In the recent past, the Indian economy has had to overcome varied challenges in itsresolve to sustain its economic success. The major challenges were unsupportive externalenvironment, domestic structural constraints, growth slowdown and inflationary pressures.The slowdown manifested in the decline in the growth of Gross Domestic Product (at factorcost at constant 2004-05 prices) from 8.9% in 2010-11 to 4.5% in 2012-13 and 4.9% in2013-14. The slowdown of growth in India is broadly in sync with trends in similaremerging economies. The sharp downturn in growth owes to the interface of domestic factorswith the global economic environment of uncertainties and slow growth in many advancedeconomies.
However, Indian GDP is likely to grow by 5.6% in 2014-15 against the growth of lessthan 5% in the last fiscal. The economic growth in 2014-15 is likely to be contributedmajorly by the industrial sector, which is estimated to grow by 4.1%. The Indian economy,has remained constrained by slow industrial growth, contracting manufacturing output, weakinvestment and a reduction in private consumption. India's capacity for more rapid growthover the long term is high, with a promising outlook for labour, worker skills, capital,infrastructure, and productivity. The growth is expected to rise further to 6.0% in2015-16 as the recovery in advanced economies will bolster external demand and governmentactions are likely to remove some structural bottlenecks impeding industry andinvestments.
INDUSTRY STRUCTURE AND DEVELOPMENTS
a) Global Industry
According to the Travel and Tourism Economic Impact Report 2014 released by WorldTravel & Tourism Council, Year 2013 proved to be another successful year for theHospitality Industry including Travel and Tourism. Hospitality Industry's contribution toworld GDP grew for the fourth consecutive year in 2013, which was mainly due to strongdemand from international travellers. The money spent by these international tourists,also rose by 3.9% at a global level year on year, to US$1.3 trillion, and by over 10%within Southeast Asia. It is expected that the growth in Hospitality Industry and demandfrom emerging markets will continue to grow on the same pace, as large rising middle classpopulation, especially from Asia and Latin America, are willing and more able than ever totravel both within and beyond their borders.
In 2013, Hospitality Industry's total contribution to the global economy rose to 9.5%of global GDP (US$7 trillion), not only outpacing the wider economy, but also growingfaster than other significant industries such as financial and business services,transport and manufacturing. In all, nearly 266 million jobs were supported by HospitalityIndustry in 2013 - 14 i.e. 1 in 11 of all jobs in the world. The sustained demand forbetter Hospitality together with its ability to generate high levels of employmentcontinues to prove the importance and value of the sector as a tool for economicdevelopment and job creation.
The outlook for Hospitality Industry in 2014 is also very positive, with growthforecast of 4.3% of the GDP. This growth may also be driven by higher consumer spending asthe recovery from recession gathers pace and is becoming firmly established. Tourists areexpected to spend more per trip and stay longer on their holidays in 2014, while long haultravel, especially among the European markets, is also expected to gain a greater share ofinternational tourism demand. Profitability for travel companies should also start to edgeup, bringing opportunities for further job creation in the process. Hospitality Industry'sforecasts over the next ten years also look extremely favourable, with predicted growthrates of over 4% annually that continue to be higher than growth rates in other sectors.This growth rate, especially in emerging markets, will depend upon favourable businessclimate for investment in the infrastructure and human resource which will facilitate asuccessful and sustainable tourism sector. At the national level, government shall alsotake steps viz. relaxing visa rules, reducing taxes on hospitality sector, etc. If theright steps are taken, Hospitality sector can be a true force for boosting the GDP.
b) Indian Industry
According to the World Travel & Tourism Council, India's Hospitality Industryincluding Travel and Tourism is expected to grow by 7.3% in 2014, better than last year,but average spending by foreigners travelling to the country may decline to 2.9% from 6.2%in 2013. This year, revenue from tourism is expected to grow by 8.2% compared with 5.1% ayear ago, however increase in travellers, growth of low-cost airlines and upgrading ofairport infrastructure will be the growth drivers. The growth forecast in India in generalterms is good, but it is much lower as compared to other countries, like China, which grewat 9.2% in 2013 (and is anticipated to grow at 8.3% in 2014). In 2013, India generatedrevenue of INR 1.1 lakh crore from foreign visitors. This figure is likely to grow by 2.9%in 2014. International tourist arrivals are expected to touch 7.36 million in 2014 and13.43 million by 2024. Expenditure by foreign tourists in India is expected to grow by4.3% every year to INR 1.74 lakh crore in 2024. In 2013, the Hospitality
Industry contributed INR 2.17 lakh crore or 2% to the country's GDP. This is expectedto rise to INR 4.35 lakh crore in 2024
The Ministry of Tourism, Government of India has taken various measures to promoteHospitality, Travel and Tourism sector in the country. The Government of India hasextended "Visa on Arrival" scheme to more than 180 countries, which has boostedthe tourism industry. The rise in Foreign Direct Investment (FDI) in the tourism sector(sector attracted second highest FDI in 2013at US$3.2 billion) is also providing fillip toits growth. Government Policy actions such as 100% FDI, plans for extension of visa onarrival scheme to a larger number of countries and a five year tax holiday for 2, 3 and 4star category hotels located around UNESCO World Heritage sites among others are expectedto drive future growth in the sector.
Information Technology Industry
a) Global Industry
According to the Information Technology (IT) Industry Outlook 2014 released by CompTIA(the non-profit trade association for the IT professionals and IT channel organisations),the IT industry is expected to experience moderate growth in 2014. As per CompTIA, theglobal IT industry will grow at the rate of 3.4% in 2014, with upside potential of 5.9%. Arange of technologies viz. cloud computing, mobile apps, mobile data and others havegained a bigger foothold with customers over the past two years, which have boosted thegrowth of IT industry. Overall in 2014, IT services and hardware & software productsare expected to show the most growth potential. IT hardware products are projected to growat a slightly lower rate, mainly due to more intense margin pressure. On the employmentfront, 41% of IT companies propose to increase their investments in employment fortechnical positions this year, compared to 15% that plan to decrease the same. However,32% of IT companies propose to increase their investments in employment for non-technicalpositions and 16% propose to decrease the same. The data suggests medium-sized IT firmswill be the most aggressive in hiring for both technical and nontechnical positions.
b) Indian Industry Outlook
According to NASSCOM, the Indian IT industry has demonstrated resilience and agility inthe last year. IT has today become an integral part and support for growth of all thesectors. Indian IT industry is continuously evolving and innovating itself for gainingconfidence of existing consumers and attracting new consumers. The Increase in globaltechnology spending and opportunities created through adoption of disruptive technologiesare expected to propel growth of Indian IT Industry in 2014. The Indian IT industryexpects to clock export revenues of US$84-87 billion in 2014 maintaining a growth rate of12-14%. The Domestic revenues will also grow at a rate of 13-15% and are expected to reachINR 1180-1200 billion. India is the only country that offers the depth and breadth ofofferings across different segment of the IT industry viz. IT Services, Business ProcessManagement (BPM), Engineering & R&D, Internet & Mobility and SoftwareProducts. IT Services is a US$50 billion sector, BPM is a US$20 billion sector,Engineering crossed US$10 billion and Software products, Internet & Mobility areemerging opportunities. Today, existing and new IT companies are expanding their offeringsto build India as the hub for analytics, mobility, cloud, social collaboration andemerging verticals like healthcare and medical devices.
After the economic reforms of 1991-92, major fiscal incentives provided by theGovernment of India and the State Governments have boosted growth of IT Industrty, likeliberalization of external trade, elimination of duties on imports of informationtechnology products, relaxation of controls on both inward and outward investments andforeign exchange, setting up of Export Oriented Units (EOU), Software Technology Parks(STP), and Special Economic Zones (SEZ), has enabled India to flourish and acquire adominant position in world's IT scenario. In order to alleviate and to promote Indian ITindustry, the Government of India had set up a National Task Force on IT and SoftwareDevelopment to examine the feasibility of strengthening the industry. Venture capital hasbeen the main source of finance for software industry around the world. In line with theinternational practices, norms for the operations of venture capital funds have also beenliberalized to boost the industry.
Indian Hospitality Industry
Multiple tourism circuits across the Country based on varied themes of pilgrimage,adventure, natural flora and fauna, cultural heritage, national history, famouspersonalities, historical monuments, rivers and other topographic diversity provide ampleopportunities for increasing the tourism potential in India. This may further be enhancedthrough:
Identification and development of new tourism circuits or enhancement ofexisting ones;
Development of integrated circuits in collaboration with neighbouring states;
Infrastructural development focusing on tourist destinations as well as civicinfrastructure;
Encouragement for private sector participation in form of financial incentivessuch as lower taxes, subsidies, easy finance options or availability of land banks;
Establishment of required administrative set up;
Development of innovative marketing and promotion techniques;
Leverage key strength of the state in terms of natural resources, flora andfauna, rich and cultural heritage etc. to promote different forms of tourism.
Indian Information Technology Industry
There are ample of opportunities for Indian IT Industry to grow year on year due to itsevolving nature. Some of the key growth drivers that are expected to open newopportunities for the Indian IT Industry are smart computing, 'anything'-as-a-service,Internet & mobile software products, technology enablement in emerging verticals andthe Small and Medium Business (SMB) market. Information Technology plays a critical rolein contributing to India's GDP. According to NASSCOM, The IT market in India is maturingand it was the fastest growing market in the year. NASSCOM is also looking to partner withthe government of India in enhancing technology adoption in the country. The rapidadoption of Internet and mobile is creating enormous opportunities for entrepreneurship inthe country. A growing ecosystem of early stage funding, incubation and peer learning iscreating innovative start-ups building technology solutions and products for India and theglobal market. The market for customized software is also gaining momentum due to itscustomer centric approach, which is good sign as the Company is in the same field.Government Initiatives like creating a strong and robust ecosystem for start-ups,innovation clusters and centres of excellence (CoEs) are also encouraging entrepreneurshipand may result in the next generation of IT companies from India globally.
CHALLENGES, THREATS, RISKS AND CONCERNS
Indian Hospitality Industry
Safety and Security
Safety and security of tourists is of paramount importance in any country as it maymajorly impacts the inflow of foreign tourists in the country. The terrorist attacks onvarious locations in the Country in the past have affected the inflow of foreign tourists,which has hampered the growth of the Industry. Domestic tourist movements are alsoimpacted in various states and other tourist locations where tourists consider a threat totheir safety and security especially the militant affected areas. The government needs totake adequate measures for security of tourists and a proactive approach in addressingthese issues and in averting the potential impact on the industry.
Health and Hygiene
Health and Hygiene is also one of the important factor which needs improvement inensuring sound health of tourists in India especially considering the low rank of 109 forIndia in terms of health and hygiene standards as compared for 140 world economies.Amenities available at various tourist locations and en route need to be improved. Theseinclude basic amenities such as drinking water, well maintained and clean waiting roomsand toilets, first aid and wayside amenities (to meet the requirement of the touriststravelling to tourist destinations) such as lounge, cafeteria, and parking facilities,among others.
Lack of proper infrastructure
Inadequate infrastructure facilities affect inbound tourism and also could lead to anincrease in the outflow of domestic tourists from India to other competitive neighboringcountries. Hence, for the industry to register healthy growth, issues concerning all therelated sectors need to be addressed. Government of India recognizes the need forupgradation of tourism infrastructure in India and has proposed an outlay of INR 152.2billion for the tourism sector under the 12th five year plan. This includes creation ofbasic infrastructure such as improving road connectivity and wayside amenities,development of helipads, heliports and air strips, upgradation of passenger terminals andcreation of tourist infrastructure in collaboration with the private sector.
For inbound international tourists, visa procedures are seen as a hindrance. A numberof countries competing with India for tourists provide visa on arrival. India shouldprovide visa on arrival for more countries or for certain categories of tourists for aspecific duration. A number of projects in the tourism infrastructure segment and in thehotels industry are delayed due to non-attainment of licenses and approvals on time. Thereis a greater need for speedier clearances and approvals for all projects related to theindustry.
Apart from the above issues there are various other factors like lack of skilled manpower, lack of proper marketing and promotion strategy to promote India as a major touristdestination, volatility and fluctuations in foreign currency, High taxation due tomultiple taxes levied across the sector viz. service tax, luxury tax, entertainment tax,tax on transportation, tax on aviation turbine fuel (airline industry) etc. are alsoposing a threat to the Indian Hospitality Industry.
Indian Information Technology Industry
The fluctuation in foreign currency is always a concern for the IT Industry in India.To overcome this concern many IT Companies in India have started focusing on domesticrevenues instead of international. Cyber security and quality management are also few keyareas of concern in today's IT age. To overcome such concerns in today's global ITscenario, an increasing number of IT-BPO companies in India have gradually started toemphasize on quality to adopt global standards such as ISO 9001 (for Quality Management)and ISO 27000 (for Information Security). Today, IT centers based in India account for thelargest number of quality certifications achieved by any single country. India aims totransform into a truly developed and empowered society by 2020. However, to achieve thisgrowth, the sector has to continue to re-invent itself and strive for that extra mile,through new business models, global delivery, partnerships and transformation. TheGovernment initiative to increase e-governance in all the sectors has also boosted thegrowth prospects of IT industry. A collaborative effort from all stakeholders will beneeded to ensure future growth of India's IT-ITeS sector. India will need to rise up tothe new challenges and put in dedicated efforts toward providing more and more ofend-to-end solutions to the clients to keep the momentum going. India is now one of thebiggest IT service providers in the modern world and has presence of all the major ITplayers in the world IT sector.
INTERNAL CONTROL SYSTEMAND RISK MANAGEMENT
The objective of internal control and risk management is to ensure efficientimplementation of the Company's strategy and effective operations, assure compliance withboth internal instructions and laws and regulations, achieve appropriate financialreporting, and prevent fraud and other misconduct.
The Company has in place adequate systems of internal control commensurate with itssize and the nature of its operations. Internal controls and an effective risk managementregime are integral to the Company's continued operation. Overall responsibility for therisk management processes adopted by the Company lies with the Board. On behalf of theBoard, the Audit Committee reviews the effectiveness of the Company's internal controlpolicies and procedures for the identification, assessment and reporting of risks.
In order to maintain oversight and seek comfort as to Company policies and procedures,an independent internal audit act as a tool to rigorously and continuously test Companypolicies and procedures. The Risk Management & Internal Control processes areperiodically audited by the internal auditor as well as the statutory auditors. The AuditCommittee of the Board is kept abreast on a regular basis, about the key observationsduring such audits, and follow-up measures taken. A detailed note on the functioning ofthe Audit committee forms a part of the chapter on corporate governance of this AnnualReport. In view of the notification of Companies Act, 2013, which envisages theestablishment of vigil mechanism system, the Company has accordingly established VigilMechanism System. It gives an option to employees and directors of the Company to detectand report genuine concerns to the management and also be guarded against anyvictimization as a result of such disclosure. The Audit Committee has been entrusted forimplementing and monitoring Vigil Mechanism System.
In order to ensure that organisational objectives are achieved, the Company hasadequate Risk Management Policy. The Company has a well defined structure and proactiveapproach to assess, monitor and mitigate risks associated with operations, systems andstatutory compliances. The same are reviewed by the Board periodically and adequatemeasures are taken accordingly.
HUMAN RESOURCES AND INDUSTRIAL RELATIONS
The Company recognises the fact that manpower is one of the vital constituents of asuccessful organisation. The growth of a Company and its business depends on theefficiency of its manpower. The company hires the best available talent in variousdisciplines through a rigorous selection process and has been successful in attracting andretaining such talent.
Training and Development of human resources is another priority area on which theCompany mainly focuses. Apart from regular in-house training programs, the Company alsoorganizes various management development programmes in association with the well knownmanagement faculties to keep its employees updated with latest management philosophies andconcepts. The Company also sponsors employees to attend various programs, seminars,events, etc. related to their fields for their professional development. The Company alsoundertakes HR initiatives like mentoring and coaching periodically to nurture and groomfresh talent who join the company and to test the managerial skills of the experiencedemployees and prepare them to assume higher responsibilities in the future.
The Company also believes that in order to sustain its edge, it needs to win the war oftalent continuously as it cannot afford to lose its rare talent pool to competition.Accordingly, various measures pertaining to compensation and welfare of employees areundertaken and the same are revised / modified periodically according to changingcircumstances and requirements. Various entertainment activities undertaken by the Companylike Sports, Competitions, Social Gatherings, Celebrating religious festivals etc. alsomotivates employees and keeps them stress free. Apart from entertainment activities, theCompany also organizes healthcare and counseling sessions in association with best medicalfaculties to keep the employees medically and mentally fit.
The Company constantly undertakes developmental and motivational activities for itsemployees as it believes that its real asset and strength lies in the quality of itsmanpower. Industrial Relations throughout the year were cordial at all hotels andoperating units of the Company. As on 31st March, 2014, the Company had 65 employees.
MANAGEMENT OUTLOOK AND STRATEGY TOWARDS SUCCESS
The Company's outlook for 2014-15 is optimistic. A strong economy has resulted ingrowing consumer confidence and investment in lifestyle enhancing products and services.We, therefore, believe that IT and Hospitality Sector will see substantial growth in theforeseeable future and that the Company will be able to benefit from the positive trends.
The Company plans to focus on upgrading its infrastructure and services over the nextcouple of years to meet Global hospitality standards in ambience, comfort and convenience.The Company will also focus on enhancing its hospitality management services as itbelieves that the Company's expertise and equity in this segment will enable it tocapitalise on the favourable trends in hospitality sector.
It believes that the new properties and services which it plans to launch in futurewill open up newer opportunities and increase its penetration and reach further in thedomestic as well international market.
The Company and its subsidiaries currently owns / operates / manages more than 40hotels / properties with a loyal high-end client base. For us hospitality means havingcustomer delight, celebrating the culture, gastronomy and nature of the locations in whichthey are found.
FINANCIAL PERFORMANCE SUMMARY (STANDALONE)
The Company has earned total revenue of Rs 5,501.82 Lakhs as against the previousyear's revenue of Rs 5,710.90 Lakhs.
The total expenditure stood at Rs 2,663.65 Lakhs as against Rs 2,364.22 Lakhs in theprevious year.
Profit before Tax
The Profit before Tax decreased to Rs 2,838.17 Lakhs from Rs 3,346.68 Lakhs in theprevious year.
Profit after Tax
The Profit after Tax decreased to Rs 1,851.64 Lakhs from Rs 2,231.68 Lakhs in theprevious year.
FINANCIAL PERFORMANCE SUMMARY (CONSOLIDATED)
During the year consolidated revenues stood at Rs 14,396.38 Lakhs as against Rs14,244.17 Lakhs in the previous year.
The total expenditure stood at Rs 14,584.09 Lakhs as against Rs 14,473.18 Lakhs in theprevious year.
Profit/(Loss) before Tax
The Loss before Tax stood at Rs 187.71 Lakhs as against loss of Rs 229.01 Lakhs in theprevious year.
Profit/(Loss) after Tax
The Loss after Tax stood at Rs 1,197.68 Lakhs as against loss of Rs 1,282.83 Lakhs inthe previous year.
FORWARD LOOKING AND CAUTIONARY STATEMENTS
Statements made in the Management Discussions and Analysis, describing the Company'sobjectives, projections, estimates, predictions and expectations may be 'forward-lookingstatements', within the meaning of applicable securities laws and regulations. Asforward-looking statements' are based on certain assumptions and expectations of futureevents over which, the Company has no control, the Company undertakes no obligation topublicly update or revise any forward-looking statements, whether as a result of newinformation, future events or otherwise. Actual results, performance or achievements coulddiffer materially from those expressed or implied in such forward-looking statements. Thisreport should be read in conjunction with the financial statements included herein and thenotes thereto and the other information included elsewhere in the Annual Report.
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Viidyaa Moravekar , Director
Siddhartha Moravekar , Director
Vilas Mitbawkar , Director
Hemlatha Sawant , Director
Company Head Office / Quarters:
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Phone : Maharashtra-91-022-66164000 / Maharashtra-
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