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

Moreover, the promoter views the present growth prospects in the alcohol sector as an
opportunity to enlarge the scale of operations of the Company.
Please refer page no. 145 and 142 of this Red Herring Prospectus for detailed profile of the
Promoters and experience of Key Managerial Personnel respectively.
7. The expansion plan of the company is partially funded from this IPO. Delay in
raising funds or under-subscription/no-subscription from IPO may result in
difficulty in implementation of Project, leading to time and cost overruns.
Management Perception
State Bank of India has sanctioned a term loan Rs. 1200 lakhs for the proposed project. The
Company is taking all necessary steps to bring the issue in line with the schedule of
implementation framed for the project. Please refer to Internal Risk Factor 9 regarding time
overrun.
The management will ensure that there is no further failure or delay in terms of meeting the
deadlines for Trial Runs and Commercial production and operations. It is however confident
of making alternate funding arrangements through a suitable mix of secured/unsecured
loans and contribution from the promoters, should there be any eventuality such as an
unforeseen delay in or failure of the issue.
8. Further equity offerings may lead to dilution of equity and impact its market price
The Company may require further infusion of funds to satisfy its capital needs and future
growth plans, which it may not be able to procure. Any future equity offerings by the
Company may lead to dilution of equity and may affect the market price of its Equity Shares.
Management Perception
In case the Company decides to raise additional funds through the issuance of equity, the
same would be done for further value creation for the shareholders of the Company and
after taking adequate consent from them.
9. The Company is yet to place orders amounting to Rs.1368 lakhs, being 27.13% of
the total cost of Plant and Machinery required for the proposed project which may
result in cost overrun and consequently the profitability of the Company
Management Perception
The Company has already identified the machineries to be installed and has floated enquiries
for all the equipments, plant and machineries, and the quotations from various parties have
already been received. Since the Company has already set up similar facilities earlier, it has
an advantage in identifying and selecting the right supplier at competitive rates. The
Company has ordered machineries/equipments worth Rs. 3674 lakhs constituting 72.87% of
the total machineries required. The Company is yet to place order for the balance machines
worth Rs. 1368 lakhs constituting 27.13% of the total machines. The costs for the same
have already been firmed up and the Company proposes to order for the machines in due
course.
The Company has, as on July 31, 2009, spent a total sum of Rs. 1716.96 lakhs towards the
project. The above expenditure has been funded from internal accruals of the Company.
10. The Company has experienced negative net Cash Flow from activities in the years
2004-05 and 2007-08.
The Company has reported a negative net cash flow from activities as detailed below:
(Rs. in lakhs)
Year 2004-05 2007-08
Net Change in Cash and cash Equivalents -15.92 -6.84
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