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TGB Banquets & Hotels Ltd

BSE: 532845 | NSE: TGBHOTELS ISIN: INE797H01018
Market Cap: [Rs.Cr.] 318.97 Face Value: [Rs.] 10
Industry: Hotels

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Management Discussions

Industry’s Structure and Developments:

Tourism has now become a significant role in the Indian economy. It was expected thatthe tourism industry in India is likely to generate additional US $121.4 bn of economicactivity by 2015, and the hospitality sector has the potential to earn US $24 bn inforeign exchange by 2015. The booming tourism industry has had a cascading effect on thehospitality sector with an increase in the occupancy ratios and average room rates. Whilethe occupancy ratio is around 80-85%, up nearly 10% from three years ago, the averageincrease in room rates over the last one year has hovered around 22-25%.

The Government of India increased budgets on advertising campaigns like ‘IncredibleIndia’ and ‘Athithi Devo Bhava’ to reinforce the rich variety oftourism in India. The India is promoted as a sate tourist destination worldwide by theGovernment of India and undertook various measures, such as stepping up vigilance in keycities and at historically important tourist sites. The Theme & Event based campaignby Gujarat tourism directly attract tourist to travel Gujarat as holiday destination. Thedigital marketing and social media platform made this easier to comfortable travelling androle of digital marketing cannot be overlooked in the growth in the tourism industry inIndia. Further the rise in disposable income is also one of the key factor in thedevelopment of tourism Industry.

During the Financial year 2013-14, Depreciation of the Indian rupee against the dollaris of great concern to almost every industrial and service sector in the Indian economy.India’s current economic woes are good news for tourists. Whether it is foreigntraveler arrivals or domestic tourism, India’s tourism industry is experiencing areal boom. The rising value of the dollar against the rupee has made quite an impact onthe foreign travel plans of many Indian holidaymakers, prompting them to switch to cheaperdestinations.

Currently domestic tourists constitute a very small chunk of the total tourist pie, thesegment is growing. In the long term, the demand-supply gap in India is very real and thatthere is need for more hotels in most cities. The shortage is especially true within thebudget and the mid market segment. There is an opportunity for budget and mid markethotels in India as travelers look for safe and affordable accommodation. The potential forthis segment of hotels becomes more obvious in next year’s. Safety has become a moreprominent concern for tourists travelling to India. The Indian tour operators reporteddrop in business due to the cases like Delhi rap and, are inspiring other victims of sexcrimes to bring their stories into the light, Safety and security issues must be taken andwell understood in the context f tourism and are vital to providing quality in tourism.

Opportunity and Threats:

The analysts believe that the hospitality industry is having the tremendousopeertunites but it needs to cater and deliver as per the expectation of the customer andthe industry to match with the local and international appeal at the different part of theworld. The destination with Rich Heritage, Traditional, Cultural and Social Values aremost likely travel destination among tourists visiting to India. Accelerating hospitalityindustry in Gujarat, the Gujarat government have focused on the theme and destinationbased advertising campaign and effort has been made to give the real leisure’s totravelers and has formulated lucrative policy of investment to attract more investors toaugment the overall hospitality infrastructure. Further Gujarat government has alsoprovided more assistance for the investors in hospitality sector like tax holidays,interest subsidies, concession in electricity duty and tariff, modification in lendingcriteria, assistance i n land acquisition and allotment, etc.

The major deterrent for the hospitality sector is Gujarat is the fact that it is a drystate - Thus, Gujarat is not able to capitalise on its leisure segment and thereby, hotelsare also reluctant in investing at tourist locations and concentrate themselves to thebusiness driven areas.

TGB’s Business Outlook:

TGB looks forward to have its strong presence in the travel destination in Gujarat forthis the company has adopted the franchisee business model to delight his valuablecustomers. Further, Gujarat is having privilege fo r the business hubs for Pharmaceutical,Chemical, Textile, Diamond and Fertilizer and other ancillary industries which createopportunities for the budget hotels in Gujarat. During the year company has started twonew budget hotels “TGB Express” in Ahmedabad and Naidad as franchisee model andthis year company is going to make its presence in Vapi and Jamnagar through opening ofWorld Cuisine Restaurant in its franchisee model.

The one and half decade expertise in the outdoor catering and the banqueting segment,TGB created a niche for itself in Banqueting and Catering segment. The committed servicedelivery to the customers makes company to look forward extended support from its customerahead.

TGB’s response to competition is by way of our set-up of Sales & Marketingdepartment with 4 key verticals. Namely – Hotel Sales, Marketing, CentralReservations and Customer Loyalty. Very soon, our business partners will be receiving 7days reservations and sales support during business hours. By our 2nd year of operations,we will be offering reservations support from 0800-2200hrs and by the 3rd year, we aspireto go 24x7. In the next two years we plan to commission 5 more TGB Express brand hotelsthat will cater to the budget to mid-market business travel. And a new business Franchiseearm will be additional focusing in expansion of our portfolio of World Cuisine Restaurantsand Cafe & Bakery out lets. The recent inclusion of the social media platform anddigital marketing and dedicated and integrated sales and marketing effort of the companywill adds values in the business to the company and its franchisee in coming years.

To get business in this competitive environment, the company has focused more on itscore competencies and has developed more competitive advantage over its rivals.

Risk and Concern:

Human resource

Availability of skilled manpower is a major challenge faced by the travel and tourismindustry, one of the largest employment generators in the country. To sustain growth inthe travel and tourism industry, trained manpower/ workforce is required at every level -managerial, supervisory, skilled or semi-skilled. Challenges faced at each level aredifferent. At mid and senior management levels, the industry faces talent crunch and atthe front-line staff level, although human resources are adequate, a boom in other serviceindustries such as banking, retail, airline and BPO have resulted in shortage of manpowerat this level for the travel and tourism industry. Thus there is a demand-supply mismatchwith respect to manpower in the travel & tourism and hospitality sector in India..


Security has been a major problem as well for growth of tourism for a number of years.Terrorist attacks or political unrest in different parts of the country have adverselyaffected sentiments of foreign tourists. Terror attacks at Mumbai in November 2008 dealt astrong blow to tourism in the country. The terror attacks raised concerns of safety.Further the online travel industry has registered robust growth, major concerns relatingto security of online transactions persist. The industry has taken measures to make theprocess of online bookings more secure and transparent and has created awareness foronline booking.

Financial Review:

During the financial year 2013-14, the company’s total income is Rs 15834.80 Lacsas compared to Rs 16676.20 Lacs in the previous year.

Internal Control Systems & Their Adequacy:

An internal control system of your company is very well ordered which consists ofqualified and independent Audit Committee managed by our Board of Directors. It ensuresthe compliance with listing and other legal requirements relating to financial statements.It also ensures that all the assets of the company are fruitful as well as secured againstloss from unauthorized use or disposition. The company keeps on developing its systems andprocedures on continual basis for effective internal control. Adequate internal controlmeasures are in the form of various policies & procedures issued by the Managementcovering all critical and important activities viz. Revenue Management, Hotel Operations,Purchase, Finance, Human Resources, Safety, etc.

Industrial Relations and Human Resource:

Hospitality sector emphasizes on good quality of services which requires well behavedemployees and warmly welcoming managerial staff, this increases value and reputation ofthe hotels. Hence, your company believes “T he Grass is Greener where you waterit”. Therefore company ensures its privileged employees’ comfortable workplace,security, safety, nourishment, encouragement, freedom to express their innovative ideas,and training effeort has been taken for personality development of the employees. Inessence, the human relations approach sees the organization as a cooperative enterprisewherein workers’ morale is a primary contributor to productivity, and so seeks toimprove productivity by modifying the work environment.

Corporate Social Responsibility:

Your company is inherently associated to the society and environment in which itoperates. It upholds the business of TGB with trust, transparency and commitment to humanvalues. It is conscious of its corporate social responsibilities and pursues its socialresponsibilities intensely. During the year, company with the support and mutual aid ofits staff pursued several social activities.

The company has associated with the “YUYA UNSTOPPABLE”, a Non GovernmentOrganisation who act as a catalyst in the development, improvement and growth of youth andchildren, the company have adopted two municipal Schools namely Ellis bridge School No. 18anf Mahatma Gandhi School No. 1situated at ahmedabad.

To serve the society in a better way company regularly provides the financial and nonfinancial support to Approx 400 Students residing in the slum area of Naroda, Ahmedabad.your company also took forward a step to save many lives by organizing a blood donationcamp at all Units of TGB in association of the “Prathma”. The effort wasundertaken by your company to put smiles on the frown faces by making a visit at the OldAge home and spending time with them, Also regularly visit to the orphanage to helpunderprivileged children to provide them the aids with eatables and other useful items forkids and distributed the same among them. your company associated for skill developmentand to trained youth under the “Hunur se Rozgar Tak” training Scheme inassociation with Institute of Hotel Management for skill development and empowering theyouth from among the economically weaker section.

Cautionary Statement:

Statements in this Management Discussion and Analysis describing the company’sobjectives, projections, estimates and expectations may be “forward lookingstatement” within the meaning of applicable securities laws and regulations. Theactual results may differ from those expected depending upon the economic conditions,changes in Government Regulations and amendments in tax laws and other internal andexternal factors.

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Key Information

Key Executives:

Narendra Somani , Chairman & Managing Director

Devanand Somani , Whole-time Director

Hemant Somani , Whole-time Director

Ramesh Kishanchand Motiani , Whole-time Director

Company Head Office / Quarters:

The Grand Bhagwati,
Plot No 380 S G Highway,
Phone : Gujarat-91-079-26841000 / Gujarat-
Fax : Gujarat-91-079-26840915 / Gujarat-
E-mail : cs@tgbhotels.com
Web : http://www.tgbhotels.com


Link Intime India Pvt Ltd
Unit No 303 3rd floo,Shoppers Plaza V,Plaza II Off CC Road,Ahmedabad - 380009

Fund Holding
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