1. Industry structure and developments
The Indian tourism and hospitality industry have emerged as one of the
key drivers of growth among the services sector in India. Tourism in India has significant
potential considering the rich cultural and historical heritage, variety in ecology,
terrains and places of natural beauty spread across the country. Tourism is also a
potentially large employment generator besides being a significant source of foreign
exchange for the country.
India is the most digitally-advanced traveller nation in terms of
digital tools being used for planning, booking and experiencing a journey. Online hotel
bookings in India have increased due to the growing penetration of the internet and smart
phones. With the rise in the number of global tourists and realizing Indias potential,
many companies have invested in the tourism and hospitality sector. Indias rising middle
class and increasing disposable incomes has continued to support the growth of domestic
and outbound tourism.
However, during 2021, Foreign Tourist Arrivals (FTAs) in India, as per
statistics provided by the Ministry of Tourism, averages at more than 10 million a year.
During CY 2020, FTAs numbered 2.68 million compared to 10.93 million in 2019. Of this,
during April - December 2020, FTAs were only 0.21 million tourist arrivals compared to
7.75 million arrivals during the same period of the previous year, registering a drop of
97%.
In India, the hospitality industry is likely to be hit hard. March has
borne the brunt of many large-scale cancellations across the corporate, MICE and leisure
segments. Tier 2 and Tier 3 hotel markets in India continue to witness a small erosion in
business for now. Occupancies in at least the first half of March were only partially
lower despite the spread of the pandemic situations in some states. As per the Federation
of Hotel & Restaurant Associations of India (FHRAI), in FY21, the Indian hotel
industry has taken a hit of Rs. 1.30 lakh crore (US$ 17.81 billion) in revenue due to
impact of the COVID-19 pandemic.
The Government of India announced various fiscal and relief measures
under the Atmanirbhar Bharat Package to benefit the tourism and hospitality sector. Also,
the Ministry of Tourism have taken various steps to overcome the crisis caused by COVID-19
pandemic in the tourism sector.
The Indian Government has realized the countrys potential in the
tourism industry and has taken several steps to make India a global tourism hub.
Some of the major initiatives planned by the Government of India to
boost the tourism and hospitality sector of India are as follows:
• In May 2021, the Union Minister of State for Tourism &
Culture Mr. Prahlad Singh Patel participated in the G20 tourism ministers meeting to
collaborate with member countries in protecting tourism businesses, jobs and taking
initiatives to frame policy guidelines to support the sustainable and resilient recovery
of travel and tourism.
• Government is planning to boost the tourism in India by
leveraging on the lighthouses in the country. 71 lighthouses have been identified for
development as tourist spots.
• The Ministry of Road Transport and Highways has introduced a new
scheme called All India Tourist Vehicles Authorization and Permit Rules, 2021, in which
a tourist vehicle operator can register online for All India Tourist Authorization /
Permit. This permit will be issued within 30 days of submitting the application.
• In February 2021, the Ministry of Tourism under the Government
of Indias Regional Office (East) in Kolkata collaborated with Eastern Himalayas Travel
& Tour Operator Association (resource partner) and the IIAS School of Management as
(knowledge partner) to organize an Incredible India Mega Homestay Development &
Training workshop.
• In January 2021, Union Tourism and Culture Minister Mr. Prahlad
Singh Patel announced plan to develop an international-level infrastructure in Kargil
(Ladakh) to promote adventure tourism and winter sports.
• The Indian Railway Catering and Tourism Corporation (IRCTC) runs
a series of Bharat Darshan tourist trains aimed at taking people to various pilgrimages
across the country.
• In November 2020, the Union Minister of State (IC) for Tourism
& Culture Mr. Prahlad Singh Patel inaugurated the "Tourist Facilitation
Centre" facility constructed under the project "Development of Guruvayur,
Kerala" (under the PRASHAD Scheme of the Ministry of Tourism).
• The Ministry of Tourisms "Dekho Apna Desh" webinar
series titled 12 Months of Adventure Travel in November 2020, is likely to promote India
as an adventure tourism destination.
• In January 2021, Maharashtra Chief Minister Mr. Uddhav Thackeray
inaugurated Balasaheb Thackeray Gorewada International Zoological Park in Nagpur. It is
Indias largest zoological park spread over 564 hectares and expected to attract 2.5
million tourists a year.
• The Ministry of Tourism developed an initiative called SAATHI
(System for Assessment, Awareness & Training for Hospitality Industry) by partnering
with the Quality Council of India (QCI) in October 2020. The initiative will effectively
implement guidelines / SOPs issued with reference to COVID-19 for safe operations of
hotels, restaurants, B&Bs and other units.
• Ministry of Tourism launched "Dekho Apna Desh" webinar
series to provide information on many destinations and sheer depth and expanse on the
culture and heritage of India.
• Statue of Sardar Vallabhbhai Patel, also known as Statue of
Unity, was inaugurated in October 2018. It is the highest standing statue in the world at
a height of 182 meter. It is expected to boost the tourism sector in the country and put
it on the world tourism map.
• Under Budget 2020-21, the Government of India has allotted Rs.
1,200 crore (US$ 171.70 million) for development of tourist circuits under Swadesh Darshan
for eight Northeast states.
• Under Budget 2020-21, the Government of India has allotted Rs.
207.55 crore (US$ 29.70 million) for development of tourist circuits under PRASHAD scheme.
Indias travel and tourism industry has huge growth potential. The
industry is also looking forward to the expansion of e-Visa scheme, which is expected to
double the tourist inflow in India. Indias travel and tourism industry has the potential
to expand by 2.5% on the back of higher budgetary allocation and low-cost healthcare
facility according to a joint study conducted by ASSOCHAM and Yes Bank.
The industry is dependent on the tourism sector for business. The
Ministry of Tourism, along with the Ministry of Railways and the Ministry of Civil
Aviation, promotes tourism in the country. Therefore, government initiatives play a
crucial role in its growth.
The Ministry of Tourism has undertaken schemes, such as PRASHAD
(National Mission on Pilgrimage Rejuvenation and Spiritual, Heritage Augmentation Drive),
SWADESH DARSHAN (Integrated Development of Tourist Circuits around Specific Themes), and
the promotion of e-visa to encourage tourist inflow.
NABH Nirman, UDAN - Ude Desh ka Aam Nagrik, and Vision 2040 are some of
the initiatives undertaken by the Ministry of Civil Aviation to enhance air connectivity,
which would bring hotel guests even to the most remote corners of the country.
The Ministry of Railways is focused on developing railway
infrastructure to ease domestic travel. Domestic travellers constitute the largest share
of guest in the hotel industry.
However, the tourism and hospitality sectors were first to be affected
by COVID-19 and probable will be the last to come out of this. Overall, Hotel developments
have slowed down due to COVID-19 pandemic.
2. Opportunities and Threats
Travel restrictions owing to COVID-19 continue to impact hospitality,
travel and tourism sectors within India and around the world. Majority of hotel operators
expect that it will take 13 to 24 months for their hotels to return to revenue per
available room (RevPAR) levels of last year. Luxury hotel operators are expected to ramp
up much slower with some expecting that their portfolio may take more than 2 years to
reach 2019 performance levels, the survey said.
However, with the slowdown of hotel developments, capital assistance is
needed to help hotels to sustain until demand returns. Most hotels would need working
capital infusion to continue or re-start their operations because the reserves have almost
dried.
Also, there are some basic challenges. The first being constant
pressure to lower room rates to maintain occupancy levels. The second being the tightening
margins with room rates not going up and operating costs sky-rocketing.
Exchange rate volatility is the third challenge. And lastly, high
interest rates affecting the debt servicing capacity of hospitality industry.
Talent management is also a key challenge for the sector. Inadequate
supply of quality talent and increased competition for talent within the sector and from
competing service sectors has made attrition a significant issue for the industry. On the
other hand, the expectations of the guests of the level of service gone up immensely due
to competition.
Further, lack of training, manpower, political turbulence, changes in
government norms and policies and high tax structure makes the industry worse off.
3. Finance
The Company continued to face paucity of funds during the year 2020 -
21. The management is taking every effort to remedy the situation as early as possible.
4. Segment-wise or product-wise performance
The Company works in Hospitality segment. In the last week of March
2020 (23rd March 2020) there was lockdown announced due to COVID-19 pandemic.
The guests bookings were cancelled, and no fresh bookings were taken till 31st
July 2020. Subsequently, as per the order of SDO dated 05.05.2020, the hotel was announced
as COVID Centre for the stay of doctors / medical officers till February 2021.
Accordingly, during the year under review, the turnover of the Company in respect of
accommodation and food & beverages has substantially gone down as compared to the
previous year. Operating margins are continued to be under pressure. The Company has
suffered losses.
5. Outlook
Barring unforeseen difficulties, the hospitability sector looks forward
to keep up its performance.
6. Risks and concerns
Apart from the general economic situation, seasonality, growing
competition, the sociopolitical situation, governmental restrictions, changes in
government norms and policies, power and water shortages and lack of infrastructure
facilities, high interest rate and borrowing cost, fluctuation in foreign exchange rates,
global recession, pandemic situations, and natural calamities are some of risks, which
could affect the performance of the Company. Further, terrorist attacks, biological
outbreaks and incidents of political or social violence can not only significantly impact
specific locations but can also have a more widespread chilling impact on leisure travel
behavior across a region or even globally.
The stagnancy of ARR also remains an area of concern. Paucity of funds
remains the main concern.
7. Internal control systems and their adequacy
Internal Control Systems are adequate and operating effectively
commensurate with the size, nature of operations of the Company.
8. Discussion on financial performance with respect to operational
performance
The operational and financial performance of the Company has declined
as compared to the previous year due to COVID-19 pandemic situations, lockdowns,
cancellation of room bookings, employee benefit costs, finance costs and other expenses.
The Company has suffered losses.
9. Material developments in Human Resources / Industrial Relations
front, including number of people employed
The Company under the guidance of Vitizen Hotels Limited has appointed
the necessary staff required for the Hotel. The training and development of the personnel
is looked after by Vitizen Hotels Limited. The Company has 66 employees as on 30th
June 2021.
10. Details of significant changes (i.e. change of 25% or more as
compared to the immediately previous financial year) in key financial ratios, along with
detailed explanations thereof, including:
| Sr. No. |
Particulars |
Ratio |
Explanation |
Remark |
|
|
31.03.2021 |
31.03.2020 |
% of change |
|
|
| i. |
Debtors Turnover |
0.31 |
0.17 |
82 |
Debtors Turnover ratio marginally increased. Outstanding
Recoveries from debtors are under pressure due to COVID 19 pandemic. |
Pursuant to the Order passed by the Court of District and
Session Judge, Aurangabad, the office of the Sub Divisional Officer and Competent
Authority (MPID Act), Aurangabad had attached VITS Hotel and took possession and
management of day-to-day operations of the hotel. An amount of Rs. 96,41,993/- has been
transferred to account of "Additional session judge Aurangabad" till 31st March
2021 pursuant to order passed by session judge under MPID dated 24.05.2019. The same is
subject to confirmation. Vide order dated 24.10.2019, Spl. Judge (MPID), Aurangabad has
ordered to make payments to the applicants of the case out of this amount. The Company has
not received any intimation from the court authority till date about any payments made
under MPID Act to the applicants. Most of the business sectors are suffered due to COVID
19 pandemic. The tourism and hospitality sectors |
| ii. |
Inventory Turnover |
0.016 |
0.011 |
45 |
- |
|
| iii. |
Interest Coverage Ratio |
-0.44 |
0.06 |
-833 |
EBIT margin was substantially decreased due to non payment of
interest to bank / financial institution. Therefore, the ratio is significantly decreased. |
|
| iv. |
Current Ratio |
0.25 |
0.31 |
-19 |
- |
|
| v. |
Debt Equity Ratio |
5.88 |
2.34 |
151 |
Loans liabilities are increased by provision of interest on
borrowed capital. Due to financial difficulties, all such liabilities i.e. interest and
principal are not discharged till 31st March 2021. Consequently, Debt equity
ratio is being increased. |
|
| vi. |
Operating Profit Margin (%) |
-59.89 |
2.30 |
-2704 |
Turnover of the Company is significantly decreased due to
revenue from room and food sale declined as compared to previous year. The company could
not pay off the payments of banks / financial institution. Therefore, the ratio is
significantly decreased. |
|
|
|
|
|
|
|
were first to be affected by COVID-19. Due to all these
adverse circumstances, day to day business activity of the Company is largely affected. |
| vii. |
Net Profit Margin (%) or sector- specific equivalent ratios,
as applicable. |
-1.96 |
-0.36 |
-444 |
Revenue from room and food sale is declined as compared to
previous year. Therefore, the ratio is significantly decreased. |
|
11. Details of any change in Return on Net Worth as compared to the
immediately previous financial year along with a detailed explanation thereof
| Particulars |
31.03.2021 |
31.03.2020 |
% of change |
Explanation |
| Return on Net worth |
-117.04 |
-30.25 |
-286 |
The Company suffers losses due to increase in fix and
variable cost as compared to turnover achieved. Therefore, return on Net worth is
decreased significantly. |
12. Cautionary Statement
Statements in this Management Discussion and Analysis describing the
Companys objectives, projections, estimates and expectations may be forward looking
statements within the meaning of applicable laws and regulations. Actual results might
differ substantially or materially from those expressed or implied. Important developments
that could affect the Companys operations include unavailability of finance at
competitive rates, competition, significant changes in economic environment in India,
regulatory provisions, tax laws, litigations, exchange rate fluctuations, interest and
other costs.
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