Delta Corp Ltd Management Discussions

ECONOMY OVERVIEW

Global Economy Overview

The global economy showed strong resilience amidst an uncertain global environment and declining inflation in 2023. Inflation began to return to target levels after a difficult period marked by disruptions from the pandemic, the Russia-Ukraine war, and a global energy crisis. Global headline inflation is expected to decline from an average of 6.8% in 2023 to 5.9% in 2024, with a further decrease to 4.5% expected in 2025. Despite central banks raising interest rates to stabilise prices, the global economy continued to grow steadily, owing to positive supply trends. According to the International Monetary Fund (IMF), the global economy grew by 3.2% in 2023, with a similar pace expected in 2024 and 2025.

World Economic Output (%)

	2023	2024P	2025P
World Output	3.2	3.2	3.2
Advanced Economies	1.6	1.7	1.8
United States	2.5	2.7	1.9
Euro Area	0.4	0.8	1.5
Japan	1.9	0.9	1.0
United Kingdom	0.1	0.5	1.5
Canada	1.1	1.2	2.3
Other Advanced Economies	1.8	2.0	2.4
Emerging Market and Developing Economies	4.3	4.2	4.2
Emerging and Developing Asia	5.6	5.2	4.9
China	5.2	4.6	4.1
India	7.8	6.8	6.5
ASEAN-5 (Indonesia, Malaysia, Philippines, Thailand, Vietnam)	4.1	4.5	4.6
Source: IMF World Economic Outlook April 2024

Advanced economies played a key role in sustaining global resilience. Despite significant monetary tightening, advanced economies have benefited from steady employment growth and a resurgence in consumer confidence, crucial support. In the United States, growth surpassed pre-pandemic levels, reflecting strong demand and strong economic fundamentals. The Euro Area is projected to grow in 2024, despite facing the ongoing impact of tight monetary policy and high energy costs.

In 2023, despite facing challenges such as geopolitical tensions, high public debt, and unstable inflation rates, the emerging markets and developing economies (EMDE) found new opportunities for growth. However, EMDE benefited from shifts in global supply chains and saw an increase in trade flows, paving the way for future resilience and growth. EMDE has maintained steady growth achieving a growth rate of 4.3% in 2023 and projected to sustain a growth rate of 4.2% for both 2024 and 2025. High borrowing costs and reduced fiscal support significantly impacted global economic growth, along with other long-term factors like the enduring effects of COVID-19, geopolitical tensions, and low productivity in several regions. Rising interest rates, geopolitical conflicts like the Russia-Ukraine war, the Red Sea crisis, and ongoing tensions between Israel and Palestine, all contributed to the ongoing supply chain disruptions. The global economy could achieve a stable and sustainable future by focussing on medium-term fiscal consolidation and promoting multilateral cooperation among countries.

Indian Economy Overview

In FY 2023-24, the Indian economy has witnessed a remarkable surge in growth, propelled by favourable macroeconomic indicators, improved labour market conditions, heightened urban demand, and a substantial government focus on capital expenditure. The growth was further supported by strategic government reforms and investments in critical sectors in recent years. According to the Indian National Statistics Organisation (NSO), the Indian economy is expected to grow by 7.3% in FY 2023-24, surpassing the 7.2% recorded in the previous FY 2022-23.

The substantial expansion and progress in infrastructure development are closely intertwined with the enhancement and extension of airports, roads, and highways. Improved connectivity serves as a foundational element for economic advancement and global accessibility. The government has taken a significant step by for overall infrastructure development for FY 2024-25 by 11% to 11.1 Lakh Crores, a significant 10.0 Lakh Crores allocated in the previous budget. This significant investment is poised to stimulate growth across various sectors, comprising from construction to technology.

Source: NSO estimates dated 5^th January, 2024

The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) report dated 8^th February, 2024.

The RBI plays a crucial role by implementing carefully-crafted monetary policies that support sustained economic growth. In FY 2023-24, the RBIs MPC consistently maintained the policy repo rate at 6.5% and persisted in adopting the ‘withdrawal of accommodation stance. Additionally, the RBI projected an inflation rate of 5.4% for FY 2023-24. The RBI reaffirmed its commitment to keeping inflation within the range of 2-4% and has forecasted the countrys GDP to attain a growth rate of 7% in FY 2024-25.

In the business sphere, the adoption of digital platforms and e-commerce has opened new avenues for entrepreneurs and facilitated global trade. With the increasing digitisation of services, mobile users now have unprecedented convenience and flexibility in accessing a myriad the Telecom Regulatory Authority of India (TRAI), the number of mobile users witnessed a substantial increase from 798.7 million as of 31st December, 2022, to 865.3 million as of

31^st December, 2023, registering an annual growth of 8.3%. The adoption of technology-driven solutions in India, particularly innovative digital payment methods like the unified payments interface (UPI), has significantly boosted e-commerce growth in the country. Digital payment transactions have seen remarkable expansion, with the volume rising from 2,071 Crores in FY 2017-18 to 13,462 Crores in FY 2022-23, indicating a robust Compound Annual Growth Rate (CAGR) of 45%. As of 11^th December, 2023, digital payment transactions for FY 2023-24 have already surpassed 11,660 Crores, reflecting the ongoing momentum the capital expenditure in digital payment adoption, and promoting an environment for businesses to cross-sell products and attract new clients. The rise from the essential high-frequency indicators, such as automobile sales and Goods and Services Tax (GST) revenues, consistently indicate significant progress, for the overall economy.

INDUSTRY OVERVIEW - GAMING & ENTERTAINMENT INDUSTRY CASINO GAMING

Casinos attract tourists and offer diverse entertainment options, including live shows and fine dining. The growing interest in gambling among various consumer demographics is resulting in a rising demand for casino. The integrated casinos could not only offer gambling, but also the privilege to explore the rich Indian culture. The casino gaming market is poised for significant growth in gaming revenue projected to increase from US$ 150.3 billion in 2024 to US$ 191.4 billion by 2029, at a CAGR of 5.0% during the period 2024-29.

Several factors have contributed to this growth trajectory, including the rising popularity of gaming and the proliferation of online gaming platforms. In 2024, North America, Asia Pacific, and Europe emerged as the largest markets for casino gaming, with the United States dominating the North American market. However, the Asia-Pacific region is expected to experience the highest growth rate in the forecast period of 2024-29.

The casino gaming industry operates under strict regulations, but favourable policies can drive growth by encouraging investment and expansion. This increase in disposable income would lead to higher spending on gaming and associated services such as hotels, entertainment, and thecomingyears,withgross dining. As people have more financial flexibility, they are more likely to engage in recreational activities, travel, and entertainment experiences, thereby driving growth in these sectors. Technological innovations, particularly in online and mobile platforms, are expanding the reach of casinos and attracting new demographics.

GAMING INDUSTRY

Global Gaming Industry

The global gaming market experienced significant challenges in 2023, with notable trends emerging across various segments. The global games market generated US$ 183.9 billion in 2023, reflecting a year-on-year growth of 0.5%. A significant growth driver identified market in 2023 was the increasing user base of the Xbox Series and PlayStation 5 consoles. Despite a less impressive release catalogue compared to previous years, the segment experienced growth driven by live-service games and back catalogue sales. The gaming industry underwent restructuring in response to changing market conditions, including adjustments to post-COVID dynamics and rising interest rates. Various companies responded by adopting strategic decisions, focussing on sequels, and leveraging existing IPs instead of investing in new intellectual properties (IPs). Additionally, there was a trend towards developing smaller-scale AAA titles to mitigate risks.

Mobile game revenues contributed nearly half of the global market, reaching nearly US$ 90.5 billion in 2023, representing a year-on-year (YoY) decline of 1.4%. In contrast, downloaded and boxed PC games, while representing only 21% of total revenues, experienced the highest growth among all segments with a 5.3% YoY increase. Successful cross-platform strategies have further boosted the PC market. Browser PC games generated US$ 1.9 billion in revenue, experiencing a decline of 16.9% during 2023. Conversely, console gaming generated US$ 53.1 billion, showing a growth of 1.7% during the same period.

INDIAN GAMING INDUSTRY

The casino industry in India is emerging, especially in the states of Goa and Sikkim. These states are key hubs for legal gambling, boosting their tourism and local economies. Goa and Sikkims casino industries play vital roles in their tourism and economic sectors. Goa, known for its lively casino scene, and Sikkim, with its growing gaming facilities, have developed dynamic gaming markets. The industry in these states shows consistent revenue growth due to domestic and international tourists. In Goa, both offshore and onshore casinos significantly contribute to state revenue through licensing fees, taxes (GST & VAT), and tourist spending. Sikkims smaller casinos, particularly in Gangtok, also provide a notable economic boost.

Casinos attract many tourists to both states. Goas reputation as a beach and nightlife destination is enhanced by its casinos, offering gaming and entertainment. Sikkim combines its scenic beauty and cultural heritage with modern casino attractions, appealing to tourists seeking integrated entertainment experiences with luxury accommodations, dining, and live shows. Despite the economic benefits, both states address the social challenges of gambling, aiming to balance economic growth with social responsibility.

Indias casino industry is set for growth, driven by rising disposable income, tourism, and possible regulatory changes. The casino gaming industry is expected to overcome regulatory and cultural challenges to reach its full potential. strategic expansion, technological integration, and investment is also expected to boost the casino gaming industry, contributing significantly to the economy and creating a vibrant entertainment sector. Enhancing customer experiences and expanding market reach has been crucial for future growth. The online gaming segment has grown to become the fourth largest segment within the Media and Entertainment (M&E) sector followed by the filmed entertainment segment. TheIndian online gaming revenue grew by 22% in 2023 to 220 billion in 2023 from 181 billion in 2022 (refer to E&Y M&E Report 2023 bar graph on page 19). The number of online gamers in India grew to 455 million in 2023 and is expected to reach 491 million by 2024.

The growth was driven by the increase in smartphone users of over 30 million in 2023, low data charges, rising per capita income, and the popularity of gaming influencers social media and short video platforms. India is the largest market in the world for mobile game downloads, with hyper-casual games being the most downloaded genre. Sustained marketing efforts and increased awareness of online gaming are also driving growth in non-metro and regional language markets. In 2023, about 90 million gamers paid for online games. Transaction-based game revenues increased by 21%, reaching 182 billion in 2023.

Casual gaming grew by 24% in 2023, and in-app purchases saw a significant revival with the launch of platform during the year. Shooting games remained the most popular in India, generating 24% of in-app purchase revenues, followed by strategy games. Newer genres like match and party games collectively accounted for over 20% of in-app purchase revenues. With 100 million daily active users, gaming offers a significant opportunity connect with upwardly mobile young audiences, though revenue yields are still low. Multiplayer games are making a comeback, with prominent e-sports titles almost doubling to 19 in 2023. Around 1.8 million Indians participated in these e-sports events, which were available on 20 platforms.

Recent Trends in the Gaming Industry in India

The shift in the Indian gaming industry is evident in the increased time spent on gaming, and Indias leadership in global game downloads. Mobile gaming dominates the Indian gaming market, driven by smartphone adoption, thereby creating opportunities for innovative experiences. Indias cultural diversity offers a unique advantage for global game developers, allowing expansion into various languages for a more inclusive gaming experience.

Gaming Regulations in India

Offline and online gaming fall under state jurisdiction, meaning only Indian states can create laws for gambling within their territories. Goa and Sikkim are exceptions, permitting offline gaming under their state regulations. The Goa Gambling Act, 1976 allows five-star hotels to offer ‘games of electronic amusement or slot machines with a licence, and table games and other gaming forms may also be provided on offshore vessels under a licence. Andhra Pradesh, Telangana, Assam, and Odisha do not exempt games of skill in their gambling laws, prohibiting any game played for monetary stakes.

Indias casino industry, although not widespread, has a significant presence in Goa and for legal gambling and casino activities, boosting tourism and local economies. Goas casino industry operates under the Goa, Daman and Diu Public Gambling Act, of 1976, with licenses granted to both onshore and offshore casinos. Sikkim regulates its casino operations under the Sikkim Casino Games (Control and Tax) Act, 2002, allowing casinos to enhance tourism and generate revenue.

As the gaming industry grew, it presented significant opportunities. However, effective regulation was crucial to ensure sustainable growth and address potential issues. In 2023, the Ministry of Electronics and Information Technology (MeitY) introduced regulatory measures for the online gaming sector. This included the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2023, aiming to establish Self-Regulatory Bodies (SRBs) to evaluate and endorse permissible online games. Despite ongoing discussions, clarity on the future direction remained uncertain.

In April 2023, the Tamil Nadu government enacted the Tamil Nadu Prohibition of Online Gaming and Regulation of Online Games Act, 2022, banning online gaming and real-money games of chance. However, the Madras High Court overturned the ban on online skill games in September 2023.

MeitY also introduced central regulations for online gaming through amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, known as the "Online Gaming Rules". These rules proposed a co-regulatory approach, with MeitY-recognised self-regulatory bodies verifying online real-money games based on specified criteria. Additionally, MeitY announced plans to restrict certain categories of online games in June 2023.

Additionally, the amendment in GST regulations effective from 1^st October, 2023, expanded the scope of GST applicability to the gaming industry. Under the new provisions, the offline casino business must charge 28% GST on the purchase of tokens, chips, coins, and tickets used in the casino. For the online gaming business, 28% GST is charged on the money deposited with the service provider, including all services facilitated through information technology over the internet.

Following these GST rule changes, online gaming companies have absorbed the impact to ensure that their growth rates remain stable. However, this affected their margins, leading to layoffs and potential shutdowns of smaller companies unable to handle the costs. Googles decision to allow listing of skill-based real money games on its app store expanded the reach for many games charging participation fees. Additionally, MeitY issued directives in October 2022 and February 2023 to block more than 150 mobile apps and websites, including those operated by foreign entities involved in betting and gaming.

Industry Outlook

The global games market is expected to continue its growth trajectory from 2023 to 2026. The global games market revenues are projected to reach US$ 205.4 billion by 2026, growing at a CAGR of 1.3%. The Indian online gaming segment revenue is expected to achieve a substantial milestone by reaching an estimated value of 388 billion in2026, as compared to 220 billion achieved in 2023. This growth trajectory is expected to include all verticals within the segment, comprising e-sports, fantasy sports, casual gaming, and other skill-based games, ultimately attracting an estimated 150 million daily users. Revenue expansion within the segment will be primarily driven by the rapidly growing popularity of mobile-based real-money gaming and casual gaming experiences. The fastest growing segment would be in-app purchases growing at a CAGR of 27%, followed by fantasy sport growing at a CAGR of 23% and then rummy and poker growing at a CAGR of 19% till 2026. Real money gaming is projected to account for 83% of the total revenues by 2026, consistent with the share recorded in 2023. The in-app purchases are expected to grow significantly along with the consolidation trends might prevail in the sector, as companies struggle to manage the implications of GST.

In addition, rollout of 5G across the country is expected to improve the online gaming experience for users in near future.

The recent GST demand notices to offline and online gaming companies mark a significant development to regulate and tax the gaming industry effectively. While the immediate impact includes increased tax liabilities and potential legal challenges, the long-term outlook hinges on achieving regulatory clarity and a balanced approach to taxation. The industry and government must collaborate to ensure sustainable growth and compliance, fostering a conducive environment for innovation and expansion in the gaming sector.

HOSPITALITY INDUSTRY

The hospitality sector has been navigating a remarkable journey of recovery and growth post-pandemic, marked by a robust resurgence in demand and a gradual alignment of supply and demand dynamics within the premium hotel room inventory. In FY 2023-24, the Revenue per Available Room (RevPAR) for branded hotel rooms in India is projected to reach 7,200-7,400. This marks a significant the 4,200-4,400 recorded in FY 2022-23. Healthy domestic leisure and business travel have played a significant role in driving demand for hotel accommodations. Additionally, the industry has benefited from increasing foreign tourist arrivals, further boosting occupancy rates and revenue streams. This positive trend not only signifies a robust recovery for the hospitality sector but also contributes to an improved credit profile for industry players, reflecting their ability to adapt and thrive in a dynamic market environment. Organised players in the hospitality sector are strategically expanding their presence, even though greenfieldhotels take longer to set up, causing delays in increasing room inventory.

Domestic travel will remain a pivotal driver of demand in the hotel industry, buoyed by the governments infrastructure initiatives, the rapidly growing air and railway passenger traffic, and the growing preference for branded accommodations, surpassing the rate of supply growth. The resurgence in domestic tourism, particularly leisure tourism, along with the resumption of international flights and the recovery in foreign tourist arrivals, are expected to fuel the expansion of room capacity in the coming years. The uptick in business travel demand, driven by the rise in meetings, incentives, conferences, and exhibitions (MICE) events, will further contribute to the growth in room capacity additions. Going forward, the RevPAR is expected to continue its upward trajectory, reaching 7,700-7,900 in FY 2024-25. The rising urbanisation in tier-2 and tier-3 cities is anticipated to drive demand for hotels, leading to robust room additions in the coming years. Presently, India boasts approximately 1,60,000 branded hotel rooms, with plans to add around 50,000 rooms over the next five years, reflecting a CAGR of 4-5%.

Government initiatives, including new tourism policies and increased budget allocations, alongside infrastructure improvements, are set to boost travel and tourism in India, promoting growth in the hospitality sector. A shift towards asset-light options like management contracts and franchising is enhancing revenue and profitability companies. With increased capacity utilisation and stable supply growth, hotels are well-positioned to meet demand, supporting strong Average Room Rates (ARR) and Revenue per Available Room (RevPAR). Domestic demand remains robust, driving high occupancies and continued RevPAR growth in FY 2024-25. Overall, this positive outlook signals sustained growth and resilience in the hospitality industry.

Source: CareEdge March 2024 Hotel Industry Report

REAL-ESTATE SECTOR

The governments focus on infrastructure projects, increased investments, the development of smart cities, urban expansion and favourable policy reforms are shaping the real estate sector. A surge in population and the expanding middle class with increasing disposable income are fuelling demand for residential properties in the country. In 2023, residential real estate sales in India reached their highest levels since 2013, witnessing a remarkable 33% YoY growth, with a total sale of 4.1 lakh units in the top eight cities.

The outlook for the residential real estate sector is optimistic. The Indian real estate market is projected to reach a value of US$ 1.5 trillion by 2034 and the Indian residential market is expected to reach a value of US$ 906 billion by the same year, driven by buoyant demand in the residential real estate sector. According to the United Nations, urbanisation in India is set to escalate significantly, with an estimated half of the population expected to reside in urban areas by 2050, compared to 31% in 2011. Knight Frank Research and CII estimate that urban cities in India will require an additional 78 million housing units between 2024 and 2034 to accommodate this burgeoning urban population. Furthermore, the anticipated rise in the proportion of High-Net-Worth Individuals (HNIs) and Ultra High Net Worth Individuals (UHNIs) households in India from 3% tofor hotel-owning 9% by 2034 is poised to fuel demand for luxury housing.

With a growing trend towards home ownership and the prevalence of nuclear families, the residential real estate sector is well positioned to benefit from government-led housing initiatives, such as the Pradhan Mantri Awas Yojana (PMAY), Housing for All, Credit-Linked Subsidy Scheme (CLSS) and the proposed construction of 3 crores additional houses under the PMAY, covering both rural and urban areas. Furthermore, the RBIs decision to maintain the repo rate at 6.50% provides stability and confidence to homebuyers, ensuring steady loan terms and fostering an environment conducive to growth in the residential real estate market.

Source: Economic Survey 2023-24, CII, Ministry of Housing & Urban Affairs, RBI

COMPANY OVERVIEW

Company Background

Delta Corp Limited, (hereafter referred to as "the Company" or "Delta Corp",) is a key player in the Indian gaming industry having a significant presence in in 1990, the Company has emerged as one of the industrys largest organised entities, actively participating in diverse gaming formats, including live, electronic, and online experiences.

Delta Corp has a widespread footprint including the states of Goa and Sikkim, which are pivotal casino destinations in

India. Delta Corp operates with both land-based and offshore licenses, enhancing its casinos by incorporating hospitality assets. In addition to its foray into skill-based online gaming in India, the Company has secured a substantial position in the real-money gaming sector. Since its entry into the online gaming arena in 2017, it has further strengthened its foothold in Indias gaming industry by acquiring Adda52.com, a leading online gaming site in the country. The Companys revenue streams benefit significantly from online skill-based games like poker which can be played for real money in most Indian states. Currently, the Company is in ownership and control of the online platforms dedicated to poker namely ‘Adda52. com.

Over the years of its existence, the Company has developed a profound understanding of the behaviour and preferences of crucial demographics and users across different sectors. This knowledge has empowered the Company to effectively attract and retain customers.

In recent developments, the Indian government has issued significant GST (Goods and Services Tax) to both offline and online gaming companies. The amounts claimed under the above notices are inter-alia based on the gross bet/face value of all games played at the casinos/online platform and short payment of GST on consideration received towards entry to the casino / gross rake amount collected from online platform during the relevant period. The demands made by the authorities on the gross bet value/Gross face value as against gross gaming revenue/gross rake amount has been an industry issue and multiple representations have been made by the industry participants to the Government in this regard.

Without prejudice, the Holding Company and its three subsidiaries, based on a legal assessment, is of the view that all the above notices and the tax demands are arbitrary in nature and contrary to the provisions of law. The Companies have challenged such tax demands and initiated necessary legal proceedings.

Business Segments

Casino Gaming, Online Skill Gaming, and Hospitality are the Companys three primary business segments.

1. Casino Gaming

Particulars	Description	Key Features
Deltin Royale, Goa	The largest offshore gaming vessel in Asia featuring five operational decks.	950 gaming positions, 120+ live gaming tables, 2 VVIP gaming rooms, 25+ slot machines, spread over 65,000 sq. ft.
Deltin JAQK, Goa	An all-inclusive entertainment hub with four functional decks	430 gaming positions, 50+ live gaming tables, 1 VIP gaming area, 8+ slot machines, spread over 40,000 sq. ft.
King Casino, Goa	The inaugural offshore gaming casino in India, reintroduced in 2016, stands as a boutique luxury floatel.	206+ gaming positions, 30+ live gaming tables, 10+ games, spread over 25,000 sq. ft.
Deltin Suites Casino, Goa	A land-based casino situated in an all-suite hotel in North Goa	1,180 sq. ft. casino, 62+ gaming positions
Deltin Zuri, Goa	A luxury five-star hotel in South Goa hosts a land-based casino	1,180 sq. ft. casino, 59+ gaming positions
Deltin Denzong, Sikkim	Initiated operations for a land-based casino in collaboration with Hotel Welcome Heritage since FY 2018-19	200+ gaming positions, A separate VIP gaming area, spread over 15,000 sq. ft.

2. Online Skill Gaming through Deltatech Gaming Limited

Particulars	Description	Key Features
Adda52.com	Offering online poker games	All variety of poker ring games and tournaments
3. Hospitality
Particulars	Description	Key Features
The Deltin, Daman	The sole 5-star hotel in Daman, featuring approximately 52,000 sq. ft. of state-of-the-art banqueting, conferencing, and open lawn space.	176 rooms, 3 gourmet restaurants and 2 bars, 27,000 sq. ft. Indoor event space, 8,000 sq. ft. Retail space Three swimming pools, with a special kids pool and indoor & outdoor games
Deltin Suites, Goa	A North Goa hotel comprising exclusively of suites, featuring an integrated expansive casino.	62+ gaming positions, 106 rooms 24*7 vegas restaurant, whiskey lounge bar and spa

SWOT ANALYSIS

STRENGTHS

• One of the Leading Gaming Company in India

• Pioneer and having first mover advantage in the underpenetrated industry

• Extensive customer base with a strong and diverse portfolio of online and offline platforms

• A highly skilled and experienced team specialising in gaming expertise

WEAKNESS

• Geographic concentration in business operations

• Managing of non-core hospitality ventures

• Challenges in obtaining gaming licenses due to regulatory restrictions across multiple locations, leading to limitations on licensing

OPPORTUNITIES

• Skill-based games are swiftly gaining popularity as the preferred leisure activity among Millennials

• Enhancing societal approval of gaming in India

• Untapped potential in the Indian market for new licenses and geographies.

THREATS

• Adverse regulatory headwinds

• Intense competition within the gaming industry

• Being a discretionary spending sector, an economic downturn could dampen demand

• Regulatory hurdles may cause additional delays in obtaining the casino licence for Daman

FINANCIAL REVIEW

Consolidated Financials Snapshot

			( Rs in Crores)
Year	2023-24	2022-23	YoY change
Casino Gaming	812.83	825.21	-1.50%
Online Skill Gaming	146.80	162.17	-9.48%
Hospitality Division	50.85	48.64	4.54%
Gross Revenue	1,010.48	1,036.02	-2.47%
Less: Customer Incentive - Online Skill Gaming	69.78	56.30	23.94%
Less: Inter Segment Revenue	15.40	15.25	0.98%
Net Sales	925.30	964.47	-4.06%
Other Income	56.92	46.39	22.70%
Total Income	982.22	1,010.86	-2.83%
EBITDA	350.29	396.73	-11.71%
Profit before Exceptional items and Tax	275.49	328.47	-16.13%
Exceptional Item	49.78	-	-
Tax Expenses	81.56	66.98	21.77%
Profit after Tax and Minority Interest	244.23	261.37	-6.56%

• In FY 2023-24, revenues in the Casino Gaming segment declined by 1.50% to 812.83 Crores compared to 825.21 Crores in FY 2022-23, mainly due to recent amendments to the GST law impacting both offline and online gaming businesses. These changes, effective from 1^st October, 2023, required GST payment on chip sales instead of Gross Gaming Revenue (GGR) as previously done in offline gaming establishments. This shift led to increased expenses and impacted customer spending habits, prompting a more cautious approach from the Companys customers. Despite these challenges, Delta Corp remained resilient, implementing marketing and sales promotion strategies to re-engage customers and encourage continued visits and play. Additionally, the Company focussed on enhancing customer service and communication channels to support and appreciate valued patrons during challenging times.

• In FY 2023-24, revenues in the Online Skill Gaming category decreased by 9.48%, amounting to 146.80 Crores compared to 162.17 Crores in FY 2022-23.

This decline is attributed to recent changes in the GST law, which have significantly impacted the Companys online skill gaming business since 1^st October, 2023. Previously, GST was levied at a rate of 18.0% on the platform fee charged by online gaming companies. However, post the changes, GST is now required to be paid at a higher rate of 28.0% on the full value of the deposit. This substantial increase in GST has had profound implications for the online gaming industry and the Companys online skill gaming business. The GST law amendment led to reduced sector investments.

• Revenues in the hospitality segment marginally increased by 4.54% to 50.85 Crores as opposed to 48.64 Crores in FY 2022-23. The rebound was due to the strong domestic tourism and people wishing to spend more time outside their homes.

The EBITDA margin has decreased to 35.66% in FY 2023-24 from 39.25% in FY 2022-23 primarily due to decrease in revenues and increased in operational cost.

Consequently, the Company reported net profit of 244.23 Crores in FY 2023-24 as compared to net profit of 261.37 Crores in FY 2022-23.

The Group remained debt-free as on 31^st March, 2024. The cash and cash equivalents stood at 126.95 Crores as on 31^st March, 2024.

RoNW stood at 13.81% as on 31^st March, 2024 as against 13.25% on 31^st March, 2023.

KEY FINANCIAL RATIOS

			( Rs in Crores)
Ratios	FY 2023-24	FY 2022-23	YoY Change (%)
Debtors Turnover	120.17	232.40	-48.29%
Inventory Turnover	0.63	0.38	65.79%
Current Ratio	3.55	4.65	-23.66%
Operating Profit Margin	24.81%	30.24%	-17.96%
Net Profit Margin	26.44%	27.20%	-2.79%
Return on Net Worth (RoNW)	13.81%	13.25%	4.23%

• The decrease in net sales during FY 2023-24 had a cascading effect on the Companys financial ratios, including debtors turnover and current ratio.

The Debtor Turnover Ratios declined by 48.29% attributed to increase in average debtors outstanding coupled with decrease in net sales by 4.06%.

The inventory turnover increased by 65.79% in FY 2023-24. This notable improvement is primarily due to a strategic decision regarding the Companys Tonca project inventory. During FY 2023-24, the Company transferred the Tonca project inventory to the Property, Plant, and Equipment (PP&E) and capital work in progress (CWIP) category. This move removed the Tonca project inventory from the Companys standard inventory count, leading to a higher inventory turnover ratio.

Operating profit margin and Net profit margin decreased due to the combination of reduced net sales, increased operating expenses, heightened spending on sales promotion and marketing and investments in large projects yet to yield returns collectively contributed to the decline in the Companys operating profitmargin and net profit margin.

DETAILED EXPLANATION OF RATIOS

Debtors Turnover:

This ratio assesses a Companys efficiency in collecting receivables, or amounts owed by customers, indicating how effectively it manages credit. The formula involves dividing turnover by average trade receivables.

Inventory Turnover:

Inventory Turnover signifies how often a Company uses and replenishes its inventory within a specific period. The calculation entails dividing the cost of goods sold by the average inventory.

Current Ratio:

The Current Ratio, a liquidity metric, measures a Companys capability to meet short-term obligations due within a year. It is derived by dividing current assets by current liabilities.

Operating Profit Margin (%):

The Operating Profit Margin indicates the percentage of profit a Company generates from its operations, computed by dividing EBIT by turnover.

Net Profit Margin (%):

Expressed as a percentage of revenue, the Net Profit Margin reveals how much net income or profit a Company generates. It is calculated by dividing the profit for the year by turnover.

Return on Net Worth (RoNW):

RoNW, a profitability measure assesses a Companys profitability comprehensive income for the year by the average capital employed during the same period.

Debt Equity Ratio and Interest Coverage Ratio:

As Group does not have any debt during the current year and previous year, hence debt equity ratio and interest coverage ratios are not applicable.

BUSINESS OUTLOOK

Delta Corp is embarking on a transformative journey, marked by the introduction of a new offshore casino vessel, the expansion of its flagshipofferings, and ventures into significant real estate and hospitality projects. The Company maintains a strong presence in Goas casino segment, commanding a significant market share. The FY 2025-26 is set to double the Companys gaming capacity and include amenities such as a food court, retail outlets, and a spa. This expansion is expected to boost revenues by substantially leveraging the fixed cost model to enhance profitability. By capitalising on the growing tourism in Goa, the new vessel aims to attract a broader audience, including families.

Delta Corp also strives to become the preferred platform for real-money gamers nationwide. Recognising the importance of investing in their gaming platform, the Company aims to drive overall growth and attract and retain players through a variety of games and promotions. Despite challenges in the online gaming sector, Delta Corp remains committed to growth and adaptation. A vigilant focus on industry dynamics will further support the Companys objective of achieving robust and sustainable growth.

In the hospitality segment, Delta Corp is expanding its investments with a new 450-room hotel project in Goa, set to be the largest in the area, expected to be completed within the next two years. The company owns a prime 100-acre land plot in Goa, ideally located across from the new Mopa airport, which is seen as a strategic asset for future expansion. Plans for an integrated resort on this land have been approved but are currently on hold pending clarification on GST matters.

In a significant move, the company with Alpha Alternatives Fund Advisors LLP and Peninsula Land to create a real estate development platform. The companys investment in this venture is 90 crore, constituting 11.76% of the total investment. Alpha Alternatives is the major investor with a commitment of 450 crore, while Peninsula Land will contribute the remaining amount.

Delta Corps strategic focus on customer acquisition, enhancing casino offerings, and expanding its hospitality and real estate footprint positions it for sustainable growth and financial stability. The Companys proactive approach to navigating regulatory challenges and market dynamics demonstrates its resilience and commitment to delivering value to its shareholders.

KEY RISKS & MITIGATION STRATEGIES

• Government Regulations Risk: The Company faces potential adverse impacts on its business operations due to increased regulatory supervision and unfavourable developments in key areas. Violations or non-compliance with standards may lead to licence suspension, revocation, fines, and criminal penalties.

Mitigation: Over the past few decades, the Company has set up strong partnerships with local governments and authorities to ensure that any new laws or updates to existing ones are effectively complied with. The Company consistently ensures adherence to regulatory obligations, and the management of statutory compliance is meticulously administered.

• Competition Risk: The Company faces competition from both emerging and well-established players, presenting a risk of intensified new competitors with advanced technology or a change in marketing strategy by competitors could pose a significant risk to the business.

Mitigation: Over the years, the Company has built a robust brand identity and secured a leading position in the gaming industry. Delta Corp is the preferred trading partner, known for its high-quality content, skilled development personnel, advanced technology infrastructure, expertise in data analytics, extensive product and service offerings, exceptional user experience, and strong brand recognition. The Company strives to uphold its competitive advantage by enriching user engagement and experiences through the introduction of new content and services, along with an increased focus on social media hasformed interactions partnership .

• Risk related to M&A Activities: The process of acquisition, involving the complex merger and integration of two businesses, comes with uncertainties and risks. Failure to address these risks adequately could significantly impact the Companys financial position, operational performance, and cash flow.

Mitigation: Historically, Delta Corp has adeptly pinpointed strategic acquisition and investment opportunities. The Company has implemented a rigorous evaluation standard to enhance the objectivity of the acquisition process. The decision is taken by the Board based on well-defined principles, greatly minimising the chances of any mismatch.

• Geographic Concentration Risk: The risk of reduced profits arises when an organisation overly relies on a single industry or nation. Delta Corp faces a geographic concentration risk due to its excessive dependence on a specific region for its business activities.

Mitigation: The Companys focus is on gaming, with an added emphasis on gaming-related hospitality. Delta Corp has diversified into to attract a global audience, expanding its presence to Sikkim and Daman, besides Goa. This expansion minimises reliance on a single state.

• Inflation Risk: The Companys major expenses include human capital costs, which might see significant in the face of unexpected wage inflation. Moreover, increased inflation could affect the purchasing power of the Companys customers.

Mitigation: The Company secures its workforce through long-term employment contracts, ensuring payment certainty and cost visibility. Employee roles and contributions play a pivotal role in maintaining and fortifying the Companys dominant position. Delta Corp excels in recruiting, nurturing, and retaining a diverse pool of skilled individuals, aligning employees personal goals with organisational objectives. The Company prioritises high employee retention through best practices, competitive remuneration, and comprehensive training at all levels. Despite facing challenges such as inflation and economic uncertainties, the casino and gaming industry is experiencing a boost due to the recovery in leisure demand., has emerged as a top-performing sector this year.

• Risk of Unforeseen Event Impact: The Company is susceptible to unexpected risks, including geopolitical tensions, novel pandemic variants, or Black Swan events, which can impact its operations. Such occurrences may particularly affect the Companys hospitality sector, as global travel sentiment is adversely influenced.

Mitigation: Delta Corp has established itself as a well-integrated gaming and hospitality brand in the country. The rise in revenue from operations and other income is primarily attributed to an increased number of gamers and games played by both existing and first-time gamers. Moreover, the Company is adequately prepared to navigate unforeseen risks, with management closely monitoring future economic conditions and uncertainties.

INTERNAL CONTROLS

Delta Corp has a strong internal control system in place, that ensures effective operation management, asset protection, and compliance adherence. The Company is responsible for establishing and upholding internal control measures tailored to the scale and nature of its operations. Regular assessments of the internal control system are conducted across all business aspects. Both Management and Internal Auditors perform periodic evaluations, with the Audit Committee scrutinising the findings. The Board recognises the auditors reports as an unbiased affirmation of operational and business proficiency. They ensure the ongoing sufficiency and effectiveness of internal controls over time. The Company carries out the necessary corrective actions to uphold robust internal controls. Additionally, they oversee investigations and ensure that prompt and assertive actions are taken to mitigate risks while resolving the issue at hand.

CAUTIONARY STATEMENT

This report contains statements that may be ‘forward-looking including, but without limitation, statements relating to the implementation of strategic initiatives and other statements relating to Companys future business developments and economic performance. While these forward-looking statements indicate our assessment and future expectations concerning the development of our business, several risks, uncertainties, and other unknown factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, general market, macroeconomic, governmental, and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with us, legislative developments and other key factors that could affect our business and financial performance. The Company undertakes no obligation to publicly revise any forward-looking statements to reflect future/likely events or circumstances.