUS YEARProfit after tax attributable to equity share holders (after deucting priorperiod and extra ordinary items,preference dividend and tax thereon 358,767 400,961Weighted average no. of equity shares of Rs. 2/- each 96,447,940 96,447,940Basic earning per share (Rs) 3.72 4.16Since the potential equity on account of ESOP,FCCB and CCPS are anti dilutive,the diluted earning remains the same (Rs) 3.72 0.00Basic earning per share before prior period and extra ordinary items (Rs) 4.41 4.67

14 Previous year figures have been re-grouped, wherever necessary, to correspond to current year figures.

Note: Figures in brackets are those of previous year.



M. No. 010412

7272

I. Registration Details Registration No. : 27278 State Code : 20Balance Sheet Date : 31.03.2007

II. Capital raised during the year Public Issue : Nil Rights Issue : NilFCCB : USD 50 millionCCPS : USD 20 millionBonus Issue : Nil Pvt. Placement : Nil

III. Position of Mobilization and Total Liabilities : 10074904 Total Assets : 10074904Deployment of Funds(Rs. in thousand)

Source of Funds:

Paid-up Capital : 192896 Reserves & Surplus: 1655222

Paid up PreferenceShare Capital : 576828

Secured Loans : 2768699 Unsecured Loans : 3552745

Application of Funds:

Net Fixed Assets : 3288464 Investments : 101724Net Current Assets : 5635002 Misc. expenditure : –Accumulated Losses : Nil

IV. Performance of Company Turnover and : 6252235 Total Expenditure : 5580501(Amount in Rs. thousand) other Income

Profit before tax : 567421 Profit after tax : 452521Earning per share : 4.41 Dividend Rate % : 25(in Rs).

V. Generic Names of four 1. AlcoholPrincipal Products / 2. Indian Made Foreign LiquorServices of Company 3. Country Liquor(as per monetary terms) 4. Grain Based Vodka



M. No. 010412

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE AS REQUIRED INPART IV OF SCHEDULE VI OF THE COMPANIES ACT, 1956.

Hirthik Roshan,our Brand Ambassador for Magic Moments Vodka,shaking hands with Abhishek Khaitan, M.D.

Let’s celebrate these moments!

Con

cept

, Des

ign

and

Prin

ted

by T

hom

son

Pre

ss

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