hb estate developers ltd share price Management discussions


1. OPERATING RESULTS

During the year under review, the Companys total Revenue was Rs. 9877.19 Lakhs as compared to Rs. 5191.99 Lakhs in the previous year. The Company incurred total expenses amounted to Rs. 9621.62 Lakhs as compared to Rs. 7391.48 Lakhs during the previous year.

The total revenue of the hotel unit of the Company, Taj City Centre Gurugram, for the financial year under review was Rs. 9586.83 Lakhs as compared to Rs. 4987.12 Lakhs during the previous year. During the year under review, the Company incurred a cash profit amounting to Rs. 978.44 Lakhs compared to cash loss amounting to Rs. 1404.07 Lakhs incurred in the previous financial year.

Loss after tax stood at Rs. 1162.81 Lakhs as against Rs. 1567.25 Lakhs in the previous year.

2. INDUSTRY STRUCTURE AND DEVELOPMENTS 2.1 Global Scenario

Global tourism is steadily improving towards pre-pandemic levels consequent to the relaxation of travel restrictions across countries and increase in demand for travel. Tourist arrivals internationally for 2022 were 917 million, double that of 2021 but recovering to 63% of pre-pandemic levels of 2019, according to data from the United Nations World Tourism Organization (UNWTO). Europe with the largest share of global inbound tourism registered a 92% increase over 2021 to reach nearly 80% of pre-pandemic levels. The Middle East had the strongest relative increase among all regions due to large international events such as Expo 2020 Dubai and the FIFA World Cup in Qatar. Even with a 241% increase in tourist arrivals in 2022 over 2021,

Asia and the Pacific remained the weakest in terms reaching pre-

However, within the region, international tourist arrivals in South Asia at 25.5 million, were higher by 158% over 2021 and achieved 76% of pre-pandemic levels (Source:

UNWTO, Barometer January 2023). According to the S&P Global Sector Purchasing

Managers Index, the Tourism and Recreation sector led a pick-up in global business activity amongst all sectors recording its sharpest pace since May, 2022.

2.2 Indian Scenario

India is now the faster growing, major economy in the world. Indias economic recovery from the pandemic exhibited a K-Shaped recovery wherein certain sectors like information technology, e-commerce and financial services registered healthy recoveries while other sectors such as retail trade and consumer discretionary were highly impacted. Travel and hospitality remained beneficiaries f such recoveries.

FY 2022-23 continued to be year of strong recovery in the Indian Travel and tourism industry. Demand for accommodation grew significantly, mainly arising from domestic leisure travel, weddings, social events, conferences and resumption of business travel within the country. The rich and varied culture of India makes it a major travel destination for many international tourists. The year 2021 turned out to be a recovery year for the Indian travel and hospitality sector post the 2020 pandemic.

3. OPPORTUNITIES AND THREATS

The Ministry of Tourism has been allocated a budget of US$ 2.1 billion in the 2023-

24 fiscal year, with a substantial portion dedicated to enhancing the tourism industry and infrastructure in India. The countrys tourism sector is expected to witness steady growth in 2023, fueled by increasing domestic demand and a resurgence in international travel. Investor interest in the Indian hospitality space is also on the rise, with projected investments exceeding US$ 2.3 billion over the next fiveyears, further bolstering the positive outlook of the industry. Prior to the pandemic, Indian leisure travelers ranked second across 31 countries, highlighting a significant opportunity for the hospitality industry offerings to attract and retain leisure travelers. Overall, the hospitality sector is expected to maintain a consistent growth trajectory in the coming years, with domestic demand playing a pivotal role in driving this expansion.

4. FUTURE PROSPECTS AND OUTLOOK

The Outlook for the Indian Hospitality industry for fiscal year 2023-24 remains positive.

The upsides working in favour of the hospitality industry in India are good macro-economic environment evidenced by 6%+ GDP Growth, superior performance by the service sector of the Indian economy, abating COVID 19 fears, continuing g infrastructure development projects within the country, growth in air and railway passenger traffic and growth in demand for branded rooms outpacing a tepid growth in supply of those rooms to provide long-term sustainable demand. Moreover, the industry has learnt to work with volatility and adopt leaner cost structures thus contributing to higher profitability. Balance Sheets of large corporates have also strengthened over the past few years. Growth in the industry is largely expected from domestic demand which is expected to remain strong through FY 2023-24 even as international travel has shown green shoots of recovery and provides scope for further growth in demand. Additionally, the Indias G20 Presidency and an opportunity to host international events, including the ICC Mens World Cup, is expected to increase demand for hotels in the cities hosting the events. Growth in Indias service sector and higher disposable income of people working in it, referred to in HSBCs Economic Research paper above is also expected to increase demand for corporate travel and holidays. All segments of leisure, weddings, conferences events, airline crew layovers and corporate travel are expected to grow further during the year.

5. RISKS AND CONCERNS

Your Company aims to understand measure and monitor the various risks to which it is exposed and to ensure that it adheres, as far as reasonably and practically possible, to the policies and procedures established by it to mitigate these risks. The Company has taken adequate preventive and precautionary measures to overcome all negative factors responsible for low trend to ensure steady growth.

Risk Management Policy

(i) The Senior Management is responsible for identification of new risks, changes to existing risks and retirement of previously identified risks through a formal decision making process.

(ii) To ensure key risks are identified and analysed, the Senior Management:

(a) defines risks in the context of the Companys strategy;

(b) prepares risk profiles including a description of the material risks, the risk level and action plans used to mitigate the risk; and

(c) regularly reviews and updates the risk profiles.

(iii) The Company has implemented a systematic process to assist in the identification, assessment, treatment and monitoring of risks and provides the necessary tools and resources to management and staff to support the effective management of risks. (iv) Risks faced by the Company in its business principally arise from Real Estate and

Tourism industry. This includes macroeconomic risks, investee company specific risks, market wide liquidity risks and execution risks relating to the company/ its intermediaries. The macroeconomic risks, investee company specific risks are covered by investment decisions based on third party research and internal assessment. Market wide risks are assessed and managed by investment timing decisions. The execution risk is managed by dealing with reputed intermediaries and through own back office discipline re accounting and follow up f trades.

(v) The Company assesses the effectiveness of its risk management plan through structured continuous improvement processes to ensure risks and controls are continually monitored and reviewed.

6. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Your Company has adequate internal controls commensurate with its size to ensure protection of assets against loss from unauthorized use and all the transactions are authorised, recorded and reported correctly. The internal control is also supplemented by of Chartered internalauditconducted by an external and independent firm Accountants on an ongoing basis.levels.

The Internal Audit Reports along with management comments thereon are reviewed by the Audit Committee of the Board. Besides, the Audit Committee reviews the internal controls at periodic intervals in close coordination with the Internal Auditors.

7. FINANCIAL PERFORMANCE a) Share Capital: The Companys issued and subscribed share capital consists of Equity and Redeemable Preference Share capital. The paid-up share capital of the company as at 31st March, 2023, stood at Rs. 1244599470/- comprising of 19459947 Equity Shares of Rs.10/- each and 10500000 Redeemable Non-Convertible Non-Cumulative Preference Shares of Rs. 100/- each. b) Non-Current Assets & Non- Current Liabilities: During the year under review, the Non-Current Assets and Non-Current Liabilities stood at Rs. 46212.59 Lakhs Rs. 29749.29 Lakhs respectively Rs. 48334.84 Lakhs and Rs. 32109.10 Lakhs respectively in the last year. c) Current Assets & Current Liabilities: During the year under review, the Current Assets and Current Liabilities stood at Rs. 4295.60 Lakhs and Rs. 6227.43 Lakhs respectively against Rs. 4620.94 Lakhs and Rs. 5074.29 Lakhs respectively in the last year. d) Key Financial Ratio (Standalone):

Particulars

Year Ended

% change

Reason for change of more

31st March, 2023 31st March, 2022 over previous year

than 25%

1. Trade Receivable Ratio strategically enhance its

31.02 18.22 70.26

Improvement in Ratio due to improved collection and revenue growth

2. Inventory Turnover Ratio

0.68 0.45 48.75

Improvement in Ratio increase in turnover

3. Debt Service Coverage Ratio

0.79 0.21 284.30

Improvement in Ratio due to increase in earnings on account of overall business growth

4. Current Ratio 0.69 0.91 (24.25) NA
5. Debt Equity Ratio 2.28 2.20 3.49 NA

6. Operating Profit Margin (%)

27.41 3.90 602.33

Improvement in Ratio due to increase in earnings on account of overall business growth.

7. Net Profit Margin (%)

-12.06 -31.08 61.20

Improvement in Ratio due to increase in earnings on account of overall business growth.

8. Return on Net Worth (%)

5.69 0.40 1316.24 Improvement in Ratio due to increase in earnings on account of overall business growth.

8. HUMAN RESOURCES

Your Company has adequate human resources which is commensurate with the current volume of activity and is reviewed by the management periodically and the Company would induct competent personnel on increase / expansion of the activity.

9. CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis, describing the Companys objective, projections, estimates and expectations may be ‘forward looking statements within the meaning of applicable laws and regulations. Actual results might differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include interest rates and changes in the Government Regulations, tax regimes, economic developments and other factors such as litigations etc.