velan hotels ltd Management discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A. INDUSTRY STRUCTURE AND DEVELOPMENTS:

It is widely acknowledged that the tourist and hospitality sector, which encompasses travel and hospitality services like hotels and restaurants, is a development agent, a catalyst for socio- economic growth, and a significant source of foreign exchange gains in many countries. Indias rich and exquisite history, culture, and diversity are showcased through tourism while also providing significant economic benefits. The consistent efforts of the central and the state governments have helped the tourism industry & hospitality services to recover from the COVID-19 pandemic shock and operate at the pre-pandemic level.

India being one the most popular travel destinations across the globe has resulted in the Indian tourism and hospitality industry emerging as one of the key drivers of growth in the services sector in India. The tourism industry in India has significant potential considering that Tourism is an important source of foreign exchange in India similar to many other countries.

The tourism industry is showing good signs of revival after the COVID-19 Pandemic. According to the latest data released by the Bureau of Immigration, India received 6.19 million foreign tourist arrivals (FTAS) during CY 2022 compared with 1.52 million during the same period of 2021. There were 10.93 million FTAS in India during the pre-pandemic year 2019. In 2022, the FTA was 6.19 million. This is 56 percent of pre-covid levels.

The foreign exchange earnings (FEES) have risen to Rs.11.34-lakh crore from Rs.65,000 crore the previous year, compared with 2021. This was a 106 percent hike. However, it is yet to reach pre-COVID levels of Rs.2.11 lakh crore.

B. OPPORTUNITIES

With a total area of 3,287,263 sq. km extending from the snow-covered Himalayan heights to the tropical rain forests of the south, India has a rich cultural and historical heritage, variety in ecology, terrains and places of natural beauty spread across the country. This provides a significant opportunity to fully exploit the potential of the tourism sector.

To boost visitor arrival, the Tourism Ministry has declared "Incredible India ! Visit India Year 2023". The Indian Government has realized the countrys potential in the tourism industry and has taken several steps to make India a global tourism hub. The government has now launched the "Dekho Apna Desh" initiative intending to create awareness among the citizens about the rich heritage and culture of the country and encourages citizens to travel within the country. The ministry has also introduced e-Visa for five subcategories i.e. e-Tourist visa, e-Business visa, e-Medical visa, e-Medical Attendant visa and e-Conference visa for nationals of 166 countries,

In Union Budget 2023-24, US$ 290.64 million was allocated to Ministry of Tourism as the sector holds huge opportunities for jobs and entrepreneurship for youth in particular and to take promotion of tourism on mission mode, with active participation of states, convergence of government programmes and public- private partnerships.

India is the most digitally advanced traveller nation in terms of digital tools being used for planning, booking, and experiencing a journey. Indias rising middle class and increasing disposable income have supported the growth of domestic and outbound tourism.

The Ministry of Tourism has partnered with the Quality Council of India (QCI), to assist the Hospitality Industry in their preparedness to continue operations safely and mitigate risks arising out of the COVID-19 pandemic through an initiative called SAATHI (System for Assessment, Awareness and Training for Hospitality Industry).

C. SEGMENTWISE PERFORMANCE :

Please refer Note No. 38 of Notes to the financial statement

D. THREATS, RISKS AND CONCERNS :

The Hotel industry faces risk from the volatile socio-political environment in the local area.

The Hotel revenue is entirely dependent on the performance of Textile and Readymade Garments in Tirupur City. Tirupur City has approximately 60% of Indias garments exports to key markets such as the US, European Union and UK. The US and European Union are still struggling with the high cost of interest / funding and increased inflation rate. In 2022, the US and EU annual inflation reached the highest level ever. Due to this, customers are spending less on non-essential items such as leisure Travel and textile items. Inflation impacting consumption economics and delicate geopolitics continue to mask the growth potential of the industry.

E. OUTLOOK:

India took over the presidency of G-20 in December. During Indias year-long leadership of the block of countries that account for more than 80 per cent of world GDP, 75 per cent of global trade, and 60 per cent of the global population, the country to host a series of events and meetings.

G20 meetings are being held at 55 destinations across the country. Infrastructure at these cities is being augmented and upgraded for the G20 meetings. It is estimated that in 2023, more than 200 meetings involving officials and civil society from these countries will be organized in India across 50 cities. As many as 30 heads of state and government from the G20 nations, and those invited, are expected to participate in the summit. From such events, it is expected that inbound travel, MICE and in-person meetings, which had been subdued last year, would witness significant growth, which will further strengthen the path to healthy income of the Industry.

It is believed that the G20 will add to the high performance in FY23-24 of the industry, which is expected to grow at a minimum of 15 per cent this year and then at a CAGR of 10 per cent over the next decade.

F. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

- Reported in the Report of Directors

G. BUSINESS PERFORMANCE:

Results of operations for the year ended March 31,2023.

I. Revenues:

The total income stands at Rs. 2.30 lakhs from Rs.Nil in 2021-22.

ii. Operating Expenses:

The total expenditure except Interest and Depreciation stands decreased from Rs.149.55 lakhs in 2021-22 to Rs.45.07 lakhs in 2022-23.

iii. Earnings /(Loss) Before Interest, Depreciation and Tax:

During the year under review, the PBIDT is Rs.(47.37) lakh whereas in 2021-22 the PBIDT was Rs.(149.55) lakh.

iv. Interest Cost:

During the year under review, the Interest cost stands Rs.0.65 lakh as compared to Rs Rs.0.06 lakh in the previous year.

v. Profit / Loss Before Tax after Exceptional Item:

Profit Before Tax at Rs.(1845.44) lakh against profit of Rs.937.72 lakhs registered in 2021-22.

vi Profit / Loss After Tax :

During the under review, the Profit /Loss after Tax for 2022-23 stood at (Rs.1849.17) lakhs from profit of Rs. 937.72 lakhs logged in 2021-22.

H. FINANCIALPERFORMANCE WITH RESPECT TO OPERATIONALPERFORMANCE:

					(Rs. in lakhs)
Particulars	31st March, 2023	31st March, 2022	31st March, 2021	31st March, 2020	31st March, 2019
OPERATING RESULTS
1. Total Income	2.30	Nil	12.39	339.23	644.05
2. Profit Before Depre. Int & Tax	(45.07)	(149.55)	(111.99)	(126.64)	(19.46)
3. Interest	0.65	0.06	0.08	13.19	23.28
4. Depreciation	219.78	123.67	167.78	177.72	180.07
5. Tax Liability - Deferred Tax	--	--	122.63	--	--
6. Net Profit /(Loss) After Tax	(1849.17)	937.72	7.13	(317.55)	(222.81)
PERFORMANCE PARAMETERS
1. Share capital	3196.41	3196.41	3194.41	3196.41	3196.41
2. Reserves & Surplus	(2542.23)	(693.06)	(1630.78)	(1637.92)	(1320.37)
3. Secured & Unsecured loans	5189.70	6060.68	7239.60	13653.26	13714.99
4. Fixed Assets (Gross Block)	7207.14	9957.68	7851.66	13199.01	13103.38
5. Accumulated Depreciation	1955.96	1856.63	1983.70	2251.15	2124.06
6. Net Block	5251.18	8101.05	5868.96	10757.19	10979.32

I. FINANCIAL RATIOS :

Please refer Note No. 41 of Notes to the Financial Statement.

J. DEVELOPMENT IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The industrial relations continued to be harmonious and cordial providing an atmosphere conducive to sustenance of growth and enhancement of value for shareholders. However, there are no employees in the Company.