Gopal Snacks Ltd IPO

Further enhance its presence in its core market of Gujarat.

Accelerate expansion in its focus markets.

Continue to launch new products, expand wallet share with consumers and grow its consumer base.

Enhance brand awareness.

Continue to leverage technology to further optimise its operations.

Utilise its unutilised capacity and expand manufacturing capacity at its existing facilities and set-up additional strategically located facilities.

Its position in the Indian snack food market as an ethnic savouries brand with a significant presence in Gujarat coupled with our focus on quality and various offerings have helped us create a brand recognition.

Diversified product portfolio capable of capturing growing Indian snacks market.

Its position as a manufacturer of gathiya in India coupled with the growing popularity of gathiya as a snack, present opportunities for the company to expand in the gathiya segment.

Strategically located manufacturing facilities.

Vertically integrated advanced business operations resulting in quality products and cost and operational efficiencies.

Distribution network.

Experienced Promoter and management team.

Track record of profitable financial performance.

The company is significantly dependent on the sale of its products namely, namkeen, gathiya and snack pellets. The company aggregate revenue from sale of namkeen, gathiya and snack pellets accounted for 88.96%, 85.25%, 81.66%, 83.24% and 77.89% of its revenue from operations in Fiscal 2021, 2022, 2023 and the six months ended September 30, 2022 and 2023, respectively. An inability to anticipate and adapt to evolving consumer tastes, preferences and demand for particular products, or ensure product quality may adversely impact demand for its products, brand loyalty and consequently the company`s business, results of operations, financial condition and cash flows.

The sale of its products is concentrated in the company core market of Gujarat. In Fiscal 2021, 2022 and 2023 and the six months ended September 30, 2022 and 2023, its revenue from sale of products in Gujarat accounted for 74.31%, 76.27%, 79.08%, 79.06% and 76.49% of its revenue from operations, respectively. Any adverse developments affecting its operations in such region, could have an adverse impact on the company`s business, financial condition, results of operations and cash flows.

Its cost of materials consumed accounted for 81.87%, 79.39%, 71.62%, 72.99% and 70.02% of its revenue from operations in Fiscal 2021, 2022 and 2023 and the six months ended September 30, 2022 and 2023, respectively. Inadequate or interrupted supply and price fluctuation of its raw materials and packaging materials could adversely affect its business, results of operations, cash flows and financial condition.

Its Promoter Group does not include Prafulchandra Vitthal Hadvani (earlier known as Prafulbhai Vitthalbhai Hadvani), brother of Bipinbhai Vithalbhai Hadvani, one of its Promoters and his Connected Entities (as defined below) and this Draft Red Herring Prospectus does not include any disclosures pertaining to Prafulchandra Vitthal Hadvani and his Connected Entities.

Its Promoters have encumbered their Equity Shares by way of pledge. Any exercise of such encumbrance could dilute the shareholding of its Promoters and consequently dilute the aggregate shareholding of its Promoters, which may adversely affect the company`s business and financial condition.

An inability to maintain or enhance the popularity of its "Gopal" brand may adversely impact its business, results of operations, financial condition and cash flows.

The company is dependent on the sale of small pack SKUs for its revenues. Revenue from sale of SKUs available at Rs. 5 accounted for 82.68%, 80.74%, 75.48%, 77.31% and 70.41% of our revenue from operations in Fiscal 2021, 2022 and 2023 and the six months ended September 30, 2022 and 2023, respectively. Any significant increase in the cost of raw materials, packaging, or other commodities used in the production of these SKUs may lead to inflationary pressures and its inability to either increase the prices of the company SKUs or reduce the weight may have an adverse effect on its business, results of operations, financial condition and cash flows.

Its business is dependent on the company distribution network. An inability to expand or effectively manage its distributor network, or any disruptions in the company distribution network may have an adverse effect on its business, results of operations, financial condition and cash flows.

Its operations are subject to various contamination related risks, including improper storage of the company products and raw materials, labelling errors, and non-compliance with quality control standards. Any actual or alleged contamination could lead to legal liability, damage to brand reputation, and adverse impact on its business, results of operations, financial condition and cash flows.

Any slowdown or interruption to its manufacturing operations or under-utilization of the company existing or future manufacturing facilities may have an adverse impact on its business, results of operations, financial condition and cash flows.

Its manufacturing facilities are concentrated in the state of Gujarat. Any significant social, political, economic or seasonal disruption, natural calamities or civil disruptions in Gujarat could have an adverse effect on its business, results of operations, financial condition and cash flows.

The company is required to obtain certain consents under the applicable environmental laws for its manufacturing facilities. There has been a delay in making applications for such consents for one of its ancillary facilities located at Modasa, Gujarat ("Modasa Ancillary Facility").

An inability to comply with food safety laws, environmental laws and other applicable regulations in relation to its manufacturing facilities may adversely affect the company`s business, results of operations, financial condition and cash flows.

While certain of its trademarks and copyright used by the company for its business are registered, any inability to protect the company intellectual property from third party infringement may adversely affect its business and prospects.

Failure to obtain or renew approvals, licenses, registrations and permits to operate its business in a timely manner, or at all, may adversely affect its business, financial condition, results of operations and cash flows.

The Company, Promoters, and Directors are or may be involved in certain legal and regulatory proceedings. Any adverse decision in such proceedings may have an adverse effect on its business, results of operations, financial condition and cash flows.

The company has been unable to locate certain of its historical corporate records.

Any delay or default in payments from distributors could adversely affect its business, results of operations, financial condition and cash flows.

Its revenue from operations, EBITDA, EBITDA margins, PAT and PAT margin may be impacted by a variety of factors, including but not limited to, variations in raw materials, pricing, product mix, end consumer preferences, sales velocities, advertisement and sales promotion initiatives, and competition.

The company has incurred indebtedness and an inability to comply with repayment and other covenants in its financing agreements could adversely affect the company`s business, results of operations, financial condition and cash flows.

The company has in the past entered into related party transactions and may continue to do so in the future, which may potentially involve conflicts of interest with the equity shareholders.

Its insurance coverage may not be adequate or the company may incur uninsured losses or losses in excess of its insurance coverage.

The company has certain contingent liabilities that have been disclosed in the Restated Financial Information, which if they materialize, may adversely affect its business, results of operations, financial condition and cash flows.

Its Statutory Auditors have included certain remarks in connection with the Companies (Auditor`s Report) Order, 2020/ Companies (Auditor`s Report) Order, 2016.

Its corporate Promoter Gopal Agriproducts is engaged in the line of business similar to the Company.

Its business is subject to seasonality. Lower revenues outside of the festive period of any Fiscal may adversely affect its business, results of operations, financial condition and cash flows.

Its business is manpower intensive. The company`s business may be adversely affected by work stoppages, increased wage demands by its employees, or an increase in minimum wages, and if the company is unable to engage new employees at commercially attractive terms.

The company depends on the skills and experience of its Promoters, Key Managerial Personnel, Senior Management for the company`s business and future growth.

The company operates in a competitive market and any increase in competition may adversely affect its business, results of operations, financial condition and cash flows.

Its future capacity expansion plans relating to the company manufacturing facility are subject to the risks of unanticipated delays in implementation and cost overruns.

The company may not be able to derive the desired benefits from its product development efforts. Further, failure to develop and launch new products due to unpredictable consumer preferences may have an adverse effect on its business, results of operations, financial condition and cash flows.

Certain of its Promoters, Directors and Key Managerial Personnel are interested in the Company`s performance in addition to their remuneration and reimbursement of expenses.

Any inability to accurately manage inventory and forecast demand for particular products may have an adverse effect on its business, results of operations, financial condition and cash flows.

Its inability to effectively manage the company growth or implement its growth strategies may have an adverse effect on the company`s business, results of operations, financial condition and cash flows.

The COVID-19 pandemic impacted its business and operations. Future similar events may have an adverse effect on its business, results of operations, financial condition and cash flows.

Information relating to the company production capacities and the historical capacity utilization of its manufacturing facilities included in this Draft Red Herring Prospectus is based on various assumptions and estimates and future production and capacity utilization may vary.

The loss of certain independent certification of its products could have an adverse effect on the company reputation, business, results of operations, financial condition and cash flows.

The emergence of modern trade channels in the form of supermarkets and high end retail outlets may adversely affect its ability to negotiate the company distribution agreements, which may have an adverse effect on its business, results of operation, financial condition and cash flows.

The company may not successfully protect its technical know-how, which may result in the loss of its competitive advantage.

The company relies on third party manufacturers to produce some of its products. Any failure or loss of third party manufacturers could result in delays and increased costs, which may adversely affect its business, results of operations, financial condition and cash flows.

Its inability to adopt new technologies to adhere to the company quality product standards could adversely affect its business, results of operations, financial condition and cash flows.

Technology failures could disrupt its operations and adversely affect the company business, results of operations, financial condition and cash flows.

The company may be subject to fraud, theft, employee negligence or similar incidents.

Some of its manufacturing facilities and Registered Office are not located on land owned by it and the company has only leasehold rights. In the event its lose or are unable to renew such leasehold rights, the company`s business, results of operations, financial condition and cash flows may be adversely affected.

The Company has acquired land from one of its Promoters Bipinbhai Vithalbhai Hadvani.

Its individual Promoters have provided personal guarantees for loan facilities obtained by the Company, and its corporate promoter Gopal Agriproducts and any failure or default by the Company or its corporate promoter Gopal Agriproduct to repay such loans in accordance with the terms and conditions of the financing documents could trigger repayment obligations on them, which may impact their ability to effectively service their obligations and thereby, impact its business and operations.

The company has enrolled for benefits under certain Government incentive schemes. Cancellation or its inability to meet the conditions under such schemes may adversely affect its business, results of operations, financial condition and cash flows.

Land title in India can be uncertain and its may not be able to identify or correct defects or irregularities in title to the land which the company own, lease or intend to acquire in connection with the development or acquisition of new manufacturing facilities.

The company may requires additional equity or debt in the future in order to continue to grow its business, which may not be available on favorable terms or at all.

Failures in internal control systems could cause operational errors which may have an adverse effect on its reputation, business, results of operations, financial condition and cash flows.

The Company may not be able to pay dividends in the future. Its ability to pay dividends in the future will depends upon its future earnings, financial condition, cash flows, working capital requirements and capital expenditures and the terms of its financing arrangements.

Industry information included in this Draft Red Herring Prospectus has been derived from an industry report prepared by Frost & Sullivan (India) Private Limited exclusively commissioned and paid for by it for such purpose.

The company has included in this Draft Red Herring Prospectus certain non-GAAP financial measures and certain other industry measures related to its operations and financial performance. These non-GAAP measures and industry measures may vary from any standard methodology that is applicable across the Indian FMCG retail industry, and therefore may not be comparable with financial or industry related statistical information of similar nomenclature computed and presented by other companies.

After the completion of the Offer, its Promoters will continue to collectively hold majority of the shareholding in the Company, which will allow them to influence the outcome of matters requiring shareholder approval.

The Company will not receive any proceeds from the Offer.