WINSOME BREWERIES LIMITED
CHAIRMAN'S LETTER
Dear Shareholders,
The year 1998 marked another year of trade depression, exhibiting the
growth rate of Indian economy nose-diving from 7.8% in 1996-97 to 5.8%.
Being arrested with global economic recession, investment sentiments have
reached at a low ebb. Due to various inhibitive domestic fiscal policies
and uncertain political climate, we fall in line, to the grip of market
depression and economic slowdown of the country, which have been reflected
more or less in each segments of industry. However the second quarter of
1999 is evidencing a market resilience, with an all-time low inflation rate
of 1.30%, that keeps us buoyant with optimistic vision for sound recovery
of industry, from the quagmire of recession
The restricted license & permit-raj, though have been a matter of past, one
of the most daunting problem faced by breweries industry, is a
discriminatory tax regime in the country. The government levies vary from
state to state. In addition to the basic excise duty, there are a large
number of other taxes and fees. As a result, the Govt. levies account for
about 50% to 70% of the final cost to the consumer. The Beer produced in
one state and sold in another state attracts an export fee and an import
fee in addition to the basic excise duty. Such tariff structure compels the
brewer companies to spread their units in various states which goes against
the interest of small breweries units. For this reason, we are not able to
expand our market base, in the states of Andhra Pradesh, Tamilnadu,
Karnataka & Maharashtra, which are potential markets for alcoholic
beverages. So I would make a strong plea, that ramifications of this
serious issue be examined by various arms of the government for moderation
and harmonisation of tariff structure.
The past formative years were a period of considerable re-organisation and
re-engineering of our efforts and strategies to consolidate-our position in
the highly competitive Beer market. Hence competitiveness continues to be a
compelling agenda in coming days. The challenge of attaining international
quality parameter is at once humble, exciting & inspiring. Our strength &
prowess lies with the international quality of our products which is the
result of our advanced state-of-art technology collaborated with world's
renowned Henninger Brau of Germany. It has made our products distinct and
exclusive. When viewed with national context, ours is a tiny enterprise,
where major breweries control 73% of the total market share. Despite of all
odds, in these turbulent years we are determined with unequivocal aim of
forging ahead in the country, gradually clicking a sizable portion of
market share with our unparalleled quality.
So far the shareholders interest is concerned, I am to say that the
Management is acutely aware of the need improve the present profitability
on an on going basis, that will make high returns on their hard-earned
money future days.
In line with such reasoning, my vision for posterity, is for a low
leveraged, high growth oriented, and consistent profitable Company.
Sincerely yours.
R.K. BAGRODIA
CHAIRMAN