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

Interest and Finance Expenses
The interest and finance charges grew by a marginal 0.19% in proportion to the Total Income
from FY ended 2007 to 2008. The same was on account of increase in borrowings to fund the
enhanced operations. The year also witnessed escalation in the interest rates.
Depreciation
The depreciation was charged at INR 394.69 Lac in FY 2007-08 as against INR 273.83 LAC in
year ended 2007. The increase can be attributed to additions during the year.
Profit after Tax (PAT)
As a percentage to Total Income, PAT grew from 7.61% in FY 2006-07 to 7.82% at the close of
previous FY. Although proportionate earnings grew with value added products gifting higher
contributions, full benefit is not visible in PAT as it was contained by higher Admin & Selling
Exp., Finance Cost and Depreciation.
For Financial Year Ended 31st March 2007 vis a vis 31st March 2006
Sales Revenues
Sales revenue (net of excise) during the year 2006-07 grew to Rs. 11199.53 lakhs from Rs.
8,683.41 lakhs during the year 2005-06. This 29% jump was mainly on account of quantitative
growth in sale of products in the states of Haryana, Rajasthan and Delhi. Main contribution in the
growth came from bottled liquor, sales of which grew by 24.56% during FY 06-07.
Raw Material Consumed
Raw Material Consumed was Rs 7167.89 lakhs (i.e., 63.03% of total income) in FY 2006-07,
which in the previous year ended 31.03.2006 was Rs. 5593.92 lakhs (i.e., 64.76% of the total
income). Although in percentage terms of total income, Raw Material consumption was
comparable in both the years, but in absolute terms it increased in the year 2006-07 matching
growth in sales/production. Small variance is attributable to general price fluctuations.
Manufacturing Expenses
Manufacturing Expenses as a percentage of total income were 17.63% in FY 2006-07 compared
with 17.83% in FY 2005-06. Again this expenditure is comparable for both the years in
proportion to scale of operations.
Staff Costs
Staff costs as percentage of total income escalated from 1.60% in the year 2005-06 to 1.77% in
2006-07. In absolute terms the same increased by Rs 63.07 lakhs i.e., by 45.51% due to
increase in staff and yearly increments. The team was strengthened to support the growing
product range and scale of operations.
Administrative & Selling Expenses
Administrative and selling expenses were 3.92% of total income in the year 2006-07 as against
5.79% of total income for the year 2005-06. During FY 2006-07 “Discounts Claims and Rebates”
came down to Rs. 31.36 lakhs from Rs. 99.19 lakhs in FY 2005-06 and “Royalty to UDV/TDV”
declined from Rs. 241.98 lakhs in the immediately preceding FY to Rs.0.01 lakhs. However after
accounting for normal inflation in other administrative costs, these, in absolute terms dropped
by Rs. 57.25 Lakhs. Specific expenses on rebates and royalty decreased on account of severance
of bottling tie-ups with IMFL manufacturers.
Profit Before Interest, Depreciation, Tax and Amortization (PBIDTA)
PBIDTA for the year ended March 31 2007 increased to Rs. 1551.78 lakhs from Rs 865.22 lakhs
in the previous FY 2005-06; an increase of 79.35%. This spurt is explained by marginal savings
in the cost of raw material consumed (1.73% of total income amounting to approx. Rs. 197
lakhs) and significant drop in the administrative and selling expenses (1.87% of total income
amounting to Rs. 217 lakhs).
Interest Expenses
Interest and Finance charges as percentage of total Income remained same in both the years
i.e., 0.47%, though in absolute terms the interest in FY 2006-07 was higher by Rs. 13 lakhs as
compared to FY 2005-06. This is due to fresh loan and its usage during the year.
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