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

The interest and finance charges grew by 0.81% in proportion to the Total Income from FY
ended 2007-08 which was on account of an increase in the borrowings raised in order to fund
the enhanced operations of new IMFL market. The FY 2008-09 also witnessed an escalation in
the interest rates.
Depreciation
Depreciation was charged at INR 573.48 Lac in FY 2008-09 as against INR 394.69 Lac in the
previous year. The increase can be attributed to the depreciation charged on the additional gross
block of Rs. 2589.75 lacs purchased during the Financial Year.
Profit after Tax (PAT)
In absolute terms PAT grew from Rs. 1264.16 lacs in FY 2007-08 to Rs. 1293.15 lacs in FY 2008-
09. Although the proportionate earnings grew with the increase in value added products, PAT as
a percentage to Total Income decreased from 7.82% in FY 2007-08 to 6.40% in the FY 2008-09
which was on account of Raw Material Costs, Selling Expenses, Finance Cost and Depreciation.
For Financial Year Ended 31st March 2008 vis a vis 31st March 2007
Sales Revenues
During FY 2007-08, net sales (net of excise) jumped to INR 15692.37 Lac from INR 11199.53
Lac in the previous year. An over 40% rise is clearly explained by increase in sale of Industrial
Spirit and number of Country Liquor cases in FY ending 2008. Against 90,60,121 BL of Industrial
Spirit and 41,86,322 cases of Country Liquor sold in FY 2006-07, GSL sold 1,23,94,550 BL of the
Indl. Spirit and 47,38,214 of Country Liquor. IMFL sales of franchise & own brands also started
during FY 2007-08. This also contributed substantially to the growth in sales revenue.
Total Income
In the total income besides sales, Other Income also grew from INR 49.21 Lac in FY 2006-07 to
INR 276.36 Lac in FY 2007-08. During FY ended 2008, GSL installed and commissioned
“decanters” in its Behror, Rajasthan Unit for collecting sludge. The sludge was sold as cattle feed
which fetched additional revenue clubbed as Miscellaneous Income with the Other Income in
Profit and Loss Account of that year.
Raw Material Consumed
Raw Material Consumed during FY 2007-08 was 60.93 % of the Total Income at INR 9844.45
Lac against 63.03% of Total Income in FY 2006-07 at INR 7167.89 Lac. In proportion to Total
Income the raw material consumption dropped by approx 2% as the year witnessed production
of IMFL with higher value addition.
Manufacturing Expenses
Manufacturing expenses dropped from 17.63% of the Total Income in 2006-07 to 14.40% in
2007-08. Although the main factor again was introduction of value added products resulting in
higher contribution, during the previous financial year GSL concentrated on more judicious use
of resources and input costs, which further optimized the operations.
Staff Costs
Given economies of scale the staff cost dropped marginally from 1.77% of the Total Income in
2006-07 to 1.60% in FY 2007-08.
Administrative & Selling Expenses
The admin and selling expenses during FY 2007-08 shot to 7.89% of the Total Income from
3.92% in FY 2006-07. This is simply explained as commencement of operations under
Franchisee Agreement with BDA and during the year GSL paid INR 682.64 Lac of royalty to BDA
which was non existent in the immediately preceding financial year.
Profit Before Interest, Depreciation, Tax and Amortization (PBIDTA)
PBIDTA increased from INR 1551.78 Lac in FY 2006-07 to INR 2453.22 Lac in the previous FY,
which on Total Income was a 1.54% growth. The same was a result of higher contribution from
GSL’s products sold during the year.
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