United Breweries (Holdings) Ltd

To

The members of

United Breweries (Holdings) Limited.

1. We have audited the attached Balance Sheet of United Breweries (Holdings)Limited, Bangalore, as at 31st March 2010, the Profit and Loss Account and also theCash Flow Statement for the year ended on that date annexed thereto. These financialstatements are the responsibility of the Company’s management. Our responsibility isto express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted inIndia. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by the management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 issued by theCentral Government of India in terms of sub-section (4A) of Section 227 of the CompaniesAct, 1956 (1 of 1956), we enclose in the Annexure a statement on the matters specified inparagraphs 4 and 5 of the said order.

4. We draw attention, without qualifying our report, to Note No 9(iii) in Schedule 12regarding diminution in the carrying value of investment, Note No. 11 in Schedule 12regarding the delay in recovery of unsecured advances to subsidiaries amounting to Rs.13,151.541 million and Note No. 13 in Schedule 12 regarding company’s exposure toguarantees given on behalf of subsidiaries.

5. Further to our comments in the annexure referred to above, we report that:

i we have obtained all the information and explanations, which to the best of ourknowledge and belief were necessary for the purpose of our audit;

ii in our opinion, proper books of account as required by law have been kept by thecompany so far as appears from our examination of those books;

iii the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the books of account;

iv in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statementdealt with by this report comply with the accounting standards referred to in sub-section(3C) of section 211 of the Companies Act, 1956;

v on the basis of written representations received from the directors and taken onrecord by the Board of Directors, we report that none of the directors is disqualified ason 31-03-2010 from being appointed as a director in terms of clause (g) of sub-section (1)of section 274 of the Companies Act, 1956; and

vi in our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts, read together with the notes thereon, give the informationrequired by the Companies Act, 1956, in the manner so required and give a true and fairview in conformity with accounting principles generally accepted in India;

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at31-03-2010;

(b) in the case of the Profit and Loss account, of the profit for the year ended onthat date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended onthat date.

Re: United Breweries (Holdings) Limited

(i) (a) The company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets.

(b) All the assets have not been physically verified by the management during the yearbut there is a regular programme of verification which, in our opinion, is reasonablehaving regard to the size of the company and the nature of its assets. Discrepanciesnoticed on verification during the year have been properly dealt with in the books ofaccount.

(c) During the year, the company has disposed off a portion of its land and building.This transaction has not affected the "going concern" status of the company.

(ii) (a) As explained to us, the inventory has been physically verified during the yearby the management. In our opinion, the frequency of such verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the company and the nature of itsbusiness.

(c) In our opinion and according to the information and explanations given to us, thecompany is maintaining proper records of its inventory. The discrepancies noticed onphysical verification of inventory have been properly dealt with in the books of account.

(iii) (a) In our opinion and according to the information and explanations given to us,the company has granted unsecured loans to a party covered in the register maintainedunder section 301 of the Companies Act, 1956. The amount of such loans outstanding as at31-3-2010 is Rs. 3,212.275 million. The rate of interest and other terms and conditions ofloans given by the company are prima facie not prejudicial to the interest of the company.The repayments of the dues are in accordance with terms and conditions stipulated.

(b) The company has not taken any loans from companies, firms or other parties coveredin the register maintained under section 301 of the Companies Act, 1956. Therefore, theprovisions of clause 4(iii)(e) to 4(iii)(g) of the Companies (Auditor’s Report)Order, 2003 are not applicable to the company. (iv) In our opinion and according to theinformation and explanations given to us, there exists in the company an adequate internalcontrol system commensurate with the size of the company and the nature of its businesswith regard to purchases of inventory, fixed assets and with regard to sale of goods andservices. During the course of our audit, we have not observed any continuing failure tocorrect major weaknesses in the internal control system of the company.

(v) (a) In our opinion and according to the information and explanations given to us,the particulars of all contracts or arrangements that need to be entered into the registermaintained under section 301 of the Companies Act, 1956 have been so entered. (b) In ouropinion and according to the information and explanation given to us, the transactionsmade in pursuance of contracts or arrangements entered in the register maintained undersection 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs inrespect of any party during the year have been made at prices which are reasonable havingregard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, thecompany has complied with the provisions of section 58A and 58AA and other relevantprovisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules,1975 with regard to the deposits accepted from the public. No order has been passed by theCompany Law Board or Reserve Bank of India or any Court or any other Tribunal in relationto the deposits accepted by the company.

(vii) In our opinion and according to the information and explanations given to us, thecompany has an internal audit system commensurate with the size and nature of itsbusiness.

(viii) In our opinion and according to the information and explanations given to us theprovisions of section 209(1)(d) of the Companies Act, 1956 with regard to maintenance ofcost records are not applicable to the company.

(ix) (a) In our opinion and according to the information and explanations given to us,the company is generally regular in depositing with appropriate authorities undisputedstatutory dues including dues in respect of provident fund, investor education protectionfund, employees state insurance, income tax, sales tax, wealth tax and other materialstatutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amountspayable in respect of income tax, wealth tax, service tax, sales tax, excise duty etc.,were in arrears as at 31-3-2010 for a period of more than six months from the date theybecame payable except an amount of rupees 0.700 million in respect of customs duty.

(c) According to the information and explanations given to us, following is the list ofdues on account of taxes, which have not been deposited on account of disputes.

(x) The company does not have any accumulated losses. The company has not incurred cashlosses during the financial year covered by our audit and during the immediately precedingfinancial year.

(xi) In our opinion and according to the information and explanations given to us, thecompany has not defaulted in repayment of dues to financial institution or banks. Thecompany has not issued any debentures.

(xii) In our opinion and according to the information and explanations given to us, thecompany has not granted any loans on the basis of security by way of pledge of shares,debentures and other securities. Therefore, the provisions of clause 4(xii) of theCompanies (Auditor’s Report) Order, 2003 are not applicable to the company.

(xiii) In our opinion and according to the information and explanations given to us,the company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, theprovisions of clause 4(xiii) of the Companies (Auditor’s Report) Order, 2003 are notapplicable to the company.

(xiv) In our opinion and according to the information and explanations given to us, thecompany is not dealing in or trading in shares, securities, debentures or otherinvestments. Therefore, the provisions of clause 4(xiv) of the Companies (Auditor’sReport) Order, 2003 are not applicable to the company.

(xv) In our opinion and according to the information and explanations given to us, theterms and conditions on which the company has given guarantees for loans taken by othersfrom banks or financial institutions are not prejudicial to the interest of the company.

(xvi) In our opinion and according to the information and explanations given to us, theterm loans raised during the year have been applied for the purposes for which they wereraised.

(xvii) In our opinion and according to the information and explanations given to us andon an overall examination of the balance sheet of the company, we report that no fundsraised on short-term basis have been used for long-term investment.

(xviii)According to the information and explanations given to us, the company has notmade any preferential allotment of shares to any parties covered in the registermaintained under section 301 of the Companies Act, 1956. Therefore, the provisions ofclause 4(xviii) of the Companies (Auditor’s Report) Order, 2003 are not applicable tothe company.

(xix) According to the information and explanations given to us, the company has notissued any debentures during the year. Therefore, the provisions of clause 4(xix) of theCompanies (Auditor’s Report) Order, 2003 are not applicable to the company.

(xx) According to the information and explanations given to us, the company has notraised any money during the year by public issue. Therefore, the provisions of clause4(xx) of the Companies (Auditor’s Report) Order, 2003 are not applicable to thecompany.

(xxi) According to the information and explanations given to us, no fraud on or by thecompany has been noticed or reported during the course of our audit.