Financial Accounting (ACC 211)

A Financial ReportOf
MCDOWELL’S

Bachelor of TechnologyIn
Computer Science and Engineering

Submitted to

Lovely Professional University

Phagwara, Punjab

Submitted By

Name of student: ANSH RAJ Registration

Number: 12114120
 Company Profile (Question 1)

Vision of the Company:

McDowell's No1 is a brand that has been deeply entrenched among Years since 120 years.
From celebrating the bonds of friendship to enabling years to express and acknowledge their
Yaari to each other, McDowell’s No1 has created a unique bond with its 25+ million consumers.
Made by blending whisky and select Indian malts, it is ranked as the largest selling Whisky Brand
in the world as per World's Million case spirits brand 2020 ranking. It is an Indian brand
of spirits manufactured by United Spirits Limited (USL), a Diageo Group company.
It is USL's flagship brand and the largest umbrella spirits brand in the world, comprising
three categories – whisky, brandy and rum (under the name McDowell's No.1 Celebration). The
brand also has bottled water and soda. The brand began with the launch of McDowell's No.1
Brandy in 1963–64. The brand's slogan is No1 Yaari Ka No1 Spirit.

• Quality and Craftsmanship: Many companies emphasize their commitment to producing

high-quality products through traditional craftsmanship and expertise.
o Explanation: Many companies in the alcoholic beverage industry emphasize their commitment
to producing high-quality products. This often involves using traditional craftsmanship and
expertise in the production process. Quality and craftsmanship can manifest in the choice of
ingredients, the distillation or brewing process, and the attention to detail at every step of
production. Companies that prioritize quality and craftsmanship aim to deliver a consistent and
exceptional product to their customers, which can build brand loyalty.

• Customer Satisfaction: Ensuring customer satisfaction and providing enjoyable and

responsible drinking experiences is a common goal.
o Explanation: Ensuring customer satisfaction is a fundamental goal for companies in
the industry. Happy customers are more likely to become repeat buyers and brand
advocates. Providing enjoyable and responsible drinking experiences is crucial. This
includes not only the taste and quality of the product but also responsible
marketing, packaging, and information about alcohol consumption. Companies
often invest in customer service, product development, and marketing to meet and
exceed customer expectations.

• Innovation: Some brands strive to innovate and offer new and unique products or
experiences to stay competitive in the market.
o Explanation: Innovation is vital for staying competitive in the market. This can involve
creating new and unique products, flavours’, or packaging to capture consumer
interest. Companies may also innovate in marketing strategies, distribution methods,
and customer engagement to stand out from the competition. Staying up-to-date with
consumer trends and preferences is key to successful innovation.
 • Sustainability: Sustainability and responsible production practices are becoming
increasingly important in the industry, and some companies incorporate these principles
into their visions.
o Explanation: Sustainability is increasingly important in the industry due to growing
environmental awareness and regulations. Companies aim to reduce their
environmental footprint by adopting sustainable practices in sourcing, production,
and packaging. Sustainable practices may include using renewable energy, reducing
water usage, recycling materials, and supporting eco-friendly initiatives.

• Global Expansion: If the company has international ambitions, its vision might include
expanding its presence in new markets or regions.
o Explanation: Global expansion is a vision for companies looking to grow beyond
their domestic markets. Expanding into new markets or regions can increase market
share and revenue opportunities. Companies must adapt their products and marketing
to suit the preferences and regulations of each new market they enter.

• Corporate Responsibility: Companies may also include a commitment to corporate

responsibility, which can involve social and environmental initiatives, as part of their vision.
o Explanation: Corporate responsibility involves a commitment to ethical and socially
conscious business practices. Companies may engage in social initiatives, such as
supporting local communities or charities. Environmental responsibility can include
reducing emissions, conserving resources, and minimizing waste. Ethical sourcing
and fair labour practices are also part of corporate responsibility efforts.

Mission of the Company:

The mission of Diageo India, a global spirits major, as described by its Managing Director
& CEO, Hina Nagarajan, is centered around becoming a top-performing consumer products
company in India. "To be the most admired global leader in the spirits industry by creating
unique high-quality brads for consumers, driven by highly motivated employees and supported
by best-in-class processes and continued innovations. United Spirits is and will continue to be
responsible towards its stakeholders and the society."
Here are the key components of their mission:

• Sustained Double-Digit, Profitable Toplines Growth: Diageo India aims to achieve

sustained double-digit growth in its toplined revenue while ensuring profitability. This
signifies their commitment to increasing their market share and revenue in India.
o Explanation: Diageo India is dedicated to achieving continuous, double-digit growth
in its top-line revenue, reflecting its commitment to expanding market share and
revenue in India. The "sustained" aspect underscores their long-term approach,
aiming for consistent growth. By prioritizing "profitable" growth, they ensure that
this expansion is financially viable and sustainable. This mission demonstrates their
ambition to not only excel in the Indian market but also enhance their competitive
position. In essence, it represents their resolute commitment to bolstering their
presence and revenue while maintaining profitability, emphasizing both growth and
financial health in their business strategy.
• Long-Term Value for Stakeholders: The company is dedicated to creating long-term value
for all its stakeholders, which includes shareholders, customers, employees, and the
broader community. This demonstrates a focus on sustainable and responsible business
practices.
o Explanation: Diageo's unwavering dedication to generating long-term value for
stakeholders reflects its commitment to responsible and sustainable business
practices. Stakeholders encompass shareholders, customers, employees, and the
wider community. By emphasizing "long-term" value, the company prioritizes
enduring relationships and benefits over short-term gains. This commitment
extends beyond profits to encompass broader societal and environmental
considerations, exemplifying a responsible corporate ethos. In striving to enhance
value for all stakeholders, Diageo aims to foster trust, loyalty, and positive impacts
that extend well into the future, underlining its commitment to ethical and
sustainable business conduct in its operations and interactions with various
stakeholders.

• Reshaping Portfolio: Diageo India plans to restructure its product portfolio. This could
involve launching new products, rebranding existing ones, or discontinuing less profitable
offerings to align with market demands and consumer preferences.
o Explanation: Diageo India's strategic focus on reshaping its product portfolio
reflects its adaptability to evolving market dynamics. This initiative involves a
deliberate effort to assess and adjust its range of offerings. It may include the
introduction of innovative new products to meet changing consumer preferences,
refreshing the branding of existing items to enhance their appeal, or discontinuing
less profitable products that no longer align with market demands. By continuously
realigning its portfolio, Diageo India seeks to remain competitive, responsive, and
attuned to consumer needs, ensuring that its product lineup remains fresh,
relevant, and in sync with market trends and customer expectations.

• Margin Improvement: They are striving to achieve and maintain 'mid-to-high teens'
margins, indicating a commitment to improving operational efficiency and profitability.
o Explanation: Diageo India's pursuit of 'mid-to-high teens' margins reflects a
steadfast commitment to bolstering operational efficiency and profitability. This
target signifies their dedication to optimizing various facets of their business
operations. To achieve and maintain such margins, the company likely focuses on
several key strategies. Firstly, cost management becomes paramount, involving
measures to control and reduce expenses while maintaining product quality and
customer satisfaction. Streamlining production processes, supply chain
management, and resource allocation are essential components of this effort.
Secondly, innovation in product development and marketing may help command
premium pricing and enhance revenue streams, contributing to improved margins.
Additionally, effective market positioning and brand management can stimulate
customer loyalty, enabling the company to maintain price points and generate
stronger profits. Ultimately, striving for 'mid-to-high teens' margins is indicative of
Diageo India's overarching goal to not only grow revenue but also manage costs
effectively. This approach fortifies financial stability, empowers further investment
in business development, and supports the company's long-term sustainability and
growth aspirations in a competitive market landscape.
• Creating an Organization of the Future: Diageo India intends to evolve its organizational
structure and capabilities to meet the changing demands of the market. This could include
investing in technology, talent development, and leadership initiatives.
o Explanation: Diageo India's vision to create an organization of the future signifies
its proactive stance in adapting to a rapidly evolving business landscape. This entails
a strategic transformation of its organizational structure, workforce capabilities,
and operational methods. Investments in cutting-edge technology, talent
development, and leadership initiatives form the core of this endeavor. By
embracing innovative technologies, nurturing talent, and fostering leadership skills,
the company aims to remain agile, competitive, and responsive to the dynamic
market requirements. This forward-looking approach positions Diageo India to
effectively navigate industry changes, drive innovation, and deliver sustainable
growth, ensuring its relevance and success in the years to come.

• Ambitious Role in Society: The company envisions playing an ambitious and active role in
society, beyond its core business. This suggests a commitment to corporate social
responsibility and contributing positively to the communities in which it operates.
o Explanation: Diageo India's aspiration to take on an ambitious role in society
extends beyond its core business activities, emphasizing a profound commitment to
corporate social responsibility (CSR) and community engagement. This vision
signifies a broader sense of purpose that transcends profit generation. By actively
participating in societal development, Diageo India aims to address pressing issues,
promote positive change, and contribute to the well-being of the communities in
which it operates. This could involve initiatives such as supporting education
programs, promoting responsible drinking campaigns, investing in environmental
sustainability, or championing social causes. Such endeavours enhance the
company's reputation and goodwill among stakeholders, fostering trust and loyalty.
They also align with growing consumer expectations for socially responsible
businesses. Diageo's ambitious role in society demonstrates a genuine commitment
to making a meaningful impact, aligning its corporate values with the betterment of
the broader community, and exemplifying responsible corporate citizenship.
Business of the company:

McDowell's No. 1 is a brand of alcoholic beverages, particularly known for its whiskey products. It
is a subsidiary brand of United Spirits Limited, which is a part of the British alcoholic beverages
company Diageo. The primary business of McDowell's No. 1 involves the production, marketing,
and distribution of various alcoholic beverages, including:

• Whiskey: McDowell's No. 1 is well-known for its whiskey products, which include a range
of blended and premium whiskeys.

• Rum: The brand also offers rum products, catering to consumers who prefer this distilled
spirit.

• Vodka: Some variants of McDowell's No. 1 may also include vodka among their offerings.

• Brandy: Brandy is another type of alcoholic beverage that may be part of the brand's
portfolio.

• Beer: In some markets, McDowell's No. 1 may also include beer products in its portfolio.

• Flavoured and Specialty Spirits: The brand may produce flavoured or specialty spirits to
cater to specific consumer tastes and trends.

• Variety of Brands: Under the McDowell's No. 1 umbrella, there may be multiple product
lines or brands, each offering a range of alcoholic beverages with distinct characteristics
and flavour profiles.

• Marketing and Distribution: The brand invests in marketing and distribution to promote its
products and ensure they are available to consumers through various retail channels,
including liquor stores, bars, and restaurants.

• Responsible Drinking Initiatives: As part of its corporate responsibility, McDowell's No. 1

may also engage in responsible drinking initiatives, which can include awareness campaigns
and programs to promote responsible alcohol consumption.

• Other Spirits: Depending on the market and regional preferences, McDowell's No. 1 may
offer other spirits and alcoholic beverages.
 Board of Directors:

1. Mahendra Kumar Sharma, Chairman & Independent Director

Mahendra Kumar Sharma holds Bachelors’ degrees in Arts and

Law, PG Diplomas in Personnel Management and Labour Law,
and has completed the Advanced Management Programme at
the Harvard Business School. Mr. Sharma joined Hindustan
Unilever Ltd (HUL) in 1974, and retired from the company in
2007. He was a member of the Board of Directors of HUL for 12
years, including seven years as Vice Chairman. He is the founder
of M.K. Sharma & Associates and has rich experience in the field
of mergers and acquisition, corporate restructuring and law. He has been a member of the
Corporate Law Committee of the Ministry of Corporate Affairs, and the Naresh Chandra
Committee on Corporate Governance, as well as being involved in several industry associations.
He was Chairman of the Board of Directors of ICICI Bank and was on the board of prestigious
companies such as Wipro, Asian Paints and Blue Star. He is also a member of the Executive Board
of the Indian School of Business.

2. Hina Nagarajan, Managing Director and Chief Executive Officer

Hina was the Managing Director, Diageo - Africa Emerging Markets

(AEM) since August 2018, where she was leading business
operations across Ghana, Ethiopia, Cameroon, Indian Ocean,
Angola and other WACA countries. A passionate leader known to
drive change, with over three decades of experience in the FMCG
industry, Hina has held several leadership positions at Reckitt,
Mary Kay India and Nestlé India. Hina is an accomplished senior
leader with a proven track record in business transformation and
development in complex emerging markets. She has a unique and versatile experience of
building high quality and growth businesses in the diverse power markets of India, China, SE
Asia and Africa across several sectors (food & beverage, health & hygiene, nutrition, beauty,
home décor). She has also been an active and passionate advocate for inclusion and diversity
in Africa and Diageo more broadly. As a top woman leader, she is also a strong advocate of
creating opportunities for women and has contributed extensively to Inclusion & Diversity
Programmes. She holds a Bachelor’s degree from Delhi University and MBA from the Indian
Institute of Management, Ahmedabad.
3. D. Sivanandhan, Independent Director

D. Sivanandhan is a highly regarded IPS officer with an illustrious

career spanning 36 years. After earning a postgraduate degree in
Economics, he joined the IPS in 1976 and retired as the Director
General of Police of Maharashtra state police in 2011. He has held
several senior positions in the Intelligence Bureau, Central Bureau of
Investigation and Mumbai crime branch. He has also served as
Commissioner of Police of Nagpur, Thane city and Mumbai. He has been awarded the
meritorious service medal (1993), the president’s distinguished service medal (2000) and also the
Internal Security Medal (1998). He has worked in the National Security Council Secretariat, New
Delhi as a member of the special task force and also as the Security Adviser to the RBI for three
years. He is on the Board of several prestigious companies.

4. Dr. (Mrs.) Indu Shahani, Independent Director

Dr. lndu Shahani is currently the Founding President & Chancellor

of ATLAS SkillTech University. She is the Former Sheriff of Mumbai
(2008-09), Member of the University Grants Commission (2011-14)
and Principal of H.R. College of Commerce & Economics, Mumbai
(2000-16). An Academician with over four decades of institution
building experience. She has played the lead role in nurturing her students to become
professionals with a heart. She was the first Indian to be appointed Vice-Chair on the Board
of Governors of the International Baccalaureate. She has been invited to leading Corporate
Boards and key listed companies providing an impetus for 'Academia - Industry
Collaboration', the subject of her PhD from The University of Mumbai. Dr. Shahani is an
independent Director on the Board of Colgate Palmolive (India) Limited, HSBC Asset
Management, Bajaj Electricals Limited, Clariant and Lighthouse Learning Limited.

5. Rajeev Gupta, Independent Director

Rajeev Gupta founded Arpwood Financial Group in 2012,

comprising an M&A investment bank (Arpwood Capital Pvt Ltd)
and a mid-market PE buyouts firm (Arpwood Partners). Prior to
setting up Arpwood, he was a global partner at The Carlyle
Group, and before that the Joint Managing Director of DSP
Merrill Lynch Ltd. He has an MBA from IIM Ahmedabad (1982) and a B.Tech from IIT BHU
 (1980). Arpwood Capital, known for strategic financial advice and reliable execution of
complex M&A transactions, ranks among the top 5 M&A advisors in India. Its marquee
transactions include Essar Oil sale ($13 Billion), L&T Electricals sale ($2 Billion), Lafarge India
sale ($ 1.4 Billion), Tata Steel acquisition of Bhushan Steel ($5.4 billion), and Piramal
acquisition of DHFL ($ 5 Billion). Arpwood Partners specializes in mid-market control PE
investments. Its investing partners have a cumulative three decades investing experience
with large global buyout Funds.

6. V. K. Viswanathan, Independent Director

V.K. Viswanathan is a Chartered Accountant from the Institute of

Chartered Accountants of India. He has completed several advanced
leadership management programmes from many prestigious
institutions, including Stanford University. Mr. Viswanathan has over
40 years' experience in the automotive and consumer goods sectors
and was Chairman of Bosch Limited. He has held various leadership positions in Bosch Group,
Hindustan Unilever Limited and Tata Consultancy Services across the globe, including India,
UK, Germany and USA. He is also on the board of several companies, including Bharti Airtel
Limited, ABB India Limited, HDFC Life Insurance Company Limited, TransUnion CIBIL Limited.
He has also served as a Management Committee member of the Indo-German Chamber of
Commerce.

7. Mark Sandys, Non-executive Director

Mark Sandys has worked at Diageo for 25 years, beginning as a

graduate trainee. In July 2022, Mark Sandys was appointed Chief
Innovation Officer for Diageo, responsible for the full portfolio of
brands worldwide and for all of Diageo’s R&D, sustainability, and
digital innovation. Prior to this role, Mark was the Global Head of
Beer, Baileys, Smirnoff & Captain Morgan. In this role, Mark was accountable for all of
Diageo’s beer businesses worldwide and some of the largest and most loved spirits brands in
the world. Before this, Mark was the Category Director, Whisky & Reserve, for Diageo Asia
Pacific, based in Singapore, and the Marketing Director for Diageo Russia and Eastern Europe,
based in Moscow. He first joined Diageo in 1997 as a graduate trainee and worked for first
five years in sales and marketing roles on the Guinness brand in GB, before managing the Gin
portfolio in the UK and then taking the position of Strategy & Innovation Director for the
Baileys Global Brand team in Dublin.
8. Mamta Sundara, Non-executive Director

Mamta Sundara is a graduate from the National Law School of

India University, Bangalore and has over 23 years of work
experience. She has worked at Diageo for over 14 years in various
roles and locations. Mamta took on her current role of Global
Counsel - Business Integrity & Commercial Operations based in
London in January 2023. In this role Mamta is accountable for
Diageo’s global Business Integrity program as well as legal support to global supply chain &
procurement and Diageo’s shared service business. Prior to her current role, Mamta was the EVP
and General Counsel, for United Spirits Limited from 2015. Based in India, Mamta played a key
role in advising the USL Board on complex legacy matters, while delivering the highest standards
of corporate governance and mitigating risks for the business, alongside enhancing USL’s real
estate, brand protection and corporate security strategies. Mamta has been a strong partner to
the Diageo India Executive Committee in managing the volatility in the India business while
delivering business goals and has played a critical role in embedding compliance within the
Diageo India business.

9. Pradeep Jain, Executive Director & Chief Financial Officer

Pradeep Jain is the Executive Director & Chief Financial Officer at

Diageo India. He is also a member of Diageo’s Global Finance
Leadership and Diageo India’s Executive Committee. His
responsibilities include overseeing Finance, Accounting, Treasury,
Tax, Governance, Compliance, Investor Relations, Secretarial,
Business Strategy, and IT functions. Pradeep is also leading Diageo
India’s digital transformation journey and productivity initiatives
to achieve greater performance across the business value chain.

An experienced Finance professional, Pradeep has spearheaded several organization-wide

transformation initiatives from sourcing to consumer fulfilment while scaling ESG performance. A
problem-solver, Pradeep has leveraged data-driven insights and a customer-centric approach to
steer the organization through complex business environments. He is a massive advocate of the
people agenda and has worked passionately to build varied capabilities within the finance team.
He has been instrumental in establishing governance standards within the Company.

Prior to joining Diageo, Pradeep held leadership positions across well-known organisations such
as Eicher Motors, PepsiCo, and Pidilite Industries. As an agile leader, with an outstanding track
record of over 25 years across sectors, Pradeep has a vast experience in general finance and
strategic financial planning, treasury, controllership, optimal capital structuring and allocation,
global organisation design and performance transformation. He has also played a pivotal role in
leading and building large finance teams, and honed their capabilities in pursuance of
organisational strategies and future-proofing the organisation.

Pradeep is a Chartered Accountant from the Institute of Chartered Accountants of India and an
alumnus of the Shri Ram College of Commerce, Delhi University.
Competitors:

1. Officer’s Choice

2019: 30.6m
2018: 26.3m
% change: -10.0%

Place last year: 1

It was an unfortunate year for Officer’s Choice, which slipped from the top spot as the world’s
biggest-selling Indian whisky. The brand dropped by 10% to below the 30m-case threshold for the
first time in five years.

Produced by Allied Blenders & Distillers, the brand was 5m cases ahead of McDowell’s No.1
Whisky in 2018. Could 2020 see the brand continue to slip further down the list as Imperial Blue
comes hot on its heels?

2. Imperial Blue

2019: 26.3m
2018: 22.7m
% change: 16%

Place last year: 3

Witnessing the largest increase among our top 10 best-selling Indian whiskies is Pernod Ricard’s
Imperial Blue brand, which rose by 16% to 26.3m cases. The brand has witnessed five years of
consistent year-on-year growth.

This year could see the brand reach 30m cases if it continues at this growth rate and close the gap
between it and nearest competitors, Officer’s Choice and McDowell’s No.1.
 3. Royal Stag

2019: 22.0m
2018: 21.6m
% change: 2.1%

Place last year: 4

Pernod Ricard’s Royal Stag brand also witnessed five years of continued growth after reporting a
small 2.1% increase to reach 22.0m cases.

The brand is one of three Indian whiskies owned by Pernod Ricard in the ranks of million-case
brands.

4. Original Choice

2019: 12.7m
2018: 11.5m
% change: 10.3%

Place last year: 5

One of only two brands to record double-digit growth in 2019 was John Distilleries’ Original Choice
whisky. The brand grew a healthy 10.3% to 12.7m cases after four years in growth.

John Distilleries also produces the high-volume Bangalore Malt and the super-premium Paul John
single malt Indian whisky brands.

The Original Choice range also consists of a rum, gin and a VSOP brandy

5. Haywards Fine

2019: 9.6m
2018: 9.4m
% change: 2.1%

Place last year: 6

The third United Spirits-owned brand to make our top 10 list is Haywards Fine, which saw volumes
grow 2.1% to 9.6m cases. The brand last hit 9.6m cases in 2014.

The Indian whisky is edging closer to the 10m-case mark after five years of continued growth and
could be set to surpass the milestone in 2020.
 6. 8PM

2019: 8.5m
2018: 8.2m
% change: 3.9%

Place last year: 7

Also sticking to its seventh place spot is Radico Khaitan’s 8PM brand, which witnessed a 3.9% rise
in 2019 to 8.5m cases. The brand has witnessed consistent growth rates over the last five years.

Earlier this year, Radico Khaitan, owner of Rampur Indian single malt whisky and Jaisalmer
gin, began production of hand sanitiser at its Rampur Distillery on a permanent basis to “support
ongoing global health care”.

7. Blenders Pride

2019: 7.7m
2018: 7.3m
% change: 4.6%

Place last year: 8

Maintaining its eighth place position on our list of best-selling Indian whiskies is Blenders Pride,
owned by French firm Pernod Ricard.

The brand continued its upward trajectory, climbing by 4.6% to 7.7m cases in 2019.
Launched in 1995, Blenders Pride is blended from Indian grain spirit and Scottish malt whisky.

8. Bagpiper

2019: 6.1m
2018: 5.6m
% change: 9%

Place last year: 10

Returning to growth last year with an encouraging 9% increase was Royal Challenge stablemate
Bagpiper, also owned by United Spirits.
Following two years of declines, the brand could be on its way to reaching the 7m case mark it last
recorded in 2016.
 9. Royal Challenge

2019: 5.5m
2018: 5.6m
% change: -0.4%

Place last year: N/A

A new entry to our top 10 list is United Spirits-owned Royal Challenge whisky, despite a sales dip
of 0.4% to 5.5m in 2019. The whisky registered its first decline in five years.

The brand is one of a number of Indian whiskies owned by Diageo’s Indian arm United Spirits.
Royal Challenge was launched in India in the early 1980.

IDENTIFICATION & INTERPRETATION OF THE

ACCOUNTING CONCEPTS AND CONVENTIONS
(GIVEN IN THE ANNUAL REPORT 2022-23)
(Question 2 & 3)

1st Identification:
2nd Identification:
3rd Identification:
4th Identification:
5th Identification:
6th Identification: