gagan gases ltd Management discussions

Global economy:

January 2023 World Economic Outlook Update projects that global growth will fall to 2.9 percent in 2023 but rise to 3.1 percent in 2024. The 2023 forecast is 0.2 percentage point higher than predicted in the October 2022 World Economic Outlook but below the historical average of 3.8 percent. Rising interest rates and the war in Ukraine continue to weigh on economic activity. Chinas recent reopening has paved the way for a faster-than-expected recovery. Global inflation is expected to fall to 6.6 percent in 2023 and 4.3 percent in 2024, still above pre-pandemic levels.

• Recession postponed, not canceled

Despite the aggressive monetary policy tightening weve seen so far, economic activity in developed economies has shown to be more resilient than expected amid a strong rebound in the services sector.

• Inflation remains stickier than expected

While headline inflation is easing, core inflation remains stubbornly high, and it isnt just due to services inflation: Goods inflation is inflecting higher after a period of decline.

• Unexpectedly hawkish central banks

From the Bank of Canada to the Reserve Bank of Australia to Bank Negara Malaysia to the U.S. Federal Reserve, central banks around the world are proving to be more hawkish than expected.

• A shifting geopolitical backdrop

There are signs that were entering a new global regime, requiring a rethink of how risk assets respond to changes in the macro backdrop.

OUTLOOK

Global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades. The cost-of-living crisis, tightening financial conditions in most regions, Russias invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook. Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023. This is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic. Global inflation is forecast to rise from 4.7 percent in 2021 to 8.8 percent in 2022 but to decline to 6.5 percent in 2023 and to 4.1 percent by 2024. Monetary policy should stay the course to restore price stability, and fiscal policy should aim to alleviate the cost-of-living pressures while maintaining a sufficiently tight stance aligned with monetary policy. Structural reforms can further support the fight against inflation by improving productivity and easing supply constraints, while multilateral cooperation is necessary for fast-tracking the green energy transition and preventing fragmentation. Source :World Economic Outlook Update, July 2022

INDIAN ECONOMY

Real GDP or Gross Domestic Product (GDP) at Constant (2011-12) Prices in the year 2022-23 is estimated to attain a level of Rs. 159.71 lakh crore, as against the First Revised Estimate of GDP for the year 2021-22 of Rs. 149.26 lakh crore. The growth in GDP during 2022-23 is estimated at 7.0 percent as compared to that of 9.1 percent in 2021-22.

Nominal GDP or GDP at Current Prices in the year 2022-23 is estimated to attain a level of Rs. 272.04 lakh crore, as against Rs. 234.71 lakh crore in 2021-22, showing a growth rate of 15.9 percent.

The sector-wise estimates have been compiled using indicators like

(i) Index of Industrial Production (IIP),

(ii) financial performance of Listed Companies in the Private Corporate sector available for Q1, Q2 and Q3 2022-23,

(iii) Second Advance Estimates of Crop Production for 2022-23,

(iv) Production targets for 2022-23 and production estimates of Major Livestock Products for Summer and Rainy seasons of 2022-23,

(v) Fish Production,

(vi) Production/ Consumption of Cement and Steel,

(vii) Net Tonne Kilometres and Passenger Kilometres for Railways,

(viii) Passenger and Cargo traffic handled by Civil Aviation,

(ix) Cargo traffic handled at Major Sea Ports,

(x) Sales of Commercial Vehicles,

(xi) Bank Deposits & Credits,

(xii) Accounts of Central & State Governments, etc., available for first 9/10 months of the financial year 2022-23.

OUTLOOK

According to the IMF, Indias projected economic growth for FY 2023 is 8.2%. This growth will be driven by higher capital expenditure, infrastructure development through the new institutional framework, a boost to the manufacturing sector and buoyant exports. The growth estimates have seen downward revisions due to the conflict in Ukraine, which will cause inflation to be higher than previously expected. Consequently, growth will be influenced by global headwinds such as elevated commodity prices, global logistics, supply side bottlenecks and rising prices of industrial raw materials. For the first half of the next fiscal year, inflation is projected to be at 5 per cent. The RBI has embarked on a normalization of eased monetary policy undertaken since March 2020 to mitigate the distress due to the pandemic. RBI has increased the policy repo rate by 40bps and more such hikes are expected in the current financial year as the RBI will continue with policy normalization amid elevated inflation. Rates on long term bonds are at elevated levels driven by higher yields on US bonds and higher domestic inflation.

OVERVIEW OF THE TRAVEL AND HOSPITALITY INDUSTRY WORLDWIDE

Last year, despite the economic and geopolitical issues , the Travel & Tourism sectors recovery continued at pace, growing 22% year-on-year to reach $7.7TN.

This recovery represented 7.6% of the global economy in 2022, the highest sector contribution since 2019, although its global GDP is still 22.9% behind its 2019 peak.

In 2021 the global sector grew 24.7% year-on-year, and last year it grew a further 22% to reach a GDP contribution of $7.7TN.

The research shows that the ongoing conflict in Ukraine and prolonged travel restrictions imposed by a number of countries such as China had a significant impact on the global recovery. But the recent decision by the Chinese government to reopen its borders from January will propel the sector and see it recover to pre-pandemic levels next year. From a pre-pandemic high of more than 334MN, the COVID-19 pandemic ravaged employment in the sector which saw losses of more than 70MN to bring the total number employed in 2020 to just 264MN.

Following the recovery of 11MN jobs in 2021, the sector created 21.6MN new jobs in 2022 to reach more than 295MN globally – one in 11 jobs worldwide. Spending from overseas visitors grew by a record 82% to reach $1.1TN in 2022, showing that international travel is firmly back on track.

Julia Simpson, WTTC President & CEO, said: "The Travel & Tourism sector continues to recover at pace, demonstrating the resilience of the sector and the enduring desire to travel. "By the end of the year, the sectors contribution will be within touching distance of the 2019 peak. We expect 2024 to exceed 2019. Travel & Tourism will be a growth sector over the next ten years. "The recovery will speed up this year as Chinese travellers re-enter the market. "Travel & Tourism provides 300 million jobs worldwide." The global tourism body is forecasting that the sector will grow its GDP contribution to $15.5TN by 2033 representing 11.6% of the global economy and will employ 430MN people around the world, with almost 12% of the working population employed in the sector. The latest EIR also reveals that 34 of the 185 countries analysed in the EIR have now recovered to pre-pandemic levels in terms of GDP contribution. WTTC forecasts that by the end of 2023, nearly half of the 185 countries will have either fully recovered to pre-pandemic levels or be within 95% of full recovery.

INDIAN SCENARIO

According to the report, the recovery path for the hospitality sector is becoming clearer, with more than $400 million in investment expected during 2020-23. It also predicts the addition of approximately 12,000 rooms in 2023, with numbers expected to grow at a compound annual growth rate (CAGR) of around 3.3% by 2025.

As per IBEFs report on Growth of Tourism and Hospitality Industry, Travel and tourism are two of the largest industries in India, with a total contribution of about US$ 178 billion to the countrys GDP.

Indias average hotel rates saw a strong increase of 30-32% in H1 2023 compared to H1 2022 and were 21-23% higher than in H1 2019. The steady rise in average rates helped the nationwide RevPAR to reach INR4,650-4,850, reflecting a growth of 46-48% compared to H1 2022.

OUTLOOK

The hotel industry in India is expected to reach a value of INR 1.2 trillion by the end of 2023 owing to the high arrival rate of foreign tourists and business delegates. Leading hotel companies are leveraging advance technologies such as artificial intelligence, machine learning, internet of things, near-field communication, mobile payment and data analytics to increase online reservations, improve the return on advertising spend, better understand guest preferences and build stronger customer relationships.

There is significant pent-up demand for tourism in the domestic market due to restrictions imposed over the last two years caused by the pandemic. Also, the diversion of outbound leisure travel to domestic tourism has been positive for the Indian hospitality sector. Therefore, domestic tourism is expected to recover faster than international travel.

THE CHALLENGES

• Lack of clear land titles;

• Financing and capital requirement;

• Continuous Tech Advancements;

• Retaining and Attracting Employees

• Unfavorable Supply Vs. Demand Dynamics;

• Increased cost of compliance and manpower

• Shortage of Skilled Manpower;

• Delays in project approval and other procedural difficulties;

• Rising Operating Costs;

• Lack of adequate sources of finance;

• Lower sales volume;

• Implementation of Technology

• Environmentally Friendly Practices

• Personalizing Customers Experience

Financial Performance:

Particulars	Year ended 31.03.2023	Year ended 31.03.2022
	(Rs in Lacs)	(Rs in Lacs)
Revenue from Operations	346.52	173.95
Total Income for the year	389.67	292.38
The years working shows a Gross Profit of	-100.53	-41.45
Out of which, Provisions have been made for:-
Depreciation	54.79	52.37
Exceptional item	Nil	Nil
Provision for Taxation:
(i) Current Income Tax	Nil	Nil
(ii) Deferred Tax	36.33	19.05
(iii) Mat Credit Entitlement	0.00	0.00
Provision for doubtful debts	0.00	0.00
Previous year expenses	0.00	0.00
Profit after Income Tax	-118.99	-74.67

Outlook on Risks and Concerns:

Your Company is exposed to a number of risks such as economic, regulatory, taxation and environmental risks and also the investment outlook towards Indian Real Estate Sector. Some of the risks that may arise in its normal course of its business and impact its ability for future developments include inter-alia credit risk, liquidity risk, regulatory risk, commodity inflation risk and market risk.

Internal Control System:

The Company has adequate internal control systems and procedures with regard to purchase, stores and raw materials and bookings and other service and for sale of goods. The Company has an adequate internal audit system commensurate with size and nature of its business. The Company has engaged a firm of Chartered Accountants for its internal audit function. Reports of Internal Auditors are reviewed in the meetings of the Audit Committee of the Board.

Industrial Relations & Human Resource Development:

The Company has always valued its human resources and considered them as the biggest assets of the Company. The Company believes in the infinite potential of each employees and focus on the overall development of each employee. Industrial relations continued to be harmonious and cordial throughout the year. The company employed 48 numbers of employees as on 31st March, 2023.

Road Ahead

World Tourism Day 27th of September 2023 has been chosen to inspire us to consider what we want tourism to achieve, and how we can get there. The United Nations General Assembly recently held its special debate on tourism, highlighting the historic relevance of the industry, and showing that it is now a priority for governments and international organizations worldwide. This marks a remarkable development for the industry on a global scale.

In 2022, the tourism sector has shown signs of remarkable recovery with more than 250 million international arrivals recorded. However, long-term and holistic thinking is needed to meet the challenges facing our world. A more sustainable tourism model based on social inclusion, environmental protection, and responsible tourism practices is crucial for the industrys continued success.

To achieve sustainable tourism, we need to focus on important lines of action to guide responsible tourism recovery. These include public health, social inclusion, biodiversity conservation, climate action, circular economy, and governance and finance. Promoting sustainable tourism practices will create economic, social, and environmental benefits for communities around the world.

The first line of action is responsible recovery for people. The tourism sector can contribute to public health and humanitarian aid, which will help build confidence and trust in the industry. Targeted support for vulnerable groups, such as youth, women, rural populations, and indigenous communities, will allow for a more inclusive recovery. The second line of action is social inclusion, which focuses on creating long-term support for small and medium enterprises beyond initial relief measures. Digital technologies can contribute to business continuity while capitalizing on the new services that tourism businesses and creative industries have provided to destinations in times of crisis, bringing an opportunity to create stronger ties with local communities.

The third line of action, responsible recovery for the planet, aims to support conservation efforts through tourism. By investing in nature-based solutions for sustainable tourism, we can foster disaster resilience in urban and natural environments.

The fourth line of action, climate change action, aims to accelerate the decarbonization of tourism operations. Enhancing mitigation efforts in the tourism sector, including investments to develop low-carbon transportation options and greener infrastructure, is crucial to the industrys resilience.

The hospitality business is dependent on global and domestic economic conditions. The Company is assessing the short term and on its operations, profitability, liquidity position and demand for its services etc. The Company has taken several measures to sustain the operations, optimization of financial resources and cost control. Some of them are here-

1. To explore the other avenues of the income within the current business operations.

2. To diversify the use of the Land and other assets of the Company.

3. To further optimize the Human Resource Operation

4. To explore opportunity to lease / rent out options for the Companys Assets/ properties.

5. To explore opportunities for contract farming or such other options to use the Agricultural Land of the Company.

6. To refinance the financial structure of the company.