SRS Limited (RHP) - Karvy

SRS Limited11. The Company has not registered some of the brands / trade marks. As a result, the Companymay have lesser recourse to initiate legal proceedings to protect the brands.As on date of filing of this RHP, the Company holds six registered trademarks. Out of which, thetrademarks named SRS WORLD (Class 41); SRS world (Class 42); and SRS CINEMAS (Class 41) areregistered in the name of SRS Commercial Company Limited (erstwhile name of the Company). Theapplication for change of name of the Company to SRS Limited has been filed with the Registrar ofTrademark on December 15, 2009. Further, the registered trademark named SRS Value Bazaar (Class35) and SRS club (Class 41) are registered in the name of SRS Entertainment Limited (erstwhile nameof the Company). The application for change of name of the Company to SRS Limited, for saidregistered trademark has been filed with the Registrar of Trademark on May 12, 2010.The trademark named SRS (under Class 14) is registered (retrospectively from May 19, 2008) in thename of SRS Limited vide certificate dated January 13, 2011.Additionally, as on date of filing of this RHP, the Company had already applied for registration of 36trademarks, which are pending for registration. Further, the Company is not the sole & exclusive ownerof the aforesaid trademarks, as the Company has issued a “No Objection Certificate” in favour of theother group companies, who have also applied for / registered for some of the similar trademarks,though under different classes. Therefore, the group appears to have conflicts to the extent of similar /over-lapping registration of trademarks.Further, the Company is also receiving Rs.5,00,000/- per annum from SRS Meditech Limited asconsideration from July 20, 2010, for granting the permission to use the word and the logo “SRS”.The Company may have a lesser recourse to initiate legal proceedings to protect the brands /trademarks. For further details, please refer section titled “Goverment and Other Approvals” on page357 of the Red Herring Prospectus.The Company’s success with its brands depends, partly on its ability to protect and defend its currentand future intellectual property rights relating to such brands / trademarks.12. The operating results of Company’s business depend on the effectiveness of the Company’smarketing and advertising programs.Revenues in the business segment, where the Company operates, are influenced by brand marketingand advertising. The Company’s marketing and advertising campaign may not be successful and theCompany may, therefore, fail to attract new customers or expand its customer base, which maymaterially affect its financial performance.13. Any inability to manage the rapid growth could disrupt the business of the Company.The Company’s business has experienced high growth in recent periods. The total sales of theCompany have grown from Rs. 1,543.63 mn. in the financial year ended March 31, 2008 to Rs.20,055.66 mn. in the financial year ended March 31, 2011 at a CAGR of 135.09%. However, the futuregrowth plans of the Company can place significant demands on its management and other resources.There can be no assurance that the Company will be able to execute its business strategy on time andwithin the stipulated budget or that it will meet the expectations of the customers and sustain the highgrowth rates in future.14. The business of the Company depends on its ability to attract customers and maintainconsistency in customer service.There is huge demand for personnel having relevant experience in the food and beverages and retailindustry. The Company’s ability to maintain high standards of customer service in its stores is criticalto its success. This will depend on its ability to hire the right personnel and also train the new personnelin the implementation of its processes effectively. In addition, the attrition rate of employees is high inthe food and beverages and retail industry and in the event the Company loses employees at a higherrate or it cannot recruit fresh talent, this may adversely affect its financial performance.xx