g m breweries ltd Management discussions

G.M.Breweries Limited (GMBL) is engaged in the manufacture of alcoholic liquor. Though the company has got the facility to blend and bottle both Indian made foreign liquor and country liquor, the concentration has been mainly on country liquor during this year also due to competitive market conditions in the IMFL segment. The Company has been making steady progress in the business of country liquor during the past years. Even though not much official statistics are available about the production of country liquor by various manufacturers, the data gathered from The State Excise Department shows that the company contributes about 25 to 30 % of the total

Excise duty for country liquor in the whole of Maharashtra.

OPPORTUNITIES, THREATS AND CONCERNS

The Companys products have been enjoying consistently good brand image and loyalty from the consumers for the past several years and the company enjoys substantial market share in country liquor in the districts of Mumbai, Thane & Palghar. It is the single largest manufacturer of country liquor in the State of Maharashtra. The company has capacity to process 13.76 crore bulk litres of country liquor per annum out of which only about 53.79% has been utilized last year.

The company is taking all possible steps to utilize the surplus capacity by extending its business to interior districts of Maharashtra taking advantage of its brand image. Even though stringent steps have been taken by the various Government agencies, the parallel duty evaded market which eats into Companys market share as well as Governments revenue continues to be the major threat to the Company. The company continues to make representations at various levels of the Government to take effective steps to curb the illicit market in the interest of the industry, revenue of the state as well as the public health.

The Company has been facing difficulty also due to very high levels of taxation and frequent changes in laws. In fact the exorbitant rate of taxation is one of the factors, which breeds duty evasion. The high level of fluctuations in the prices of its main raw material namely Rectified Spirit and as well as acute shortage in the availability of Spirit are the constraints faced by the Company during the past several years. In the recent past company also faces the problem of exercise of concurrent and parallel jurisdiction by more than one government agency like the State Excise Department, Legal

Metrology Department and Food and Drugs Administration Department (FDA) which are conflicting in nature. To overcome the problem of shortage, wide price fluctuation and heavy breakages in glass started marketing all sizes of country liquor in PET bottles which has gained wide acceptance from the consumers.

However, during the last year the company faced the problem of sudden spurt in the prices of PET bottles due to increase in petroleum prices in the international market and fluctuation in exchange rates. During the

91.20 % of the companys total production & sale consisted of PET bottles.

The government of Maharashtra through a notification has banned use of PET bottles for filling alcoholic liquor with effect from April 01, 2016. Various trade bodies of the industry have filed writ petitions in the Hon. Bombay High Court challenging the legality of the notification. The Hon. Bombay High Court has admitted the writ petitions and granted interim stay in the matter. The stay is in force till date and the Hon. Bombay High Court has not passed the final judgment in the matter. As Companys all bottling lines have been designed to handle both glass and PET bottles final outcome in the matter will not have any impact on the manufacturing operations of the company.

All the forgoing factors are expected to have a serious impact on the business of the company during the current financial year also and at this point it is not possible to quantify or gauge the impact as again it cannot be forecasted when the complete normalcy will be restored.

OUT LOOK

Barring the aforesaid deterrents, the company does not foresee any major threats to its growth and market share in the coming years. The existing capacity should take care of the companys requirement at least for the next Five years and the Company does not foresee any technological obsolescence for its products.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has an independent department to carry out the internal audit and ensure that recording and reporting are adequate and proper, the internal controls exist in the system and that sufficient measures are taken to update the internal control system. The system also ensures that all transaction are appropriately authorised, recorded and reported. Exercises for safeguarding assets and protection against unauthorised use are undertaken from time to time. The company has also installed an extensive CCTV Surveillance system to cover the entire factory premises which is being upgraded on a regular basis. All these measures are continuously reviewed by the management as and when necessary improvements are affected. The Company has ensured:

3 Effective and productive use of resources;

3 All transactions are approved and properly reported;

3 Reliability and consistency of accounting data.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial performance during the year under reference has been reasonably good in all respects. The company could achieve marginal growth in terms of turnover as well as profits in spite of high prices of Raw Material and Packing

Materials.

CORPORATE SOCIAL RESPONSIBILITY

The company has fully complied with the mandatory norms prescribed for contributions towards corporate social responsibility.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED.

As on March 31, 2024 the company had 193 permanent employees at its manufacturing plant and administrative office. The company recognizes the importance of human value and ensures that proper encouragement both moral and financial is extended to employees to motivate them. The company has provided rent free accommodation to all its staff & workers adjacent to the factory premises of the company. The company enjoyed excellent relationship with workers and staff during the last year.

Cautionary Statement

The statements in the "Management Discussion and Analysis Report" section describes the Companys objectives, projections, estimates, expectations and predictions, which may be "forward looking statements" within the meaning of the applicable laws and regulations. The annual results can differ materially from those expressed or implied, depending upon the economic and climatic conditions, Government policies and other incidental factors.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

G.M. Breweries Limited (GMBL) is one of the leading alcoholic beverage Company in India, with an outstanding portfolio of premium brands. We are a high-performing business sensitive to consumer, community, and societal needs. We are proud of being a responsible producer and marketer of alcoholic beverages. We seek to do this while committing to keep the highest standards of corporate governance, and responsibility to our people, planet, and society. Our distillery operations encapsulate our perpetual quest for excellence. Over the years, GMBL has earned reverence in the market through steady growth and expansion efforts. We have ceaselessly improved the quality and image of all our products in

India and overseas. The organization has strived to create efficient and environmentally conscious processes. Combined with our leadership teams experience, we can proudly state that our ability to run distilleries in India is unparalleled. GMBL is engaged in manufacturing and marketing Alcoholic Beverages, such as Country Liquor (CL) and Indian-made Foreign Liquor (IMFL).

Mr. Jimmy Almeida, the Founder chairman of the Company aims to provide the finest quality country liquor at the most economical price. The Company is growing steadily and has earned a dedicated customer base. GMBL is the largest country liquor manufacturer in Maharashtra, with a sizeable market share. GMBL also contributes substantially to the state exchequer through excise duty and value-added tax.

GMBL has a fully automated state-of-the-art Bottling Plant at Virar, District Palghar, in the state of Maharashtra. The bottling plant can produce over 50,000 cases a day, far surpassing its initial production rate of 200. Mr. Jimmy Almeida introduced 180 ml bottles to the country liquor industry. Before this, the industry manufactured only 750 & 375 ml bottles. Furthermore, he popularized PET bottles in the country liquor industry.