MANAGEMENT DISCUSSION AND ANALYSIS REPORT
GLOBAL ECONOMIC VIEW
The Global Economy recovered strongly from the COVID-19 pandemic, supported by the
release of pent up demand as movement restrictions were scaled back, as well as huge
amounts of fiscal and monetary support. China’s recent reopening has paved the way
for a faster than expected recovery. But it is now being buffeted by two major shocks:
high inflation and rising interest rates.
The IMF has projected that global growth will fall to 2.9 percent in 2023 but rise in
2024. Global inflation is expected to fall to 6.6 percent in 2023 and 4.3 percent in 2024,
still above the pre-pandemic levels.
Labor markets are tight, household spending and business investment remain strong, and
European economies proved quite resilient against the energy crisis. Global growth is
expected to slow from 3.4% in 2022 to 2.9% in 2023. The slowdown will be more pronounced
for advanced economies. China and India will account for 50% of global growth. (Source:
IMF Global Economic Outlook)
INDIAN ECONOMIC OVERVIEW
The IMF has forcast India’s growth at 6.1% in 2023 as compare to 6.8% in 2022,
terming the country a bright spot and major engine of growth amid an expected fall in
global growth. India is shifting toward greater renewable energy generation while striving
to improve energy access, affordability, and security. It’s also poised to be one of
the fastest growing economies in coming years, which will in turn sharply boost energy
demand.
As per survey by Ministry of Finance, the economy is expected to grow at 7% for the
year ending March, 2023. Despite the three shocks of COVID-19, Russian-Ukraine conflict
and the Central Banks across economies led by Federal Reserve responding with synchronised
policy rate hikes to curb inflation, leading to appreciation of US Dollar and the widening
of the Current Account Deficits (CAD) in net importing economies, agencies worldwide
continue to project India as the fastest-growing major economy at 6.5-7.0 percent in FY
23.
INDIAN LIQUOR INDUSTRY
The alcohol industry has quickly recovered after lockdown and the industry is one of
the fastest growing in Indian markets. Numerous homegrown brands have carved out a place
for themselves in the segment as alcoholic beverage companies have made their way into the
domestic market. Currently, this industry supports approximately 20 million jobs, and with
its growing landscape, further employment opportunities are likely to be created. The
alcohol industry is a significant sector of the Indian economy. It not only provides the
states with up to 2 lakh crores in revenue, but it also directly supports nearly 40 lakh
farmers.
COMPANY STRUCTURE AND DEVELOPMENT
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 Company’s products have been enjoying consistently good brand image and
loyalty from the consumers for the past several years and the company enjoys virtual
monopoly 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 37.5% has been utilized last year. The compa-ny 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 Company’s market share as well as
Government’s revenue continues to be the main 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 bottles, the Company has 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 year under review about 94.00 % of the company’s 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 Company’s 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.
Even though the pandemic situation is under control for the time being, there are
apprehensions raised by the medical fraternity that it may resurface again. If such
situation arises again the same may have adverse impact on the functioning / 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 and at this point it is not possible to quantify
or gauge the impact as again it can not 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
company’s 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:
• Effective and productive use of resources;
• All transactions are approved and properly reported;
• 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 respectable 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, 2023 the company had 195 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.
KEY FINANCIAL RATIOS
| Sr.No |
Particulars |
March 31,2023 |
March 31, 2022 |
Comments |
| 1 |
Debtors Turnover (No. of Days) |
0.27 |
0.41 |
Average collection period of the company is less than a
day. |
| 2 |
Inventory Turnover |
5.38 |
6.14 |
Company has strong sales and low holding costs. |
| 3 |
Interest Coverage Ratio |
N.A |
N.A |
Company has no borrowings so this is not applicable. |
| 4 |
Current Ratio |
1.27 |
1.64 |
Company’s capacity to meet its current obligations is
quite good |
| 5 |
Debt Equity Ratio |
N.A |
N.A |
Company has no borrowings so this is not applicable. |
| 6 |
Operating Profit Margin (%) |
6.81 |
7.19 |
In the current year, Company’s operating profit
margin is comparatively lower |
| 7 |
Net Profit Margin (%) |
5.66 |
6.64 |
In the current year, Company’s net profit margin is
comparatively lower |
Cautionary Statement
The statements in the "Management Discussion and Analysis Report" section
describes the Company’s 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
ex-pressed or implied, depending upon the economic and climatic conditions, Government
policies and other incidental factors.
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