ajwa fun world resort ltd Management discussions


1. ECONOMIC & BUSINESS ENVIRONMENT:

Economic overview Global economy

The global economy faced a series of severe and mutually reinforcing shocks -the COVID 19 pandemic, the war in Ukraine and resulting food and energy crises, surging inflation, debt tightening, as well as the climate emergency. The most important indicators for the future economy will be the threat of resurge of COVID-19, the war between Russia and Ukraine, and climate change. The IMF predicts in a more recent update, that there will be no global recession. The new projection is for global growth to decline to 2.9% in CY2023 before increasing to 3.1% in CY2024. Several key economies, including China, Russia, the US, Germany, and Italy, have had their CY2023 GDP forecasts raised significantly, while the United Kingdoms forecast was downgraded by almost 1% point.

The global growth outlook remains uncertain as economic dynamics that have been propelling the post-pandemic recovery are compounded by the conflict in Ukraine. This conflict has intensified supply disruptions and elevated commodity prices, thereby fuelling inflation. But the world economic outlook report shows a silver lining. Global inflation is set to fall from 8.8% in CY2022 to 6.6% in CY2023 and 4.3% in CY2024, stated the IMF. The price rise is stabilising for two main reasons:

• Central Banks across the world resorted to liquidity tightening measures. Higher interest rates drag down overall demand for goods and services, which in turn slows down inflation.

• In the wake of faltering demand, prices of different commodities — both fuel and non-fuel have come down from their recent highs.

In CY2023, advanced economies are expected to have an inflation of 4.6% while emerging economies will continue to face an inflation of 8.1%. About 84% of countries are expected to have lower headline (consumer price index) inflation in CY2023 than in CY2022. Macroeconomic policies need to be carefully calibrated to strike a balance between stimulating output and stabilising inflation. It is anticipated that the pentup demand in numerous economies, along with a significant reduction in inflation, will contribute to accelerated economic growth in CY23.

Indian economy

The Indian government has managed to maintain a favourable domestic policy environment and prioritise structural reforms, allowing the countrys economy to remain resilient amid global challenges. Projections indicate that Indias economy will continue to progress and expand at a rate of 7% during the fiscal year 2022-23. Additionally, the countrys stable inflation rates, higher disposable income and continued investment in infrastructure development are expected to contribute positively to economic growth in the future.

Various high-frequency indicators, such as GST collections, railway and air traffic, electronic toll collections and E- Way bill volume, suggest a robust economic recovery in India. This persistent growth momentum has positioned India as an attractive investment destination.

In response to monetary policy actions by the RBI, together with other supply-side measures, headline CPI inflation has gradually declined from its peak of 7.8% in April 2022 to 5.7% in March 2023 and is projected to moderate further to 5.2% in Q4, 2023-24.

The capex outlay for FY 2023-24 was hiked by 33% to INR 10 trillion to provide a massive infra boost, which will be instrumental for economic growth, job creation, and incentivising private investment flows. These budget estimates offer a promising outlook for the Indian economy.

2. TOURISM AND MOBILITY

Industry structure and development i.e. THE INDIAN PARKS INDUSTRY

Tourism, travel and hospitality industries have continued to struggle post the pandemic, with sinusoidal performance data, even into the early part of FY2022. Through FY2022, the domestic and international tourism industry gradually reopened. The primary driver of the positive impact on the industry was the governments vaccination drive, coupled with the widespread distribution of vaccines throughout the country. As the Indian economy gradually recovers, travel and mobility are now more accessible.

Many travellers, however, choose personal transportation due to their lack of trust in the safety of public transportation. Various organisations, such as malls, theatres, and amusement parks, have implemented strict guidelines for web ticketing, mandatory mask-wearing, thermal screening, sanitiser provision, physical barriers, and disinfection protocols for public spaces to ensure proper safety protocols while improving mobility.

The tourism sector in India is a significant economic multiplier and is becoming increasingly important as the country strives for rapid economic growth and employment creation. Despite the tourism sector being severely affected by COVID-19, India witnesses a jump in Foreign Tourist Arrivals in 2022.

The Draft National Tourism Policy is a holistic framework for sustainable and responsible growth of the tourism sector in the country. India is observing ‘Visit India 2023 in order to develop tourism and accelerate Indias rise towards world leadership in the tourism sector. Tourism is becoming increasingly important for India as it generates income, creates jobs, helps reduce poverty, and promotes sustainable development.

According to the World Tourism Organisation, the sector provides for 10% of the worlds GDP, 7% of the global trade and creates one in every 11 jobs worldwide.

The travel and tourism sector in India has the potential to grow much faster and support 46 million jobs by 2025, provided the right investments and policies continue to be implemented. With optimistic predictions of about 13.34 million foreign tourists arriving by 2024, there is a pressing need to upgrade our security systems especially to provide a flawless security blanket cover to foreign tourists.

3. INDUSTRY OVERVIEW:

Global amusement park industry

The global outbreak of the COVID-19 has significantly impeded the growth of amusements market in 2020, due to lockdowns and travel restrictions imposed by governments worldwide. Amusement parks, in particular, have been severely impacted by the pandemic and social distancing measures, resulting in prolonged closures. However, it is anticipated that the amusements market will gradually recover from the setback in the forthcoming period.

Global Amusement Park market size was valued at USD 48.8 billion in 2021 and is poised to grow from USD 51.23 billion in 2022 to USD 79.26 billion by 2030, growing at a CAGR of4.97% in the forecast period (2023-2030).

The theme park market is poised for growth, driven by factors such as the expansion of urban population, rise in GDP per capita, and a growing middle class, as well as increased spending on international tourism. However, the market isnot without its challenges, including currency exchange rate fluctuations, shifting regulations, and the inherent seasonality of the industry.

Amusement parks are expected to experience rapid growth in the coming years, as there is pent- up demand for entertainment options which provide immersive experience. Due to changing lifestyles and cultural transitions, amusement parks are popular across all age groups and corporate employees.

Aside from the primary sources of revenue, food & drinks and merchandise sold at retail stores and restaurants within the park are projected to produce additional revenue.

The market is driven by factors such as increasing disposable incomes, urbanization, and rising tourism. Modern-day consumers priorities unique experiences with personalization over purchasing goods, leading to a surge in the experience economy. Social media has become a key influencer in driving consumer demand for these experiences, as they are willing to invest their disposable income in them.

Outlook for global amusement parks

Amusement park companies are witnessing positive momentum towards pre-pandemic levels of business after facing covid induced headwinds in the recent years. The growth is due to the rearrangement of operations and recovery from pandemic restrictions involving social distancing, remote working and closure of commercial activities.

The global amusement parks market grew from $67.16billion in 2022 to $106.57 billion in 2023 at a compound annual growth rate (CAGR) of 58.7%. The Russia-Ukraine war impacted the chances of global economic recovery post the pandemic, at least in the short term. The war between these two countries has led to economic sanctions on multiple countries, a surge in commodity prices and supply chain disruptions, causing inflation across goods and services and affecting many markets across the globe.

The growing usage of social media and mass media is having a positive impact on the amusement park market. As an increasing number of visitors share their experiences on social media platforms, it helps in promoting the parks to potential customers. As a result, social media has become an effective marketing tool for amusement parks to attract new customers. The extensive use of social media is expected to drive the growth of the amusement park industry and companies are leveraging this tool to acquire new customers.

Amusement parks are incorporating virtual and augmented reality technology to enhance the overall customer experience. These technologies offer an immersive experience by creating a computer-generated environment that can interact with a person or by placing virtual objects in the real world. Rides and theatre-based attractions are among the areas where this technology is being implemented to enhance the visitors experience.

4. INDUSTRY OVERVIEW:

AJWA is a leading player in the Indian amusement park industry and continues to grow and innovate to provide visitors with unforgettable experiences. AJWA parks have been visited by over 10 million visitors since 2000, making us the most visited amusement park in India. The Company has nearly two decades of expertise in administering parks in Vadodara.

5. DIGITAL TRANSFORMATION:

The Company is embracing digitization to improve internal processes and increase efficiency, safety, and productivity. The organisation runs frequent training programmes to provide its employees with the skills needed to adapt to new digital platforms that are released on a regular basis.

6. OPPORTUNITIES AND THREATS:

The Company has ability to leverage the ‘first-mover advantage through Fun world and resort. There are significant barriers to entry in the business of theme and Resort in India and it is difficult to replicate a project of similar scale and size in India. Among the most important of these barriers is the need for significant capital expenditure to set up theme and Resort, the difficulty to identify and purchase large and suitable parcels of land on commercially viable terms and the long lead-time from the conceptualization to the launch of rides and attractions. The Company believes that its location off the vadodara, the large parcel of land owned by the Company, Its rides and attractions of quality and standards and its qualified management and operations team provide the Company with a significant competitive advantage over any new park.

7. OUTLOOK AND OPPORTUNITIES:

The all-round India growth story continues to remain strong and attractive. Both IMF and World Bank (WB) have predicted the Indian economy is growing in very fast phase. The key drivers of growth for the India economy are in place for a sustained and uninterrupted growth in the future. Both favorable macroeconomic factors as well as dynamic demographics indicate to a period of assured uptrend and growth in the Indian amusement parks industry. Against this positive and optimistic outlook of the economy, the outlook for the Company is extremely favorable and exciting, with a high potential for accelerated growth and expansion. The company is adopting the following business strategies to grow the business in the future and due to the covid effect the business of the company is being completely stopped.

8. INTERNAL CONTROL SYSTEM

Your company continues to place considerable emphasis and effort on the internal control systems. There is well established internal control system with clearly laid down powers and responsibilities, wherever necessary, that can be exercised by various levels of the Management

in the Company.

9. HUMAN RESOURCES

Human resources management is an important function in the Company in view of the large set up of the organization and diverse line and staff functions. The goal is to create an inclusive working environment that attracts and retains the best people, enhances their flexibility, capability and motivation and encourages them to be involved in the growth of the Company. Systematic and purposeful training to its workforce is undertaken resulting in improving their motivation to work thus benefiting both employees as well as the Company. The Company continued to enjoy healthy industrial relations during the year.

10. FINANCIAL OVERVIEW:

The Company achieved a robust and resilient performance throughout the year. The introduction of quarterly events, park activities, and expanded food and beverage offerings led to a rise in footfall, ultimately contributing significantly to the companys success. The Company reported total Revenue of ^ 324.58Lacs, and EBITDA of ^26.18Lacs, and PAT at^26.18Lacs in this for FY2023.

11. CAUTIONARY STATEMENT

Statements in this report on Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be ‘forward looking statements within the meaning of applicable security laws or regulations. These statements are based on certain assumptions and expectations of future events. Actual results could however differ from those expressed or implied. Many important factors including global and domestic estimates, changes in government regulations, tax laws and other statutes, and force majeure may affect the actual result which could be different from what the directors envisage in terms of future performance and outlook.