Goel Food Products Ltd Management Discussions

INDUSTRY OVERVIEW

Banquets, catering, and hotels have long been integral aspects of our society. Over the years, these services have evolved into a significant industry, providing employment to hundreds of thousands of people globally and making a notable contribution to national GDPs.

The COVID-19 pandemic caused substantial damage to this industry, with its effects still being felt today. Although the pandemic has been largely brought under control worldwide and people are eager to resume celebrations, the path to full recovery continues. The infrastructure supporting hotels, banquets, and catering is still not fully prepared to meet the desired demand, leading to increased service costs. As a result, while demand exists, the supply is coming at a higher price.

Despite these challenges, there is a positive outlook. After enduring nearly two years of restricted living conditions, people are now eager to celebrate and enjoy parties and functions once again. With improving vaccination rates and relaxed restrictions, the industry is slowly but steadily rebounding, driven by the publics strong desire to gather and celebrate.

INDIAN ECONOMY

Economic growth in FY 2023-24 helped India maintain its position as the fifth-largest economy after overcoming repeated waves of COVID-19 pandemic shocks. Real GDP in the first quarter of 2023-24 is currently about 6% higher than its corresponding period in 2020-21, indicating a robust start to Indias recovery from the pandemic. With the release of pent-up demand and widespread vaccination coverage, the contact-intensive services sector is projected to be the main driver of development in 2023-24. Rising employment and significantly increasing private consumption, supported by growing consumer sentiment, will support GDP growth in the coming months.

Future capital spending by the government in the economy is expected to be bolstered by factors such as tax buoyancy, a streamlined tax system with low rates, a thorough assessment and rationalization of the tariff structure, and the digitization of tax filing. In the medium term, increased capital spending on infrastructure and asset-building projects is set to enhance growth multipliers, and with the revival in monsoon and the Kharif sowing, agriculture is also gaining momentum. The contact-based services sector has largely shown promise in boosting growth by unleashing pent-up demand over the period of April-September 2023. The sectors success is being captured by a number of high-frequency indicators (HFIs) that are performing well, signaling the beginnings of a strong comeback.

India has emerged as the fastest-growing major economy in the world and is expected to be one of the top three economic powers globally over the next 10-15 years, backed by its robust democracy and strong partnerships.

HOTELS AND HOSPITALITY IN INDIA

Sustenance of domestic leisure travel, demand from meetings, incentives, conferences, and exhibitions including weddings, and business travel (despite a temporary lull during election period) are likely to drive demand in FY2025. Spiritual tourism and tier-II cities are expected to contribute meaningfully in FY2025. Sustenance of a large part of the cost-rationalisation measures undertaken during Covid period, along with operating leverage benefits, has resulted in sharp expansion in margins compared to pre-Covid levels.

MARKET SIZE

According to WTTC, India is ranked 10th among 185 countries in terms of travel & tourisms total contribution to GDP in 2019. During 2019, contribution of travel & tourism to GDP was 6.8% of the total economy, Rs. 1,368,100 crore (US$ 194.30 billion). In 2020, the Indian tourism sector accounted for 39 million jobs, which was 8% of the total employment in the country.

In 2021, the travel & tourism industrys contribution to the GDP was US$ 178 billion; this is expected to reach US$ 512 billion by 2028. In India, the industrys direct contribution to the GDP is expected to record an annual growth rate of 7-9% between 2019 and 2030. In

2020, the travel & tourism industrys contribution to the GDP was US$ 121.9 billion.

The travel market in India is projected to reach US$ 125 billion by FY27 from an estimated US$ 75 billion in FY20. The Indian airline travel market was estimated at ~US$ 20 billion and is projected to double in size by FY27 due to improving airport infrastructure and growing access to passports. The Indian hotel market including domestic, inbound and outbound was estimated at ~US$ 32 billion in FY20 and is expected to reach ~US$ 52 billion by FY27, driven by the surging demand from travelers and sustained efforts of travel agents to boost the market.

By 2028, international tourist arrivals are expected to reach 30.5 billion and generate revenue over US$ 59 billion. However, domestic tourists are expected to drive the growth, post pandemic. International hotel chains are increasing their presence in the country, and it will account for around 47% share in the tourism and hospitality sector of India by 2020 and 50% by 2022.

As per the Ministry of Tourism, Foreign Tourist Arrivals (FTAs) in February 2023 were 865,779 with a positive growth rate of 259.4% as compared to 240,896 in February 2022.

FTAs during the period January-February 2023 were 1,733,939 as compared to 442,442 in January-February, 2022.

The percentage share of Foreign Tourist Arrivals in India during February 2023 among the top 15 source countries was highest from Bangladesh (20.3%) followed by the USA (16.4%), UK (11.1%), Canada (5.8%), Australia (3.7%), Malaysia (3.0%), Sri Lanka (2.8%), Russian Federation (2.7%), Germany (2.5%), France (2.4%), Nepal (1.9%), Thailand (1.7%), Singapore (1.5%), Italy (1.2%) and Japan (1.2%).

(Source: https://www.ibef.org/industry/tourism-hospitality-india)

OUTLOOK

With safety & hygiene as the foremost criteria, the pandemic has forced the banquets & hotel industry to come up with innovative ways to utilise their assets by opening newer revenue streams such as co-working space, use of technology, redesigning hotels and others. Though the flow of large booking is high in peak season, we have started focusing on attracting small bookings like kitty party, birthday party, kirtans in off season.

RISKS AND CONCERNS

Economic Risk: Our business is closely associated with the macro environment that impacts the consumers behaviour and spending power. The Covid-19 pandemic has not only led to global health and safety concerns, but has also thrown many economies into slowdown.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Internal control systems are integrated into all processes and functions within the Company. These systems are regularly reviewed and, when necessary, modified or redesigned to enhance efficiency, effectiveness, and control.

All processes and systems undergo Internal Audit, complemented by Statutory Auditors who verify that financial reporting is accurate and fair, and that these controls are properly designed and functioning effectively.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:

RATIO	Numerator	Denominator	FY 2024	FY
				2023
CURRENT	Current	Current	1.56	0.74
RATIO	Assets	Liabilities
DEBT EQUITY	Total Debt	Shareholders	1.33	1.87
RATIO		Equity
DEBT	Earning	Debt Service	2.31	2.25
SERVICE	Available For
COVERAGE	Debt
RATIO
RETURN ON	Net profit	Net Worth	25.39%	67.65%
EQUITY	after tax	Equity
RATIO
INVENTORY	Cost of goods	Average	32.54	53.82
TURNOVER	sold	Inventory
RATIO
TRADE	Net Sales	Average	18.42	60.91
RECEIVABLES		Accounts
TURNOVER
TRADE	Net Credit	Average	4.06	4.62
PAYABLES	Purchases	Accounts
TURNOVER
RATIO
NET CAPITAL	Net Sales	Working	18.65	1.31
TURNOVER		Capital
RATIO
NET PROFIT	Profit after	Net Sales	0.21	17.87
RATIO	Tax
RETURN ON	Earning	Capital	0.19	15.87
CAPITAL	Before	Employed
EMPLOYED	Interest and
	Tax
RETURN ON	Interest	Cost of	0.00%	0.00%
INVESTMENT	Income	Investment

 

	For and behalf of
	GOEL FOOD PRODUCTS LIMITED
	(Formerly called Goel Food Products Private Limited)
Date: 30.05.2024	Sd/-	Sd/-
Place: Kolkata	(Dinesh Goyal)	(RashmiGoyal)
	Managing Director	Directors
	DIN: 00881868	DIN: 05253256