ECONOMIC OVERVIEW
Global
The global economy in this fiscal stayed fairly robust and constant pace of 3.1%,
supported by emerging economies particularly in commodity exporters, but growth in
developed markets stayed modest. The pickup in global growth anticipated in the April
remains on track, with global output projected to grow by 3.5% in 2017 and 3.6% in 2018.
Emerging and developing economies are projected to see a sustained pickup in activity,
with growth rising from 4.3 percent in 2016 to 4.6 percent in 2017 and 4.8 percent in
2018. The US Federal Reserve continued with the interest rate normalization cycle in FY
2016-17 by increasing rates twice, in Dec 2016 and Mar 2017. The global low interest rate
and abundant liquidity cycle is likely to slowly normalise
Indian
India has emerged as the fastest growing large economies in the world, with a currency
that performed better than most other emerging markets. The Government of India has
forecasted that the Indian economy will grow by 7.1% in FY 2016-17. As per the Economic
Survey 2016-17, the Indian economy should grow between 6.75 and 7.5% in FY 2017-18. There
was a significant upturn in commodity prices after a year of deflation. Consumer spending
stayed subdued during the early part of the year impacted by two years of drought. This
year was marked by the way for the long awaited and transformational Goods and Services
Tax (GST).
INDUSTRY STRUCTURE AND DEVELOPMENTS Hospitality Industry:
a) Global Industry:
According to World Travel and Toursim Council, the travel and tourism sector had
generated Rs. 14.1 trillion (USD208.9 billion) in 2016, which is worlds 7lh
largest in terms of absolute size; the sum is equivalent to 9.6% of Indias GDP.
Additionally, the sector created 40.3 million jobs in 2016, which ranks India 2nd
in the world in terms of total employment generated. The sector accounts for 9.3% of the
countrys total jobs.
The outlook for the Travel & Tourism sector in 2017 stays robust and will continue
to be at the front position of wealth and employment making in the global economy, despite
the coming out of a number of challenging headwinds. Direct Travel & Tourism GDP
growth is pick-up the pace to accelerate to 3.8%, up from 3.1% in 2016. As nations seem to
be looking increasingly inward, putting in place barriers to trade and movement of people,
the role of Travel & Tourism becomes even more significant, as an engine of economic
development and as a vehicle for sharing cultures, creating peace, and building mutual
understanding. Travel & Tourism forecasts over the next ten years also look extremely
favourable with predicted growth rates of 3.9% annually.
b) Indian Industry:
Total contribution by travel and tourism sector to Indias GDP is expected to increase
from US$ 136.3 billion in 2015 to US$ 275.2 billion in 2025. Travel and tourism is the
third largest foreign exchange earner for India. A sum of US$ 1.76 billion was earned
under foreign exchange through tourism during the month of September 2016.
Tourism in India accounts for 7.5% of the GDP and is the third largest foreign exchange
earner for the country. The tourism and hospitality sectors direct contribution to GDP,
in 2016, is estimated to be USD 47 billion. During 2006-16, direct contribution of tourism
and hospitality to GDP is expected to register growth at a CAGR of
11.3%. The direct contribution of travel and tourism to GDP is expected to grow at 7.2%
per annum, during 2015 - 25, with the contribution expected to reach USD 160.2 billion by
2026.
The sectors total contribution to GDP is expected to (USD billion) increase to USD
136.2 billion by the end of 2016, witnessing growth from USD 88 billion in 2007, and is
expected to further grow to USD 280.5 billion by 2026. The total contribution of travel
and tourism to Indian GDP is forecasted to increase by 4.97% per annum to USD 280.5
billion by 2025 (7.2% of GDP). In December 2016, the country earned foreign exchange of
around USD 2.12 billion, from the tourism sector.
Indias Travel and Tourism sector was also the fastest growing amongst the G20
countries, growing by 8.5% in 2016. A further 6.7% growth is forecast for 2017.
c) Government Initiatives:
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 taken by the Government of India to give a boost to the
tourism and hospitality sector of India are as follows:
• Tourism and hospitality is included as one of the 25 focus sectors under the
governments Make in India initiative, which aims to transform India into a global
design and manufacturing hub.
• The government has allowed 100 per cent FDI under the automatic route in the
tourism and hospitality sector, including tourism construction projects - such as
development of hotels, resorts and recreational facilities.
• The Ministry of Tourism (MoT) is focussing on driving tourism through branding
and promotional campaigns, such as Incredible India and Atithi Devo Bhava
• In October 2016, the government set up a task force for adventure tourism to
resolve challenges related to the segments development and promotion in the country.
• Striving to improve the ease of doing business, the MoT has set up a website for
online recognition of travel trade service providers.
• The government is encouraging local involvement in tourism by promoting
homestays; it is also urging the states to make the licensing process easier for
homestays, and exempt them from service tax and other levies.
• The MoT continues to promote tourism through bilateral/tripartite agreements and
Memoranda of Understanding (MoUs) with other countries and international organisations;
India currently has 48 such agreements in place.
Information Technology Industry:
a) Global Industry:
As per the NASSCOM Strategic Report 2017, global technology industry had seen modest
yet commendable growth of 4% in Current Year 2016, after a couple of years of remaining
flat. The Global IT-BPM market (excluding hardware) stood at USD 1.2 Trillion in Current
Year 2016. Information Technology services grew by 2.5% to reach USD 649 Billion in
Current Year 2016 on account of acceptance of cloud models and investment in cloud
infrastructure. Global sourcing market growth continues to outperform ITBPM spends growth.
India continued as the worlds No. 1 sourcing destination with a 55 % market share.
b) Indian Industry:
India is the worlds largest sourcing destination for the information technology (IT)
industry, accounting for approximately 67 per cent of the US$ 124-130 billion market. The
industry employs about 10 million workforces. The IT industry has also created significant
demand in the Indian education sector, especially for engineering and computer science.
The Indian IT and ITeS industry is divided into four major segments - IT services,
Business Process Management (BPM), software products and engineering services, and
hardware.
The Indian IT sector is expected to grow at a rate of 12-14 per cent for FY2016-17 in
constant currency terms. The sector is also expected triple its current annual revenue to
reach US$ 350 billion by FY 2025. Total spending on IT by banking and security firms in
India is expected to grow 8.6 per cent year-on-year to US$ 7.8 billion by 2017. Indias
internet economy is expected to touch Rs 10 trillion (US$ 146.72 billion) by 2018,
accounting for 5 per cent of the countrys GDP.
Cross-border online shopping by Indians is expected to increase 85 per cent in 2017,
and total online spending is projected to rise 31 per cent to Rs. 8.75 Lacs crore (US$ 128
billion) by 2018.
India ranks among the top five countries in terms of digitalization maturity as per
Accentures Platform Readiness Index, and is expected to be among the top countries with
the opportunity to grow and scale up digital platforms by 2020.
c) Government Initiatives:
Some of the major initiatives taken by the government to promote IT and ITeS sector in
India are as follows:
• The Government of Gujarat has signed 89 MoUs worth Rs 16,000 crore (US$ 2.3
billion) in the IT sector, during Vibrant Gujarat Global Summit- 2017.
• The Government of Telangana has signed an agreement with network solutions giant
Cisco Systems Incorporation, to cooperate on a host of technology initiatives, including
Smart Cities, Internet of Things, cyber security, education digitisation of monuments.
• The Pune Smart City Development Corporation (PSCDCL) has signed a memorandum of
understanding (MOU) with the European Business and Technology Centre (EBTC), which will
allow it to gain access to real-time knowledge of technologies, solutions and best
practices from Europe.
• Government of India is planning to develop five incubation centres for loT
start-ups, as a part of Digital India and Startup India campaign, with at
least two centres to be set up in rural areas to develop solutions for smart
agriculture.
• The Government of India has launched the Digital India program to provide
several government services to the people using IT and to integrate the government
departments and the people of India. The adoption of key technologies across sectors
spurred by the Digital India Initiative could help boost Indias Gross Domestic Product
(GDP) by US$ 550 billion to US$ 1 trillion by 2025.
• India and the US have agreed to jointly explore opportunities for collaboration
on implementing Indias ambitious Rs 1.13 trillion (US$ 16.58 billion) Digital India
Initiative. The two sides also agreed to hold the US-India Information and Communication
Technology (ICT) Working Group in India laterthisyear.
OPPORTUNITIES
Indian Hospitality Industry:
Indias travel and tourism industry has huge growth potential. The tourism industry is
also looking forward to the expansion of E-visa scheme which is expected to double the
tourist inflow to India. Travel and tourism has become one of the largest service
industries in India and has a huge growth potential. With thousands of tourists coming in
and its growing share in the GDP, the room for growth in travel and tourism in India is
nearly exponential.
• Under "Swachh Bharat" Mission Government plans to come up with 100
model Swachh Tourist Destinations under a special clean-up initiative focused on
developing iconic heritage, spiritual and cultural places in the country.
• Total outbound trips increased by 8.7% to reach 19.9 million in 2015, while
inbound tourist volume grew at a Compound Annual Growth Rate (CAGR) of 6.8% during
2010-2015.
• Foreign Tourist Arrivals (FTAs) during the month of December, 2016 were 10.37
Lacs as compared to 9.13 Lacs during the month of December, 2015 and 8.85 Lacs in
December, 2014. There was a 13.6% growth in FTAs in December, 2016 over December, 2015.
• Tourist arrivals on e-Tourist Visa (e-TV) witnessed a year-on-year growth of
196.6% to reach 66,097 tourists in August 2016; this can be attributed to the e-TV visa
being expanded to include 150 countries compared to the previous 113 countries.
• The hotel and tourism sector attracted around US$ 9.23 billion worth of Foreign
Direct Investment (FDI) from April 2000 to March 2016.
• 86 Memoranda of Understanding (MoUs) worth around Rs. 15,000 Crores were signed
at the first Incredible India Tourism Investment Summit 2016, for the development of
tourism and hospitality projects.
• Foreign Exchange Earnings (FEEs) during the month of December, 2016 were Rs.
16,805 Crore as compared to Rs. 14,152 Crore in December, 2015 and Rs. 12,988 Crore in
December, 2014.
• The tourism industry is expected to generate 13.45 million jobs across
sub-segments such as restaurants (10.49 million jobs), hotels (2.3 million jobs) and
travel agents/touroperators (0.66 million).
India rose by 13 ranks from the 65th to the 52nd rank in the World Economic Forums
Travel and Tourism Competitiveness Index (TTCI) in 2015.
• India was the top international tourism source market for Dubai in 2016, and
brought in 1.8 million overnight tourists, reflecting a 12 percent growth over2015.
Indian Information Technology Industry:
• India is the topmost offshoring destination for IT companies across the world.
Having proven its capabilities in delivering both on-shore and offshore services to global
clients, emerging technologies now offer an entire new gamut of opportunities fortop IT
firms in India.
• Social, Mobility, Analytics and Cloud (SMAC) are collectively expected to offer
a US$ 1 trillion opportunity. Cloud represents the largest opportunity underSMAC,
increasing at a CAGR of approximately 30% to around US$ 650-700 billion by2020.
• The social media is the second most lucrative segment for IT firms, offering a
US$ 250 billion market opportunity by 2020.
• The Indian e-commerce segment is US$ 12 billion in size and is witnessing strong
growth and thereby offers another attractive avenue for IT companies to develop products
and services to cater to the high growth consumer segment.
CHALLENGES. THREATS. RISKS AND
CONCERNS
Indian Hospitality Industry:
• The indirect tax levied on the tourism and
hospitality sectors offerings in India is considerably higher at 18-25 per cent than
that levied by some of the major tourist destinations globally, where it is below 10
percent
• The tourism infrastructure at several major tourist destinations in India is
inadequate to support sustainable tourism; the primary areas of concern include poor and
unsafe road transportation, insufficient regional air connectivity, unsanitary conditions
and safety of travelers.
• Although tourist police has been officially deployed by several states, the
objective is likely to be achieved once it is strengthened further.
• Unregulated tourism activities at several tourist spots, including some heritage
sites in the country, are adversely affecting the ecological balance in those places.
• Tourism and hospitality is a labour-intensive sector, and the countrys complex
labour laws at the centre as well as at the state level affect the existing and new
businesses trying to enter the Indian market.
• The sector has also witnessed a temporary slowdown owing to the governments
recent move to demonetise high currency notes of INR 500 and INR 1,000, which effectively
removed 86 per cent of the cash value in the economy.
• Being a state subject, tourism is challenged by the inconsistencies in
regulations imposed on the sectors businesses.
Indian Information Technology Industry:
• The Indian IT-BPM industry has been traversing through various challenges. The
ambit of reasons, including protectionism in the global market, perplexed political
scenario, visa regulations and the emergence of new technologies, have added to the
challenges. The IT services sector has been facing the brunt of pressing issues, such as
pricing pressure, decrease in IT spending patterns and the average deal size getting
smaller.
• With the digital disruption, global companies are shifting towards digital
services and cloud computing. These companies are looking for high- value propositions and
innovative solutions, rather than what was provided by the Indian companies traditionally.
With the shift towards digital, Indian companies are lagging behind in upskilling their
employees for high-value work and new-age technologies.
• While the emerging technologies have created opportunities on the one hand, they
have also given rise to uncertainties on the other; automation and Artificial Intelligence
(Al)-based platforms are replacing processes dependent on
human input to a significant extent.
INTERNAL CONTROL SYSTEM AND RISK MANAGEMENT
The Company maintains an adequate internal control system, which provides, among other
things, reasonable assurance of recording the transactions of its operations in all
material aspects and of providing protection against significant misuse or loss of
Companys assets. Overall responsibility for the risk management processes adopted by the
Company lies with the Board. On behalf of the Board, the Audit Committee reviews the
effectiveness and efficiency of the Companys internal control policies and procedures for
the identification, assessment and reporting of risks.
The Internal Auditor monitors and evaluates the efficacy and adequacy of internal
control systems in the Company, its compliance with operating systems, accounting
procedures and policies at all locations of the Company and its subsidiaries and reports
the same on quarterly basis. Based on the report of internal auditor, respective
departments undertake corrective action in their respective areas and thereby strengthen
the controls. Significant audit observations and corrective actions thereon are presented
to the Audit Committee of the Board.
HUMAN RESOURCES AND INDUSTRIAL RELATIONS
The primary objective of Human Resource (HR) function is to attract and retain talent
with requisite competencies, especially for emerging businesses and focus on training and
development to improve productivity thereby strengthening the competitive edge of the
Company.
Given the dynamic nature of business environment, nurturing the human capital becomes
necessary for achieving sustainable growth. With long term objective in mind the Company
undertakes and sponsors various training and development programs to impart the employees
with necessary skill sets. Talent acquisition helps us to enhance efficiency and also
bring about positive cultural change within the Organization.
Industrial Relations throughout the year were cordial at all hotels and operating units
of the Company. As on 31st March, 2017, the Company had 106 employees.
MANAGEMENT OUTLOOK AND STRATEGY TOWARDS SUCCESS
The Company is striving and persistently focusing on upgrading its infrastructure and
services year on year to meet Global hospitality standards in ambience, comfort and
convenience. The Company will also constantly focus on enhancing its hospitality
management services as it believes that the Companys hotel management expertise and
equity in this segment will enable it to capitalise on the favourable trends in
hospitality sector.
The Company and its subsidiaries currently owns / operates / manages more than 40
hotels / properties with a loyal high-end client base. For the Company, hospitality means
having customer delight, celebrating the culture, gastronomy and nature of the locations
in which they are found.
Financial Performance Summary (Standalone):
Revenues
The Company has earned total revenue of Rs. 3475.34 Lakhs as against the previous
years revenue of Rs. 3242.82 Lakhs.
Expenditure
Total expenditure stood at Rs. 3296.83 Lakhs as against Rs. 3466.04 Lakhs in the
previous year.
Profit before Tax
Profit before Tax decreased to Rs.431.12 Lakhs fromRs. 1681.39 Lakhs in the previous
year.
Profit after Tax
Profit after Tax decreased to Rs. 343.84 Lakhs from Rs. 1294.04 Lakhs in the previous
year.
Financial Performance Summary (Consolidated):
Revenues
During the year consolidated revenues stood at Rs.14103.32 Lakhs as against Rs.14217.84
Lakhs in the previous year.
Expenditure
Total expenditure stood at Rs.16610.92 Lakhs as against Rs. 17571.34 Lakhs in the
previous year.
Profit/fLoss) before Tax
Loss for the year before Tax adjustment stood at Rs. 1953.55 Lakhs as against a net
loss of Rs. 1394.20 Lakhs in the previous year.
Profit/fLoss) after Tax
Loss for the year after Tax and other adjustments stood at Rs. 2042.33 Lakhs as against
net loss of Rs. 1791.87 Lakhs in the previous year.
FORWARD LOOKING AND CAUTIONARY STATEMENTS
Statements made in the Management Discussions and Analysis, describing the Companys
objectives, projections, estimates, predictions and expectations may be forward- looking
statements, within the meaning of applicable securities laws and regulations. As
forward-looking statementsare based on certain assumptions and expectations of future
events over which the Company has no control, the Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Actual results, performance or achievements could
differ materially from those expressed or implied in such forward-looking statements. This
report should be read in conjunction with the financial statements included herein and the
notes thereto and the other information included elsewhere in the Annual Report.
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