RED HERRING PROSPECTUS Dated August 24 ... - Globus Spirits

The Company constantly endeavours to procure raw materials at competitive prices on
account of its long-term association with its suppliers and constantly developing new
sources.
3. Change in Technology and trends in the industry may affect Company’s ability to
compete
Any failure to keep abreast of the latest trends in the IMFL industry may adversely affect the
competitiveness and ability of the Company to compete with newer generation products.
Management Perception
The Company is in the liquor business for about a decade and a half, and has the requisite
experience and ability to adapt to newer generation products and technology. The Company
is well aware of the development of market description, consumer preferences, competition,
regulations etc. The current project is in line with the Company’s constant endeavour to
keep itself abreast of latest technological advances and systems.
4. The Company’s sustained growth depends on its ability to attract and retain skilled
personnel. Failure of the Company to attract and retain skilled personnel could
adversely affect the Company’s growth prospects, performance and results.
Management Perception
The Company has a professional set-up and a competent human resources division. The
Company constantly attempts to devise employee-friendly policies to enable a sound human
resource policy to take shape and retain its key management personnel and talent. Some of
the key management personnel have been with the organization for quite some time. The
Company constantly endeavours to take adequate care of its employees by providing various
facilities. The Company does not foresee any major problem in recruiting fresh talent and
also retaining its existing key personnel.
5. One of the objects of this IPO is acquisition of Canteen Stores Department (CSD)
registered IMFL Brands aggregating to Rs. 300 lakhs. This acquisition cost of Rs.
300 lakhs for the Canteen Stores Department (CSD) registered IMFL Brands is not
based on any independent/expert valuation; but is based on internal estimates of
the Company.
Since there is no independent valuation of the brands proposed to be acquired, it may result
in the Company’s inability to negotiate a brand of choice as it may cost more than the
amount raised, or alternatively the Company may possibly pay more than the actual value of
the brand on account of lack of expert valuation.
Management Perception
Most of the brands being supplied to CSD are in the hands of established players. The
Company is already negotiating with certain leading manufacturers for purchase of a CSD
registered brand. In this regard, the Company has made progress in its discussions with M/s
Alcobrew Distilleries India Pvt. Ltd.
6. Competence of the Promoters in handling Project of this size is yet to be tested
The cost of the project has been financially appraised by the State Bank of India. The project
cost is substantial in relation to its current size of operations. Although the promoters have
experience in the Alcohol industry, their competence in handling a project of this magnitude
remains to be demonstrated. An equity investor is therefore faced with an uncertainty of
performance by the management.
Management Perception
The Company has drawn out a business plan for the activities to be pursued in the alcohol
industry. The promoter of the Company has considerable experience in the alcohol industry
for over 24 years. The Company has appointed senior and experienced professionals who
have the requisite experience of setting up similar facilities in the past.
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