Apollo Sindoori Hotels Ltd Management Discussions.


Indias Gross Domestic Product (GDP) grew by 4.2% during fiscal 2020, compared to growth of 6.1% during fiscal 2019. Investments as measured by gross fixed capital formation declined by 2.8% during fiscal 2020 compared to a growth of 9.8% during fiscal 2019 and private final consumption expenditure growth moderated to 5.3% in fiscal 2020 compared to a growth of 7.2% in fiscal 2019. On a gross value added basis, the agriculture sector grew by 4.0% in fiscal 2020 compared to 2.4% in fiscal 2019, industry by 0.9% in fiscal 2020 compared to 4.9% in fiscal 2019 and the services sector by 5.5% in fiscal 2020 compared to 7.7% in fiscal 2019.

The Government of India announced a number of measures during the year with a view to support growth in the economy. A key announcement was a reduction in the tax rate on corporates from 30% of profits to 22% (effective rate of 25.17% including cess and surcharges), for corporates not availing of any exemptions or incentives.

Since the first quarter of CY2020, the Covid-19 pandemic has impacted most of the countries, including India. This resulted in countries announcing lockdown and quarantine measures that sharply stalled economic activity. The Government of India initiated a nation-wide lockdown from March 25, 2020 for three weeks which was extended to May 31,2020 and it has been further till July 31,2020

Several countries including India have taken unprecedented fiscal and monetary actions to help alleviate the impact of the crisis. The Reserve Bank of India (RBI) has announced several measures to ease the financial system stress, including enhancing system liquidity, reducing interest rates, moratorium on loan repayments for borrowers, asset classification standstill benefit to overdue accounts where a moratorium has been granted and relaxation in liquidity coverage requirement, among others. The government announced an economic package which included direct benefit transfers to individuals in low-income groups, free food-grain distribution, access to credit for small businesses with government guarantee and policy reforms. Economic growth and investor and consumer confidence have been impacted significantly since March 2020. According to the International Monetary Fund (IMF), the global economy is expected to contract by 3.0% during calendar year 2020, and growth could improve in 2021 assuming the pandemic fades away in the second half of 2020 and containment efforts can be unwound.

Impact of Covid-19 :

The Indian economy would be impacted by Covid-19 pandemic with contraction in industrial and services output across small and large businesses.

1. The Company had proactively initiated work from Home as per the directions of Government at all its office locations which is still continuing. The offices shall resume based on the guidelines from the local administration maintaining safe work practices.

2. In due compliance to various Government directives the factories remained closed and resumed only after due approvals with limited operations.

3. Regular interactions are made with employees by senior management, updating them with the situation and guiding them on importance of social distancing, travel guidelines, thermal scanning, permissible number of em ployees per site and recommending to downloading Aarogya Setu app.

4. The Company has formulated requisite guidelines based on the directives from the Central/ State/ Municipal authorities for safe work practices.

5. Regular internal communications are sent to employees encouraging them to adopt safe practices to contain the spread of COVID-19

6. Communication has been made to other stakeholders such as customers and vendors to promote preparedness in the current situation to ensure safety of products and people in the supply chain at various locations.

Economic scenario

India has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers of the world over the next 10-15 years, backed by its strong democracy and partnerships. Indias GDP is 7.0% (17/18) 6.1% (18/19) 4.2% (19/20) - 3.2% (20/21). India has retained its position as the third largest startup base in the world with over 4,750 technology start-ups Indias Labour Force Participation Rate is reported by reported by World Bank. In the latest reports, Indias Population reached 1,341.0 million people in Mar 2020.

The Ministry of Finance monitors and regulates them through ECB policy guidelines issued by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act of 1999. Indias foreign exchange reserves have steadily risen from $5.8 billion in March 1991 to ?38,832.21 billion (US$540 billion) in July 2020.[76][354] In 2012, the United Kingdom announced an end to all financial aid to India, citing the growth and robustness of Indian economy.

As the third-largest economy in the world in PPP terms, India has attracted foreign direct investment (FDI).[360] During the year 2011, FDI inflow into India stood at $36.5 billion, 51.1% higher than the 2010 figure of $24.15 billion. India has strengths in telecommunication, information technology and other significant areas such as auto components, chemicals, apparels, pharmaceuticals, and jewellery. Despite a surge in foreign investments, rigid FDI policies[361] were a significant hindrance. Over time, India has adopted a number of FDI reforms.[360] India has a large pool of skilled managerial and technical expertise. The size of the middle-class population stands at 300 million and represents a growing consumer market.[362]


Inflation as measured by the Consumer Price Index (CPI) increased from 2.9% in March 2019 to 4.0% in September 2019, remaining within the policy target range. However, inflation increased during the latter part of the year to a high of 7.4% in December 2019 and subsequently eased to 5.9% in March 2020 largely driven by movement in food prices. Core inflation (inflation excluding food and fuel) broadly remained moderate during the year and reduced from 5.0% in March 2019 to 4.1% in March 2020.

Interest rates

Considering inflation was within the comfort levels of RBI in the first half of fiscal 2020, the RBI reduced the repo rate by 110 basis points during April-October 2019 from 6.25% at end-March 2019 to 5.15% at October 2019. The policy stance was changed from neutral to accommodative in June 2019. However, the policy rate was maintained subsequently till March 2020 when a sharp reduction of 75 basis point to 4.40% was announced as a measure to combat the impact of the Covid-19 pandemic.

Financial markets

During fiscal 2020, the Rupee depreciated by 8.9% from Rs.69.16 per US dollar at end-March 2019 to Rs.75.33 per US dollar at end-March 2020, with a sharp depreciation of 3.9% in March 2020. Yields on the benchmark 10-year government securities eased by 121 basis points from 7.35% at end-March 2019 to 6.14% at end-March 2020. This easing of government bond yields was partly due to the comfortable systemic liquidity maintained by RBI for most part of the year as a measure to support growth and improve flow of funds to the economy.

Current account and fiscal position Following moderate global crude oil prices for most part of fiscal 2020, Indias current account deficit came down from 2.1% of GDP in fiscal 2019 to 1.0% during 9M2020. During the year, merchandise exports declined by 4.8%, while merchandise imports contracted by 9.1%. Government spending was a key driver of GDP growth during 9M-2020 and the revised estimate of fiscal deficit as a proportion of GDP for fiscal 2020 was 3.8% as compared to the budgeted 3.3%. The governments fiscal position is likely to be further impacted by the Covid-19 pandemic, reflecting in both revenues and expenditure.

Industry structure and development

The core business of your company is the catering, management service, hospitality and restaurants. As set out in Regulation 34 read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, Company provides the following details relating to Management Discussion and Analysis

The Hospitality market is expected to grow at a CAGR of around 8% to nearly $5,891 billion by 2022. Growth in the historic period resulted from improved earning capacity, emerging markets growth, travel, and tourism. Going forward, economic growth in developed nations, and technological development will drive growth. Factors that negatively affected growth in the historic period were talent crunch in emerging Asia, online travel agencies (OTAs) increasing power, slow growth in Asia and low customer retention. Factors that could hinder the growth of this market in the future are increasing preference for healthy food options, security concerns, and government regulations. Global catering services market stood at $ 130 billion in 2018 and is projected to grow at a CAGR of more than 6% during the forecast period to cross $ 205 billion by 2024, on account of increasing emphasis on the adoption of technology to improve customer experience and reduction in the time spent waiting for food. Catering is the business of providing food service at a remote site or a site such as a hotel, hospital, pub, aircraft, cruise ship, park, filming site or studio, entertainment site, or event venue. Rising demand from high-income households and businesses would aid global catering services market, with consumers spending more money on parties and other catered functions along with loosening corporate budgets in line with stronger corporate profit.

This sector is not only the dominant sector in Indias GDP, but has also attracted significant foreign investment flows, contributed significantly to exports as well as provided large-scale employment. As per a report from Ministry of Food Processing Industries of India (MOFPI), EY and the Confederation of Indian Industry (CII) F&B Industries of India is growing at a large scale. India is one of the fastest growing economies in the world, therefore demonstrating a strong business case for the global F&B industry. They can establish presence or plan on expanding operations in India as various segments of the Indian F&B industry will continue to witness tremendous growth in the foreseeable future. Food Safety and Standards Authority of India (FSSAI) aligning itself with Codex Alimentarius (literally, food code) international food standards, and so on. This reflects the governments positive outlook, and a clear intent to develop the sector. The expansion in services activity was driven by boost in capacity and demand along with favourable public policies.


Economic conditions remain challenging going forward considering the uncertainties with regard to the impact of the global health crisis and the stand-still in economic activity. There has been a significant rise in risks in the operating environment along with lack of clarity on the timeline for conditions to normalise and economic activity to revive. The Indian economy would be impacted by this pandemic with contraction in industrial and services output across small and large businesses. Current estimates of Indias GDP for fiscal 2021 by various agencies and analysts indicate a contraction in GDP growth. While systemic liquidity is abundant, the economic weakness caused by the pandemic and uncertainty regarding normalisation will impact banking sector loan growth, revenues, margins, asset quality and credit costs.

Government initiatives

The Union Budget of India for 2020-2021 was presented by the Finance Minister, Nirmala Sitharaman on 1 February 2020, as her second budget. This is the second budget of Narendra Modi led NDA governments second term. The Economic Survey for 2019-2020 was released on 31 January 2020, a day before the budget.Before the budget speech the report of the 15th Finance Commission was tabled by the Finance Minister.The central ideas of the Budget are - "Aspirational India, Economic development, A Caring Society".These three broad themes are connected by governance that is corruption free and a financial sector that is clean and sound.

The Union budget in 2020 was presented in a backdrop of a slowing down of the Indian economy with estimated GDP growth for 2019-20 being at an 11-year low of 5%

Numerous foreign companies are setting up their facilities in India on account of various government initiatives like Make in India and Digital India.

Mr. Narendra Modi, Prime Minister of India, had launched the Make in India initiative with an aim to boost the manufacturing sector of Indian economy, to increase the purchasing power of an average Indian consumer, which would further boost demand, and hence spur development, in addition to benefiting investors.

Besides, the Government has also come up with Digital India initiative, which focuses on three core components: creation of digital infrastructure, delivering services digitally and to increase the digital literacy.

Road Ahead

Indias gross domestic product (GDP) is expected to reach US$ 6 trillion by FY27 and achieve upper-middle income status on the back of digitisation, globalisation, favourable demographics, and reforms.

Indias revenue receipts are estimated to touch Rs 28-30 trillion (US$ 385-412 billion) by 2019, owing to Government of Indias measures to strengthen infrastructure and reforms like demonetisation and Goods and Services Tax (GST).

India is also focusing on renewable sources to generate energy. It is planning to achieve 40 per cent of its energy from non-fossil sources by 2030 which is currently 30 per cent and also have plans to increase its renewable energy capacity from to 175 GW by 2022.

India is expected to be the third largest consumer economy as its consumption may triple to US$ 4 trillion by2025, owing to shift in consumer behaviour and expenditure pattern, according to a Boston Consulting Group (BCG) report; and is estimated to surpass USA to become the second largest economy in terms of purchasing power parity (PPP) by the year 2040, according to a report by PricewaterhouseCoopers.

1. Segment-wise or product-wise performance.

We not only showed improvement in the financial frontier but also on companys share performance in the market.

2. Discussion on financial performance with respect to operational performance.

In a challenging external environment, your company performed well and delivered another year of consistent, competitive and responsible growth. Your Companys revenue from operation has increased to Rs.191 Crores in Financial Year 2019-20 from Rs.169 Crores in FY 2018-19. This growth in challenging circumstances is a testimony to the robustness of your Companys business strategy and innovative service offerings that helped capture new markets.

Your Companys profit before tax stood at Rs.13.50 Crore for FY 2019-20 as compared to Rs 13.45 Crores in FY 2018-19.

3. Business development

The major development during the year was as under:-

• Since Indian healthcare companies are entering into merger and acquisitions with domestic and foreign companies, we will drive growth and gain new markets

• Implementation of innovation in the marketing efforts of the company. This was instrumental in delivering the sales growth during the year.

• Huges improvement initiative with respect to IT Dept.

• Consolidating the sales and distribution operations in the existing geographies.

The major work plan for the current year is as under:-

• To expand the footprint in all the geographies.

• Exploring new opportunity.

• To further invest in the organizational capacity and capability of the business in Non Apollo Business

4. Opportunities & threats

Company perceives following as the opportunity and threat:

• Major players in the market prefers to outsource F&B services to industrial caterers.

• Few players in the market has the niche of providing customized menu for patients and hospitals.

• Expansion or growth in hospital or health care sectors provides us an opportunity to expand business.

• Regulated work and regulatory environment.

5. Risks and concern

As organized retail needs to comply with various regulations including FSSA, APMC and other local regulations, this leads to unfair competition with unorganized retail as the cost of compliance adds additional burden to the low margins. An efficient food supply chain is critical for organized food retail as food products need to be made available fresh and at good quality. Currently, this is turning out to be expensive due to lack of adequate cold storage/chillers and cost of power.

6. Outlook

The continued efforts to develop the business should stand it in good stead. However, the inflation prevailing within the country and continuous increase in raw materials costs have a significant role to play in the actual performance.

7. Internal controls and their adequacy.

The company has proper and adequate internal control system to ensure that all that all the assets are safeguarded and that all transactions are authorized, recorded and reported correctly. Regular internal audits and check are carried out to ensure that the responsibilities are executed systems and procedures to ensure the efficient conduct of business the audit committee of the board oversees the internal controls within the organization.

8. Material developments in Human Resources / Industrial Relations front, including number of people employed.

Our employees form the backbone of our organization. your company takes pride in the commitment, competence and dedication shown by its employees In all areas of operation. Industrial relations have remained harmonious throughout the year. Your company endeavors to follow best HR practices across all areas. theses cover recruitment, induction, development and training and appraisal systems which are tied in with defined key result areas.

9. Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefore, including:

Ratio Analysis :

FY 19 - 20 FY 18 - 19
Debtors Turnover Ratio Turnover / Avg A/cs Receivable 5.06 Times 4.50 Times
Inventory Turnover Ratio Cost of goods sold / Avg Inventory 72.78 Times 139.15 Times
Interest Coverage Ratio EBIT / Interest * 20.24 Times 139.43 Times
Current Ratio Current Assets / Current Liabilities 2.17 Times 2.14 Times
Debt Equity Ratio Total Liability / Share Holders Eq + R + S 0.76 Times 0.79 Times
Operating Profit Margin % EBIT / Net Sales 7.66% 8.19%
Net Profit Margin % Net Income after Tax / Net Sales 5.54% 5.95%

* - Interest includes interest on rent as per IND AS

10. Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.]

FY 19 - 20 FY 18 - 19
Return on Capital Employed % EBITDA / Capital Employed 38.18% 41.20%

11. While in preparation of financial statements, treatment was different from that prescribed in an Indian Accounting Standards:

Company has followed the required accounting standard and has not deviated from treatment as prescribed under accounting standard.