Dear Fellow Shareholders,
It gives me great pleasure to greet you all at this 93rd Annual General Meeting of the Company. Since we last met in the immediate aftermath of the global melt down, India has been, along with China, the first to emerge from the shadows of this global malaise. Even as the economies of the developed Western world struggle to cope with an aging population, breakdown of financial systems, steep fall in asset values and corresponding destruction of wealth and employment prospects, we are seeing yet another step in the inevitable shift of the global economy from Europe and America towards Asia.
Leading this seismic shift are the economic power houses of India and China, though both economies have different triggers. While China benefited from a unilateralist command economy, which enabled the Government to take economic steps without consultation, India, blessed with a vibrant democracy, must necessarily pay the price of this democracy in the form of consensus building. The pace of India’s growth is more measured, but, for that reason is more assured. The other significant difference between the two Asian giants is the dependence of the Chinese economy on exports and Government spending, whereas our own country is powered by the natural entrepreneurial spirit of our people and growth in market demand fuelled by domestic consumption. If one billion people were used to stretching two billion palms for alms in the past, I now see 2 billion hands reaching out for a fair share of well being.
Despite the impressive growth recorded by our economy in the last several years, in no mean measure due to deregulation and empowerment, we are indeed two economies (i) a middle class one comprising perhaps 300 million people, which is growing at double digits and powering demand led growth across categories and (ii) a much larger 800 million people strong economy that still survives from hand to mouth and sees only marginal growth. You will share my view that sustainable prosperity and double digit growth requires this section of our country to participate in the fruits of growth. Even as our metropolitan cities are creaking under the burden of unplanned growth, enterprise will need to relocate, or at the very minimum, cater to future growth in our smaller towns. These towns numbering in the several hundreds across the length and breadth of the country are by no means less prone to entrepreneurial spirit or consumer aspiration. We need, as a nation, to ensure that the green shoots of economic activity take root in our towns and villages.
Our country is fortunate that after a protracted period of highly fractured political mandates driven by narrow factionalism, the recent general elections have provided a reasonable mandate to a single secular party, even while retaining the federal structure that has added so much to the vibrancy of our political process.
Early indications are that the newly installed Government under the leadership of Prime Minister Man Mohan Singh, has recognized the need to drive reforms in an inclusive manner. Focus on rural employment, education and health, farm productivity, along with a much awaited overhaul of an archaic legal and taxation structure are all important steps along the path to sustained growth that touches all Indians and not just a small section. And, unlike the earlier torch bearers of a socialist India, the attempt now is to raise the standards of the poorest and make them active participants in the economic process rather than bringing down the affluent to the lowest common denominator.
As I visualize the UB Group and its prospects for the near and middle term, I am enthused by the backdrop which I have detailed above. The per capita consumption of almost any product or service in our trillion dollar economy is still below Sub Saharan African levels. The combination of higher incomes resulting from guaranteed employment, investment in social infrastructure and rising consumption, fuelled by the near global access to media in the country are all indicators of a nation that can continue to build on domestic consumption, while prospering at both individual and corporate levels.
We, the UB Group, have over the last several years attempted consciously to create a power house of branded consumer goods and services. United Breweries (Holdings) Limited (UBHL) as the parent, holds controlling stakes in market leading companies across extremely fast growing consumer sectors namely beer, spirits and civil aviation. These are our core businesses and all of them meet our exacting standards of domestic leadership and global relevance. We are justly proud of the fact that Kingfisher is widely acknowledged as the first global consumer brand of Indian origin. I am pleased to recall for your attention the fact that the McDowell range of products has become India’s largest consumer brand calculated by value of retail sales, overtaking Amul during the course of last year. Similarly, Kingfisher Airlines (KFA) has raised the level of service to new heights and this has been acknowledged by KFA being voted, for the second consecutive year as the Best Airline in Asia Pacific and also its continued Five Star hospitality rating.
Friends, I have personally long believed in the value of branding and UB Group companies started investments in brands in an era when most Indian companies were traditionally in the commodities business, while brands were created by multinationals. If today our companies can stand proud as acknowledged leaders in their fields, not just in India but on a global footing, it is largely due to this decades old commitment.