Asian Hotels West Ltd Management Discussions

This year, the global economy shows a mixed outlook. The year was marked by significant challenges, including the lingering effects of the COVID-19 pandemic, geopolitical tensions, particularly the Russia-Ukraine conflict and the Israel-Palestine conflict, and inflationary pressures which were worsened by supply chain disruptions. Global growth slowed as major economies faced rising interest rates aimed at curbing inflation, leading to tighter financial conditions. Emerging markets, while showing resilience, also contended with high debt levels and inflation. Despite these challenges, there were signs of recovery, particularly in sectors like digital services and renewable energy, driven by technological advancements and increased investments.

INDIAN ECONOMY

As per the first advance estimates released by the National Statistical Office, Ministry of Statistics & Programme Implementation (MoSPI), the real gross domestic product (GDP) growth for FY25 is estimated to be 6.4 per cent. From the angle of aggregate demand in the economy, private final consumption expenditure at constant prices is estimated to grow by 7.3 per cent, driven by a rebound in rural demand. PFCE as a share of GDP (at current prices) is estimated to increase from 60.3 per cent in FY24 to 61.8 per cent in FY25. This share is the highest since FY03. Gross fixed capital formation (GFCF) (at constant prices) is estimated to grow by 6.4 per cent.

The services sector continues to perform well in FY25. A notable growth in Q1 and Q2 resulted in 7.1 per cent growth in H1 FY25. Across sub-categories, all the sub-sectors have performed well. The robust performance of the services sector is also reflected in high-frequency indicators (HFIs). PMI services have been in an expansionary zone during H1 FY25, supported by growth in new orders, rise in output, improvement in sales and enhanced employment generation. The hospitality sector performed well, with hotel occupancy rates in H1 FY25 similar to the previous year. Average daily rates and revenue per room increased due to higher corporate and leisure travel. (Source: Economic Survey Report 2024-25)

INDUSTRY STRUCTURE AND DEVELOPMENTS

‘Travel and ‘Transport services represent areas where India holds a relatively smaller share in global exports, at 2.1 per cent and 2.2 per cent, respectively, likely facing competition from other worldwide tourism and logistics hubs. There are opportunities for further growth, especially in enhancing international tourism infrastructure and global transport networks. Indias financial services sector lags behind the global average, highlighting the potential for growth in global banking, insurance, and investment services. On the other hand, with a global share of 3.4 per cent in Personal, Cultural, & Recreational services and 3.5 per cent in Construction services, India ranks 6th and 8th, respectively, demonstrating its competitive edge in cultural exports and international infrastructure projects.

The tourism sectors contribution to GDP regained the pre-pandemic level of 5 per cent in FY23. The tourism sector created 7.6 crore jobs in FY23. International tourist arrivals (ITAs) in India have rebounded to pre pandemic level in 2023. The share of Indias ITAs in World ITAs stands at 1.45 per cent in 2023. Foreign exchange earnings through tourism were 28 billion USD. India received 1.8 per cent of world tourism receipts and attained a rank of 14th worldwide in world tourism receipts during 2023.

INDIAN HOSPITALITY OUTLOOK

The government has envisaged a new tourism policy which is designed to drive growth and make India one of the top five tourism destinations in the world by 2030. The policy focuses on five keys aspects hospitality skill development; digital tourism; destination management; the development of tourism micro, small and medium enterprises (MSMEs); and green tourism and sustainability

OPPORTUNITIES, THREATS, RISKS AND CONCERNS

The government has introduced several initiatives to promote domestic tourism. Pilgrimage Rejuvenation and Spiritual Augmentation Drive (PRASHAD) aims to develop tourism infrastructure at identified pilgrimage destinations and heritage cities Another major initiative of the Government to promote domestic tourism is Swadesh Darshan, which is aimed at the integrated development of tourism destinations, including theme-based tourist circuits. This programme was rechristened as the Swadesh Darshan Scheme 2.0 (SD 2.0) in 2022, with the vision to develop sustainable and responsible tourism destinations. Under this scheme, 34 projects have been approved, with a total funding of 793.2 crore. 6.42 Moreover, in line with the FY25 budget announcement, 40 projects across 23 states have been approved for interest-free loans for 50 years for an amount of 3,295.8 crore under the special assistance to states for capital investment. This initiative aims to create iconic tourist centers of global standards by supporting their development and marketing.

SEGMENT WISE PERFORMANCE

During the period under review, the Company engaged in only one segment of Hotel Business hence segment wise performance is not applicable.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place adequate reporting systems in respect of financial performance, and reporting with respect to compliance of various statutory and regulatory matters. The operations of the Company are still not started. The internal auditors of the Company had regularly conducted exhaustive internal audits pertaining to financial and compliance areas and their reports were placed before the Audit Committee for its review and recommendations. During the year the Company has initiated Internal Financial Controls (IFC) with RCM Creation and Testing of Design and Operating Effectiveness of controls.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT T O OPERATIONAL PERFORMANCE (STANDALONE BASIS).

Total Income

The total income of the Company for the financial year under review was INR [ 5.64] as against INR [9.82] Crores during the previous Financial Year ended on 31^st March 2024.

Profit before Tax

Your Company has registered PBT of INR [-35.89] Crores as against INR [-80.32] Crores during previous Financial Year.

Total Comprehensive Income/(loss) after tax

Your Company has registered Comprehensive Income/(loss) after tax of INR [-36.28] Crores as against INR [-79.86] Crores during previous Financial Year.

Key Ratios

Key financial ratios are given below: