HB Estate Developers Ltd Management Discussions.

1. OPERATING RESULTS

During the year under review, the Companys Total Revenue is 8324.29 Lakhs as compared to 9077.45 Lakhs in the previous year. The Company incurred total expenses amounted to 9475.73 Lakhs as compared to 10288.06 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 8154.62 Lakhs as compared to 8605.47 Lakhs during the previous year. During the year under review, the Company earned a cash profit amounting to 253.30 compared to 185.07 Lakhs incurred in the previous financial year.

Loss after tax stood at 879.78 Lakhs as against 1042.93 Lakhs in the previous year.

2. INDUSTRY STRUCTURE AND DEVELOPMENTS

The travel and tourism industry contributed 6.8% to Indias GDP and registered the growth of 4.9% in 2019. The industry supports close to 40 million jobs in the country (8% of total employment). India is a large market for travel and tourism. It offers a diverse portfolio of niche tourism products - cruises, adventure, medical, wellness, sports, MICE, eco-tourism, film, rural and religious tourism. India ranked 34 in the Travel & Tourism Competitiveness Report 2019 published by the World Economic Forum. In 2019, arrivals through e-Tourist Visa increased by 23.6% y-o-y to touch 2.9 million.

The COVID-19 pandemic has impacted all businesses, though in varying degrees. A major impact of the pandemic has been felt by the travel and tourism sector consisting of airlines, hospitality, cruise liners, road and railway transportation, travel and tour operators, in addition to industries such as real estate, construction, passenger vehicles, luxury retail, etc. The COVID-19 pandemic, being highly infectious in nature, has impacted the tourism industry in an unprecedented manner, more so as the industry is highly people-centric in nature, and service delivery involves close interactions between service providers and guests.

The hospitality and tourism industry is facing a dire and hitherto-unknown situation that has thrown up new challenges and taken the industry by surprise. Even though the government and the RBI announced stimulatory measures to mitigate the immediate challenges faced by the industries and businesses, considering the diverse nature of the hospitality and tourism industry, especially the fact that it is one of the major contributors to the GDP and also a major employment provider, the industry feels that specific measures from the government are extremely crucial for its survival in these challenging times. In this regard, the Federation of Associations in Indian Tourism & Hospitality (FAITH), has made a representation to the task force set up by the government for relief and bailout packages for the industry.

3. OPPORTUNITIES AND THREATS

The launch of several branding and marketing initiatives by the Government of India such as ‘Incredible India! and ‘Athiti Devo Bhava has provided a focused impetus to growth. The introduction of a new category of visa—the medical visa or M visa—is expected to encourage medical tourism in India. Several other factors promoting tourism in general, and hospitality in particular are:

• Focus on improving infrastructure, including airports, roads and rail connectivity across the country.

• Further extension of E-visas, which are currently available to nationals of 169 countries.

• Introduction of 100% FDI in tourism underthe automatic route

• Introduction of Tax Refund for Tourists (TRT) scheme in line with countries like Singapore in the latest Union budget, to encourage tourists to spend more in India and boost tourism.

• Rationalistion of GST rates applicable to room tariffs, where the existing rates of 28% and 18% were reduced to 18% and 12%, respectively, made effective from October 1,2019.

The COVID-19 pandemic has impacted all businesses, though in varying degrees. A major impact of the pandemic has been felt by the travel and tourism sector consisting of airlines, hospitality, cruise liners, road and railway transportation, travel and tour operators, in addition to industries such as real estate, construction, passenger vehicles, luxury retail, etc. The COVID-19 pandemic, being highly infectious in nature, has impacted the tourism industry in an unprecedented manner, more so as the industry is highly people-centric in nature, and service delivery involves close interactions between service providers and guests.

4. FUTURE PROSPECTS AND OUTLOOK

The outbreak of the COVID-19 pandemic and consequent nationwide lockdown and other restrictions imposed by the government on movement across the country since March 24, 2020 is expected to severely affect the economic growth during FY 2020-21, especially in the first quarter.

Due to ongoing COVID pandemic and its impact on various sectors of the economy, notability on tourism and hospitality Industry, the short term outlook is uncertain. Gradually, over a period of time, the outlook is expected to improve.

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 by 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 of 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 unauthorised use and all the transactions are authorised, recorded and reported correctly. The internal control is also supplemented by internal audit conducted by an external and independent firm of Chartered Accountants on an ongoing basis.

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, 2020, stood at 1044599470/- comprising of 19459947 Equity Shares of 10/- each and 8500000 Redeemable Non Convertible Non Cumulative Preference Shares of 100/- each.

b) Non-Current Assets & Non- Current Liabilities: During the year under review, the Non-Current Assets and Non-Current Liabilities stood at 48270.64 Lakhs and 50479.84 Lakhs respectively 25952.08 Lakhs and 27791.27 Lakhs respectively in the last year.

c) Current Assets & Current Liabilities: During the year under review, the Current Assets and Current Liabilities stood at 3669.20 Lakhs and 3831.86 Lakhs respectively against 5402.88 Lakhs and 4541.68 Lakhs respectively in the last year.

d) Key Financial Ratio (Standalone):

Particulars FY 2018-19 FY 2017-18 % change over previous year Reason for change of more than 25%
1. Debtors Turnover Ratio 33.90 25.78 31.51 Timely recovery/ Low sale due to Covid Pandemic Situation.
2. Inventory Turnover Ratio 0.54 0.71 -23.63
3. Interest Coverage Ratio 0.54 0.56 -4.22
4. Current Ratio 0.68 0.84 -19.51
5. Debt Equity Ratio 1.52 1.47 3.54
6. Operating Profit Margin (%) 16.19 17.18 -5.78
7. Net Profit Margin (%) -10.83 -11.73 7.64
8. Return on Net Worth (%) -4.32 -4.76 9.31

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.