H. S. India Ltd Management Discussions.

1. INDUSTRY STRUCTURE AND DEVELOPMENTS:

The hotel segment of the hospitality sector scenario in India stands drastically changed following the spread of COVID-19 pandemic, which is still lingering. New expectations and new technologies have been evident in the hotel segment over the past year. Demand for hotels and tourism has dramatically transformed. Consumer behaviour in hospitality has also changed.

Consumer satisfaction has become the primary concern when it comes to hospitality. All these

have a significant impact on the management and marketing activities of hotels. There are many challenges that the industry is facing, which in the coming year are expected to become more marked. The domestic hospitality industry has been one of the worst-hit sectors, severely affected by the COVID-19 pandemic and subsequent lockdowns, which restricted mobility and hotel occupancies in all the major markets. The hospitality sector has the potential to be the main driving force behind the growth of the economy.

The pandemic and the consequent lockdowns had an immediate impact on most industries and sectors, leading to a steep decline in the gross domestic product (GDP) of most countries. But still the services provided to guests continued to be worth despite of the challenges faced and by ensuring the highest health and safety standards.

2. OPPORTUNITIES, THREATS, RISK AND CONCERNS:

The 2nd wave of COVID-19 faced in India, our industry has once again come under stress. As it is patrons were avoiding visits to their favorite hotels and restaurants and with the restrictions,

things are coming to a grinding halt like last year. With the vaccination drive gathering momentum in the country, the Hospitality industry was optimistic about a bounce back in business.

The Ministry of Tourism developed an initiative called SAATHI (System for Assessment, Awareness & Training for Hospitality Industry) by partnering with the Quality Council of India (QCI) in October 2020. The initiative will effectively implement guidelines/SOPs issued with reference to COVID-19 for. safe operations of hotels and restaurants.

The Company has initiated the arrangement for vaccination to its employees and have taken various initiatives to protect the Health and Safety of employees and guests. All precautions based on World Health Organisation Guidelines and directions of the Central and State Governments have been implemented and are being strictly adhered to.

3. FINANCIAL AND OPERATIONAL PERFORMANCE:

The total revenue of your Company for the year 2020-21 was Rs. 1049.71 Lakh, which was lower than the total revenue of previous year of Rs. 2631.87 Lakh due to impact of COVID- 19 pandemic. The Company reported Net Loss after tax of Rs. 143.68 Lakh for the year 202021 in comparison with a net profit after tax of Rs. 126.14 Lakh of the previous year.

4. DETAIL OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:

(i) On account of lockdown and travel restrictions imposed by the Government of India, due to the spread of COVID-19 pandemic, the revenue of the Company had shown a skewed trend towards the second half of the year, specifically in the last quarter. Also, the equation has considered average of opening and closing figures of debtors. Though, the debtor payment cycle had been delayed due to impact of the pandemic, but the same had been highlighted due to the skewness of the revenue, hence higher impact of change in Debtor Turnover Ratio by 54.55%.

(ii) On account of lockdown and travel restrictions imposed by the Government of India, due to the spread of COVID-19 pandemic, the revenue of the company has shown a skewed trend towards the second half of the year, specifically in the last quarter. The drop in revenue had resulted in an approximately equivalent drop in Cost of Goods Sold, but due to the skewness of revenue towards the end of the year, the inventory levels were maintained at almost equivalent levels as the last year, thus resulting in a positive change in Inventory Turnover Ratio by 37.21%.

(iii) On account of lockdown and travel restrictions imposed by the Government of India as well other countries to avoid spread of COVID-19 pandemic, the revenue of the Company contracted sharply in first two quarters of the year and then last quarter due to the second wave of the pandemic, the Company was not able to generate adequate amount of revenue. On the other hand, the interest to the bank had been charged on an accrual basis and hence, with the dropdown of revenue, there was a sharp decreased in Interest Coverage Ratio by 94.71%.

(iv) The Company had opted for moratorium period in repayment of term loan up to the end of January, 2022 and an additional Term Loan had also been availed under the GECL scheme of the Government, accordingly current liabilities had reduced to that extent decreased in current liabilities over the previous period. The effect of above was reflected in Current Ratio which was improved by 46.55%.

(v) On account of lockdown and travel restrictions imposed by the Government of India as well other countries to avoid spread of COVID-19 pandemic, the revenue of the Company contracted sharply in first two quarters of the year and then last quarter due to the second wave of the pandemic, the Company was not able to generate adequate amount of revenue and in spite of taking all the necessary steps in order to curtail the expenditure to the optimum, resulted in a negative profitability for the period. The Company had managed to work upon a decent operating profit ratio, but due to lower business, was not able to maintain the Net Profit Margin as well as the Return on Net Worth and reported these to be down by 360.40% and 208.57% respectively.

5. FUTURE PROSPECTS:

The impact of COVID-19 on the hospitality sector is likely to constrain supply in the near term, which is expected to trigger growth in occupancy levels and rates once consumer and business confidence returns post this crisis. We believe that with the demographic dividend of the country, the vast and widespread tourism landscape, forts and palaces, wellness retreats, wildlife sanctuaries, tea and coffee plantations, hill stations, deserts and seas, the cultural, religious and spiritual destinations which makes India a nation so rich and diverse, the opportunity for hospitality and tourism to flourish and drive employment and foster economic growth will help overcome any short and medium term impediments.

As the Government authorities begin to lift restrictions and reopen the economy with the vaccination drive, the hospitality sector can turn its attention to recovering from the shock of lockdown. However, the recovery process will be challenging. Businesses in this sector will need to adhere to authorities guidance to help prevent outbreaks of corona virus infection.

The Company is doing a business with well-rehearsed safety Protocols and with implementation of the guidelines by the Local Authorities. The trust that the Companys brands enjoy help it gain market share as and when the economy revives.

6. ADEQUACY OF INTERNAL CONTROL SYSTEM:

The Company has proper, strong, independent and adequate internal control systems to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and that transaction are authorized, recorded and reported correctly. The internal control systems are supplemented by an extensive programme of internal audits reviewed by management and documented policies, guidelines and procedures. The internal control systems of the Company are designed to ensure that the financial and other records are reliable, for preparing financial statements and other data, and for maintaining accountability of assets.

7. HUMAN RESOURCE DEVELOPMENT:

The manpower employed in your Company for 2020-21 was 109 employees.

The Company depends extensively on its human assets and consider this as one of the most precious asset and not affordable to lose.

Your Company has a team of able and experienced industry professionals. Your Company always believe to invest in human resources by means of providing various facilities, with a view to strengthen its presence in existing business and for taking advantage of the emerging growth opportunities in the hospitality sector. Your Company seeks regular feedback from its employees to ascertain their levels of satisfaction and to ensure that employees morale and motivation are constantly improved. Critical human resource issues are analysed, corrective actions initiated and results monitored regularly. In order to preserve competent employees and to provide homely environment, your Company has arranged monthly staff function, religious programs, picnic tours, etc. Special insurance cover was introduced this year for our employees for COVID-19 and its related expenses incurred by the Company. Human resource is drawn from diverse academic backgrounds and the Company has placed emphasis on recruiting people with formal training that matches their job profile,

8. CAUTIONARY STATEMENT:

Certain statements made in the Management discussion and analysis report, describing the Companys objectives, projections, estimates, predictions and expectations may be forward looking statements, within the meaning of applicable securities law and regulations and actual results may differ materially from those expressed or implied. Significant factors that make differences to Companys operations include competition, changes in Government policies and regulations, tax regimes and economic development within India. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent development, information or events or otherwise.