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

The Company has reported a net negative cash flow from activities in the year 2004-05 and
2007-08. The negative net cash flow during these years was due largely from negative cash
flows from investing activities in these years.
11. Trade Marks for the Company’s product brands are under the process of
Registration as on date. The Company does not have, as on date, an effective
system, to protect its existing intellectual property rights. The Company may not
be able to obtain timely injunctive or equitable relief to protect its intellectual
property. If it fails to protect its material intellectual property rights, it may have
material adverse effect on its business. Also, the ineffective protection and
enforcement of its intellectual property rights may encourage some unauthorised
parties to infringe upon its intellectual property rights. This may also have material
adverse effect on its business.
Management Perception
The Company makes continuous endeavour to innovate and develop intellectual
property rights and makes applications for the registration of these rights, details of which
can be referred to at page no. 116 of this Red Herring Prospectus. So, at every point of time,
several applications remain pending for registration. The Company is in the process of
devising a stronger system for effective protection of its intellectual property rights. Such
protection shall be more important as soon as it procures some existing well known
marks/brands which are also one of the objectives of this IPO.
Also, the Company neither uses any patented process nor produces any product which is
protected by any patent. It has also not sought any patent protection for any of its products
or processes. The Company has not undertaken any Research & Development activities to
develop any product or process which may be a subject matter of patent protection in
future. The Company consequently does not have any risk on account of opening up of
patent regime.
12. The Company’s dependence on its promoters is tremendous, and any inability on
the part of the promoters to contribute to the growth and business of the Company
may affect its performance.
Management Perception
The Company is dependent on the experience and efforts of its promoters, as is applicable to
any other company/industry. However, the Company has been in this business for about a
decade and a half. Generations of the promoters’ family have been associated with the
alcohol industry, its business, and critical functions such as development of new products,
marketing, and other operations of the Company. The Company also has a qualified team of
marketing executives, finance professionals and other professionals who are involved in the
day-to-day operations of the Company.
13. The Company’s’ products lack adequate brand presence and awareness and also
have limited geographical presence across the country. Further, the Company is
dependent on a single customer for bottling of IMFL products.
The Company’s products and brand presence are limited to a few states and are yet to have
a national reach. The Company’s failure or inability to accomplish a national presence may
impede its growth and business prospects as compared to established players.
Management Perception
The Company already has branded products in its Country Liquor segment and the IMFL
segment and its market share is competitive. At present, the Company has presence in the
states of Haryana, Rajasthan, Delhi, Chandigarh, Uttar Pradesh, Kerala, Andhra Pradesh and
Karnataka and has plans to increase the spread of its brand. Through bottling of BDA Private
Limited’s (BDA’s) IMFL products such as Officer’s Choice Prestige Whisky, the awareness
level of Company’s name in the market has improved. The Company is making efforts to
acquire Canteen Stores Department (CSD) registered brand as it intends supplying to the
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