ANNEXURE-B
The information is required in compliance of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 and forming a part of the Boards Report for the year
ended March 31, 2023 and has to be read in Conjunction with the Companys financial
statements, which follows this Section. The management of the company is presenting herein
the overview, opportunities and threats, initiatives by the Company and overall strategy
of the company and its outlook for the future. This outlook is based on managements own
assessment and it may vary due to future economic and other future developments in the
country.
GLOBAL ALCOHOLIC BEVERAGE INDUSTRY OVERVIEW
The global alcoholic beverage is estimated to reach a value of US$ 1900bn by the year
2030. This is an increase represented by the Compound Annual Growth Rate (CAGR)of 3.00% by
2023 to 2030.
The alcoholic drinks market is predicted to have6.6% of its total revenue coming from
online sales by 2023. Out-of-home consumption, such as in bars and restaurants, is
expected to contribute to 42% of spending and 25% of volume consumption by 2027. Volume is
estimated to reach beyond 300 bn litres by2027, with an anticipated growth rate of 2% in
2024. The average volume per person in the alcoholic drinks market is expected to be 36.73
litres in 2023.
The global alcoholic beverages markets experiencing a rapid increase in demand due to
various factors such as a growing youth population, rising middle-class income and a
robust economy. Consumers are seeking new and innovative alcoholic beverage options.
Further, consumers are becoming more aware of the potential negative effects of
consuming low-alcohol beverages, which is leading to an increased demand for
higher-alcohol content beverages. This shift in consumer preferences is driving the growth
of high-performance and high-quality alcoholic beverage manufacturers, who are
experiencing significant commercial success.
(Source: statista.com)
INDIAN ALCOHOLIC BEVERAGES MARKET OVERVIEW
The alcoholic drinks market is poised for significant growth, with an expected revenue
of US$ 49,580.00 mn in 2023. The Spirits segment is the largest in the market, accounting
for US$ 34,470 mn of the total revenue in 2023.On a per capita basis, the alcoholic drinks
market is expected to generates$ 34.92 in revenue in 2023. Online sales are expected to
contribute 0.5% of total revenue in the market by 2023.
The overall volume of the alcoholic drinks market is expected to reach 14,100 mn litres
by 2027, with a projected growth rate of 3.9% in 2024.On average, each person is expected
to consume 8.58 litres of alcoholic beverages in 2023.
The emergence of reasonably priced premium brands and peoples evolving drinking
habits, especially among the younger generation, have brought about major changes in the
Indian subcontinents liquor market. A significant proportion of the alcohol industry is
largely made up of Indian made or -manufactured foreign liquor(IMFL), Indian-made Indian
liquor(IMIL), wine, beer and imported alcohol.
Whiskey trumps the IMFL category in India. Moreover, vodka is flourishing as a
consequence of a rise in pubs, hotels and restaurants, in addition to emerging nightlife
and consumer choices. The alcohol industry contributes significantly to the Indian
economy. Itnot only generates up to 2 Lakh Crore in revenue to the states, but it also
effectively assists nearly 40 Lakh farmers. (Source: statista.com, timesofindia.com)
INDIAN WHISKY SEGMENT OVERVIEW
India is one of the fastest growing liquor markets in the world. Alcoholic beverages
are considered a sunrise industry owing to its high-growth potential and increasing social
acceptance. Growth in urban population coupled with the increasing disposable income is
projected to propel the market growth of alcohol. Moreover, the advent of variety in the
flavor of alcohol coupled with the expanding product portfolio by the manufacturers has
further projected to boost the growth of alcohol market.
India is primarily a market for brown spirits, with whisky holding the lions share. In
fact, we are the worlds largest whisky market by consumption, accounting for 10% of
global liquor consumption. The whisky segment is a significant contributor to the
alcoholic drinks market, with a revenue of US$ 18.38bn expected in 2023 and an estimated
annual growth rate of 5.34% from2023 to 2027.
On a per capita basis, the revenue generated in the whisky segment is expected to be
US$ 12.95 in 2023. The volume of whisky is projected to reach 3.93 bn litres by 2027, with
a growth rate of 2.6% in 2024.
On average, each person is expected to consume 2.51 liters of whisky in 2023.Whisky
consumption is expected to reach 289.49 mn cases by 2027-28. In 2021, India consumed
237.22 mn cases of whisky. Consumers preference for quality whisky, is witnessing rapid
growth for premium whisky at a CAGR of 15.66% over the projected timeframe. The
superpremium range of whisky is expensive and in short supply because it is exclusively
available to the countrys elite class.
INDIAN EXTRA-NEUTRAL ALCOHOL MARKET
The Indian Market for the ENA was valued at Rs. 97.7 bn in 2022 and is expected to grow
at a compound annual growth rate of 4.21 % for the next 5 years. In India, almost 90% of
ENA is used for potable alcohol. Increased consumer disposable incomes, rapidly growing
Western influence, cultural views toward drinking and a fundamental change from country
liquor to Indian-made foreign liquor (IMFL) are driving the increased production and
consumption of potable alcohol made ENA in India.
INDIAN MADE FOREIGN LIQUOR SEGMENT OVERVIEW
The Indian made foreign liquor(IMFL) market in India was valued at approximately US$ 20
mn in fiscal year2021. Moreover, the market is expected to grow to more than US$ 32 mn by
the fiscal year 2025.
The market for IMFL increased by 13% in 2022. Sales volumes of IMFL rose 24%, with
demand increasing for all key segments - whisky, brandy, rum and vodka. Characterized by a
high base, whisky, which dominates two-thirds of the entire market.
GROWTH DRIVERS
Change in demographics, coupled with the change in lifestyle is another major factor
expected to foster the market of alcohol. The legal drinking age in India varies from
state to state (from18 years to 25 years), further indicate that India is ideal for the
high growth of the alcohol market.
The outlook for the Indian alcoholic beverages continues to remain positive due to
favorable demographics, expanding middle class, rising disposable income levels, greater
preference for premium food and drink experiences and greater acceptance of alcoholic
beverages in social circles. Increased consumption of liquor in rural areas will be
another major reason for the growth in the market. Although the average per adult intake
of alcohol is considerably low in India when compared to other countries such as the
United States, drinkers among young Indians are more prevalent. This provides tremendous
opportunity to drive growth of Alcobev industry on the back of its rising working age
population. It is expected that per capita consumption will increase with changes in
lifestyle and aspiration of the population.
The Indian market is huge and has great potential for all the players in this space, we
firmly believe there is room for everyone in this industry. The age demographics are in
Indias favor and because of rapid urbanization, the industry will continue to witness
healthy demand.
BUSINESS ANALYSIS AND COMPANY OVERVIEW
The company is now focusing on its liquor business as the edible oils business is not
conducive as the plant at Sikandrabad (UP) is quite old and requires substantial capex
towards technological up-gradation and addition of new equipment.
Due to this the company diversified into liquor business and set up Bottling Plant for
Indian Made Foreign Liquor (IMFL)at Sandila, Dist. Hardoi, Uttar Pradesh which commenced
commercial production in July 2020. The Company also set up Distillery unit as a backward
integration of Bottling Plant. The Distillery unit commenced commercial operations in
September 2023.
The company is exclusively manufacturing IMFL for United Spirits Ltd in their popular
and prestigious brands. The company also has a long term agreement for supply of ENA to
United Spirits Ltd.
The companys financial performance is gradually improving after diversification into
the liquor segment. The company posted a net profit of Rs1,315.30 Lakh in FY 2022-23 as
against net profit of Rs 473.87 Lakh in FY 2021-22. The distillery unit commenced its
operation in mid of FY 2022-2023, therefore the profitability will further improve with
full year operation of Distillery unit.
RISKS & CONCERNS, OPPORTUNITIES & THREATS
The risks and opportunities of all corporations are inherent and inseparable elements.
Directors and management of the Company take constructive decisions to protect the
interests of stakeholders.
RISKS & CONCERNS
Liquor industry is dependent on the policies of the State Governments as potable liquor
is a State Subject. There is a threat of imposition of prohibition on consumption of
liquor as done in the States of Gujarat and Bihar.
Prohibition in certain states poses a threat to legitimate sales and gives rise to
inter-state smuggling impacting industry growth. This may also lead to a proliferation of
country liquor sales in absence of / curtailed availability of branded products.
The industry is exposed to multiple regulatory risks emanating from state taxes, and
changes in regulations with respect to pricing, licensing, working of operating
facilities, manufacturing processes, marketing, advertising, and distribution.
OPPORTUNITIES
There is good opportunity in the liquor business as demand for potable liquor is
showing a steady growth year on year.
With rising disposable income and evolving consumer lifestyles presents significant
opportunity to grow sales and expand margins.
Low per capita consumption, rapid urbanization, favourable macroeconomic indicators,
higher disposable incomes and evolving lifestyles bode well for the industry as a whole.
Dynamic lifestyles and enhancing brand awareness.
Expansion into new territories.
Establishing brand value through mergers and acquisitions
THREATS
Since the liquor industry is highly regulated by the State Governments, there is always
a threat of change in the Government policies which can affect the industry.
Consumption de growth due to inflationary pressures and other macroeconomic factors.
-I- Availability and procurement of inputs.
Growing health awareness among individuals, resulting in dietary shifts FINANCIAL
PERFORMANCE
| PARTICULARS |
FY 2022-2023 |
FY 2021-2022 |
|
(Rs. In Lakh) |
(Rs. In Lakh) |
| REVENUE FROM OPERATION/ SEGMENT PERFORMANCE |
13868.17 |
8021.37 |
| TOTAL EXPENDITURE |
12964.79 |
7617.08 |
| EARNINGS BEFORE INTEREST AND TAX |
960.41 |
536.96 |
| PROFIT AFTER TAX [PAT] |
1315.30 |
473.87 |
During the year under review, your Company achieved a revenue of INR 13868.17 Lakh as
against the 8021.37 Lakh in the previous year. This translates to increase of 72.89 over
previous year. However, the most encouraging part is that the company has posted a profit
of Rs1315.30 Lakh as against the profit of INR 473.87 Lakh in the previous year.
OUTLOOK
After the diversification into liquor business the financial performance of the company
is improving year on year. The outlook of the liquor industry is positive and the
financial performance of the company would further improve with the commissioning of the
Distillery unit.
DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS
| RATIOS |
FY 2022-2023 |
FY 2021-2022 |
CHANGE |
REMARKS |
| Net profit margin |
9.49 |
5.38 |
61.43% |
Change in line with increase in revenue |
| Operating profit Margin |
13.23 |
11.42 |
15.83% |
Change in line with increase in revenue |
| Debtors turnover |
95.45 |
964.51 |
-90.10% |
Sales are being made on credit period unlike previous year |
| Stock turnover |
9.93 |
18.97 |
-47.67% |
More inventory is being maintained since new manufacturing facility started. |
| Debt-equity ratio |
6.94 |
14.66 |
-52.70% |
Ratio has improved due to share capital raised in the current year. |
| Current ratio |
0.29 |
0.13 |
126.64% |
Ratio has improved due to profits made. |
| Interest service coverage ratio |
3.44 |
4.04 |
-14.83 |
Due to increase in finance cost after the commissioning of distillery unit |
| Return on capital employed |
0.11 |
0.06 |
70.14% |
Change in line with increase in revenue |
HUMAN RESOURCES AND INDUSTRIAL RELATIONS
Your Company recognizes that people are the prime assets of the organization. Your
Company believes that its employees are integral to driving business success. Your
Companys talent pool plays a key role in commitment to deliver quality products and
services. Your Company recognizes that the long-term success and sustainable growth of our
organization depends on our capacity to attract, retain and develop our employees. We are
committed to providing our employees across the country with a safe and healthy work
environment and helping them realize their full potential. The organization fosters an
open and transparent work culture that drives innovation and nurtures entrepreneurial
spirit among all employees. Your Company believes in celebrating milestones, both big and
small, and encourages people to connect, communicate and collaborate through various
forums.
The Company continues to focus on attracting and retaining right talent with right
opportunities to employees. Learning is ingrained in our culture and employees are
constantly encouraged and given ample opportunities to upgrade their knowledge and skill.
Your Company remains committed to enhancing employee capabilities, equipping them with
the necessary tools to thrive in a rapidly evolving industry and adapt to future
challenges. It is worth noting that the Companys industrial facilities operate smoothly
without the presence of labor unions, ensuring uninterrupted operations and minimal
disruption.
Industrial relations during the year has been cordial and contributed to mutual
development. Company maintained healthy, cordial and harmonious industrial relations at
all levels. The Board of Directors and management wish to place on record their
appreciation for the efforts put in by all employees to achieve good performance.
Industrial Relations continue to be harmonious and peaceful at all levels and at all
locations of the Company.
There was not any case pursuant to the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013 was reported during the year.
CASH FLOW ANALYSIS
The Cash Flow Statement of the Company for the year under review, in terms of
Regulation 34(2) of the (Listing Obligations and Disclosures Requirements) Regulations,
2015 is annexed to the Annual Accounts of the company which forms part of the Annual
Report.
SEGMENT REPORTING
The company has two business segments- Edible Oil Operations and Liquor Operations.
Edible oil operations consist of trading activities and high seas sale of edible oil. No
manufacturing is being done for edible oils. Liqueur operations consists of manufacturing
ENA & IMFL through the Companys plant situated at Sandila, Dist. Hardoi, Uttar
Pradesh. The company is exclusively manufacturing IMFL for United Spirits Limited.
Details of the Segment revenue and expense is given under Notes to Financial Statements
which forms part of the Annual Report.
FINANCE COST
The financial cost for the financial year ended on March 31,2023 was Rs. 535.45 Lakhs.
This is mainly on account of interest payable on the unsecured loan taken by the company.
OTHER EQUITY (RESERVES AND SURPLUS)
As on March 31, 2023the Reserves and Surplus in the Balance Sheet were negative at Rs.
6239.30 Lakh as compared to the negative balance of Rs. 7584.60 Lakh during the Financial
Year ended on March 31,2022.
EARNINGS PER SHARE
Earnings per share of the company is 8.65 as against the Earning per Share of 5.95 of
last year. INTERNAL CONTROLS
The Company has well-equipped and effective internal control systems in place that
match the scale of its sector and the complexity of the market it works in. Such stringent
and detailed controls ensure the effective and productive use of resources, to the degree
that the Companys assets and interests are safeguarded, transactions are approved,
registered and properly reported, and checks and balances guarantee reliability and
consistency of accounting data.
The Audit Committee and the Board reviews the performance of the audit and the adequacy
of internal control systems and compliance with regulatory guidelines. The Management
takes corrective actions on basis recommendations received from internal auditor and the
audit committee.
CAUTIONARY STATEMENT
Statements in the Management Discussion and Analysis, describing the Companys growth
prospects, are forward-looking statements. The actual results may vary, depending upon
economic conditions, raw-material prices, government policies, regulations, tax laws and
other incidental factors.
| By Order of the Board |
|
| For Shri Gang Industries and Allied Products Limited |
|
| Sd/- |
Sd/- |
| Arun Kumar Sharma |
Syed Azizur Rahman |
| Whole Time Director |
Director |
| DIN:09008061 |
DIN: 00242790 |
| Place: New Delhi |
|
| Date: 25.08.2023 |
|
+91-9892691696
