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

Similarly, for consumers like fuel companies and chemical manufacturers, alcohol does
not have any viable alternative currently. Science and technology inventions do provide
a scope but the same also holds true for current technological advancements and
Research & Development efforts towards mitigating such risks.
5. The extent to which material increases in net sales or revenue are due to
increased sales volume, introduction of new products or services or increased
sales prices:
• Yes, the major contributor to increases in net sales or revenue are sales volumes
due to basic increase in consumption patterns socially, increase in per capita
consumptions year upon year and increased sales prices primarily due to increases
in the duties payable to the government as well as increase in cost of input.
• However, another contributor to increased net sales or revenue is the constant effort
on cost reduction with the help of technological input in the system and economies
of scale, which become better year upon year.
6. Total Turnover for the Industry
Please refer to the discussions in the section titled “Industry Overview” beginning on page
no. 64 of this Red Herring Prospectus.
7. The extent to which the business is seasonal:
The business is not seasonal as the demand and consumption is prevalent throughout the
year.
8. Any significant dependence on a single or few suppliers or customers:
Though the agri raw materials being used by the industry are seasonal in nature, the
production, consumption and storage norms that have evolved over a period of time are
such that this is not a risk.
Further, there is virtually no dependence on any particular supplier or group of suppliers
or customers.
9. Competitive conditions:
The competitive conditions are like that of any FMCG product. However, in this industry,
securing the use of basic raw material like molasses is an issue, which for stand-alone
distilleries requires special efforts.
This has been mitigated by ensuring large storage capacities and the ability to process
multiple raw materials like grain etc. in the event of a storage / high price of molasses.
10. Competitive position of the company within Indian market and overseas with
reference to market share, major competitors and new capacity coming up:
There is no impact on the position of the company as far as overseas products and
companies are concerned due to completely different market segment that is being
addressed by the Company.
However, domestically the Company’s competitive position can be impacted with new
capacities and competitor activities. This is mitigated by the fact that the pace of capacity
addition is similar to that of overall growth of the market.
Further, constant improvement efforts in terms of quality and costs of production, the
Company’s competing market strategies and its current product / brand franchise in the
segments the Company is present in acts as a mitigant.
197